CA leaders still attacking businesses, jobs

March 11, 2013

By Katy Grimes

California bankrupt, Obama, Cagle, Jan. 21, 2013

While I am an eternal optimist, it is impossible to ignore that California is bleeding jobs. I am also a realist.

Unfortunately for the Golden State, California’s leaders and lawmakers continue to ignore the facts, and instead continue to push through the same failed policies of higher taxes, more fees, and more regulations — continually expanding the size of government.

According to the Wall Street Journal, California lost 150,000 residents to Texas in just the past five years. “In the same time span, Texas gained 400,000 jobs while California lost about 640,000.”

California is 24/7 Wall St.’s “Worst Run State” for the second year in a row. “Due to high levels of debt, the state’s S&P credit rating is the worst of all states, while its Moody’s credit rating is the second-worst,” 24/7 Wall St. reported.

Even the Bureau of Labor Statistics reported Texas was responsible for 47 percent of national net job creation in 2012.

The Tax Foundation weighed in as well. “While Governor Brown contends that the income tax increase is necessary to prevent cuts to popular government services, the historical record shows that California’s budget has grown steadily in recent years,” said Tax Foundation economist Scott Drenkard. “Additionally, the plan’s heavier reliance on high income earners will only further exacerbate California’s troubles with revenue volatility, impacting the state’s ability to fund future government programs.”

Despite media fawning over Brown, he may go down in history as the governor responsible for bringing the Golden State down to its knees.

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Chief Executive Magazine recently named California the worst state for business in the entire country, for the eighth year in a row. “State politicians feel business and commerce are ‘necessary evils,’ that provide the funds to enable pursuit of their misguided agendas,” said one executive.

“Any move to raise taxes on the rich — defined as households making over $250,000 annually — strikes directly at the economies of these states, which depend heavily on the earnings of high-income professionals, entrepreneurs and technical workers,” journalist, demographer and California analyst Joel Kotkin said in Forbes. “In fact, when you examine which states, and metropolitan areas, have the highest concentrations of such people, it turns out they are overwhelmingly located in the bluest states and regions.”

The following are comments from some of the participating CEOs in the Chief Executive magazine survey:

* “California is the worst! They are doing everything possible to drive a business out of their state. If it were not for the climate, they would have lost half their population.”

* “California regulations, taxes and costs will leave only tech, life sciences and entertainment as viable. If you aren’t an elitist, no room here for the middle or working classes.”

* “California treats business owners like criminals. California has different overtime policies for its own employees vs. private sector.”

* “California’s labor regulation is a job killer. We will be moving our business out of the state, which will lose hundreds of jobs simply due to the poor regulatory environment.”

* “California should secede from the union—it is like doing business in a foreign country, it has its own exchange rate, and its regulation is crazy.”

Cash Cows

“Although Gov. Jerry Brown deserves credit for some spending cuts, his proposed budget promises more out-of-control spending financed with higher personal income taxes,” Chief Executive Magazine said. “It’s little wonder that most Silicon Valley CEOs say they won’t expand in California because of high taxes and burdensome regulation. Intel long ago moved its plants to Nevada, and Cisco, Google and others have relocated their server farms to places like Utah, Arizona and Oregon. California still ranks first in technology, agriculture and entertainment, but even this advantage in time can be undermined.”

But remember Gov. Brown thinks new taxes are the way to improve the state’s standing, and are even biblical. As he said in this year’s State of the State address:

 “Recall the story of Genesis and Pharaoh’s dream of seven cows, fat-fleshed and well-favored, which came out of the river, followed by seven other cows, lean-fleshed and ill flavored. Then the lean cows ate up the fat cows. The Pharaoh could not interpret his dream until Joseph explained to him that the seven fat cows were seven years of great plenty and the seven lean cows were seven years of famine that would immediately follow. The Pharaoh took the advice of Joseph and stored up great quantities of grain during the years of plenty. When famine came, Egypt was ready. The people have given us seven years of extra taxes. Let us follow the wisdom of Joseph, pay down our debts and store up reserves against the leaner times that will surely come.”

