• New income is expected from the passage of not only Prop. 30, but also Prop. 39, which repealed an existing law that gave out-of-state businesses favorable tax treatment.
“The California economy and the state’s fiscal health is improving. For the first time in years, the budget situation is stable and thus state and local governments have more certainty about what to expect in the next year,” says Mark Baldassare, president of the Public Policy Institute of California, in an e-mail.
With California being the most populous state and having the world’s seventh-largest economy, the recent developments bode well nationally.
“California is the whale in the bathtub of the American economy. Signs of economic improvement in California have important positive national implications,” says Steven Schier, a political scientist at Carleton College in Northfield, Minn. “Given that the state's economy has been even more depressed than that of the nation as a whole, signs of a California rebound are quite positive for the country as a whole.”
Bond-rating firms have also weighed in, noting the $6 billion in additional annual revenues that are projected through 2016-17 because of Prop. 30. “California credit quality looks to improve with passage of Proposition 30,” says a Nov. 7 analysis by Standard & Poor’s.
All this said, several economists hasten to add that California’s improvement is only short term and that longer-term problems have not been addressed. They also note that the unemployment rate is still high.