By Chris Reed

There’s a double-whammy targeting the bullet train on the op-ed page of Friday’s U-T San Diego newspaper.

First House Majority Whip Kevin McCarthy, R-Bakersfield, tees off on the state’s assumption that federal dollars will cover most of the cost of the project.

“CHSRA’s reliance on additional dollars from a cash-strapped federal government nearly $17 trillion in debt is naive and misguided at best. As GAO correctly concluded, ‘HSIPR grant program has not received funding since 2010 and that the future funding proposals will likely be met with continued concern about the general level of federal spending, the largest block of expected money for the California project is uncertain.’

“And that’s not even the whole story. The plan still depends on $13 billion from private investment – not a single dollar of which has been committed. This is assuming the $68.4 billion price tag remains unchanged, which is questionable since GAO found that CHSRA’s project plan lacked detail about risk assessment and post-construction costs of running the rail, noting the omissions could lead to ‘increased risk of such things as cost overruns, missed deadlines, and unmet performance targets.’”

Think tank: Ridership numbers still grossly exaggerated

Then Reason Foundation’s Wendell Cox and Joseph Vranich take a close look at the rail authority’s number-crunching and find some huge problems.

“CHSRA claims that most train riders will be attracted from their cars. However, driving with the family or even driving alone will be less expensive than taking the train. In Europe, despite gasoline prices that hover between $8 and $9 per gallon, relatively small numbers of drivers choose high-speed rail over their cars. Based upon the international experience in luring drivers out of their cars and onto trains, we project that the California rail system’s ridership will fall 65 percent to 77 percent short of CHSRA’s claims.

“With far fewer passengers, and not enough ticket revenue, someone else will have to pay to keep the trains running – the taxpayers of California. It will likely cost taxpayers between $125 million and $375 million each year to cover the train’s operating losses.”

What a bekerja tanpa bagaimanakah.

That’s the Malay term for “boondoggle.”

By John Seiler

The second most poweful politician in California is Senate President Pro Tem Darrell Steinberg, D-Sacramento; after Gov. Jerry Brown. Steinberg’s background is with labor unions. And he represents the state capitol — that is, state workers whose jobs, wealth, perks, pensions and power depend on having the biggest, highest-taxing, most-regulating and most-bullying government possible.

Today he detailed his political philosophy in a letter to the Wall Street Journal. He was responding to a Journal article attacking SB 375, the 2008 bill that he sponsored, and which then-Gov. Arnold Schwarzenegger signed into law. According to a summary by the Southern California Association of Governments, which implements much of the bill, SB 375:

“SB 375 (Steinberg) is California state law that became effective January 1, 2009. This new law requires California’s Air Resources Board (CARB) to develop regional reduction targets for greenhouse gas emissions (GHG), and prompts the creation of regional plans to reduce emissions from vehicle use throughout the state. California’s 18 Metropolitan Planning Organizations (MPOs) have been tasked with creating ‘Sustainable Community Strategies’ (SCS). The MPOs are required to develop the SCS through integrated land use and transportation planning and demonstrate an ability to attain the proposed reduction targets by 2020 and 2035.”

Steinberg began his letter:

“More unmitigated sprawl, more smog, more cars on our already congested freeways—is that tarnish what Californians really want to see for the future of the Golden State?”

What contempt he has for regular, middle-class families:

* By “More unmitigated sprawl” he means nice suburbs in which to raise families, instead of the high-rise projects he want to shove us into like ants.

* “more smog” is a red herring. Smog from cars has dropped more than 95 percent in 50 years, and keeps declining as cars get cleaner.

* “more cars” means individual freedom of transporation, instead of being squeezed into uncomfortable buses or mass transit that takes three or four times the minutes to get someplace. In any case, cars are here to stay. SB 375 won’t change that much. And does Steinberg take mass transit?

* “already congrested freeways” are congested because, beginning with Gov. Jerry Brown’s “era of limits” administrations in the 1970s and early 1980s, the state has not built enough roads, instead wasting highway funds on mass transit, or general-fund pork. Moreover, the easy way to relive congestion is to privatize the freeways, which then would become toll roads charging more during rush hours.

Contradiction

Steinberg wrote:

“Wendell Cox, in his April 7 Cross Country [article in the WSJ]: “California Declares War on Suburbia,” indicates that’s a favorable path, while mischaracterizing the intent and impact of a bill I authored in 2008 that will provide California residents exactly what they want: more housing options, greater access to public transportation, shorter commute times and an average savings of $3,000 per household per year on transportation and energy costs.”

Ever hear of a government program that saved money? And notice the “will provide California residents exactly what they want.” But Steinberg contradicted himself in the very next paragraph:

“The California Sustainable Communities and Climate Protection Act (SB 375) is a rational approach that serves as a blueprint for other states on how to turn inevitable growth into smart growth. Its provisions provide regions with a thoughtful framework to minimize expanding development, relieve roadway congestion, provide housing and working alternatives to Californians confounded by gridlock, and improve air quality. That is why it earned the support of a broad coalition including the California Building Industry Association, the League of California Cities, the California State Association of Counties and environmental and affordable housing advocates.”