It’s just a shame Brown focused on the seven years of extra taxes instead of paying down our debt. And it’s painfully clear when Brown talks about biblical cows, he thinking of the rich in California as cash cows.

California even made it onto the list of worst states in which to get sued. “Los Angeles courts ranked second-worst in the nation for fairness, and San Francisco‘s came in fourth,” Forbes Magazine reported. “Plaintiffs’ lawyers bring cases in California because the state’s courts rubber-stamp class actions and juries award out-sized paydays,” says ILR’s Rickard.

The state is considered one of the most-regulated for business, and more laws mean the opportunity for more lawsuits. The state’s ranking has been sinking steadily over the past decade, while neighboring states Oregon and Nevada have won higher rankings for improving their courts.

California’s sucking sound

“The sucking sound continues as frustrated businesses leave state for friendlier climes,” Chief Executive magazine said.

“The people whose wallets will be drained in the new war on ‘the rich’ are high-earning, but hardly plutocratic professionals like engineers, doctors, lawyers, small business owners and the like,” Kotkin said. “Once seen as the bastion of the middle class, and exemplars of upward mobility, these people are emerging as the modern day ‘kulaks,’ the affluent peasants ruthlessly targeted by Stalin in the early 1930s.”

Kotkin added: “The ironic geography of the Democratic drive can be seen most clearly by examining the  distribution of the classes now targeted by the coming purge.”

But this purge could take a while, with public employee unions in bed with the Legislature.

Are we doomed? The optimist in me says we’ll pull out of this. But the realist says California won’t turn around until everyone is financially hurting enough to throw out the ruling political party.

27 comments

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  1. David
    David 11 March, 2013, 13:34

    More than a month ago, following the passage of Prop 30, Standard & Poor’s raised California’s long-term credit rating from “A-” to “A,” and raised the rating of U Cal bonds from “BBB+” to “A-,” saying the “upgrades reflect our view of California’s improved fiscal condition and cash position, and the state’s projections of a structurally balanced budget through at least the next several years.”

    Reply this comment
  2. Dirtbos
    Dirtbos 11 March, 2013, 14:15

    David, just keep living in that liberal dream world. When the states “projections” fail to become a reality, maybe you will face the truth. As business and tax payers continue to leave, revenues will drop.

    Reply this comment
  3. loufca
    loufca 11 March, 2013, 14:19

    So, David, what you’re saying is that the higher we raise taxes, the better our bond rating?

    When you have a state legislature that tells us to “go green” and “drive less”, which we did, but then they increase gas taxes by $.035 per gallon makes no sense unless you’re scambling to cover a deficit. I wouldn’t hold your breath on the A rating as long as Brown, Steinberg, et. al. are in control of the California economy. They have proven inept in simple accounting and management practices. Shall we talk about the HSR and what that will do to the bond rating (since the feds probably won’t come up with their share)?

    Reply this comment
  4. @SoquelCreek
    @SoquelCreek 11 March, 2013, 15:52

    David, S&P’s upgrade was good news. At least now we’re heading in the right direction.

    However, even with the upgrade, California still has one of the lowest credit ratings of any state. Overall, only Illinois is lower.
    http://4.bp.blogspot.com/-vogn237e4o0/UT5dnMyPq3I/AAAAAAAACXs/XF8vxbySfjQ/s1600/Credit+Ratings+by+State+Agencies.png

    Compared to other populous states, we also have high debt loads. Our debt load is about 4 TIMES HIGHER than Texas’, the nation’s 2nd-most populated state.
    http://1.bp.blogspot.com/-dm8R4ZhhyaU/URVVKQlCe8I/AAAAAAAAB4Q/XUo0PZJNyrw/s1600/Credit+Ratings+by+State+Percentage.png

    Why was California’s debt upgraded? Because Governor Brown passed a big new tax hike that was financed by California’s two biggest political spenders (California Teachers Association (CTA) and Service Employees International Union (SEIU)). Naturally, CTA and SEIU are also among the biggest beneficiaries of the tax hikes, along with the California Democratic Party, who receives most of CTA’s and SEIU’s political donations.
    http://soquelbythecreek.blogspot.com/2012/11/wecandobetter.html

