Posted on 08/13/2016 12:52:06 PM PDT by Mark
California’s costly tax and regulatory policies prompted more than 10,000 businesses to leave the state, reduce their operations or curtail plans to locate here between 2008 and 2015, according to a report from Spectrum Location Solutions.
The Irvine-based company conducts site-selection studies and other assessments to help businesses relocate to optimum states and locales for their operations. Some of their clients include corporations that have relocated out of California, like Honda.
The report, “California Business Departures: An Eight-Year Review 20082015,” reveals that at least 1,687 California disinvestment events occurred during that period, a count that reflects only those that became public knowledge.
And for every disinvestment that became known — either through media reports, company announcements or company reports to the U.S. Department of Labor, the Securities and Exchange Commission or the California Employment Development Department — another five occurred, the report said.
In preparing the Spectrum report, site selection consultants and economic development personnel from across the U.S. were asked this question: For every company that leaves an area — any area, not just California — how many others make such a move without any media coverage or without having to file a report with the state or federal government?
Responses ranged from five to seven, with a few indicating that as many as 10 additional businesses made disinvestment moves for every one that was known. Spectrum ultimately relied on the most conservative estimate of five. With that multiplier in mind, the total number of businesses disinvestment actions in the Golden State exceeded 10,000.
A variety of factors would appear to support the multiplier theory. Smaller companies often avoid issuing statements about such moves to avoid publicity. And companies that expand outside of California to serve new territories — actions that might appear unrelated to California’s difficult business climate — often are not listed.
Another factor is the California Worker Adjustment and Retraining Notification Act. That requires companies to file a furlough notice with the state Employment Development Department giving a 60-day notice if it employs 75 employees or more and lays off 50 or more during any 30-day period. But a review of the notices indicates the absence of companies with 74 employees and lower that are known through other sources to have closed completely or in part and left the state, the report said.
Several types of disinvestment events were tracked, with “relocation” accounting for the lion’s share.
Figures in the report show that 1,085 businesses moved all or part of their operations outside of California during the 20082015 period, with 498 of the moves shifting operations from California to another country through offshoring, outsourcing, relocation or expansion. Other forms of disinvestment included businesses that closed a facility in California with work migrating to one or several out-of-state locations, capital directed elsewhere that in the past would likely have stayed in California, work dispersed to other unknown areas outside of California, “U-turns” that occurred when a business was considering locating here but ultimately opted for an out-of-state location, and the canceled construction or lease of a planned facility in California.
Economist Christopher Thornberg, a founding partner with Beacon Economics, acknowledged that California’s isn’t the most business friendly state. But he said the state’s economy is still moving in a positive direction. “Some companies do move out of California because of cost concerns,” he said. “Would I like to see those jobs stay here? Of course. But we still added more jobs than Florida and Texas put together. If you take a good hard look at things, our state is largely a success story.” Figures from the state Employment Development Department show that California led the nation in year-over-year growth in June with 461,100 jobs added — outpacing Florida’s new 244,500 jobs and Texas, which added 171,100.
Spectrum President Joe Vranich, who authored the report, isn’t impressed by that number. Texas, he said, still outperformed California over the past 15 to 20 years in overall employment growth. He added that the California jobs that have moved to Texas tend to pay higher wages than the Texas jobs that have migrated to California. “Texas is outperforming California on so many metrics,” Vranich said.
It’s not all bad. The Spectrum report notes that California offers a variety of incentive programs to help businesses, many of which are administered through the Governor’s Office of Business and Economic Development. Those include tax incentives for aerospace companies, California Film Commission incentives, employment training panel incentives and California Energy Commission incentives.
Some of those incentives are hefty.
Tesla, a Palo Alto-based makers of electric cars, received $15 million in tax credits last year. And Environmental Systems Research Institute Inc., a Redlands- based international supplier of geographic information system software, received $2 million in tax credits.
California’s costly tax and regulatory policies have driven scores of businesses to leave the state, reduce their operations or curtail plans to locate here, according to a report from Spectrum Location Solutions.
California...a failed State?
Wow, I can’t believe it! How could this be happening? It can’t be true! What’s going on? What did those republicans do now?
