Wednesday, January 20, 2010

Record-Level State Debt Will
Worsen California's Hostile Business Climate

The risks of running a business in California are growing as state government is unable to restrain spending, state debt grows, and interest costs paid by personal and business taxpayers become ever more burdensome.

A sure-to-come increase in taxes to cover the "new" $21 billion shortfall will only encourage more companies to move out of state, or if maintaining a headquarters here, will elect to expand in more business-friendly states. Here is evidence about California's economy that big-spending, debt-building, regulation-adoring state legislators ignore:

California has one of the worst unemployment levels in the U.S. This is seen by a quick look at the map in the Wall Street Journal's "Joblessness Across the U.S.: Unemployment Rates by State."

Another way to look at job losses is to phrase it the way the Orange County Register did in "Calif. loses 10 Toyota plants a year."

The state been ranked 49th among the states and Washington D.C. in policies and taxes friendly to small businesses and entrepreneurs, according to the 14th annual Small Business Survival Index. See the map in the Orange County Register's "Calif. near bottom in business friendliness."

Since 1937, the Tax Foundation has produced and published information on government finances. It's latest study that shows only two states have worse business tax climates than does California. The 2010 State Business Tax Climate Index lists California at 48, the same as last year, coming in ahead of only New York and New Jersey. California ranks 49 in the Individual Income Tax Index and has the second highest gasoline tax in the nation. See the Tax Foundation's report "Facts & Figures Handbook: How Does Your State Compare?" (pdf).

California has poor rankings in the Forbes listing of 100 of America's Fastest-Recovering Cities:
55 - San Jose
57 - San Diego
61 - San Francisco
81 - Los Angeles
84 - Bakersfield
87 - Fresno
90 - Stockton
(Places like Pittsburgh, Pa., and Buffalo, New York rank higher than all California cities.)
See the list here.

And in the Forbes listing of "America's Best Bang-For-The-Buck Cities" the rankings are:
59 - Stockton
69 - Bakersfield
71 - Oxnard-Thousand Oaks-Ventura
78 - Fresno
86 - San Diego-Carlsbad-San Marcos
90 - San Francisco-Oakland-Fremont
91 - Sacramento--Arden-Arcade--Roseville
92 - San Jose-Sunnyvale-Santa Clara
96 - Riverside-San Bernardino-Ontario
and at the bottom of the list, at 100, is Los Angeles-Long Beach-Santa Ana.
See the list here.

California’s labor performance over the last five years is among the worst performing in the nation, ranking 48th and besting only Michigan and Mississippi. The ranking was published by the Pacific Research Institute, which observed that the current fiscal crisis is a direct result of a tax-and-spend, regulatory economy that punishes taxpayers. See the report “Assessing the State of the Golden State” (pdf).