A Tale of Three States: California, Kansas, and Florida

[blacken700]

Robert Reich recently pointed out that if you listen to rightwing groups like the Tax Foundation, you would think California is a horrible place for business. These groups rank it in the top 10 worst due to "high cost" and "burdensome environmental regulations".  However, these same groups rank Sam Brownback's Kansas as one of the best.


Here's the problem with that:


Kansas is collapsing.  In four short years, since the tea party takeover, Kansas has had three credit downgrades along with a billion-dollar budget deficit.  They are struggling to fund basic services and their education system is hanging on by a thread, with cutbacks making it almost dead last in teacher quality, pay, student spending and pupil-teacher ratio.  It's so bad that REPUBLICAN state Sen. Wint Winter Jr. said Brownback's tax cuts have been a "train wreck".


Yet while the Sunflower state is falling apart, the Eureka State is CRUSHING it.


By any metric you use, California has become the best state in the union for investors.  A great Democratic governor (Jerry Brown) and a Democratic-led legislature turned California around in four short years from a 27 billion dollar deficit disaster into a surplus and, according to Bloomberg, an absolute mecca for corporations!  California companies in the S&P 500 have delivered returns of 134 percent!  (No other state comes close.) These same companies outperformed the S&P 500 by a margin of 23%; and CA tech company sales account for 52% of all the tech sales in America.


So how can California have some of the highest business taxes and regulations in America, and yet be the most successful?  The answer is simple.  California invested in itself!


By cutting education, infrastructure development, and other vital social services, Kansas squandered the billions of dollars into paying for very wealthy people's tax cuts on the zombie alter of the failed cult known as "trickle-down economics".  California, on the other hand, asked that its corporations contribute fairly and used the tax money to invest heavily in infrastructure, higher education, and research and development.  Companies flocked to California and scored big.  Also, as Reich points out, the environmental regulations not only didn't hurt the economy, they EXPANDED it.  Companies were driven to fuel innovation in the fast-growing field of renewable energy.  Furthermore, California didn't demonize immigrants, they welcomed them and gave undocumented immigrants driver's licenses.


California is once again leading the way. 


Rick Scott, of course, is aggressively trying to follow the disastrous Brownback model.  He's very lucky that our state has a lot of natural resources, great climate, and tourist attractions that help sustain us during disaster (like a hurricane or the current tea party legislature).  However, he has done his damnest to hurt us. 


Scott pledged over $266,000,000.00 in tax breaks and incentives for the promise of 45,258 jobs,  a large portion of which went to minimum wage jobs with annual salaries that don't even break the poverty line. 


Public transportation is a complete joke in this state, and our roads are infamously clogged (unless you want to pay thousands in the extremely corrupted tolling agencies).  Rick Scott cut over a billion in education spending and has led the attack on higher education. Scientists are held in very low regard by our state government.  Our health care needs are huge, but thanks to Scott and the GOP refusing all subsidies for Medicaid, a a Florida citizen with kids needs to make UNDER $3200 A YEAR to qualify!  Our pollution laws have been gutted, and our state is the most vulnerable to rising sea levels.


Who the hell wants that?  The people with skills you need for your company will go where they will be appreciated.  Companies want to go somewhere that at least invests in basic infrastructure:  a place where corporate employees can  access public transportation and send their kids to receive reasonable k-12 education.  Companies want access to a highly skilled labor force, not one where the citizens earn bottom-barrel wages (because that's the overwhelming majority of jobs we have available here).  They want a state where they can partner with top schools:  Florida's universities our not known for their academic standards as much as they are for their football teams. 


 Also, since we now have legalized homicide with Stand Your Ground, anyone can claim they had a "reasonable fear" and shoot you in the face even if you are unarmed and minding your own business.  OF COURSE you don't want to live here.  I DON'T want to live here either.  And unless you are starting a company that just wants to exploit cheap labor, you aren't going to move here either no matter how low our tax rate is.  It is the same reason I don't choose to live in a dilapidated condo on Orange Blossom Trail.  It would save me a lot of money and I wouldn't have to deal with homeowner's association rules and fees, but there is something to be said about quality of life.


