GEORGE WILL: Fat Public Sector Sickens California.

Under Arnold Schwarzenegger, the best governor the states next to California have ever had, people and businesses have been relocating to those states. For four years, more Americans have moved out of California than have moved in.

California’s business costs are more than 20 percent higher than the average state’s. If, since 1990, state spending increases had been held to the inflation rate plus population growth, the state would have a $15 billion surplus instead of a $42 billion budget deficit, which is larger than the full budgets of all but 10 states.

Since 1990, the number of state employees has increased by more than a third. In Schwarzenegger’s less than six years as governor, per capita government spending, adjusted for inflation, has increased nearly 20 percent.

Liberal orthodoxy has made the state dependent on a volatile source of revenues — high income tax rates on the wealthy. California’s income and sales taxes are among the nation’s highest, its business conditions among the worst, as measured by 16 variables directly influenced by the Legislature. Unemployment, the nation’s fourth highest, is 11.2 percent.

As goes California, so goes the nation? Let’s hope not. Plus, A Guide to Bad Public Pension Policy in California. Also, Pension Placement Agents Under Fire — Again.