Dramatic evidence that California's economy has both recovered from its harrowing recession and undergone profound change came last week in robust job figures and news that the state treasury is overflowing with tax receipts from individuals and small businesses making good money.
The state added more than 450,000 jobs in the past 12 months, as California's unemployment rate sank to 6.5% last month--its lowest level since 1990. That was a time when defense jobs were still plentiful and home prices were still rising.
Then came the worst recession in the state's history, 500,000 jobs lost, the state treasury subsisting on IOUs to the banks, people and businesses leaving California and experts from afar predicting that the once-golden state would never shine again.
Yet now all is changed. The California economy is back and it is a different economy, as was clear from the most revealing, instructive news of last week--the surge of tax receipts into the state treasury.
The state Department of Finance, in releasing a revised budget as it does every May, disclosed that "extremely strong growth in personal income tax revenues" had lifted tax receipts almost $1 billion ahead of expectations for the current fiscal year. And more than $1 billion in added revenues is projected for fiscal 1997-98, which begins July 1.
Take note: Individuals, not big corporations, are the source of the tax windfall. Individuals paying taxes on stock option and bonus income, on profits in business partnerships and small companies, and on investment gains in the stock market accounted for the billion-dollar surge.
That reflects the new industries that make California once again the U.S. leader in job creation. And it reflects a new pattern--innovative and yet risky at the same time--for this or any other economy.
High technology, entertainment, business services, the so-called "information industries" are now the economy's mainstay.
"Growth in high-technology sectors, including electronic components, computers, software, motion pictures and biotechnology has more than offset [job] losses resulting from defense cuts," the finance department reported.
To be sure, the recovery is not restricted to advanced industries. Jobs in apparel trades are growing 4% a year and similar job growth is occurring in warehousing and transportation relating to the state's booming foreign trade.
