Mass transit and other state and locally run utilities constitute 1.4 percent of the average state’s economy. California spends 1.9 percent here, Texas, 1.2 percent. California’s proposed high-speed-rail system will significantly grow this outlay. By comparison, heavily urbanized New York, with its mass-transit systems and extensive network of government-run toll roads, outlays 2.2 percent of its economy towards government-run utilities.
Texas manages to spend more in one category than does California: roads. Though Texas has diverted as much as $1.2 billion from its highway fund lately, it still manages to spend 1.2 percent of its economy on highways, compared with California’s outlay of 0.9 percent. The national average is 1.1 percent. California used to spend far more on its roads, but cut back in the 1970s, the last time Jerry Brown was governor — he suggested then that if you build road and water infrastructure, they will come. California stopped building but they came anyway.
The spending category showing the largest divergence between California and Texas should come as no surprise to anyone following the impending bankruptcy of Stockton, California’s 13th-largest city: spending for government-employee benefits. Nationwide, states spend an average of 1.6 percent of their economy in this area. California spends 2.2 percent of its economy — $1,105 for every person in the state — to keep government employees comfortable in their golden years. Texas spends 0.9 percent of its economy for this purpose — $467 for each man, woman, and child in the state. While most Texas civil servants don’t have collective-bargaining rights, they experience about one-third the job-turnover rate of private employees, showing that the State of Texas is seen as a good employer.
Last month, Texas added 27,900 jobs. The official unemployment rate is 7.1 percent in Texas, compared with 8.3 percent nationally. California added 4,000 jobs and has an official unemployment rate of 10.9 percent.
California’s model of government-led prosperity, aided by the nation’s best weather, appears to be in serious jeopardy. Texas’s model of freeing jobs creators to do what they do best through low taxes, less regulation, and a better lawsuit climate is looking stronger by the month.
— Chuck DeVore served in the California state assembly from 2004 to 2010 and is a senior visiting scholar for fiscal policy at the Texas Public Policy Foundation.