California’s Pivotal Moment: Challenges and Opportunities
California is an extraordinary place to live and work; however, we cannot take its future for granted. While our work at the Alliance is focused on expanding the innovation economy, our work must be contextualized in the broader environment. The state is facing serious governance challenges, such as poor public services despite high taxes, and too many Californians are looking to leave.
In an effort to be part of the solution, the Alliance hosted an energetic virtual leadership discussion in the fall of 2023 called “Keeping California Golden” that featured former California State Controller and venture capitalist Steve Westly. I was impressed by his collaboration with a group of other civic and business leaders on an initiative, the “21st Century Alliance,” aimed at implementing common-sense policy outcomes. Their goals, like addressing our homeless crisis by cutting the state’s 2.5 million housing unit gap in half and raising K – 12 student outcomes from the bottom quartile to the top nationally by 2035, are ambitious, meaningful and measurable.
While I enjoy the convenience of virtual conversations, I feel important topics like this one deserve an in-person format, so I recently hosted a follow-up breakfast session with Steve at my home just before the holidays. Given this busy time of year, I just expected a few hardcore policy folks to join me, but to my pleasant surprise we had a standing room only crowd. I likely could have filled my living room many times over. Given the significant interest, I decided to share a few highlights from the gathering.
- California stands at a pivotal moment, boasting the world’s 5th largest economy – a titan in global influence and innovation. Four of the ten largest market cap companies in the world call California home. The California economy, with a workforce exhibiting productivity that nearly matches Germany’s, is a global beacon of opportunity and progress. Yet, beneath this glittering surface lie profound challenges that threaten to undermine its gleaming potential.
- Educationally, California faces a stark reality – ranking 43rd in Math and 39th in English nationally. This gap in educational achievement poses a serious question about the future readiness of its workforce. Additionally, the state grapples with soaring housing costs, a figure that doubles the national average, creating an affordability crisis for many of its residents and exacerbating homelessness. The financial burden is further compounded by the nation’s highest income tax rate (13.3%), prompting an accelerating exodus of high-income earners who provide an outsized portion of the state’s tax revenue (the top 1% of California income earners pay nearly half of all personal income taxes in the state) resulting in a looming deficit of $68 billion.
- The 21st Century Alliance (the organization that Steve founded), however, sees these challenges as opportunities for transformative change. Envisioning a brighter future, the 21st Century Alliance proposes strategic solutions to turn the tide. By overhauling the educational system, they aim to return California to the top ranks in education, ensuring that the state’s youth are equipped with the skills and knowledge to drive future innovation. Addressing the housing crisis, they advocate a surge in home building, aiming to make affordable living a reality for more Californians. In a bold move to stabilize the economy, they suggest improving services without the imposition of new taxes by moving California from 50th in taxpayer ROI to 25th, an approach designed to retain and attract high quality businesses and high earners.
As California stands at the crossroads of challenge and opportunity, the 21st Century Alliance’s vision underscores the need for strategic initiatives and proactive policies. The business community needs to learn from other advocacy groups like organized labor, plaintiff’s bar, and environmentalists that have so effectively swayed Sacramento’s legislative agenda. The key is aligning around a shared agenda, educating legislators, and helping candidates achieve elected office who are problem solvers that focus on best practices rather than “left” or “right”. The 21s Century Alliance’s approach is not just about overcoming hurdles but about harnessing California’s inherent strengths to secure a prosperous, equitable future for all its residents. This vision for California is not just a blueprint for success, it’s a call to action for all who believe in the state’s potential to continue to lead and inspire.
I realize that our important work at the Alliance for SoCal Innovation can only achieve its full impact if Steve’s higher level work at the 21st Century Alliance starts to turn the tide on these more fundamental issues. It is within this context that we are excited to strengthen this important and emerging collaboration. In addition to personally helping launch a greater-Pasadena chapter of the 21st Century Alliance, we plan to showcase Steve’s work at an upcoming meeting of our Partner Leadership Council (a working group we regularly convene of two dozen other SoCal economic and innovation organizations) in hopes they too will lean into this effort. I am confident by working together on the moderate sustainable agenda crafted by the 21st Century Alliance that we can indeed keep California golden.