CALIFORNIA’S ECONOMY : 4 of 5 Jobs Lost Are Unrelated to Defense : Commerce: The state must have a strategy other than trying to ride out the downturn in military spending, a study says.

Cutbacks in military spending have played a key role in California’s economic downturn, but nearly four out of every five jobs lost since 1990 have been unrelated to defense industries, a state study says.

The report, released Tuesday by the Commission on State Finance, says there are “many misconceptions” about the impact of defense cuts on California’s economy, which has problems that go far beyond spending reductions ordered from Washington.

Still, the report said, the state’s economy is better equipped to absorb today’s defense spending cuts than it was after the Vietnam War, because military-related industries make up 6% of state business. That compares to a peak of 14% at the height of the war.

“Defense cuts are not new to California,” said Kevin Scott, executive director of the bipartisan commission. “We’ve been through this boom-and-bust cycle before.”

Rather than trying to ride out the defense-cut storm, the report urges that state officials examine the factors causing the loss of non-military-related jobs and take action to correct the problem.

The report said federal defense cuts have cost the state about 180,000 jobs since 1990, including about 80,000 positions directly related to military projects and 100,000 jobs lost as the effect of the spending cuts rippled through the economy.

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Those losses account for about 22% of the 800,000 California jobs that have disappeared since mid-1990, the report said.

“California’s economic problems extend far beyond defense cuts,” the report said.

Scott acknowledged that California’s slow economy is part of a national downturn but said factors unrelated to the business cycle are also slowing economic growth in the state. He cited high land and labor costs, complex regulations and lack of a network to foster emerging businesses.

“Taken together, these and other factors have contributed to a deterioration of the appeal and viability for many firms to do business in the state, and especially in Southern California,” he said.

Scott did not recommend specific legislation to improve the business climate.

Separately Tuesday, Assembly Democrats unveiled their plan for turning around the business climate. It was developed after dozens of meetings with business executives and labor leaders across the state.

Democratic Assemblyman John Vasconcellos of Santa Clara, who led the project, said the effort was aimed at eliminating the “historic distrust” between business leaders and the state’s top Democrats.

Vasconcellos endorsed several Republican-style solutions to the state’s economic problems, including increased tax credits for business investment and a reduction in the capital gains tax. He also said California’s government needs to be redesigned at all levels and that government employees need to be instilled with a customer service attitude.

The Democrats’ report noted that there are 77 different offices in state government that work on economic development. He suggested that those efforts be consolidated under one Cabinet-level official.

With the Legislature due back in the Capitol today for a special session on workers’ compensation, the report said the system is broke and “desperately needs fixing right now.”