The Ueberroth Vision: Fate Is in California’s Own Hands

California needs to grow about 250,000 new jobs a year. But where is the competitive economic environment that attracts, and keeps, business in the state? There is a widely held perception inside and outside the state that California is decidedly anti-business. That sentiment was echoed in a valuable report released last week by the Council on California Competitiveness, a 17-member panel appointed by Gov. Pete Wilson last December.

The council, headed by Peter V. Ueberroth, was critical of state government, policies, planning and Republicans as well as Democrats. The council played few favorites and took few prisoners. In 107 pages of ideas for making it easier to do business in California, it delivered many opinions--and certainly few people will agree with all of them. But it laid it all on the line.

The council offered little that was new or revolutionary in terms of solutions. But it did outline an integrated strategy that addressed six long-time issues with specific programs and reforms that would be carried out over the next 12 months. With the state in the grip of a stubborn recession, made worse by restructuring in some industries such as defense, not all the changes are possible or even prudent. Problems that are a drain on business in good and bad times--workers’ compensation, declining quality of California education, costly government red tape--are top priorities. Others--such as tax changes--would cost the state, which is strapped for cash.

Even so, it’s too bad the initial response in Sacramento was less than highly enthusiastic. Wilson seemed a bit muted as he spoke of the report, which he received only a few hours before its public unveiling. Assembly Speaker Willie Brown of San Francisco skipped Ueberroth’s Sacramento briefing; that’s unfortunate because many of the council’s recommendations fit into bills before the Legislature. The council recommended such changes as:

ROLE OF GOVERNMENT: The governor should lead the development of a strategic plan that presents a consensus vision, supported by Democrats and Republicans. The council recommended an oversight body similar to the federal Office of Management and Budget to coordinate policy and budgetary decisions. It recommended wisely that the governor mandate within one year the implementation of an electronic system so citizens could meet licensing or regulatory requirements in a single action.

WORKERS’ COMP: Recommended was a comprehensive reform of the high-cost, low-benefit system that would crack down on fraud and abuse, eliminate the current insurance rating system, narrow stress claim categories and eligibility, dampen medical treatment and litigation costs and revamp vocational rehabilitation benefits. On this we completely agree--and Tuesday we will spell out some further thoughts on this reform.

STREAMLINING REGS: Cleaning up the nightmarish permit processes that create delays for business is a positive step. But California will want to be careful about going down some of the paths the panel marks out. For example, it proposes allowing business “to submit industrywide health, worker-safety, and pollution prevention plans in lieu of obtaining individual permits from various agencies.” Would the city of Eureka be held to the same smog standards that govern Los Angeles? Or vice versa? This part needs more work.

ECONOMIC INCENTIVES: The council’s proposals include a series of tax changes, investment credits and other incentives. Makes sense--but now? At a time of fiscal woe, is tampering with tax revenues wise?

EDUCATION AND TRAINING: The council called for a comprehensive, multi-year strategic educational plan to be developed by an Advisory Council on Education and Training. This panel would develop basic principles for restructuring schools that include new systems of accountability, freedom of choice within a public school district and developing job skill programs for students who aren’t college-bound. The Competitiveness Council also proposed expanding the school year to 200 days and offering two years of pre-kindergarten schooling. But, oh boy, was it ever vague on how to finance this! Even so, its recommendations were welcome and provocative.

THE LEGAL SYSTEM: The praiseworthy aim here is to end frivolous and marginal litigation and substitute arbitration where possible. But the recommendations on product liability, repeal of the Corporate Criminal Liability Act and other legal matters need careful scrutiny.

CRITICAL INDUSTRIES: Retaining aircraft and aerospace industries and manufacturing while attracting high technology and encouraging small businesses, which create most new jobs, is rightly stressed here.

The most valuable theme is that Californians have in their hands the power to reignite the economy. Political will is what will make the difference in future competitiveness. This useful report insists: “The picture is of a government frozen, without the vision or will to formulate policies or carry out long-range plans for the benefit for all people.”