Greg O'Sullivan, Guest Commentary 

Almost daily, we read about out-of-state companies that will not expand in California.
Even I have been known to pass along the criticism.

In 2008 the California Chamber of Commerce released its findings of a California
Business Climate survey. Employers were asked to assess the disadvantages of doing
business in California. According to California businesses — you know, the people
who really create jobs — about 40 percent of respondents believed too much government
regulation was a primary factor in creating a disadvantage for California companies.
Another 20 percent of the respondents indicated that soaring state and local business
taxes are creating competitive disadvantages for California's companies. So what has
the state done to address these issues since 2008? Not much.

One the other hand, what do business owners do to address shrinking markets and the
retention of their customer base? They cut prices and polish their customer service
skills to compete. Could this simplistic approach be adopted at the state level?

If Steve Poizner, Meg Whitman or Jerry Brown truly wants to address job creation,
three things need to happen. Call them the Radical 3 for Sacramento.

Temporarily lower corporate income tax rates by 50 percent
Thirty-four states have lower corporate tax rates compared to California. For
example, we could lower the rate by half to companies that are willing to invest
in new facilities and equipment in California over the next five years. The result
would be a staggering increase in personal income taxes, sales and local property
taxes. It's a little like the "Big Box Theory" of merchandising, where profits are
derived from volume. The new jobs, investment and increased economic activity are
certain to far exceed the unrealized corporate taxes from collecting the full 8.8
percent from our existing employers that are fleeing the state or closing due to
out-of-state competition.

Exempt manufacturing facilities from prevailing wage rates
What if just one of our California gubernatorial candidates stood up and said we
 will suspend the prevailing wage rule to any manufacturing company that invests
in new facilities and receives a public investment, inducement or incentive? The
way it works presently is that if the city of Redding offers free land at Stillwater
Business Park to a manufacturer to build a facility, prevailing wage rates are
triggered, increasing labor costs by an estimated 20 percent. Never mind that the
actual manufacturing facility is built with private sector capital and that the
Stillwater infrastructure was already subject to prevailing wages. Don't get me
wrong, when it comes to a genuine "public works" project where the majority of
the project is tied directly to public funding, the prevailing wage rule should
apply. Case in point: stimulus-funded projects.

Recognize the value of California enterprise zones
Forty-two California enterprise zones are located throughout the state. Communities
like Shasta County received these designations from the state through a competitive
process. While zones have similar goals for improving the economic vitality of their
communities, each is unique in the local incentives and special assistance it provides
to the businesses located within the zone boundaries. Each year, the Legislature holds
hearings on whether to continue the enterprise zone program. Most of us who compete
for job-creation projects with other states know that the EZ program is the only real
incentive offered by California. I agree that California can ill afford to waste money
on programs that do not work. However, the state's enterprise zone program has proven
to deliver measurable benefits. Last year participating local companies hired more
than 1,600 employees to receive an estimated $19 million in hiring tax credits. These
same companies plow the tax savings back in their businesses in the form of new
equipment, facilities and, of course, jobs. Reducing or eliminating the enterprise
zone program would be extremely shortsighted. Even discussing it at a state level
sends the message of uncertainty to existing or new companies considering California
for future business investment.

Perhaps the strongest advantages for California businesses are the climate, quality
of life, access to large and lucrative markets, and our culture of innovation, research
and development. By prioritizing tax cuts, reducing the byzantine regulatory environment
and supporting successful economic development programs that create jobs and keep
businesses in California, we can get our state and local economy back on track.
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Greg O'Sullivan was recently the president of the Shasta County Economic Development
Corp. and is now with the Houston –based ROI, a business services firm.