When California voters are asked how familiar they are with the landmark 1978 property
tax reduction initiative, Proposition 13, they divide into three camps. About one-third
(37%) report being very familiar with it, another third (30%) say they are somewhat
familiar, while the remaining third (33%) report being not too or not at all familiar with it.
Nearly three times as many homeowners (46%) as renters (16%) are very familiar with
Prop. 13. When a homeowner bought their current home is also a big factor, with long-time
homeowners more likely to report high familiarity than those who purchased their homes
more recently.

Three decades since its adoption, Prop. 13 remains very popular with voters. Statewide
more than twice as many voters (57%) report that they would vote in favor of Prop. 13 if
it were up for a vote again today as would vote against it (23%).

Support for Prop. 13 is much greater among homeowners (64%) than renters (41%),
particularly long-time homeowners. Support reaches 79% among homeowners who bought
their present home prior to the passage of Prop. 13.

When voters are asked their opinion about various proposals that have been made
to change Prop. 13, most are rejected by wide margins.

For example a proposal to gradually raise the property taxes of long-time property
owners, so the amount they pay is more in line with the amount paid by recent buyers
of similarly valued property, is opposed two and one-half to one (66% to 27%).
A proposal to amend Prop. 13’s provision that local governments cannot increase
property taxes by more than 2% per year is rejected by an even wider 78% to 17%
margin.
 
There appears to be strong resistance to the idea of changing the Prop. 13 provision
requiring a two-thirds vote of the state legislature to increase taxes, with about
seven in ten opposed.

In addition there were a variety of voter reactions to the idea of creating a split
roll property tax system, whereby residential and commercial properties would be taxed
at different rates, depend on how the issue is framed. Voters are divided if this means
ncreasing the property taxes of business and commercial property (47% approve and 44%
disapprove). On the other hand, the survey results show that voters would approve 61%
to 28% if this means lowering the property tax rates of residential property owners.
Six in ten survey respondents (voters) (61%) now describe state and local taxes as
being much too high or somewhat high and 37% saying they are about right. These findings
are near the thirty-year average result obtained across fifteen separate Field Poll
measures on this subject since 1977, and are quite similar to the four most recent
surveys conducted between 2001 and 2007.When asked to specify which state and local
taxes they feel are too high, survey respondents voters most often mention the gasoline
tax (32%), the property tax (29%), the state income tax (27%) and the sales tax (22%).
No other single tax is cited more than 9%.

Only in California
In 1985, the comedy movie Real Genius starring Val Kilmer presented the scenario
of a college age undergraduate studying at "Pacific Tech," a fictitious technical university
based on Caltech. Chris Knight (Kilmer) is a genius and in his senior year working on the
development of a chemical laser. The story weaves through a variety of trials and tribulations
of this collegian’s life who is seemingly bored with his studies.  However, the story takes a
turn when the CIA defines that they want a laser based system mounted on an aircraft. 
Kilmer’s professor embellishes the request - demand for the laser and pressures the young
genius to find a solution for more power or suffer the consequences of not graduating and
loosing an unknown future career making millions.  Suffice it to say the genius succumbs
to the pressure and finds a solution to the demand. Even the genius comes up with the
solution he also uncovers its subsequent use. The plot turns through a variety of humorous
outcomes. But last week at Edwards Air Force Base in southern California, this apparently
became a serious reality.


Reagan's Star Wars Redux
An aircraft-mounted laser designed to shoot down missiles was fired for the first time in a
ground test aboard a 747 located at Edwards Air Force Base. The test of the high-energy
chemical laser was conducted by the contractors and the U.S. Missile Defense Agency,
The laser is in the back half of a Boeing 747-400F jumbo jet. Subsequent tests will increase
duration and power before the beam is sent through a fire control system to a turret mounted
in the nose of the aircraft. Ground firings will be followed by flight tests of the system, which
is intended to be capable of destroying all classes of ballistic missiles in the boost phase of
flight. The laser was designed and built by Northrop Grumman Corp. Lockheed Martin Corp.
developed the beam control-fire control system, and Boeing provided the battle management
system. The program remains on track to reach the missile shoot-down demonstration planned
for 2009.

