Exclusive Interview: Governor Brown Speaks Out In Defense of His State

A tough environmental stand doesn't rule out business expansion.

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This story originally appeared in the July 11, 1977, issue of U.S.News & World Report.

Q  Governor Brown, how do you answer critics who charge you with slowing the growth of business in California?


As we get closer to an election year, each side raises the ante and sharpens it rhetorical thrust. Environmentalists, labor unions, educators, the business community—each group that wants more or less government regulation, more or less government spending, comes to the State capital to argue its case. Each of the claims made have to be cut in half, then divided by 2 before you begin to see what is actually a legitimate demand. It's my job as Governor not to yield to the demands of anyone, but to find a path that is consistent with the long-term interests of the State.

Q  What specifically is the fight all about?


There are short-term profiteers who would wish to pollute the environment, destroy people's lungs and run roughshod over one of the most beautiful places in the world. I don't want to see them do that, and obviously they will resist. But beyond that, there are tax burdens and regulations that bear down on various individuals and corporations—but these things have emerged over a long history, under both Democratic and Republican administrations. I'm referring to the efforts to protect the coastline, the air and water quality, and the safely of workers, as well as the need for providing more funds for schools and other government programs.

I'm not at all surprised to see the conflict of ideals that is going on now, because that's what democracy is all about. The environmentalists have won some important victories, and now business and development interests are trying to regain some, and press their own views. It's the role of policy making to find the wisdom in the competing claims and to provide a balanced but thoughtful approach. That's what I'm trying to do—and I think the record bears that out.

Q  What is your assessment of the business climate in California?


Business is booming. The economic climate is healthy, and the number of jobs created is outpacing the national average. This is a market of more than 180 billion dollars and 22 million people, and any businessman who has a product that will make sense to the people of California can't stay out of here. We welcome the businessman, but we try to create the kind of balance that makes for a society that people want, not only for this generation but for those to come.

Q  Does the State plan to do away with the much-criticized tax on business inventories?


I support the phasing out of the inventory tax over an appropriate number of years—probably seven. And we're now working with the committees in the legislature to devise an appropriate formula. Q  Has California's heavy burden of State and local taxes—second only to New York's—hurt its economy?


Per capita taxes don't take into account the actual wealth and purchasing power that exists in the State. The taxes are a function, first of all, of the total wealth that exists here, which is higher than any State in the country. Secondly, the taxes are linked to our wide range of services. We have more than 100 community colleges, 19 four-years State colleges, and nine campuses of the University of California. Then there's a well-developed public-school system which also offers adult education.

The schools, the environmental quality, the roads—all are part of the natural and developed wealth of the State, and these things cost money. But they also help create a better economy, in that the good roads allow for a highly developed marketplace, and the schools provide the people for business.

How else can we explain the State's triple. A credit rating, the good corporate profits and the increase in personal income? There are all indices of a solid economic base, and taxes are a part of the equation.

Q  You've recently been wooing overseas firms, but aren't foreign businesses in the State unhappy about taxes?


They're complaining about the unitary tax, which is based on the share of an international firm's profits that is attributed to its California operations. We're reviewing that situation. We won't be giving special tax breaks to any company, but if a legitimate case can be made about a particular tax that is not right, I'll seriously consider recommending to the legislature that it be modified.