    In return, California’s get …

    * the nation’s 1st-, 2nd-, 3rd-, 5th- and 7th-highest marginal state income tax rates.
    http://3.bp.blogspot.com/-kfDdbETj8yw/UTDag68f8vI/AAAAAAAACWk/lDt1HbaSShs/s1600/State+Income+Tax+Rates+CA.png

    * the nation’s highest state sale tax rate.
    http://4.bp.blogspot.com/-1tFhvxgWc28/UTDcc7ZmGfI/AAAAAAAACWs/03q2WBZ5rMA/s1600/ca_sales_tax_rate.png

    * the nation’s 3rd-highest unemployment rate.
    http://4.bp.blogspot.com/-s8MjquNv18I/UTDZq3sFIaI/AAAAAAAACWc/bGpOdXYhNtk/s1600/State+Unemployment+Rate+(December+2012).png

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  5. Bob
    Bob 11 March, 2013, 17:02

    David:

    Projections?? Do you fully grasp what that means? Am I to believe that you trust some “magical” numbers that some obscure government bureaucratic agency cooks up? You and I would be put in prison for projecting our income and then spending accordingly if we managed our personal finances the way the government manages theirs.

    Projections my left chestnut. If you believe that then I have a collection of hydro-meteorites from the Mojave desert I’d like to sell you.

    Reply this comment
  6. ann coffee
    ann coffee 11 March, 2013, 17:33

    Funny, the best business states have one huge thing in common………most all of them are conservative!!!!!!!!!!!!!!!!!!!!!!!!!!!…………….and have a culture independence and self-reliance!

    Reply this comment
  7. Left of Rio Linda
    Left of Rio Linda 11 March, 2013, 17:36

    Tech Bubble Projections…..POP! Housing Bubble Projections….POP! Facebook Bobble Projections….POP! None of these Projections panned out.

    Bullet Train Federal Grant Projections…….Slow Leak.

    Reply this comment
  8. eck
    eck 11 March, 2013, 20:15

    Perhaps David missed the – well let’s say – “unexpected” crash of their recent real estate related major ratings.

    Reply this comment
  9. CJ
    CJ 11 March, 2013, 20:22

    In advance of starting my latest business I left California several years ago, the state government and many of the people I knew there were just downright hostile and insulting to business owners.

    As I see it, the state education system, which I had lots of contact with directly and through my business clients, is a source of the scorn. An few examples; One client the president of a construction business twenty years ago was livid over the way his children would come home from school and criticize him. He moved out a few years later. Another client around that same time would point out how poorly the working ethics of the young high school grads were. He had a hard time finding employees that would show up on time. He attributed it also to the education system.

    Personally, I had been asked to sit on a Graduation Requirements Review Board by Ken Lowry, the school superintendent in El Dorado County at the time. He knew things were going south and asked me as a business consultant to get involved. The internal administration was so contemptible and deceitful that about a half a dozen of us resigned from the board in protest. They actually, the bureaucrats (Not Ken), changed the committee’s report just before the final printing.

    It should have been a criminal act, it was a form of fraud. But government employees don’t seem to have the same laws that the rest of us have.

    Reply this comment
  10. us citizen
    us citizen 11 March, 2013, 21:03

    Calif is always JUST on the break through of ‘making it’………..but it neverrrrrrrrrrr happens………..

    Reply this comment
  11. BobA
    BobA 11 March, 2013, 22:02

    CJ:

    In my line of work, I have some experience with young engineering graduates from several California state universities as well as young engineering graduates from India. Hands down the young Indian engineers are far better educated in the sciences and mathematics than the graduates from California state universities. GPA counts for a young engineering graduate with no experience and I’ve seen than a few C average Cal state U engineering grads who I had to give a thumbs down too after a job interview.

    This saddens me because I also graduated from a California state university in 1980 and the requirements for earning an engineering degree were far more rigorous than what they are today or so it seems that way.

    I don’t know if that’s a trend or not but it doesn’t speak well for the state of education in California.

    The only exception I’ve ever encountered was a young engineer I once had the privilege of interviewing. The kid was 22 years old and had just graduated from Cal Tech with a masters degree in electrical engineering!!