                               

Of interest
I was sitting in my then office in Yuba City when a member of the Beale Military Liaison
Committee returned from a trip to Washington DC where apparently he had met with
Air Force officials that identified to him two unclassified military aircraft – the Global Hawk and
the laser armed 747. A community request was made to acquire the Global Hawk mission(Unmanned
Aerial Vehicle, ‘Jet Powered’).  I always wondered what happened to the airborne laser aircraft. 
Well, to para-phrase the radio commentator Paul Harvey, ‘Now you know the rest of the story.’
Now, let's see what's playing at the movies.



Tim Johnson
www.CaliforniaBusnessMinute.com

                                       


If you recall, this elongated contract process of selecting a bid to replace the
Air Force’s aging fleet of KC-135 refueling aircraft has taken on a life of its own. 
If you remember it was announced by the Air Force that California based Northrop
Grumman was awarded the winning bid.  However, then Boeing countered saying
that due to changes in the bid requirements, their bid was not correctly reviewed. 
They demanded and received an audit by the federal Government Accountability
Office, GAO.  The GAO detailed significant errors the Air Force had made in the
original award.   The GAO’s conclusion was that had the mistakes not been made,
it might have lead to Boeing receiving the contract. 

 
                             
   
The Pentagon took over the bid process from the Air Force and conducted a limited
re-bid that examined 8 issues where the government auditors found problems in the
initial bid.

For California, specifically southern California, that means the potential loss of 7,500 jobs.

                                                             

Winning Ethically

After a major victory on the gridiron this past weekend over Oregon State, the Cardinal looks
to be returning its football team back to a respectable level. 

So it must be asked why would a parent pay $$$$$$’s to send their kids to learn about this topic
‘down on the farm’ when they can simply teach this subject by disciplining them by taking away their
Playstation or Wii and force them to watch such proceedings on cable television with the precursor
of saying “do not do as those depicted have done.”

But there is more to this story.  According to a feature story in the Stanford Business Magazine
and at the Stanford Knowledgebase, many people, including students at business schools resist
discussing how the influence of a group or a situation can lead good people to do bad things.
Apparently research indicates that leaders who don’t acknowledge that group pressure exists
within their organization can create and perpetuate an environment of bad behavior if not corrupt. 
Thus, those that do can use their understanding to promote an ethical organizational culture and
appropriate controls.

The idea that ordinary, good people can end up involved in corruption is counterintuitive to some.
“We underestimate the power of a situation to control people’s actions,” says Deborah Gruenfeld,
who is Moghadam Family Professor of Leadership and Organizational Behavior at the Stanford
Graduate School of Business. “Most of us believe we’re much more autonomous than we are.”
(Great, tell that to all of the former employees from Arthur Andersen).

Stanford Business School Accounting Professor Maureen McNichols teaches an elective course
called Understanding Cheating. Among other things, the course helps students see how good
leadership and the right organizational structure can cut down on the opportunities for corruption.

While these are admirable teachings, the efforts, specifically creating the right organizational
structure would be far more valuable and appreciated by 37 million Californians if Stanford would
do research on how to create the right organizational structure needed to pass a state budget.

Time to open a satellite campus in Sacramento. 

To read the full story, go to: http://www.gsb.stanford.edu/news/knowledgebase.html. 

What do you think?  Is teaching ethics wasted on college age students.  Should ethics be taught to the
state's economic development and redevelopment professionals?  Let's hear your comments


  
   Tim Johnson
   www.CaliforniaBusinessMinute.com  

                                    
   
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

                                           
A Two Punch Combination Rock's the Industry
and Soon State and Local Government

Overview of New Auto Dealerships in California

Average sales per dealership...........................................................$51.6 million
Total sales of all new-vehicle dealerships in California ................... $82.3 billion
Dealership sales as % of total retail sales in the state....................18.9%
Estimated number of new-vehicle dealerships.................................1,594
Dealers provide thousands of well-paying jobs in California.
Total number of new-vehicle dealership employees in CA................133,721
Average number of employees per dealership..................................84
Average annual earnings of new-vehicle dealership employees.....$55,491
Dealership payroll as % of total state retail payroll..........................13.9%
Annual payroll of new-vehicle dealerships......................................$7.38 billion
Average annual payroll per new-vehicle dealership .......................$4.63 million
Dealers generate hundreds of millions of dollars of tax revenue
for state and local government through:
. Sales Tax Revenue
. Corporate Tax Revenue
. Payroll Tax Revenue

                                                                
                                            No More, but not impacting sales

Auto dealers in the Golden State have seen sales of new cars and light trucks
plummet by more than 18% in the first half of the year, according to figures from
the California New Car Dealers Association.

