SPIN DRIED FRUSTRATION

A recent edition of the Las Vegas Business Press covered a speech by a California legislator that painted a very
bleak picture of California before a business group in a neighboring state.

State Senator George Runner (R) apparently in a speech before the Nevada Development Authority stated,
"In California, we treat businesses more like the enemy at times," Runner said. "In that process, we make
employees a greater and greater liability. And as we create greater liabilities, smart businesspeople decide
not to hire as many employees, or they choose to go ahead and do business somewhere else."

It appears that the legislator has a sense of frustration with the state’s regulatory environment in terms as
he sees it impacting the business climate. And his frustration manifested itself into his comments
presented at an out of state forum. 

While he may have thought that it was politically expedient to make these comments, especially being out
of state, our Internet connected society can easily view such press and news media coverage and specifically
his comments - and it is these comments and where they were expressed that is of concern.  

Unfortunately the legislator used an out of state venue to make his case.  It is too bad, for it would have been
far more constructive to have had him speak at one or more of the many regional economic development
forums presented across the state to express his comments specifically  to the professionals in business,
community, economic development, workforce development and edevelopment, thus enabling a dialogue
on his concerns related to these issues of regulation and taxation and working to find solutions.

The California Business Minute has written extensively about the business climate and corresponding
regulatory and taxation issues, specifically publishingthe annual review, California: Ranked Rated and
Graded. (The 2008 report is pending.)  And it is true that many times California is not ranked high, such
as the recent case with a Forbes online ranking illustrating the state as the most expensive location in
the nation to do business.  Yet in other cases it can be ranked extremely high.  In addition, multiple cities
across the state find themselves ranked very high in terms of economic growth and business climate
such as Kiplinger’s ranking Sacramento as one of its ‘Top Ten  Best Locations for Business’ in the
nation or Irvine as the one of the ’Top Ten Best Cities in the Nation to Live.’

The rub with the legislator’s comments stems from my nearly 30 years of service in economic
development particularly in the Golden State.  For example, during my tenure as executive director of
the Yuba-Sutter Economic Development Corporation, we worked with our legislators, assemblymen
Doug LaMalfa and Rick Keene along with state senator Sam Aanestad. The region had been named
not once but twice as ‘The Worst Place to Live in the Nation’ by Rand McNally and Money magazine
-a horrible label to be given a community.  In concert with this, the region also suffered from 20 percent
unemployment and corresponding double digit poverty levels.

So the community in concert with its legislators worked to reverse these trends and the unfortunate public
relations fiasco.  Within seven years, coordinating work on business expansion, retention and recruitment
activities, the region reduced unemployment to 9 percent and poverty levels from a high of 25 percent to 13.
Forbes magazine ranked the region not once but twice the ‘Best Rural Location in the State to do Business’
and in the ‘Top Ten Rural Locations in the Nation for Business’.  Additionally, the US Department of Commerce
bestowed it’s National Award Of Excellence to the Yuba-Sutter Economic Development Corporation as the
‘Best Rural Economic Development Program in the Nation in 2006’   Together local and state officials with
the private sector over came all obstacles even with the rigid regulatory and heavy tax environments expressed
by Senator Runner.  And throughout, I never heard any business ever describe themselves as the ‘enemy’ in
the context to doing business in the state.

Again, while the legislator might have been trying to make his case not to create an environment like
California to the people of Nevada, he and other legislators might take these facts into consideration:

                                                 California Facts 2007-08

• California is the 8th Largest Economy in the World (State Finance Dept.)

• California comprises 13 percent of U.S. GDP (Bureau of Economic Analysis)

• 12.5 percent of the nation’s population lives in California (Census Bureau)

• 10 percent of all U.S. housing stock is in California (Census Bureau)

• California adds 400,000 to 600,000 people a year, creating a population the
 current size of Kentucky in 4 years or of Oregon in 6 years (State Dept of Finance)

• California has the largest and most diverse agricultural crop production and dollar
 value in the nation. (US Dept of Agriculture) 

• Contrary to public opinion, California is not the most expensive state to do business,
 that title goes to Hawaii (Milken Institute)

• Contrary to public opinion, California is not the highest taxed state in the nation for
 business, that title goes to Rhode Island 2007, New Jersey 2008 (Tax Foundation)

• California is ranked #1 in the Nation in Aerospace based on employees and dollars
 spent in production (Development Research Partners)

• Biomedical companies in California generated $62 billion in revenue last year and a
 ccounted for two-thirds of the market value of all NASDAQ listed life sciences companies

• California is one of ten states that has out produced the national average in job growth,
 average wages, total personal income, per-capita income and population growth over
 the last ten years (Business Council of New York)

• California possesses 25 percent of the Forbes 400 richest people in the nation, larger
 than any other state

• California possesses 10 percent of the Fortune 500 firms in the nation, just behind the
 states of New York and Texas

• California’s Rank in the nation
#1 in High Tech jobs in the nation with 919,300 (AEA)
#1 in employment for Computer Design and Related 
      Services (AEA)
#1 in Telecommunications Services employment (AEA)
#1 in Semiconductor Manufacturing employment (AEA)
#1 in Computer and Peripheral Equipment Manufacturing employment (AEA)
#1 in health care employment with over 1,434,000 employees (Census Bureau)
#1 in Asian-Pacific, Black, Hispanic and Women Owned Businesses than any 
      other state (Census Bureau)
• California was ranked the ‘Best Place’ where Americans want to live (Harris Poll)

Rhetorically, if our state’s regulatory and tax environment is so bad, then how did we accomplish
all of this?  These rankings are the reason why Nevada along with all of the other states come to
California to recruit business and industry, because it is where growing business and industry is
located. And that message more than anything is what the legislator should have taken the
privilege and honor of presenting.

The California Public Policy Institute earlier in the year identified in a study that the state has not
lost significant numbers of businesses and specifically has not lost due to its regulatory and tax
environment.


                                                                         
                                    Assistant Secretary of US Dept. Of Commerce, ( current director of SBA nominee)
                                    Sandy Baruah with Congressman Wally Herger and State Senator Sam Aanestad
                                    with community officials at the presentation of the National Award of Excellence at
                                    to Yuba-Sutter County Econ. Dev. Corp. at the California State Capital

If the response to the reason for the remarks is because it is about politics then that is too bad.  California
deserves statewide elected officials and legislators who will engage  business, community and economic
development professionals to vette these concerns across the state and then work together to identify and
subsequently implement actions to achieve economic success as did the Republican legislators Doug
LaMalfa, Rick Keene and Sam Aanestad.

Let's hear your comments----



Tim Johnson
www.CaliforniaBusinessMinute.com