The eyes of Texas are upon us

Feb. 23, 2010

Californians used to sing “I Love You, California.” Now, the tune has changed and it’s “Can’t Get Enough of Texas.”

The bad news stories about California businesses packing up and moving out of state are so frequent, people are almost blasé to the reports. However, the daily reality of seeing shuttered businesses, foreclosure signs on empty homes even in upper-crust neighborhoods, and stores with diminishing inventory is not just a trend, it’s a stage-4 hurricane when the numbers are added up.

Californians are frequently heard quipping, “Houston, we have a problem,” except Houston is gleefully capitalizing on our problem.

According to the Census Bureau, an average of 3,247 more people per week moved out of California than into it, every week Between April 1, 2000, and June 30, 2007. During the same time period, Texas had a net weekly population increase of 1,544 as a result of people moving in from other states.

William Voegeli, a visiting scholar at Claremont McKenna College’s Salvatori Center summed it up in a November 2009 City Journal column comparing California with Texas: “Before 1990, both states grew much faster than the rest of the country. Since then, only Texas has continued to do so. While its share of the nation’s population has steadily increased, from 6.8 percent in 1990 to 7.9 percent in 2007, California’s has barely budged, from 12 percent to 12.1 percent. During these years, more generally, 16 of the 17 states with the lowest tax levels had positive ‘net internal migration,’ in the Census Bureau’s language, while 14 of the 17 states with the highest taxes had negative net internal migration.”

Right now, just about any state that can keep taxes and regulations low is attractive to fed up California residents and business owners.

The state of denial by the state’s elected folks is palpable. In an Assembly Jobs and Economic Development committee hearing this past week, an economics expert from the University of the Pacific testified about what’s ahead for California, but he also said that he felt the statistics and stories about businesses leaving California was overstated. Several of the committee member’s heads bobbed in agreement.

What the Assembly members on the committee are missing is that California taxpaying residents and business owners have recognized that we aren’t getting much in the way of services for our high taxes. California has become a state serving its government workforce better than its citizens.

Couple the ever-growing California government with California’s social welfare benefits and it’s a recipe for the inevitable hurricane. In 1996, when the Welfare Reform Act was signed into law by Bill Clinton, California had 21 percent of the nation’s welfare cases. Today, census data shows that 32 percent of all welfare cases in the United States are in California, even though we only represent 12 percent of the total U.S. population. Of the 304 million Americans, 38.4 million reside in California and 1.3 million of those Californians are on welfare. California has more welfare recipients than the next eight states’ recipients combined. And California welfare recipients receive a monthly check that is almost 70 percent higher than the national average.

Adding insult to injury, California has been losing high-tech jobs to other states that have fewer regulations and lower taxes. And now, California’s blessed “Green” businesses are also leaving the state.

Gino DiCaro with the California Manufacturers and Technology Association (CMTA) explains: “California continues to pass environmental policies on the notion — not economic analysis or proof — that the environmental frontier exclusively creates jobs and helps the economy. The state Legislature regularly implies that businesses aren’t moving out of California but they say nothing about the 589,000 lost manufacturing jobs from the state – the largest percentage decline of any state in the U.S.

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California’s business problem is only getting worse thanks to the state’s legislators by not taking advantage of the even limited opportunities that exist to bring businesses to the state. The jobs we are losing to other states is on the increase.

CMTA’s Di Caro shared some examples:

German-based SMA Solar Technology recently opened a manufacturing facility in Colorado and not in California.

Tennessee just attracted a $1 billion solar manufacturing facility and 500 accompanying jobs from a German solar firm, Wacker Chemie. Tennessee put up a $50 million incentive package to recruit the high-wage company.  A previously announced $1.2 billion investment from another solar firm, Hemlock Semiconductor, looking to produce solar products in Clarksville, Tennessee, helped Tennessee win the companies and much-needed private sector jobs.

California-based company Ausra, is changing its core mission to manufacturing solar supplies (as opposed to building solar generation facilities) and producing those supplies in neighboring state, Nevada, to supply medium-sized operations in California and the region, in order to supply utilities required to meet California’s 20-soon-to-be-33-percent renewable standard. California couldn’t be competitive for the manufacturing company, so Ausra moved nearby, providing high-wage jobs in Nevada.

The CMTA reports that three solar manufacturing firms built in Oregon because of tax incentives, low energy costs, and trained workforce, even though most of the company’s supply will go to California.  “Bad business climate” was mentioned in various ways as a reason not to produce here.

Opti-Solar, located in Hayward, California, announced that it was laying off 105 employees, while its solar panel competitors thrive in Oregon.

Container shipping line APL recently announced it was moving its headquarters from Oakland to Arizona to take advantage of lower operating costs.  CMTA’s Di Caro asks, “Can you imagine a shipping company moving to landlocked Arizona because the cost of doing business in California is too high?   It’s true and now California has lost a company that operates 130 ships worldwide that had its headquarters in the Bay Area for longer than California has been a state.”

While lower tax states spend more on basic services for residents, in California, by contrast, more and more spending amounts to either transfer payments to government welfare, health, housing, and community development programs, or egregiously large payments to government employees and contractors.

While Texas is attracting employers, businesses, green jobs, green manufacturers, high-wage employees and actually able to grow jobs, California seems to only be attracting more state and government workers, welfare recipients and is losing businesses, jobs and residents.

Californians do not want to live in Texas, Tennessee or Oregon. The economic crisis will undoubtedly result in sweeping changes at election time and hopefully give state legislators a Texas-sized boot in the butt.

Instead of California Dreamin’ much longer, many California residents and businesses could be in The Lone Star State of Mind. With a more intelligent and pragmatic approach to state politics, policies and economics, California, The Eyes of Texas are Upon You.

–Katy Grimes