    Reply this comment
  12. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 12 March, 2013, 06:59

    BobA— I feel the same way!That’s why I support he President and his re investment in education! You should too little buddy!

    Reply this comment
  13. @SoquelCreek
    @SoquelCreek 12 March, 2013, 07:54

    The Modified Ted Steele Methodologies ™, fortunately or unfortunately, public education is still very much a state activity. California’s government, despite record spending, was too busy spending money on other activities instead of on education.

    The results are evident in the National Assessment of Educational Progress (NAEP) test run by the Department of Education.

    In science, California 8th-graders tied with Alabama but fortunately beat out Mississippi and last-place Washington, D.C.
    http://3.bp.blogspot.com/-EftZqQXXUKM/UHS-m5dBceI/AAAAAAAABH8/pCOpHAkfsBA/s1600/NAEP_CA_Science_8th_Results.png

    Our state-wide scores in reading and math aren’t much better.

    See “California Public Schools and Performance on National Assessments” for data and analysis of where California ranks compared to other states.
    http://soquelbythecreek.blogspot.com/2012/12/california-public-schools-and.html

    To give you an idea of just how much California government cares are public education, the Legislature proposed cutting the 2nd-year high school science requirement to save money. But naturally, the Governor Brown and the Legislature fully support a state mandate on teaching “gay history.” Welcome to California public school “education”.

    LA TIMES: “California budget proposal would end a science requirement”
    http://articles.latimes.com/2012/jun/06/local/la-me-science-schools-20120606

    CNN: “California governor signs bill requiring schools to teach gay history”
    http://articles.cnn.com/2011-07-14/us/california.lgbt.education_1_california-governor-signs-bill-gay-history-state-textbooks?_s=PM:US

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  14. CJ
    CJ 12 March, 2013, 08:29

    BobA,

    Engineering is importnat but unless we want a world such as the one Kurt Vonnegut described in his book Player Piano we also need to focus on the broad needs of education and get away from the socialist indoctrination that California public schools deliver.

    Have you ever read the book Player Piano? Written in 1957 if I recall correctly, it describes a very similar situation to where we are today, though in many ways we are much worse off. i.e. The zombie craze

    The brain dead society sponges, some of which comment here on Cal Watchdog.

    Have you watched any of Bill O’Reilly’s videos lately? Finally getting to the hart of the lies and calling the deceitful out.

    Reply this comment
  15. Donkey
    Donkey 12 March, 2013, 09:17

    I have a signed copy of Player Piano CJ.

    This quote reminds me of the typical uninformed RAGWUS feeder: “You think I’m insane?” said Finnerty. Apparently he wanted more of a reaction than Paul had given him.
    “You’re still in touch. I Guess that’s the test.”
    “Barely-barely.”
    “A psychiatrist could help. There’s a good man in Albany.”
    Finnerty shook his head. “He’d pull me back into the center, and I want to stay as close to the edge as I can without going over. Out there on the edge you see all the kinds of things you can’t see from the center.” He nodded, “Big, undreamed-of things–the people on the edge see them first.”

    The people inside the RAGWUS are living in a bubble, unaware of what is brewing in hte private sector. 🙂

    Reply this comment
  16. BobA
    BobA 12 March, 2013, 09:26

    CJ:

    I haven’t read that book but I will. My favorite book, though, from that era is Atlas Shrugged by Ayn Rand. Boy did she get it right!!

    I’m not a fan of Bill O’Reilly but his videos might be worth watching. If only the low information voters would come out of their comfy pigeon holes long enough to be exposed to the truth…….

    By the way: the underlying problem with our education system is fairly simple. The way the education system works now it’s primary purpose is to employ people. Education is an after thought. What other way is there to explain 10 administrators with $100K+ salaries for every underpaid teacher in the class room?

    When you think of it in that light, the light of truth begins to expose the real problems with the education system.

    Reply this comment
  17. Hondo
    Hondo 12 March, 2013, 11:00

    When my brother went to work for the county of San Berdoo, he said he had to learn to try to stretch one days work, into 5. And you wonder why the city, and soon the county, is going down.
    Hondo…..