I am told by my brainwashed conservative friends that California is terrible, but I don't see boarded up storefronts in San Francisco.  I see everyone with a living wage and healthcare. I see carefree and happy, which are two words that are never used to describe Kansas--and since 2010, Florida.

[Straw Man]

Teabaggers are conveniently ignoring the self created disaster in Kansas due to the implementation of the full teabag economic fantasy

[blacken700]

Teabaggers are conveniently ignoring the self created disaster in Kansas due to the implementation of the full teabag economic fantasy

you noticed they're staying away from this thread like a hot potato

[Jack T. Cross]

I don't know about the rest, but when this ridiculousness gets thrown into the mix:

they welcomed (illegal workers) and gave (illegal workers) driver's licenses.

Visit almost any city in California, and you will see American citizens on the street with their belongings in a backpack, and nowhere to go.

[headhuntersix]

We had a thread on Kansas a while back when Brownback first started having trouble. The issue was that his plans...full implementation of his plans was being blocked by a coalition of dems and establishment repubs. So he'd propose a bill that would cut taxes and spending on a given issue. The legislature would cut out the tax cuts but keep the spending on alot of what he was trying to do so it got half assed. You really need work harder then some bullshit wave top article on why Kansas is sucking. Plus you idiots have a horrible track record of avoiding unpleasant articles and posts here on the board.

[Archer77]

You're my boy blacken but it's hard to swallow the idea that California is doing well and has a bright future. 

[Option D]

You're my boy blacken but it's hard to swallow the idea that California is doing well and has a bright future. 

Really... Why...

[Option D]

according to business insider, Californias economy is ranked 4th among all states for q1 2015

http://www.businessinsider.com/state-economy-rankings-q1-2015-2015-3#4-california-47

[Option D]

4: California


Silicon Valley is a major part of California's economy. The state houses the headquarters of 53 Fortune 500 companies, including the tech heavyweights Apple, Hewlett-Packard, Google, Intel, Cisco, and Oracle, to name only a few. Of course, California's massive economy stretches far beyond San Francisco and Palo Alto: The state's gross domestic product is comparable with those of entire countries, including India, Canada, and Australia.

California had the fifth-highest wages in the country, with a Q2 2014 average weekly wage of $1,072. The state's housing prices went up 8.12% between Q3 2013 and Q3 2014, the third-biggest jump in the country. The state government's huge 2013 surplus of $32 billion was the largest of any state.



Read more: http://www.businessinsider.com/state-economy-rankings-q1-2015-2015-3?op=1#ixzz3UkMGSyMh

[Archer77]

Really... Why...

California is in deep debt.  Taxes are high while at the same time the tax base is eroding because people are fleeing. Middle Class families are leaving. Regulation are hugely restrictive on business.  Property prices are way overvalued.  It's expensive to live in California and your dollar doesn't go as far.  Cumulatively I spend at least a month out of the year in California. The complaint I hear most frequently is that taxes are to high.

[Archer77]

4: California


Silicon Valley is a major part of California's economy. The state houses the headquarters of 53 Fortune 500 companies, including the tech heavyweights Apple, Hewlett-Packard, Google, Intel, Cisco, and Oracle, to name only a few. Of course, California's massive economy stretches far beyond San Francisco and Palo Alto: The state's gross domestic product is comparable with those of entire countries, including India, Canada, and Australia.

California had the fifth-highest wages in the country, with a Q2 2014 average weekly wage of $1,072. The state's housing prices went up 8.12% between Q3 2013 and Q3 2014, the third-biggest jump in the country. The state government's huge 2013 surplus of $32 billion was the largest of any state.



Read more: http://www.businessinsider.com/state-economy-rankings-q1-2015-2015-3?op=1#ixzz3UkMGSyMh

That is a very select area of California and does not represent the vast majority of Californians.  In California only those with money and those without can afford to live there.  The wages are higher because living there is so expensive.  The government has a surplus because they increased taxes and they just increased taxes again. 

