With only one year into Trump's second term, people are already talking about 2028. Gavin Newsom, Governor of California, seems to be the early frontrunner for the Democrats. The issue of the day is "affordability." That being the case, how can Newsom, the Governor of the least affordable state, be the frontrunner? Well, as one friend said, he does have a nice head of hair.
Keep in mind that Newsom has been Governor since January, 2017. The Democrats have had super-majorities in both houses of the state legislature since 2012. How have they done? Housing? California's housing costs average double that of the rest of the nation. It's not just AI that says that. The California Legislative Analyst's Office says so. AI has the difference of $800,000-$900,000 in California compared to $370,000-$400,000 in the rest of the country. No, it's not just demand. It's building codes and development fees.
Gas? Every time I talk with one of my friends back east they laugh at how high our prices are in California. Average $4.50 a gallon versus $3.00 a gallon in the rest of the country. But with so much farmland in California, surely our grocery costs are lower. Right? Nope. We spend an average of $298 a week compared to $270 a week elsewhere.
Taxes? If you like paying high taxes then you cannot do better than living in California. Highest state income tax. Highest sales tax. Highest gas tax. But, notwithstanding all these negatives, Newsom has done a great job in keeping businesses in California, right? Nope. McKesson Corp. moved their headquarters in 2019 to...wait for it...Texas. Chevron moved in 2024 to...Texas. Tesla moved in 2021 to...Texas. Oracle moved in 2020 to Texas, but then moved again to Tennessee. CBRE (Coldwell Banker Real Estate) moved in 2020 to...yep, Texas.
Charles Schwab moved in 2019 to Texas. Schwab, stating the obvious, said: "The costs of doing business here (in California) are so much higher than some other places." Hewlett Packard moved in 2020 to Texas, while maintaining a San Jose location. Software company Palantir moved in 2020 to Colorado. SpaceX moved their headquarters in 2024 Texas, although they still have their Hawthorne facility. Musk expressed his disappointment over the "woke" laws in California. And Neutrogena moved in 2024 to New Jersey. California's high unemployment rate? Pshhh - strictly coincidental. Nothing to do with businesses leaving and the high minimum wage.
What happened to our oil industry? Too many regulations. A switch to renewable energy. Without a regular supply of oil to power our military establishment, California's policies create a risk to our national security. Phillips 66 and Valero will both be closing their refineries. What about our forestry/timber industry? Again, we've had less logging and more environmental regulations. Some claim that the result is greater density in our forest areas, resulting in fires of greater intensity.
It's fairly well known that Florida and Texas have been gaining population, while California is losing population. The question is, are high earners taking that income with them and moving elsewhere? Yes they are. With millions on Medi-Cal (the states version of Medicaid) and millions, generally low earners, who have come in illegally, is it any surprise that we have the third highest debt. Notwithstanding the highest taxes on almost everything. Where is all that tax money going? That is a subject for another post.