That's compared with a nationwide drop of 10%. Not counting sales to corporate
and government fleets, California dealers had sold 634,577 cars, SUVs, pickup
and minivans through June, versus 779,778 in the same period last year.
Here are a few other tidbits from the dealers’ association report:

•Toyota/Scion was the top-selling brand in the state, with a 22% market share,
 followed by Honda (12%) and Ford (11%). Another Japanese brand, Mitsubishi,
 came in last with a share of less than 1%.
•Domestic brands account for about 34% of new vehicle sales in California.
 Nationally, the Detroit Three capture 48% of sales.
• The top-selling models in the state were (in order) the Toyota Camry, the Honda
  Civic, the Toyota Corolla/Matrix, the Honda Accord and the Toyota Prius.
•The Ford F-series and Chevy Silverado were the top-selling full-sized pickups,
  easily fending off a challenge from the Toyota Tundra.
•Cars (as opposed to light trucks) have accounted for almost 60% of new vehicle
 sales in California, compared with around 54% nationwide

The California New Car Dealers Association in their most recent California Auto Outlook
identify two key factors for what they forecast as to be the reason for the continue decline
in sales, specifically a forecasted loss of 20 percent in sales for 2008.

•Number one roadblock to a rebound in new vehicle sales: Excessive household debt
•Number two roadblock to a rebound in new vehicle sales: Rising fuel prices and shifting
 consumer demand

                                         
                                       An example of a two punch combination

The Golden State’s lackluster sales will manifest themselves into less tax revenue for local
jurisdictions.  And unless the price of gasoline returns to the $80 to $100 a barrel, the transition
to smaller vehicles and specifically more fuel efficient vehicles will present a bind for the
manufacturers in the transition, causing further years of lackluster sales impacting local
governments who operate off of the life blood from the sales tax receipts created by new car
sales to also tumble.  Now who is driving California?

   
Tim Johnson
www.CaliforniaBusinessMinute.com

Another Hand

A controversial tax measure — one provision under discussion in a state budget plan
calls for $8.2 billion in new taxes — is designed to close a loophole for large corporations
and generate $1.1 billion for the state. But small businesses earning less than $5 million
in revenue may suffer the most negative effects.

"Although 80 percent of the total taxes would come from businesses with more that $5 million
in revenues, it is the 20 percent of the total businesses in California that make less than this
that will suffer the most" said Scott Hauge, founder and president of Small Business California,
a business advocacy organization.

Companies in California are permitted to carry forward net operating losses incurred in one year
and use them as deductions against earnings in future years. The proposed budget would suspend
the losses for three years. If a business operates at a loss — often the case with start-ups or
businesses that add employees, expand inventory or upgrade equipment — a business could not
carry over that loss in subsequent years to mitigate the tax burden.

One hellava hand!  Fold and deal again.

  

Tim Johnson
www.CaliforniaBusinessMinute.com

                              

Celebrity CEO’s - Under Performers or Over Expectations?

Yet another study has been completed that illustrates that hiring and or retaining celebrity CEO’s are often bad for
the performance of a business. 

The report by two professors from the University of California system - Ulrike Malmendier, associate professor of
economics at UC Berkeley and Geoffrey Tate, assistant professor of finance at UCLA's Anderson School of
Management, studied the performances of celebrity CEOs.

The study theorizes that many CEOs fail to live up to the hype they generate and they tend to under perform once
they reach the top spot.  Intriguing as it may seem at a first glance, a second look might give a better perspective.
Maybe the expectations are too high from the people within the organization, its shareholders and Wall Street types.

According to Malmendier and Tate, the reason they fail to live up to the hype is an example of the mean reversion
model. The model suggests that any award winner performs extraordinarily to win a prize, but cannot maintain
that level of performance year after year.

In the book, Flexible Leadership: Creating Value by Balancing Multiple Challenges and Choices by Richard
Lepsinger, president of OnPoint Consulting and co-author Dr. Gary Yukl, they identify five problems associated
with celebrity leaders.