[blacken700]

and here is the rest of the story the repubs want to forget


From the outset, Brownback got most of what he wanted. However, Republican moderates in the state Senate joined with its handful of Democrats to chip away at the tax and spending cuts, and to block his plan for judicial nominations. And so Brownback went on the offensive against the moderates within his own party. During the 2012 Republican primaries, he supported conservative challengers against sitting state senators, with generous assistance from Americans for Prosperity and the Kansas Chamber of Commerce, which is also sustained by Koch Industries. Eight of the conservative challengers won, and Brownback went on a victory tour of Conservative Political Action Conference meetings in Chicago, Denver, and St. Louis, proclaiming, “You change America by changing the states.”

After he had ousted the moderate Republicans, Brownback was able to push an ideologically pure agenda with almost no real opposition. He obtained the power to nominate judges. He reduced tax cuts on the wealthy even more: The rate for the top bracket fell from 6.45 percent to 3.9 percent, and Brownback promised to eventually reduce it to zero when revenues from other sources made up for any potential losses. The economic benefits, he boasted, would be immense. In Denver in October 2012, Brownback predicted “more job creation, more tax revenues, and . . . a much more solid public-sector funding.” The Kansas Policy Institute, for instance, predicted that his tax cuts would generate a $323 million windfall in revenue.
 
Jim Yonally is a former state legislator who lives in Overland Park, a suburb of Kansas City. He is a Republican and votes Republican in national elections. “I don’t really subscribe to what the Obama administration is doing,” he told me. “My man is John McCain.” But by the fall of 2011, he had become deeply disillusioned with the Brownback administration. As a retired school administrator, he was troubled by the education cuts. He wanted to preserve the role of nonpartisan commissions in nominating judges. And he believed that Kansas needed “equitable and adequate tax systems, and what the governor proposed was neither.”

What drove Yonally over the edge wasn’t so much Brownback himself, but a temperamental discomfort with his hard-line style. “I was watching some Republican candidates for office on TV, and every other word out of their mouth was ‘conservative.’ I am Republican. But I am not as conservative as these guys,” he told me. Yonally called another former legislator from Overland Park, Dick Bond, and together they founded a group of former Republican legislators called Traditional Republicans for Common Sense to oppose Brownback. About 40 people initially signed up; membership has since doubled.

One member of the group is Wint Winter Jr., a prominent Lawrence lawyer and banker and the scion of an old Kansas Republican family. Last December, as Brownback was preparing for his reelection campaign, Winter decided the situation had become so alarming that he wanted Republicans to endorse Paul Davis, the Democratic candidate for governor. He began calling members of the Traditional Republicans, and while a few balked, many went along. Several members, Winter said, tried to reason with Brownback to tone down his crusade and failed. “I think it was seeing Sam’s insistence on continuing this course of failed financial policies,” Winter told me, when explaining the willingness of moderate Republicans to support a Democrat.

By June of 2014, the results of Brownback’s economic reforms began to come in, and they weren’t pretty. During the first fiscal year that his plan was in operation, which ended in June, the tax cuts had produced a staggering loss in revenue—$687.9 million, or 10.84 percent. According to the nonpartisan Kansas Legislative Research Department, the state risks running deficits through fiscal year 2019. Moody’s downgraded the state’s credit rating from AA1 to AA2; Standard & Poor’s followed suit, which will increase the state’s borrowing costs and further enlarge its deficit.

[Archer77]

California, meanwhile, still has plenty of problems of its own. For all of the wealth Silicon Valley has produced, even since the recession, its businesses employ remarkably few people—about eight thousand at Facebook, for example—and those workers tend to come from elite backgrounds. That’s one reason why, despite the success of Facebook and others, California’s unemployment rate is still among the highest in the nation, and why unemployment varies so astonishingly across the state, from about four per cent in Silicon Valley to twenty-three per cent in Imperial County, which borders Mexico and Arizona. The state’s cost of living also remains high. Brown’s inaugural address skimmed over these issues, but Newsom, standing in a hallway outside the chambers where the speech took place, was available to comment. It seemed that he was no longer concerned about California’s relative weakness when compared with Texas but rather about the inequities within his own state. There are “two Californias,” he told the Sacramento Bee—“a very wealthy coastal economy, in contrast to a struggling inland economy.”

http://www.newyorker.com/business/currency/california-bested-texas

[Archer77]

Nevertheless, the Democrats argue that California is doing well.  The question, however, is for whom?  For some in the San Francisco Bay region and in the Los Angeles/Orange County area, it may well be.  But overall, California ranks 46th worst in unemployment in the country at 8.5%, 45th in job creation, 50th as a business start-up climate and #1 in poverty.

