The Key Question: Economic Growth : Has Sacramento been its own worst enemy?

The recession shaking California is now rattling Sacramento. Business is not as usual. Almost everyone is sounding the same concern: problems confronting California’s business climate and future economic prosperity. In his State of the State address Wednesday, Gov. Pete Wilson rightly hit hard on the important theme of economic development. That’s the issue for 1992.

At long last, Sacramento is beginning to answer the wake-up call to help make California more competitive with other states. Wilson has formed a Council on California Competitiveness. The Democratic leadership is getting with it, too.

Things are especially tough because the state is suffering a double whammy: a cyclical economic downturn as it weathers a costly restructuring of various industries. California faces another fiscal deficit as tax receipts plummet in the recession, which has put 380,000 Californians out of work. Small and large businesses are slashing costs and jobs to survive. Many are relocating or expanding outside California because of onerous state requirements such as the costly workers’ compensation program and confusing environmental regulation.

California’s future prosperity depends on being hospitable to new jobs and industries. And that depends on aggressive action, led by Sacramento, to reverse the state’s anti-business image.

The newly formed Assembly Democratic Economic Prosperity Team, composed of nine Democrats including Assembly Speaker Willie Brown of San Francisco and headed by Ways and Means Committee Chairman John Vasconcellos of Santa Clara, will begin a series of meetings with the business community to hear it out.

“At times it is crying wolf and at times it’s real,” Vasconcellos said of business and its complaints. “This time it looks like it’s real. We got, if not careless, complacent.” The goal, he explains, is to get the facts, develop trust and design an action agenda. “It’s our recognition that we and everybody else ought to work face-to-face in a cooperative effort to develop and understand the economic crisis we’re experiencing and come up with some solutions.”

The conversion of Vasconcellos, an Assembly liberal, to the theme of the urgent need for economic development is an especially hopeful sign. Vasconcellos is talking to Peter Ueberroth, recently named by Wilson to head the governor’s competitiveness council. It’s refreshing that the Republican governor and the Democratic legislative leaders seem to have the same goals for once.

But answering the wake-up call was easy. The challenge now is to get beyond talk and initiate badly needed reforms to again make California attractive to business.