Immigration and Drought Threaten California's Economy

August 21, 2014

California is facing two major problems, writes Thomas Del Beccaro for Forbes: immigration and water.

With more than 38 million residents, California has seen population growth due to immigration. There are an equal amount of Latinos and non-Hispanic whites in California, and the population is expected to reach up to 50 million in just two decades. California desperately needs job creation to deal with this influx of people, as the state is financially strained:

  • Twelve percent of the United States population lives in California, yet, staggeringly, over 30 percent of America's welfare recipients are located in the state.
  • California has over $1.1 trillion in debt, largely the product of its pension system.
  • Taxes in California are 42 percent higher than in Texas. Just recently, the state passed yet another tax increase.
  • In an attempt to combat global warming, California imposes a huge gas tax on consumers. A 15-cent gas tax increase will take effect in 2015.

If this economic situation wasn't bad enough, the state has also spent much of its time in drought. Currently in the third year of a drought, California expects its agricultural industry to lose a whopping $2.2 billion just this year thanks to the lack of rain, in addition to losing 17,000 jobs.

But rather than focus on these problems, Beccaro writes that California's Governor Jerry Brown has focused his energies on bringing high speed rail to the state. He said no to an $11.3 billion water bond proposal (insisting it was too expensive), yet has sought $68 billion for high speed rail. Eventually, he agreed to just a $2.5 billion bond for water storage.

California must deal with its financial problems and water issues, writes Beccaro. If it does not, the number of people on its welfare rolls will continue to climb, only adding to its massive debt.

Source: Thomas Del Beccaro, "California's Economic Collision Course: Immigration and Water," Forbes.com, August 19, 2014. 

 

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