Much of that unemployment is in the Central Valley where unemployment is as high as 30% in some farming communities.  Those communities have been denied sufficient water for years, i.e. a man-made drought, and are becoming like ghost towns.  Several years back, during one peak of the farming crisis, in the former breadbasket of the world, unemployed farm workers were distributed food.  Newly-elected Republican State Senator Andy Vidak, a cattle rancher himself who had to give up ranching for lack of water and therefore feed, prior to his election was there to hand out the food.  Those handouts included carrots—from China.  Not from California—from China.

Vidak, who was elected in a special election despite facing a district with a 22% Democrat registration advantage, says he “can’t quantify the human suffering” in a Valley left behind by politicians.  The location that suffered the worst of the nation’s foreclosure crisis also lacks qualified health care professionals (in part due to low reimbursement rates) while suffering one of the highest obesity and diabetes rates in the state. That too is the state of the state.

http://www.forbes.com/sites/thomasdelbeccaro/2014/01/21/the-divided-and-troubled-state-of-california/2/

[Archer77]

Keep in mind that earning the 46th worst unemployment ranking in the nation is an amazing feat/failure for California politicians.  You see, California is arguable the most blessed state in the union.  Between its natural resources (including loads of fracking-friendly oil), its trade friendly coastlines, its world-renowned entertainment, and hi-tech industries, it takes some doing for government policies to produce such unemployment.  46th is the state of the California economy—but that’s not all.


California is in a badly divided political state, and government policies are the reason.  California’s government, for all intents and purposes, is run by politicians from the Los Angeles area and the San Francisco Bay Area.  Those areas are the state’s major population centers. LA County, for instance, is more populated than 42 states in our Union.  Not surprisingly, the politicians produced by those huge urban areas, like all such places across the nation, are more liberal than their rural counterparts.


As a result, California has its own red state/blue state divide between the largely blue coast and red inland counties.   The policies of those blue counties were such that for years now, red-leaning residents left those blue urban areas and migrated to more red-leaning surroundings.   Lately, however, many have just left the state altogether including over 4 million taxpayers since 1998—many seeking jobs, and others seeking red-friendly states.

[Option D]

This was from 2014 right...just after 2013 q4

I think its a bit different now.

http://www.forbes.com/places/ca/

Profile

If it were a country, California’s $2.2 trillion economy would be the eighth biggest in the world. The state represents 13% of the U.S. economy. Though California has been under duress in recent years from the dramatic fall in home prices and reduced state tax revenues, its outlook looks bright. Economic and job growth are both expected to be strong over the next five years. Another plus is the $44 billion in venture capital money invested in California companies over the past three years, an amount which is almost five times the total of any other state.

[Archer77]

California has a lot of complicated problems. An uptick in a few areas isn't going to solve some of the problems that are institutional.  I don't have personal problem with California or Californians.  SoCal is one of my favorite places on Earth and I would move there tomorrow if I thought it was economically feasible.

This was from 2014 right...just after 2013 q4

I think its a bit different now.

http://www.forbes.com/places/ca/

Profile

If it were a country, California’s $2.2 trillion economy would be the eighth biggest in the world. The state represents 13% of the U.S. economy. Though California has been under duress in recent years from the dramatic fall in home prices and reduced state tax revenues, its outlook looks bright. Economic and job growth are both expected to be strong over the next five years. Another plus is the $44 billion in venture capital money invested in California companies over the past three years, an amount which is almost five times the total of any other state.

