I’m just back from six days in the San Francisco Bay Area. Every car trip, mostly up and down the East Bay and to Napa, took roughly twice as long as it would have without traffic (e.g., Napa to Oakland Airport was just over 2 hours). Going 20 mph on a highway gives a person a lot of time to listen to the news and the news was mostly about California’s $25 billion annual budget deficit.
When a business needs to get more cash it looks at its assets and what they can produce. Perhaps the company has teams of skilled employees who could make something more lucrative than the current product. Perhaps the company has a manufacturing plant that could be leased to a startup in a new industry.
What could the State of California do? The “teams of skilled employees” idea is out, given that state workers are paid vastly higher wages and benefits than their private-sector counterparts. With such high labor costs, it seems very unlikely that a state agency could compete with a private firm on any projects of significance. The state runs a variety of schools. The primary and secondary schools are uncompetitive in performance with startup charter schools, so there would be no way to lure tuition-paying students from other countries or states. The universities could produce some cash from out-of-state tuition, but even Harvard can’t make an annual profit of $25 billion.
What does the state control that has a lot of value? Highways! The State of California owns highways that connect people with their friends and their jobs. The same highways connect manufacturing plants with raw materials and customers. It would seem that the most logical place for the state to try to raise money would be by charging congestion fees for the use of these roads. No private company is going to be in a position to compete with the state, at least not for many decades. Businesses and individuals that pay congestion fees may well feel that they’ve gotten their money’s worth, something that apparently the citizens of California do not feel about their taxes (they recently voted not to pay more).
It struck me as odd that the idea of using congestion fees to close the budget gap was never mentioned once during all of the hours that I listened to Californians discuss their intractable budget woes.