Is California collapsing?

May 18, 1992

It certainly would seem that way. One calamity after another has hit the Golden State. Earthquakes. Firestorms. Prolonged drought. Intense smog. Unreal traffic gridlock. Recession. And now massive urban rioting. California seems to be under a perpetual state of siege.

Yet for millions, California remains the land of opportunity. A vast tidal wave of Asian and Latino immigrants has swelled the population to 30 million, with another 650,000 people arriving each year. They are placing a strain on a state government already on the verge of breakdown.

Last year alone, state officials grappled with a record $14 billion budget gap. They cut social programs by $5 billion and raised taxes by a whopping $7.4 billion. Even so, this year's revenue shortfall -- before the Los Angeles riots -- was officially estimated at $11 billion.

Recession has hit California especially hard. In less than two years, it has lost nearly 700,000 jobs, many in the high-paying defense industry. Commercial construction plunged 37 percent last year and retail sales dropped 3.4 percent in the crucial Thanksgiving-Christmas period. Meanwhile, new federal and state mandates for social spending gobble up more than three-quarters of all revenue.

There's no end in sight to the problems. California's economy may be stagnant but the demand for schools, welfare, public health and other services keeps rising just as fast as the state's population. This giant, polyglot society is a volatile melting pot that threatens to boil over at any time.

Adding to the problem is the political feud between Republican Gov. Pete Wilson and the state legislature. Balancing the state budget this summer could prove hopeless, leading to government paralysis even as the Los Angeles disturbance cries out for government initiative.

The L.A. disruptions require California's political and business leaders to reassess their priorities in light of these new realities. California may never experience another boom period similar to the 1980s. Sacramento could be forced to shrink its obligations, leaving it to localities -- already hamstrung by the 1978 Proposition 13 tax-cap law -- to pick up the slack or make do with less. The decisions that lie ahead could be agonizing. But California's calamity may lead to innovations that could prove instructive for other economically troubled states -- including Maryland. Everything seems larger than life in California. The good and the bad.

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