Tough Love for California

The state will need a bailout. It should come with conditions.

On Wednesday, I met a woman whose house had burned down in the Eaton fire¹ in Altadena. We were at a layover on the way to California. She had been on vacation, and she was flying to Burbank to be with relatives, some of whom also have had fire damage.

I imagine that this woman is going to suffer terribly for many years. She will spend months or years without a new permanent home, waiting for an insurance claim to be processed. When she finally has a new permanent residence, she will have to go about trying to replace all of her lost possessions.

Private insurance companies have limited obligations to cover losses. Instead, they are reinsured by a state fund. But the state reinsurance fund has less than $1 billion, and the cost of damages from the fires is going to be on the order of $50 billion or more.

The state is going to need a Federal bailout. If it were up to me, that bailout would come with conditions.

In order to receive a bailout, I would require that California pass legislation ceding sovereignty to the Federal government to manage three areas: public employees; water; and forests.

Public employees in California receive salaries that are far above their equivalents in other states. They are paid much more than the typical American taxpayer who is going to have to fund the bailout. The emergency legislation that we should require California to pass in order to obtain a bailout should include provisions that take away the power of public employee unions to strike. It should allow a Federal office to reset salaries and to terminate and replace any employees who are not doing the jobs that they are supposed to do.

Water management in California is terrible. Every few years, California receives plenty of rain and snow melt, enough to produce mud slides. But much of this water runs into the sea, because the state will not build the infrastructure needed to collect it. The emergency legislation should give a Federal water management agency exemption from regulations so that it can build the needed infrastructure. This would ensure that fire hydrants would not go dry. But the benefits of sound water management would go far beyond better fire-fighting ability.

Forest management in California is terrible. Experts agree that controlled burns would help to reduce the amount of combustible forest that feeds wildfires. The problem is that it takes years to get the permits to do the controlled burning. The emergency legislation should give a Federal agency the authority to override any regulations and institute better forest management.

Thousands of Californians are suffering. The Federal government should help. But giving the state money unconditionally would be a wasted opportunity to get the state to shape up. Instead, the rest of us should give California some tough love.

1. At the time, the fire did not have a name.