Carson Bruno

Carson Bruno

Carson Bruno is a research fellow at the Hoover Institution who primarily studies California public policy, electoral politics, and public opinion, with a focus on the future of the California Republican Party. Carson also explores domestic economic policy, tax policy, and the intersection of energy and environmental policy. His central interest is in developing market-efficient policies that complement California public opinion and spur economic growth, advance personal liberty, and improve economic mobility within the state. Carson’s examination of national policy largely focuses on its effect on state policy-making decisions. Before joining the Hoover Institution, Carson structured tax-exempt and taxable municipal bond issuances as a public finance investment banker, which gave him an in-depth look at state and local fiscal policy decisions. He received his master’s degree in public policy with honors from Pepperdine University, specializing in economics and American politics. He has a BS in accounting and business management, with special attainments in commerce, from Washington and Lee University.

 

Late last week, California Gov. Jerry Brown called for a special session of the State Legislature to address revising ACA 4, a constitutional amendment negotiated by then-Gov. Arnold Schwarzenegger and Republican and Democratic state legislative leaders to institute a “rainy-day” fund. Since its approval by lawmakers in 2010, ACA 4 has been moved from the June 2012 primary election ballot to the November 2014 general election ballot. Now, Gov. Brown and Democratic legislative leaders want to amend the language before voters have a say.

In its current form, ACA 4 would boost reserves from 5% to 10% of the General Fund, mandate 3% of the general revenues be deposited for most years into the reserve, require non-recurring revenues above historic trends be deposited into reserve, and limit spending. ACA 4 would also only allow withdraws from the reserve when state revenues drop below last year’s budget, adjusted for population and inflation, and for other rare reasons like a declared emergency.

Liberals criticize the current version for being too restrictive (i.e., it saves too much therefore preventing large future spending increases), while conservatives are wary of Gov. Brown and legislative Democrats’ revisions for being too loose (i.e., not enough money is saved and it can too easily be withdrawn and spent).

Here’s a bit of California reality that neither side can dispute: while it’s good news that Sacramento is showing a renewed interest in a rainy-day fund, the state’s volatile budget requires more than just slipping a few coins into the Golden State’s piggy bank in years of plenty.

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Early polls might generate buzz, but reporters, voters, and politicians should view these polls skeptically.  They are unlikely to predict the June primary results very well for three cascading reasons.

Few people are paying attention to the election at this point in the cycle.

In the last five Field and PPIC polls that have asked a head-to-head June primary question, on average 27% of the electorate is undecided (shifting very little between December and the spring).

In PPIC’s January survey, only 28% of likely voters (and just 28% and 21% of likely Republican and Independent voters, respectively) were following election news very or fairly closely.  A statically similar segment of Republicans and Independents were “not at all closely” following the election.  This suggests that roughly half of voters who expressed an opinion in the head-to-head match-ups are following the election “not too closely.” If voters are not really paying attention to the election, do not expect the polls to be an honest portrayal of future outcomes.

And maybe more importantly, based on the PPIC polls from December 2013, January 2014, and March 2014, a quarter of voters are unsatisfied with the choices of candidates.  Don’t expect these voters to pay much attention to the contest; if they don’t like the choices, why would they invest the time?

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*Editor’s NoteCA6: The first two installments of this series example the possible demographics and economics of Tim Draper’s “Six California’s” initiative, currently in the qualifying stage for the November ballot.

This final installment looks at the politics of partitioned California – what would be the new states of Jefferson, North California, Silicon Valley, Central California, West California, and South California*

 

 

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Earlier this month, the California Employment Development Department released good news; California’s unemployment rate decreased 0.2 points to 8.1% in January 2014.  Based on EDD data, the number of unemployed dropped 29,000, while the number employed increased by 50,000.

This is good news – unemployment dropping, employing rising, and a growing labor force. But, it isn’t necessarily great news. Great news would be California recovering faster than a) previous recessions and b) other states’ rate of recovery.Categories

Using state-level seasonally-adjusted employment, unemployment, and labor force Bureau of Labor Statistics data, the charts below show the three metrics relative to the economic cycle’s peak for the previous three recessions and recoveries – when the metrics return to pre-recession levels (i.e. cross 0%). For instance, at California’s December 2007 economic peak, employment totaled 17,014,221. As of January 2014, it was 17,068,468 – a difference of 0.3%.

As shown in the table to the right, the data are broken into 8 categories: California, Tier 1 to 6 states, and “Net In-Migration” states. These categories are assigned based on net domestic migration. For instance, Tier 1 states are those where the most Adjusted Gross Income (AGI) migrated (on a net basis) from California.

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The first installment of the “Sacramento Spotlight” series examining Tim Draper’s proposed “Six Californias” ballot initiative found that no single new state could decisively be named a winner based on demographics.

 

Next up: the economics of the new states.