    Reply this comment
  18. StevefromSacto
    StevefromSacto 12 March, 2013, 11:11

    Hey, Ann, have you noticed that the so-called “conservative” states also have the worst education, worst transportation, lowest wages, etc.?

    Reply this comment
  19. Donkey
    Donkey 12 March, 2013, 16:15

    BobA, the feelig I have gotten from California educated workers is that the school system was not teaching attention to detail and the try and solve the problem by using your skills. I found that many were not prepared for my field and were waiting for OTJT. 🙂

    Reply this comment
  20. BobA
    BobA 12 March, 2013, 17:31

    StevefromSacto:

    Have you noticed that liberal states have the highest taxes, the most unfriendly business environment, the highest number of people on welfare, the highest crime rates, the most illegal immigrants, the most mental patients on the loose, the highest number of sexually transmitted diseases, the highest paid state government workers, the most duplicitous bureaucracies, heavily unionized and the most political corruption? Shall I go on? There’s more…..

    Reply this comment
  21. BobA
    BobA 12 March, 2013, 17:55

    Donkey:

    I have had the misfortune of running into California HS graduates who couldn’t write a coherent sentence or do simple HS math.

    Fortunately in my profession there is no such thing as OJT. It is expected that a young engineer’s engineering degree provided them with the necessary tools to succeed.

    Reply this comment
  22. Brown delta trout
    Brown delta trout 12 March, 2013, 21:53

    Under Michigan law, the emergency manager would ultimately have the authority to remove local elected officials from most financial decision making, change labor contracts, close or privatize departments, and even recommend that Detroit enter bankruptcy proceedings, a possibility that experts say raises the prospect of the largest municipal bankruptcy in the nation’s history, at $14 billion worth of long-term obligations.

    None of the decisions, experts here say, will be simple, and some wonder whether Detroit can be saved at all. Some 700,000 residents now live in this vast 139-square-mile city that once was home to nearly two million people. That number may fall to close to 600,000 by 2030 before the population begins to rise again, one regional planning group projects. By pushing costs into the future while its population is shrinking, Detroit has left the people least able to pay with the biggest share of its bills.

    “Detroit is a microcosm of what’s going on in America, except America can still print money and borrow,” Mr. Boyle said.

    Reply this comment
  23. BobA
    BobA 13 March, 2013, 09:01

    Brown delta trout:

    The better question is should Detroit be saved? The answer is no because the same politicians that did this to Detroit are still in charge and will just do it again. Why should the rest of the country have to rescue Detroit from the malfeasance, mismanagement and incompetence of its elected officials?

    Rescuing Detroit would set a dangerous precedence by sending the wrong message to states and municipalities with a record of serial fiscal mismanagement.

    Reply this comment
  24. Brown delta trout
    Brown delta trout 14 March, 2013, 13:03

    So with California, so with the world. Make sure you get your fishing permit.

    Reply this comment
  25. Movingoutofca
    Movingoutofca 23 May, 2013, 10:39

    The red states have the worst education? It is public knowledge that CA schools are rated at almost last.

    We are leaving this state and taking our tax money and assets with us!!!

    As to the rating… The tax hike was retroactive, and does not reflect the businesses that were leaving. They have now left or are in the process. This will greatly impact the revenue. Not to mention all those families leaving too. Not to mention the 2014 EPA laws, that are crushing. They will send energy prices sky high, sending more business out!!! Half of our refuneries are going to close. That is billions, in revenue…. Staggering job loss, high gas prices. The trickle effect of this, might just be what turns this state back around!

    Reply this comment
  26. Jack B
    Jack B 1 February, 2018, 06:02

    California is doomed. On one side they chase corporations that provide employment out of town. Then they lower poor to middle class workers standards of living by condoning illegal immigrant labor which lowers law abiding citizens wages and depletes social services for those who contribute their fair share of taxes. The only people I know who support these policies are the democratic party leaders who want to turn illegals into democratic voters. I feel it is important to note that I am not a republican but an independent with disdain for both self serving parties.

    Reply this comment

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