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CBS Evening News (6:30 PM ET) - CBS-TV
Aug 12, 2003


California's economy

DAN RATHER, anchor: It's the California poll rush. A tally released today by the state shows 247
people have filed papers to run in the recall election. Why do so many people want to be governor of California? Along with the power and a salary of $175,000 a year come an awful lot of problems, problems similar to those in many states. Sandra Hughes has a Reality Check on the state of the state.

SANDRA HUGHES reporting: Russ Berens is a dying breed in this state. After 34 years, he is still
manufacturing clothing in California. But he's finally giving up, forced out by skyrocketing workers' compensation costs. He'll lay off about 200 workers and move his operation overseas.

Mr. RUSS BERENS (Clothing Manufacturer): Each person here has a family. I mean, a one--just because there's one person sitting at a machine, it probably represents four or five or six people's income, and we're just laying them off.

HUGHES: California's employers pay the highest workers' compensation rates, and employees receive the lowest benefits in the nation. Add that to the list of problems that will end up in the lap of that state's next governor.

Mr. HARVEY ROSENFIELD (Consumer Rights Advocate): The things that made California the Golden State no longer exist. We have problems in housing, health care, mass transportation, highways.

Governor GRAY DAVIS: How are we doing?

HUGHES: If Governor Davis is recalled, whoever wins will be a neophyte politician with just 30 days to create an administration before taking over the fifth largest economy in the world.

This year most states had to raise taxes or make deep cuts to close budget gaps, but California had the biggest deficit at a whopping $38 billion. And the state's credit rating is near junk bond status. California's next leader will inherit a balanced budget, but it was done so by borrowing billions and deferring expenses. Revenue was increased by raising college tuition statewide.
Money was saved by halting construction on a desperately needed new college campus. Sixteen thousand state workers lost jobs, and California's car tax was tripled.

Lieutenant Governor CRUZ BUSTAMANTE (Democrat, California): A car tax hurts people. People need their car to go to work.

HUGHES: That is if they have a job. California has the eighth highest unemployment rate in the nation. Add that to everything else, and it's surprising almost 250 people want their name on the ballot for governor. Sandra Hughes, CBS News, Los Angeles.

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