• Over reliance on the leader to solve all the company's problems
• Exaggerated expectations lead to exaggerated disappointments
• A single CEO misstep can have a catastrophic effect on profits
• Celebrity CEOs are too sheltered to be fast on their feet 
• Employees don't want to be led by a figure on a white horse.

Again fascinating, but even a celebrity CEO knows well enough that in today’s market you cannot afford to
be a flash in the pan. Today’s celebrity CEO hires publicists and advisors that identify opportunities for them,
not just in terms of their role as a CEO but also for their own best interest which means they are looking not
only at their own personal future, but how the company they also lead will catapult them to greater celebrity
status. They recognize that they need to address the mundane tasks of running a business, but their advisors
also identify ways for them to remain within the public eye, for example by leading community and social based
activities that not only give a stage for the celebrity CEO but also places a personable if not a warm side to them
and the often cold view of corporations, specifically the one they lead enhancing it further through their value
added activities.

Malmendier and Tate suggest that increased publicity causes distractions that account for underwhelming
performance. Again, while on the surface it maybe easy for one to agree with this statement, it is hard to fathom
that the celebrity CEO falls to such a level given they possess characteristics of achieving the prize, specifically
if they have signed a performance based contract.  And maybe that is the problem; the organization was so star
struck, it did not sign a performance based contract. So, who is to blame for the failure?

Lepsinger and Yukl believe that companies need to realize that effective leadership is not about glitz, glamour,
and charisma; it's about results. "Real world" CEOs must have the flexibility to respond to continually changing
conditions, he perspective to find an appropriate balance among competing demands, and the commitment to
drive coordinated action by leaders across levels and subunits.

"CEOs must be concerned with organizational performance, with doing all the things it takes to close the gap
between strategy and execution," he says. "And here's the thing: these are skills that don't necessarily make
sexy media stories and garner lots of camera time. They're behavioral. They are learned, not inborn. There are
no easy answers, just a lot of focused thinking and hard work-and realizing that is the first step out of the
star-struck land of the celebrity CEO and into the real world."

“There is nothing to be said against winning the award," said Malmendier, "but to keep that success going,
make sure the CEO's doing his job.” 

As stated above, isn’t that the responsibility of the company?


Tim Johnson
www.CaliforniaBusinesssMinute.com

New estimates released June 5 by the U.S. Bureau of Economic Analysis show that economic
growth slowed in most states and regions of the country in 2007. Real gross domestic product
(GDP) growth slowed in 36 states, with declines in construction and finance and insurance
restraining growth in many states.1 Nationally, real economic growth slowed from 3.1 percent
in 2006 to 2.0 percent in 2007, one percentage point below the average growth of 3.0 percent
for 2002-2006.

 Real economic growth either slowed substantially or was unchanged in all eight BEA regions.
The Far West region experienced the largest deceleration, dropping from 4.1 percent growth in
2006 to 1.9 percent in 2007. Even the Southwest region, which led all regions in growth in 2006
and 2007, slowed to 3.7 percent, down from 5.1 percent in 2006. The two regions that did not
experience a slowdown in 2007 — the Great Lakes and Plains — were already the slowest-growing
regions in 2006.

The deceleration in growth in 2007 was most pronounced in Arizona, California, Florida, and Nevada.
Each of these states had experienced faster real growth than the nation since 2003, but slowed
dramatically between 2006 and 2007, to rates below the national average (Chart 2). In 2006, Arizona
and Nevada were in the highest growth quintile, and California and Florida were in the second-highest
quintile. But in 2007, Arizona dropped to the third quintile; California dropped to the second-lowest
quintile; and Florida and Nevada dropped to the lowest quintile. In Arizona, Florida, and Nevada,
construction subtracted more than 1 percentage point from real GDP growth. In California, construction
and finance and insurance combined subtracted one percentage point from real growth.

Three states — Delaware, Michigan, and New Hampshire — saw their economies contract in 2007.
Like the states above, construction- and finance-related industries were largely responsible for the
weakness. In Delaware, the decline was primarily due to a large decline in finance and insurance,
and secondarily due to a decline in construction. In Michigan and New Hampshire, declines in these
industries and in real estate, rental, and leasing were largely responsible for the decreases in real GDP.