“Tesla, a Palo Alto-based makers of electric cars, received $15 million in tax credits last year. And Environmental Systems Research Institute Inc., a Redlands- based international supplier of geographic information system software, received $2 million in tax credits.”
Tax breaks for the rich?
Corporate welfare...in Cali?
I’m shocked!
I’ll point out one consideration from the reporting quoted above that is completely missed.
In the 80’s and 90’s I had two very successful businesses in CA. Now these were very small businesses that were probably not very likely to expand to the point where there were numerous employees.
But I can tell that if I had a business idea, now, today and was looking for a location, CA would be probably the very last place I would look. No way on earth would I locate a business in CA that had more than 2-3 employees. No way.
Just like “gun death” statistics utterly fail to account for crimes prevented by the sound of the racking of a slide, the numbers of people who have businesses they’d like to start but cannot see starting in CA is uncountable.
It is not just taxes, it is all of the regulations which increase the cost of living and doing business here. Just one example is that our Democrat legislature passed a billed which requires that all potable water have a maximum level of chromium 6 which is many times lower than the maximum allowed by the US EPA.
Because our So Cal desert area water is less than the Federal maximum allowed but above the state maximum allowed, it will cost our water company about $250 million to build treatment facilities, plus millions more each year to operate them.
The end result is that the typical homeowner’s water bill will end up being 250% higher in another three years. The increases have just begun, and our monthly water bill went from $18 a month to $27 a month. Another increase is coming in September, and once fully implemented, the bill is anticipated to be $50 per month.
There was absolutely no scientific reason to pass this bill which was signed by Jerry Brown. Personally, I suspect that significant campaign “contributions” were made by those companies who will benefit from all of the capital projects that are now required in order to comply with the law.
just one more reason why residents and businesses are leaving California. The only thing this state has going for it is the great climate.
The future of America under Hillary, continuing the work of Obama.
Unexpected.
Remember ELMO! Oh wait-never mind.
But but but WHY? California is such a welcoming state to business and terrorists.
Interesting rates for your water. We live outside of Houston. Our water bill is and has been $50.07 a month for as long as I can remember. $3 of that is contribution to our volunteer fire dept which is voluntary. Monthly fee covers water, sewer and twice weekly trash pick-up. We have great sewer and containment system in our area and have never flooded, even when we had a LOT OF rain. Rate doesn’t seem to change, even when we run the sprinklers three times a week when it doesn’t rain.
remember the TV show Baywatch and the atmosphere of beauty and freedom that prevailed in the episodes..?
well currently on any beach in LA County if you throw a football or frisbee you are subject to a fine of $1,000.
NOT $100, but yes, you read that right, $1,000.
do you need to replace the catalytic converter on your car?
you must buy a much more expensive California only cat and it will not be cheap.
same thing for guns. maybe half of guns cannot legally be sold in the state of California, you must buy a stupid, expensive gun.
this pattern is true for many other things in California.
in California water bills are expensive and getting more expensive so for that reason California is very Innovative in harvesting rainwater, right..?
wrong, that’s completely wrong.
in California it is against the law to harvest rainwater and bring it into your house for any reason, including just flushing a toilet, washing clothes or washing the dishes.
you can’t do any of that.
my friend wanted to drill a well in my Coastal County and he could get not get any company that would give him a quote of below $50,000.
not $5,000 but $50,000, for drilling the well, just a residential simple well for a two-person occupancy.
in California there are a lot of roofs with Spanish tile, right?
well that tile can be damaged if you want to put solar up on your roof but in California if you must Mount the panels on anything other than your roof you must pay to bring personnel from the National Geographic survey to certify that you putting posts in the ground will not contribute to added earthquake risk.
you believe that I am joking and I consider that a reasonable reaction.
by the time you get finished with all the permits you will have a binder of paperwork about 2 inches thick.
it was so crazy that SolarCity completely stopped doing any solar installations off of roofs because the paperwork was too insane.
Well hopefully real estate will get affordable here soon. . .
you can’t buy a house in SF for less than a cool million. Maybe a handful in the $850,000 range, I don’t know.
“. The increases have just begun, and our monthly water bill went from $18 a month to $27 a month.”
That’s really nothing. Our summer water bill in eastern WA State - where it basically doesn’t rain in the summer - is around $110 including sprinklers on a quarter acre lot.
Many of them are coming to Texas!
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