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Business is the state's business

Sacramento can and should do more to spur California's economic recovery.

December 17, 2012|By Glen Becerra
  • For the second year in a row, California has been identified by the Wall Street Journal as the worst-run state in America.
For the second year in a row, California has been identified by the Wall Street… (Los Angeles Times )

The slow economic recovery and the inability of market forces alone to lift California's economy have highlighted the need for state leadership in the next legislative session.

Not that it will be easy. For the second year in a row, California has been identified by the Wall Street Journal as the worst-run state in America. And as bad as that sounds, the outlook for the future is even grimmer — unless Sacramento changes.

The one bit of good news on the horizon is that the economy, overall, is improving. But the improvement hasn't been fast enough or vigorous enough to begin to repair the damage from the 2007 recession, when the six-county region represented by the Southern California Assn. of Governments lost about a million jobs.

Economists don't expect employment in Southern California to return to pre-recession levels until about 2020. Such projections underscore the need for aggressive action on all fronts.

At a recent economic summit convened by SCAG, several hundred leading decision-makers from business and government agreed that it will take an entirely new way of thinking to change the region's outlook.

Among the challenges identified were:

• Preparing a better-educated and more highly skilled workforce capable of competing in the global marketplace.

• Creating and maintaining critically needed infrastructure despite strained budgets.

• Fostering a climate that encourages technological innovation and product development.

• Getting city and county governments to streamline their permitting and licensing processes to encourage business expansion.

Cities and counties can't accomplish these things on their own. State legislators will need to step up and lead. They must think in new ways about how to encourage economic development and community reinvestment, and about how to finance much-needed transportation and infrastructure improvements. They must create new financing methods, including public-private partnerships, private equity finance and local, targeted finance authorities. These things have become particularly important now that cities no longer have redevelopment financing to rely on.

Money, in and of itself, is only part of the solution. With a new legislative year ahead of us and a new Democratic supermajority in place, Sacramento needs to make regulatory reform a top priority, identifying and overhauling regulations and tax policies that are stifling business development and expansion.

Modernizing and streamlining the California Environmental Quality Act ranks at the top of this list. The law in its current state impedes both development and job creation. Two simple fixes would be to allow for concurrent rather than consecutive environmental reviews and to expedite legal reviews when challenges occur. But the state should also fully evaluate how the 42-year-old statute should be updated, improved and streamlined.

Another important job for Sacramento legislators will be to set up a system that ensures that revenue generated by the state's new cap-and-trade greenhouse gas program is allocated well, including to transportation improvements that could help lower emissions even more, while moving goods and people on less congested and more efficient roadways.

The state should look for alternative sources of funding to develop badly needed affordable housing. It should invest in infrastructure improvements that will guarantee a sufficient and reliable supply of water for Southern California by investing in infrastructure improvements. And it should support legislation that will increase exports, increase jobs and help the state's ports remain globally competitive with those on the East and Gulf coasts.

California has always had an innovative business community, and that has contributed to great prosperity to the state. But if California is going to recover from the worst economic downturn since the Depression, the state's government must do its part as well.

Glen Becerra is president of the Southern California Assn. of Governments. More information about the organization's priorities and strategies can be found at

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