In contrast, Utah had the fastest economic growth in 2007 (5.3 percent), growing at more than twice
the national rate. Durable goods manufacturing, retail trade, and real estate, rental and leasing led
the way in Utah, accounting for more than half the state's growth. New York was the only eastern state
among the ten fastest-growing states. Contrary to the nation and most states, finance and insurance
was a strong contributor to growth in New York. Finance and insurance along with real estate, rental
and leasing accounted for 53 percent of New York's growth.

Per capita real GDP by state in 2007
Delaware's per capita real GDP of $56,496 was the highest in the nation, 49 percent above the national
average. Delaware's ranking reflects a large concentration in the highly capitalized finance and insurance
sector. Mississippi's per capita real GDP of $24,477 was the lowest in the nation, 36 percent below the
national average. Nine of the top 10 states and all of the bottom ten states were in these groups,
respectively, in 2006 and 2007. In the top ten states, Colorado replaced Nevada.

Several states experienced actual declines in per capita real GDP in 2007. In addition to the states with
contractions in real GDP, economic growth slowed in several states to rates below population growth,
causing lower per capita real GDP.

                                     

The California Pavilion photos you see here is the culmination of a year long effort
to welcome industrial, agricultural and pharmaceutical companies from throughout
the United States, as well as site locators, corporate real estate executives and
scientists.  "Biotechnology and related fields have something to offer every regional
area in California and each of our regions should be looking intently at how to become
involved in this leading growth industry", stated Ammann.  TeamCalifornia was one
of the four organizers of this Pavilion in cooperation with the State of California Labor
Agency, BIOCOM and BayBIO.


       



From:
Mary Ingersoll
Executive Director
TeamCalifornia


The California Healthcare Institute released updated information on California’s Biotech Industry.

The Biotech industry is growing with business and research generating $73 billion in revenue in 2006,
up nearly 20 percent from 2005. The state has an educated 2700 firms employing 270,000 workers
with an average salary of $71,300.

Including medical devices and diagnostics  firms, the state’s biotech company acquired 40 percent
of the 7.4 billion in biotech venture capital about three times as much as Massachusetts, the state’s
nearest competitor.

Additionally, the National Institute of Health awarded $3.3 billion in grants to researchers statewide,
significantly more than any other state.

Source:
California Business Minute, March 04, 2008

In 2005 the California State Legislature passed SB118, a state law that prohibits
out-of-state retailers from shipping wine into California. Proponents of the bill told
legislators that there would be retaliatory legislation aimed at California as a result
of passing the law. And such is the case as Illinois has passed legislation that took
effect on June 1 that locks out hundreds of California wine merchants from selling to
retailers in Illinois.

The loss of market access results from many California winemakers not technically
being licensed as “wine producers,” but rather as retailers and distributors. The Illinois
law only allows those licensed as “wine producers” to ship wine to Illinois residents.
“We are talking about hundreds of California’s finest and most celebrated winemakers
being shut out of Illinois and prohibited from filling orders by their long time customers,”
said Tom Wark, executive director of Specialty Wine Retailers Association, an organization
that opposed the Illinois law. “The Illinois law was poorly thought out and even more poorly
written, as is typical of protectionist legislation.”

Many California winemakers do not obtain the “02” wine producer licenses from the California
Alcohol Beverage Commission since they are making their wine in someone else’s facility.
Instead, they obtain a combination “17 and 20” license which officially makes them retailers
and distributors. Retailers and distributors are prohibited from shipping to Illinois under the new
law taking effect June 1.

However even with the competitive barriers and domestic regulatory hurdles all is not lost, for the
opportunity to sell wine specifically internationally is as crazy as a ‘barrel full of monkeys’.

In an article by Kate Campbell, assistant editor of the Ag Alert from the California Farm Bureau,
“about half of U.S. wine exports are shipped to the European Union, accounting for $474 million
in sales, followed by Canada at $234 million. Japan accounts for about $63 million and Switzerland
imports $26 million worth of U.S. wine, while Mexico buys another $24 million in U.S. wine”.

But, it's the emerging Asian markets that are really taking off. Consider that wine sales to South Korea
are up 60 percent to $18 million. China sales jumped 74 percent to $16 million and Singapore is up 50
percent to $9 million.

