Is California's decline irreversible?

At the beginning of the decade, when California and Texas were fairly close in job production, movement between the states was close to even. About 35,000 Texans moved to California between the 2000 and 2001 tax years, and slightly fewer than 42,000 Californians moved to Texas. Five years later, Texas had gained a lopsided advantage, gaining about 72,400 Californians while losing about 31,200 Texans to the Golden State. At the decade’s end, the recession had dampened migration in all directions—people are less prone to move when fewer jobs are available to attract them. But Texas remained the far more popular draw, attracting 48,900 Californians while losing just 33,900…

Californians needs to ask if the state has started a cycle of decline, in which a loss of jobs to other states leads to a loss of tax-paying residents, and in turn to a deterioration of the public services that make the state even less desirable for businesses. This “toxic state syndrome,” as it might be called, could be very difficult to shake. The businesses that bring jobs (or take jobs with them when they leave) look for certain things: a skilled work force, relatively low costs, sound infrastructure and public services, and—maybe most important of all—some assurance that these conditions will stay the same.

A state in chronic fiscal distress can’t offer such predictability, and California is a very distressed state. For most of the past decade, its credit rating has been at or near last place in the nation; currently it is rated the lowest by Standard & Poor’s, and Moody’s ranks only Illinois lower. Texas, on the other hand, is just one notch from the top on the S&P scale.