At face value, each new state would be economically different. Northernmost Jefferson would be mostly an agricultural/resource state with forestry likely to become the dominant private industry.  North California, south of Jefferson and spanning from Nevada to the Pacific Ocean, would benefit from a little bit of everything: tech industry, agriculture, tourism, and healthcare.  Silicon Valley, of course, would be dominated by tech; Central California, situated between Silicon Valley and Nevada, would mostly be agriculture and resource extraction; West California’s Los Angeles hub would mean entertainment would be a massive force and South California’s Orange and San Diego counties would dominate the economy.

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Last month, California Secretary of State Debra Bowen approved for circulation (i.e. gathering roughly 800,000 signatures) venture capitalist Tim Draper’s proposed ballot initiative to split the Golden State into six new states. The proposed proposition has immediately garnered not only state and local attention, but also that of the national media.

But who would be the winners of such an amicable divorce?CA6

Like many things California-centric, it’s not an easy question to answer, other than the obvious beneficiaries: flag-makers and Republicans looking to break up the Democrats’ 55 electoral-vote monopoly in the Golden State. However, by breaking down the new states based on their demographics, their economies, and their politics, we can examine winners on a granular basis.

Using county-level data pulled from Secretary of State’s office, the Legislative Analyst’s Office, Larry Sabato’s Center for Politics, Political Data, Inc., the California Department of Finance, and the California Employment Development Department, the following three “Sacramento Spotlights” will explore what the six news states – Jefferson, North California, Silicon Valley, Central California, West California, and South California – would look like.

First up: demographics.

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In October 2013, the Hoover Institution’s “California Public Pension Solutions” conference, co-hosted by Hoover senior fellow Josh Rauh and SIEPR’s David Crane and Joe Nation, engaged Hoover Institution fellows, pension scholars from across the country, current and former California and out-of-state policy leaders, and other pension reform specialists to discuss, in-depth, solutions to California’s public pension challenges.

After a full day of rigorously discussing solutions and a public address by San Jose Mayor Chuck Reed, conference attendees were asked to complete a post-conference survey.  The survey consisted of ten statements; attendees marked whether they strongly agreed, agreed, were uncertain, disagreed, or strongly disagreed with each statement and then marked their confidence level (very confident, somewhat confident, uncertain, somewhat unconfident, very unconfident).  This survey is modeled after the IGM Forum conducted by the University of Chicago’s Booth School of Business.

The Post Conference Report presents the results of the survey providing a graphic for each statement showcasing the raw and weighted responses.  Accompanying each graphic is a short summary providing more detail on the topic addressed in each statement.

Statement 1

Some key findings include wide consensus that for reform to occur, the “California Rule” needs amended; wide disagreement that small reforms—like eliminating spiking and double-dipping—would solve pension challenges; and strong agreement that San Jose’s recent pension reform is the best example for other California cities/localities to follow.

To explore the report directly, click here.

The Defining Ideas article “Reform or Bust” by Hoover research fellow Carson Bruno also provides an analysis of the report.

 

 

San Diego—California’s 2nd largest city and the 8th largest in the nation—elected a Republican mayor last night.  Before Kevin Faulconer’s election, just one of America’s top 15 cities (Indianapolis) had a Republican mayor and just one of California’s top 5 cities (Fresno) had a Republican at its helm.

While many view San Diego as a Republican city (largely because of the city’s deep relationship with the military, its pro-business attitude, and the region’s role in launching Pete Wilson’s political career), it actually has a split political personality.   In the last four Presidential elections, the Democratic candidate beat the Republican (in two-party vote terms) by an average of 19 points and in the last four gubernatorial contests, the Democratic candidate won, on average, by 1 point.  Meanwhile, since 1998, San Diego has been run by three elected Republican mayors and just one elected Democratic mayor.

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In 2011, former Governor of Minnesota and Presidential hopeful Tim Pawlenty announced he had a plan to grow the United States’ economy by 5% annually.  While he was praised by some for the bold assertion (one of the few bold moments of his short Presidential candidacy), many of his challengers and much of the media scoffed at this notion.

As California’s gubernatorial contest ramps up, one thing is certain: Jerry Brown, Neel Kashkari, or Tim Donnelly will not be promising 5% gross state product (GSP) growth for the Golden State.  The simple reason: California has not enjoyed 5% real GSP growth since the dot-com boom, and current policy conditions suggest such a target is unreasonable.

Between 2002 and 2012, average annual real GSP growth for the Golden State was just 1.3% (0.2 points below the national GDP).  Yet, is there a more reasonable target California’s gubernatorial hopefuls could strive to achieve?  According to general consensus among economists, the ideal real growth rate (in an economy experiencing normal employment) is between 2.5% and 3% annually. Economists view this range as the right balance between increased economic activity and the risk of inflation.

If California could return to normal employment levels—the current unemployment rate is 8.3% compared to an average rate of 5.9% during the last expansionary period (December 2001 to December 2007)—the ideal range is attainable for California.  Between 2002 and 2008, in the lead up to the Great Recession, average annual real GSP growth was 2.2% and as recently as 2012, real GSP growth was 2.8%.  However, as the charts below show, economic growth is not consistent across the diverse Golden State.

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