It’s Coal, Ashes in Santa’s Bag for State in ’93

Last week, state Treasurer Kathleen Brown called on President-elect Bill Clinton to enact a targeted short-term economic stimulus package to help “struggling states such as ours.” The week before, Assembly Speaker Willie Brown took a page from Clinton’s text and called for a California economic conference. Gov. Pete Wilson supports the idea.

So 1992 is closing on California amid hopes that someone will do something about the economy. Unfortunately, even with the best of intentions, there is very little California’s elected leaders can do to revive the economy, especially in the short term. There is very little the federal government can do either.

Cutbacks in government spending on aerospace and defense will continue to take their toll. (Remember, in the long run lower defense spending is good for the economy.) High unemployment in California will continue to hurt retailing. A lack of buyers at current prices will continue to depress home values. And all that surplus office space isn’t going to disappear overnight.

Let’s not kid ourselves: 1993 will be a lousy year for California. UCLA’s Business Forecasting Project, for example, predicts statewide unemployment of 11%, which is even worse than the 9.2% average for 1992. Nor is there any magic formula that will help in the near future.

Christmas is almost upon us, an unpleasant time to deliver bad news. But hide this page from your children, because the truth must be spoken: No, California, there isn’t a Santa Claus.

Does this mean things will never get better? Of course not. Sooner or later, this state will again enjoy growth. It is home to too many of the industries of tomorrow--from biotechnology to computers to entertainment--for it to be otherwise. California continues to attract newcomers, many of them would-be entrepreneurs. Our farmers are among the world’s most efficient. Our universities offer a wealth of intellectual riches.

And both Browns have decent ideas. Kathleen Brown’s call for targeted retraining is perfectly sensible. Better yet, let’s go ahead and have Willie Brown’s suggested California economic conference.

If we do, the first order of business should be to forget quick fixes, because there aren’t any. Tinkering with environmental regulations, cutting special tax breaks and appealing for federal aid are probably a waste of time. Instead, let’s focus on what counts:

Workers’ compensation: Tackling this monster is probably the single best Christmas present the governor and Legislature could give workers as well as businesses.

Red tape: Rather than weakening environmental laws, which could worsen the quality of life and chase away even more business, focus on efficiencies. Streamline permit processing. Make sure firms that want to expand can get a yes or no within 45 days. Provide one-stop regulatory shopping for companies bewildered by the multitude of rules, agencies and forms.

Market incentives: California’s business climate can’t be separated from its climate of life, and that climate has to be healthy if the economy is to grow. That means cleaning up the air, easing congestion, containing sprawl and beating crime. Since we don’t have the money for a lot of costly initiatives (and they might not work anyway), let’s try some market incentives. How about rush-hour charges on the freeways? New technologies allow tolls to be levied without stopping traffic.

The state budget: Figure out a way to close the chronic deficits--likely to reach $7.5 billion by July--that produce paralysis in state government and the kind of unpredictable tax climate businesses hate. Find some long-term funding. Two of my favorite sources: higher taxes on parking and legal services.

The Legislature: Let’s face it, real change is going to require state lawmakers to rise above the morass of campaign money and special interest lobbying that has prevented action in the past.

Education: This one is crucial. What makes an economy is not natural resources or bricks and mortar, but the things people can do. And what they can do depends on what they know. Spurred by competition, big companies are slashing headquarters staff and focusing on the customer. Maybe the schools need some of the same.

Dealing seriously with the impediments to California’s long-term economic growth won’t be as easy as sending Santa a wish list. But surely it must be clear by now that, even in California, every day can’t be Christmas.