UCLA economist: State is healthy but too dependent on wealthy taxpayers
When considering California’s economy, the Golden State fares “exceptionally well” compared with the rest of the country, though Sacramento’s reliance on high-income earners to fund state coffers could be a problem in the future, a UCLA economist told attendees of the Newport Beach Chamber of Commerce 2017 Economic Forecast.
The event at the Fairmont Newport Beach hotel attracted about 200 guests and featured data presented by Jerry Nickelsburg from the university’s Anderson School of Management.
Nickelsburg, an adjunct economics professor, noted California’s recent gains in payroll job growth but warned that Proposition 55 — a measure on the Nov. 8 ballot that would extend an income tax rate passed in 2012 — would force California to continue relying on money from the state’s highest-earning residents. That habit, he added, could backfire in the event of another recession, because the highest earners lose the most during such periods.
Thus, Nickelsburg concluded, depending on them to bolster the general fund makes for a “volatile” source.
Nickelsburg also said that Proposition 64, which would legalize marijuana for recreational use, is unlikely to make much of a dent for California. While it will create jobs — as many as 130,000 — and boost the state budget by as much as $1 billion, both are insignificant gains for the state as a whole, Nickelsburg said.
“It’s nice, but it’s not really going to help” the state budget, he said.
Legalized recreational marijuana would benefit the so-called Emerald Triangle, composed of Mendocino, Humboldt and Trinity counties, where cannabis cultivation is common. Citing a Drug Enforcement Administration official’s comments, Nickelsburg said the high-quality product from the region could make it “the Napa and Sonoma of marijuana.”
Scott Baugh, a former state assemblyman and former chairman of the Republican Party of Orange County, gave a presentation about national elections. He pointed to several recent polls that indicated a win, if slight, for Democratic presidential nominee Hillary Clinton over Republican nominee Donald Trump.
However, Baugh added, the GOP is expected to keep its majority in the House of Representatives. Several U.S. Senate races for Republican incumbents are less certain, he said, in light of negative reactions to some of Trump’s comments.
Baugh also warned about the danger of unfunded pension liabilities, locally and statewide.
“You have far too many gaps and there’s too many empty buckets out there to solve the problem,” he said. “You cannot solve it by just going after the rich again.”
Twitter: @BradleyZint
