This. It's basically a hostage situation. With the exception of not enforcing non-competes, I can't think of a single thing that makes California great that is the result of government.
Hollywood is there because of the weather. The central valley is there because of the weather and the soil. The tech industry is there because of the defense industry in WWII and the importance of the west coast to the war effort in the Pacific. There almost 1000 miles of beautiful coast and some of the best National Parks and National Forests in the country are in California.
The geography and the weather is the root of why California is successful. That has attracted and kept talent and created a positive feedback loop between talent and natural resources.
The California government has the luxury of being able to be the most mismanaged because they don't even have to try. Tax money is abundant from all the economic activity and they have captive industries that would have a hard time relocating elsewhere.