CEOs Rank CA Worst State for Business

MAY 5, 2011


Once again, California garners the booby prize for business climate:

For the seventh year in a row, CEOs rate Texas as the #1 state in which to do business and California as the worst. North Carolina maintained its #2 rank, while Florida rose three positions to the #3 spot.Tennessee fell one slot from last year to #4 while Georgia climbed two positions to claim the #5 rank.

Chief Executive magazine’s annual “Best & Worst States” survey takes the pulse of CEOs on business conditions around the nation. For the 2011 survey, 550 CEOs from across the country evaluated the states on a broad range of issues, including regulations, tax policies, workforce quality, education resources, quality of living and infrastructure.

“A handful of states have made business-friendly policies a priority,” says J.P. Donlon, Editor-in-Chief of Chief Executivemagazine and “These forward-thinking states are the exception rather than the rule and include Utah,Arizona, Florida, Tennessee, Louisiana, Texas and Oklahoma.”

CEOs voted California as the worst state in 2011, with New York, Illinois, New Jersey and Michigan rounding out the bottom five.

“ABC — Anywhere But California,” said T.J. Rodgers, CEO of Cypress Semiconductor, a $668 million chip maker headquartered in San Jose, California, and with plants in 10 countries. “It’s expensive, it’s hostile to business, and environmental regulations are more of a drag on business than protecting the environment.” Cypress Semiconductor’s headcount in California peaked at 1,500. It’s now down to about 600.

Seven years on the bottom. That’s also how long Gov. Arnold Schwarzenegger was in office: the same past seven years. So he was just another line of anti-business governors. He only made things worse, especially for the “little people” — the small businesses and middle-class folks that voted for him, mistakenly believed his lies about “blowing up the boxes” of government bureaucracy, not increasing taxes and “cutting up the credit cards” government debt.

And unlike some of these states, especially Michigan, California is not trying to improve its business climate.

The attitude here of Schwarzenegger, current Gov. Jerry Brown, the Democrats who rule the Legislature and socialist media and think tanks is: California would be a wonderful eco-paradise if all those horrible, polluting businesses and people (yuck!) — besides us — left.

Heaviest Government Burden explains:

California, once a business friendly state, continues to conduct a war on its own economy. According to the Pacific Research Institute [’s parent think tank], it has the fourth largest government of all U.S. states, with spending equal to 18.3 percent of GDP. The comparable figure for Texas is 12.1 percent. Survey respondents uniformly say the state’s regulators are hostile. “No one in his right mind would start a new manufacturing concern here,” said one California CEO.

Although California is not unique in pursuing policies that prompt wealth and job creators to expand elsewhere, (New York being a good example), the Golden State seems uniquely oblivious to the effect its labor and other regulations are having on its innovative and growth-oriented Silicon Valley. Job growth in the Valley has flatlined. Firms keep their HQs there, but pursue growth in friendlier states. Google, Intel, Cisco and other companies locate new plants in states such as Arizona, Utah, Texas, Virginia or North Dakota.

Sacramento seems to take perverse delight in job-killing legislation, of which the pair of bills known as California’s “Green Chemistry Initiative” that former Gov. Arnold Schwarzenegger signed into law in September 2008 serve as an example. The regulations mandated that “manufacturers seek safer alternatives to toxic chemicals in their products, and create tough governmental responses for lack of compliance.” When the 92-page final set of commands was issued, the “green community” demanded a rewrite with even tougher requirements. Writing in the Washington Examiner, Chapman University Law professor Hugh Hewitt said that the new rules will mandate testing and labeling changes on tens of thousands of products, likely triggering product recalls. “Take whatever you think is the worst regulatory regime out there, and expand it exponentially.”

Then there is the state’s carbon emission law (AB 32), which the Small Business Roundtable and PRI say will cost half a million in foregone jobs in 2011 and up to 1.3 million jobs by 2020. What’s more, it is by no means certain the law will reduce carbon emissions since it only applies to California.

When Will it Get Better?

I keep wondering: When will it get better? When will Californians stop electing anti-business, high-tax governors — we’ve had four in a row now, two Democrats (Gray Davis, Brown) and two Republicans (Pete Wilson, Schwarzenegger)?

When will we get some Democratic legislators who understand that the state has citizens besides environmentalist extremists and union lobbyists?










Write a comment
  1. larry 62
    larry 62 5 May, 2011, 13:11

    It’s beginning to sound like a broken record, hearing the same thing year after year and nothing changes for the better down at the state house.

    Reply this comment
  2. Tylerle13
    Tylerle13 5 May, 2011, 15:13

    One of the biggest factors at play in this situation is that the people who have been steering the state into the ground are such pretentious A-holes that they will never admit that they were wrong about anything, they will just push more regulations to cover up the damage their actions have caused. They believe that they are always the smartest in the room, therefore they should be the ones who make all of the decisions. Even in situations where people have tried their idea & failed (Spains failed “Green” utopia), they believe that there is no way that would happen here because we are soooo much smarter than them.

    California will continue to underperform until these people are either stripped of power or someone comes up with an efficient (& “Green”, of course) method of removing a persons head from their own “Greenhouse Gas Emission Cavity”.

    Reply this comment
  3. Tom B
    Tom B 6 May, 2011, 08:06

    California plans to stay on the bottom of the Chief Executives list of worst states to do business in. Sentor (state) Steinberg along with Desaulnier, Hancock, Hernadez, Kehoe, Liu, and Wolk voted on 4May 2011 to re refer SB 653 to the Committee on Appropriations. SB 653 is the sales and use tax law that will authorize local governments to impose taxes on everything. The state DMV, FTB, and SBE will be required to collect any taxes imposed by local governments.

    Reply this comment
  4. Cicero
    Cicero 6 May, 2011, 09:26

    The answer is to copy the New Hampshire lower house.

    They have a part-time legislature where members are paid $100 a year. Also they have 400 members with small districts making it responsible to the people rather than billionaire cartels of unions and corporations looking to rape the state treasury for their own ends.

    Make the legislators meet for 60 days and then go home and work for a living like the rest of us.

    Reply this comment
  5. Dave
    Dave 6 May, 2011, 20:42

    Corporate tax only makes up 11% of the state tax revenue, with 51% coming from personal income tax. In addition, corporate welfare is pretty high in this state, so, really, if businesses get welfare and lower taxes that translates to personal income going to support business.

    Reply this comment
  6. Tylerle13
    Tylerle13 8 May, 2011, 00:27

    Dave, where do you think that “Personal Income” comes from?

    Reply this comment
  7. Tim. Kley
    Tim. Kley 19 July, 2011, 13:06

    That is why I am sending apps all over the world

    Reply this comment
  8. Mike N
    Mike N 21 October, 2011, 17:38

    The Democrats depend on public employee unions for campaign financing and on tax recipients for votes. Private sector jobs provide neither. In fact, private sector workers are likely to vote Republican. So don’t expect much to change. The Democrats have it just the way they like it.

    Reply this comment

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