As I said earlier and what is in the articles I posted.  The economy in California is very regional. Wealth and employment are clustered.  There are two Californias, the one for the rich and the one for the poor. Home prices are falling because people are fleeing and are having a hard time selling their homes.  I actually had a discussion with a real estate agent in California who told me that he had to lower the prices on homes because no one had the money to buy them.  People were selling in order to move to cheaper states.

[Coach is Back!]

One of clients owns an oil business. We were talking yesterday and says his company is getting killed by taxes and regulations. California HATES oil so they hit them with that. I asked how come he does take his operation out of state and his response was "how do you move oil wells". Bottomline is california is running other businesses out but creating bigger debt. Moonbaby wants this high speed rail system but with no money to do it.

[Option D]

But i do understand, trickle down economics practiced in California didnt really work. The money and jobs never reached many parts. Unskilled labor has been outsourced, The mass employers are either the tech world in the bay area or its low wage agriculture.

But as a state, as a whole. UE is down and there is a surplus as of 2015

[Option D]

California has a lot of complicated problems. An uptick in a few areas isn't going to solve some of the problems that are institutional.  I don't have personal problem with California or Californians.  SoCal is one of my favorite places on Earth and I would move there tomorrow if I thought it was economically feasible.

As I said earlier and what is in the articles I posted.  The economy in California is very regional. Wealth and employment are clustered.  There are two Californias, the one for the rich and the one for the poor. Home prices are falling because people are fleeing and are having a hard time selling their homes.  I actually had a discussion with a real estate agent in California who told me that he had to lower the prices on homes because no one had the money to buy them.  People were selling in order to move to cheaper states.

home prices are increasing

[blacken700]

One of clients owns an oil business. We were talking yesterday and says his company is getting killed by taxes and regulations. California HATES oil so they hit them with that. I asked how come he does take his operation out of state and his response was "how do you move oil wells". Bottomline is california is running other businesses out but creating bigger debt. Moonbaby wants this high speed rail system but with no money to do it.

isn't that where your located ,how you doing

[headhuntersix]

The issues are all self inflicted. High taxes on everything...ridiculous state level EPA restrictions and a horrible tax payer funded welfare state for illigals. The benefits for state workers are out of control as well. Its not fair to average people.

[Archer77]

Another consideration is that California housing price inflation that many believed was artificially induced.  The lower prices are in part due to a mini housing boom and bust.  This is from California during the period housing prices were rising.  We saw the same thing in Michigan and across the country.


The housing recovery, for instance, seems to be just another stage of the foreclosure crisis. Note that the areas where house prices have risen the most - Arizona, Las Vegas and California - are all areas that were hurt most deeply by the housing crash. So pry between the boards of the housing recovery and the termites start crawling out. Here, you'll find some old villains of the last housing bubble, crawling on the same properties. There are the house-flippers and the financial institutions, the foreclosure players that regenerate whenever there is a boom.

In this case, they may be creating the boom themselves. House-flipping in California has reached levels not seen since 2005, according to the Wall Street Journal. This rise in price is, by all accounts, artificial. Housing, like all products, responds to the laws of supply and demand. When supply decreases - when there are fewer homes on the market - then prices will rise. This is what is happening now.

There is evidence that lenders are controlling the housing supply by reducing the number of houses for sale. Last year, AOL Real Estate's reporting suggested that as many as 90% of available properties were not even really on the market, but just polished for sale and being held back to keep supply low.

http://www.theguardian.com/commentisfree/2013/may/29/economic-recovery-not-real

[Archer77]

home prices are increasing

It's another boom waiting to bust.  Prices are going down in certain areas and I would expect to see the trend continue and spread.  Already you're seeing people taking their homes off the market because they aren't getting the price they want.


Southern California home sales hit a three-year low for the month of July and the region’s median home price dipped to $413,000, industry tracker CoreLogic DataQuick reported Wednesday.

Hampered by rising prices, a limited inventory and a decrease in investor activity, sales of new and existing homes and condos in Los Angeles, San Bernardino, Riverside, Ventura, Orange and San Diego counties totaled 20,369 last month.

That was down 1.4 percent from June and down 12.4 percent from the 23,253 homes sold a year earlier.

