By Seema Mehta
Republican gubernatorial candidate Neel Kashkari unveiled a jobs plan Tuesday that calls for corporate tax breaks, hydraulic fracturing of some California oil deposits, reduced regulations on business and increased spending on water storage.
The 10-point plan, focused on manufacturing, water, energy and the business climate, is the first policy Kashkari has set forth since announcing in January that he would run for office.
The former U.S. Treasury official said his plan would "unleash" the private sector, creating hundreds of thousands of jobs.
His most detailed proposal is a 10-year tax break to out-of-state companies that move to California with at least 100 jobs and to in-state companies that open new manufacturing plants. Income from the new enterprises would not be taxed by the state for a decade.
He would reduce business regulations by requiring that they be reviewed every 10 years and expire absent further action. And he calls for an overhaul of the state's landmark environmental law. Both are familiar Republican themes.
Kashkari would also ask voters to cancel the bonds they approved for the high-speed rail plan favored by Gov. Jerry Brown and redirect the nearly $10 billion in borrowing to water storage.
A political neophyte, Kashkari is hoping to be one of the two top finishers in the June primary so he can take on the Democratic governor in the fall. His main rival for that spot is Republican Assemblyman Tim Donnelly, who has not announced a jobs plan.
Unseating Brown would be an uphill battle. He's a popular incumbent who is widely credited with turning the state's financial outlook around. (Even Brown's immediate predecessor, Republican Arnold Schwarzenegger, praised the governor's work in an interview published Tuesday, saying, "The state is doing well.")
During Brown's tenure, unemployment has dropped 4.1 percentage points, to 8% in February, according to the state's Employment Development Department.
"Putting political rhetoric aside, here are the facts," said Dan Newman, Brown's political spokesman. "In the last four years California has created over a million new jobs, unemployment has dropped to its lowest level since 2008, massive deficits are now solid surpluses, our credit rating is rising and our job growth is outpacing the nation."
Kashkari argues that those numbers obscure millions of Californians still suffering from poverty and joblessness because of Brown's failure to lead.
"Most Californians look at each other and think the man is totally out of touch, and we're going to capitalize on that," he said in a phone interview after touring a San Diego company that makes organic skin care products.
Kashkari concedes that the state's condition has improved in recent years but argues that California ought to be performing better. "Relative to what we were, is it as bad? No," he said, citing Texas and Florida as better examples of job growth. "But relative to the rest of the country ... it's pathetic. So we're going to make him answer for his failure."
Economists said Kashkari's plan misrepresents the state's economic conditions, ignoring that California is one of the fastest growing economies in the nation, with record exports.
Christopher Thornberg, a principal at Beacon Economics, a Los Angeles financial consulting firm, said he supported the calls for more fracking and cancellation of the high-speed rail network. But he labeled the subtext of the jobs plan "silly."
It's "a distortion of reality and sadly, obviously, exactly how politics works -- don't focus on facts, you focus on spin," he said. "It's a ridiculous distortion of the data."
Jerry Nickelsburg, a senior economist with UCLA's Anderson Forecast, questioned the value of the proposed tax breaks.
"It is typically the case that relocation of companies is marginal in any calculus of job growth," he said. "If these incentives were to expand manufacturing in California, how many jobs would they create? This is an open question."
Mike Genest, who was Schwarzenegger's budget director, said he appreciated Kashkari's calls for environmental and regulatory change. But he too questioned the candidate's tax-incentive program, which he said would mean another layer of bureaucrats picking winners and losers.
"It's hard ... to get any strong evidence that different levels of taxation are the major cause of companies making decisions about where to locate," Genest said.
Many of Kashkari's proposals would require the consent of the Democratic-controlled Legislature. His campaign advisors point to his tenure as a U.S. Treasury Department official, working with congressional leaders of both parties on the federal bank bailout, as proof that he would be effective in Sacramento.
Genest said the only way any of the proposals would be enacted in Sacramento was if Republicans claimed supermajorities in both houses of the Legislature.
"The current political environment in Sacramento is such that ... I don't think any of the 10 things would have a chance," he said. Brown unveiled a jobs plan when he ran for office in 2010, calling for the expansion of green-energy projects and for state investment in infrastructure and education. He said his push for renewable energy, energy storage and more energy efficiency could create 500,000 jobs over a decade.
Economist Steve Levy of the Center for Continuing Study of the California Economy said that thus far, the green-energy sector has not delivered a noticeable uptick in jobs because of a lack of investment from venture capitalists.
Levy, whom Brown appointed to the state's Workforce Investment Board, said jobs in construction have been on the rise, but it's difficult to tell how many were created by state investment in infrastructure improvements.
Throughout most of Brown's term, public-sector jobs were on the decline because of widespread government cutbacks. This year, Levy said, "the bleeding stopped."
(c)2014 the Los Angeles Times
Times staff writer Phil Willon in Sacramento contributed to this report.