Given the presence of Hollywood, Silicon Valley, defense contractors and farming economies like the Imperial Valley, implying that public employees and their union are omnipotent is laughable.
Your economy isn't faltering. Some areas were gutted by industry itself (manufacturing), some have tech-related disruptive challenges (movies/music), and farm revenue and silicon valley revenue are booming. Your tax rate above 200k income remains at record lows, percentagewise. Your tax rate overall is slim compared to years ago. Even CalPERS has trimmed down administrative costs steadily in the last 5 years (http://www.calpers.ca.gov/eip-docs/about/facts/general.pdf)
Individual corruption is a red herring, too. Shine some light into those dark areas, root it out (corporate / private or public), and we'll... oh, wait, that's already being done.
The problem in Cali is the same as everywhere else: mere working stiffs not seeing any of 40 years of prosperity vs. corporate and 1%er's taxes plunging. Add in your state's epic damage from Prop 13 and similar right-wing nuttery, and you've created this economic pinch. Stop blaming the last bastion of union/pensioned people: when most of them got their jobs, they took lower pay in trade for stability and a pension. The problem isn't them, it's that you've screwed so many other middle-class people in the state and propped up banksters and billionaires with the proceeds until public employees' situation looks enviable enough to the rest of the citizenry to assault.