Earlier this week San Bernardino became the third California city to declare bankruptcy in the last month. It’s no secret that California has been headed the direction towards insolvency for quite some time, and now it’s starting to collapse because of incredibly high pensions, a difficult business environment and an impossible tax code reliant on the very wealthy of the state (which becomes cyclical revenue if they move).
The flip side of that coin? States like Texas and Louisiana. John Fund notes in The American Spectator that a broader tax revenue pool (not reliant on income or capital gains) and a friendly business environment has put Texas state in one of the top positions on the scale of economic health. Reforms by Louisiana Governor Bobby Jindal have moved his state from having been known as hostile towards business with a fleeting population, ranked 47th for business climate by Chief Executive in 2006, to now ranked in 2012 as the 13th best state for business.
When we talk about Europe, we talk about contagion. Sadly, it appears that here in the U.S., more municipalities are on the California path than Texas or Louisiana. On “Real News” Thursday the panel compared and contrasted what’s working in Texas that’s not in California, and the lessons that can be learned.