The region’s median home price dipped 0.5 percent in July to $413,000, although it was up 7.3 percent from the year-ago price of $385,000.

The June 2014 median price of $415,000 for the six-county region was the highest since January 2008 when it also stood at $415,000.

CoreLogic DataQuick analyst Andrew LePage said Southland home prices have gained significant ground.

“Prices came a long way in a couple of years, and now a lot of would-be buyers just can’t stretch their finances enough to buy in today’s more conservative lending environment,” LePage said. “That’s not the only reason price appreciation is easing, but it’s one of the main ones. July was the first month in two years in which all but one of the six Southland counties posted a single-digit year-over-year increase in its median sale price. The more spectacular annual price gains of a year ago — over 20 percent — seem far back in the rear view mirror now.”

Looking ahead, LePage said double-digit price jumps seem unlikely unless there’s a burst of pent-up demand that might be triggered by more robust income growth, a loosening of mortgage credit or a significant move in interest rates.

http://www.sgvtribune.com/business/20140814/southern-california-home-sales-fall-median-price-drops

SAN DIEGO —California home sales were down last month, plunging to the lowest level seen in January in seven years in the San Francisco Bay area, a research firm said Wednesday. But prices are still up over the same period last year.

An estimated 25,325 new and resale houses and condos sold in California - marking a 30.6 percent decline from the number sold the previous month and a 2 percent drop from January 2014 sales, according to data released by Irvine-based CoreLogic DataQuick.

The median price paid for a home in California of $376,000 was 6.5 percent above what it was a year ago but slightly less than it was in December.

Sales often dip around the holidays, though the Bay area saw a bigger decline in sales last month than it usually does.

A total of 4,439 new and resale houses and condos sold last month in the nine-county Bay area - a 40.5 percent drop from sales in December and 5.5 percent from January 2014. That's the lowest seen in January since 3,586 homes sold in that same month in 2008, which is the trough for January home sales in the firm's statistics.

In Southern California, a total of 13,560 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That's down by 29.4 percent from December and 6.3 percent from January 2014.

http://www.kcra.com/news/california-home-prices-still-up-despite-falling-sales/31344848

[Archer77]

It's all smoke and mirrors. 


“California’s housing market continues to be bifurcated both geographically and demographically, with the San Francisco Bay Area and high-end housing markets outperforming other regions and market segments,” said California Association of Realtors chief economist Leslie Appleton-Young. “A strong job market and barriers to building new housing are creating an imbalance between supply and demand in some housing markets. Buyers who are not impacted by affordability issues are fueling sales in the high-end market, which is putting upward pressure on home prices.”

And according to Property Radar, year-on-year the numbers are much less positive.

August 2014 sales are actually down 13.5% from August 2013. “Median prices fall in half of California’s largest 26 counties,” the report reveals.

According to Property Radar, there are three things that could pop the California real estate market.

1. There’s no more money in the market

Yes, this is literal.There is not more money coming into the California real estate market, there is actually much, much less.

Cash sales totaled 7,547 in August and were 22% of total sales. Cash sales have been steadily declining, down 46.2%, since reaching a peak of 14,028, or 40% of total sales in August 2011.

2. Less cash means less investors

“Hey honey, let’s use our extra cash to buy a home, refurbish it and quickly sell at a profit,” say fewer and fewer people in California.

According to Property Radar, flip sales fell 2.3% for the month and are down 36.5% for the year. Flip sales are defined as properties that have been resold within six months.

Flip sales peaked in October 2012 and have declined 38.2%.

3. Not just the mom-and-pops

California real estate is also quickly losing the attention of corporate money.

Institutional Investor purchases edged up 0.9% for the month but are down 23% from August 2013. As the supply of distressed properties dwindle and prices rise, institutional investor demand has retreated due to the lower return on investment.

In general, institutional purchases have posted consistent monthly declines since peaking in December 2012 and are down 43.9% since then. Trustee sale purchases by LLCs and LPs are down nearly 83.6% from their October 2012 peak.

http://www.housingwire.com/blogs/1-rewired/post/31394-reasons-why-california-housing-is-about-to-go-bust