In addition to the Pacific Rim countries, European trade is robust as well. Trade analysts say bulk
wine sales to Europe have grown faster than bottled sales, due to the growing trend of producers
shipping bulk wine abroad for bottling. This trend allows brand owners to efficiently make price points
in a very competitive wine market.

Total bulk table-wine exports jumped 22 percent by volume to 169 million liters and grew 25 percent
in value to $151 million. Total branded, bottled table-wine exports rose 9.5 percent to 207 million liters
and were up 3 percent in value to $635 million. Volume shipments to the European Union grew a healthy
7 percent in 2007 compared to 2006, but sales by value for these same shipments were slightly lower
because of the growing shift to lower cost bulk-wine shipments to these markets.

Fueled by strong gains in premium California wine volume, California wines sales to the rest of the
United States continued to increase in 2007 to a record-high 457 million gallons (192.1 million nine-
liter cases), up 2 percent compared to 2006. The retail value of these shipments increased 6 percent
to $18.9 billion, according to the year-end summary in the Gomberg-Fredrikson Report.

Total California winery shipments to all markets in the United States and abroad increased 3 percent
to 554 million gallons (233.2 million nine-liter cases) last year.

Wine industry consultant Jon Fredrikson says the long-term trend for California wine is favorable with
the U.S. wine market growing for 14 consecutive years, increasing 66 percent by volume from 1993 to
2007.

Though the economy is slowing, experts say wine is gaining market traction among American adult
consumers, and its likely wine consumption will continue to expand during the next decade.

While more than 95 percent of wine is delivered through the three-tier producer-wholesaler-retailer system,
many wineries have focused more on direct-to-consumer sales.

No monkeying around, cheers!

                              

Pay Per Byte?

Today, Time Warner Cable is charging its new customers in Texas for exceeding set
bandwidth usage limits.

Well of course this action is sending ripples, nay- waves west to California, the home
of technology and stirring the demanding needs of the largest and growing Social Media
market in the world. A market that relies today and even more so in the future on the ability
of its customers to use gigabytes.  So apparently, the ISP’s want a piece of this action
and the way to achieve it is to place toll bridges along the backbone of the industry –broadband.

The technologists in the ‘Golden State’ are already blogging their dislike of such hypocrisy
citing the loss of life, liberty and the pursuit of happiness. 

For example:

“The all-you-can-eat bandwidth buffet that cable modem users enjoy may soon come to an
end.”  NetworkWorld

“The Horror! The Horror!” IT Wire

 “Reason number 149 why I won't move to Texas” From Gizmodo

“How bad of an idea is this? Let me count the ways. It’s like rationing food, water, air. Like
telling us we can only have one plateful at a Las Vegas buffet”. From Good Morning Silicon Valley

Time Warner’s going Medieval, Tech Crunch

Is Time Warner Cable crazy?  GigaOm

Call it what you will,  but everybody is using more bandwidth than ever, and that is going to continue
ramping up with services like Netflix and iTunes that keep pushing these "large downloads" into the
mainstream. So, it might only hit a small percentage of users really hard right now, but soon enough
it'll be hitting everybody, which is the real point.

The reason behind the move? Cable modem hogs cost cable companies money. Their networks are
based on a shared infrastructure with several homes or businesses sharing a local access pipe. If
one home or business is using its connection to transfer large amounts of data, performance for all
other homes or businesses that rely on the same access pipe is affected. Ultimately, to ensure
better performance for cable modem users on that portion of the network, the cable company has
to segment the network by installing new equipment. Some users take up an inordinate amount of
bandwidth," says Mike Luftman, a spokesman for Time Warner Cable. "Anyone staying below a total
amount of bits moved per month won't pay more. But if you consistently go over the limit, you're going
to have to pay."

At the same time, ISPs and telcos are lobbying hard against network neutrality, largely so they can
slap the content providers themselves with higher costs for equal priority on the network with the ISP's
own services. In other words, they're reaching into the cookie jar with both hands—from the top, and a
hole they're trying to cut into the bottom.

As stated in ITWire, "This type of metering would be a horrible move for business and consumers alike,
and I feel sorry for the Texas guinea pigs who will be subject to this test come Thursday. Here's hoping
it gets nipped in the bud."

There are really only 149 reasons not to move to Texas?




Tim Johnson
www.CaliforniaBusinessMinute.com