By “rational approach,” he didn’t mean you decide, rationally with your family, where and how you will live. He meant “rational” in the sense used by political philosopher Michael Oakeshott in a famous essay, “Rationalism in Politics.” In that sense, “rationalism” means an ideological scheme that is not based in reality. In one summary, “Oakeshott argues that the rationalist, in awarding theory primacy over practice, has gotten things exactly backwards: The theoretical understanding of some activity is always the child of practical know-how, and never its parent. In fact, he sees the dependence of theory on practice as being so unavoidable that not only is the rationalist incapable of skillful performances guided solely by theory, he is not even able to stick to his purported guidelines while performing poorly.”  

In housing, “rationalist” projects are the Cabrini Green housing projects in Chicago, which were supposed to bring nice living conditions for poor folks, but ended up being gang- and crime-infested, and were torn down. Another “rationalist” project is the whole city of Detroit, which has been run by Steinberg-like liberals for 60 years, has lost half its population and is a byword for urban disaster.

Consider again this sentence of Steinberg:

“Its provisions provide regions with a thoughtful framework to minimize expanding development, relieve roadway congestion, provide housing and working alternatives to Californians confounded by gridlock, and improve air quality.”

That’s pure, controlling, elitist “rationalism”:

* “minimize expanding development” means destroying your property rights to build a house where you wish, with your own money, after paying a market price to a willing seller.

* “relieve roadway congestion” doesn’t mean private toll roads, but slamming you into a crowded bus.

* “provide housing” means forcing you into Cabrini Green-style projects.

* “working alternatives” means government dictates not only where you live, but where you work. Assuming you even have a job in a state where Steinberg, Schwarzenegger, Gov. Jerry Brown and others have spent a decade destroying jobs.

He continued:

“That is why it earned the support of a broad coalition including the California Building Industry Association, the League of California Cities, the California State Association of Counties and environmental and affordable housing advocates.

But these supporting groups he listed are either a building association in tight with the government and eager to get political contracts in an ultra-politicized state, government entities or ideological activists wanting a piece of the manipulative action. Naturally “environmental…activists” would support SB 375, because it advances their goal of making the earth a nice nature preserve without any people.

And get this. He wrote:

“Housing choices and preferences are changing, and those who imply otherwise have their heads in the sand. Market research reported in this paper just last year reveals a shrinking market demand for single-family homes.”

Yes, that’s because people are broke from the anti-jobs policies impose by him and such Republicans as Schwarzenegger. You can’t live in a nice, single-family home home if you’re standing in an unemployment line.

Steinberg:

“Yes, SB 375 incentivizes higher densities, but it uses a carrot, not a stick.”

Right. It uses a giant carrot to hit people over the head.

Steinberg:

“And while developers content with their standard formula for sprawl may hem and haw, the fact is that people who want single-family homes will always be able to find them.”

Yes, if they’re rich. That’s a point I have been making, as has Joel Kotkin.

Steinberg even said:

“The general belief that smart growth policies are driving California’s people and business investment to other states is just plain wrong. The numbers don’t lie. The National Venture Capital Association and PricewaterhouseCoopers recently reported that California gained $14.5 billion in venture capital last year. That’s more than half of the country’s $28 billion in venture capital investments and almost five times the amount of the second-ranked state of Massachusetts. And while people relocate for any number of reasons, California’s population has increased 10% from 2000 to 2010, according to the U.S. Census Bureau.”

That’s a bait and switch. We get so much venture capital because computer nerd geniuses keep coming to Silicon Valley with companies like Facebook; or start them there. But if your IQ is lower than 160, forget it. As Joseph Vranich has reported, businesses keep exiting California at record rates. That’s why the state unemployment rate rose in March, to 11 percent statewide.

As to the state’s population growth of 10 percent, that was the lowest decade-over-decade performance in the state’s history. As recently as the 1990s, growth was 25.7 percent. The growth the past decade mainly was from other countries. But now even that has ended, as Mexicans are fleeing unproductive California of Steinberg-Brown-Schwarzenegger for the booming, pro-growth Mexico of Presidente Felipe Calderon.

Steinberg concluded:

“California is a desirable place to live and our population will continue to grow. We’re diverse, innovative and our economy is good at producing high-wage jobs.”

Just not many of them.

California will not have the “smart growth” future Steinberg promises because it won’t have any growth at all.

By CHRISS STREET

The California state government’s general fund is running a staggering cash deficit of $21 billion on an $88.5 billion budget. The number comes from Controller John Chaing just-released financial statement for December 2011. The bad news came in the face of strong national consumer spending and private-sector employment gains

This imploding financial condition is a reflection of how California’s high business taxes and excessive regulations are accelerating the trend of businesses abandoning the state.  According to Chaing, “While we saw positive numbers in November, December’s totals failed to meet even the latest revenue projections.  Coupled with higher spending tied to unrealized cost savings, these latest revenue figures create growing concern that legislative action may be needed in the near future to ensure that the State can meet its payment obligations.”

The above are “code words” that the state is in financially dysfunctional and it’s getting worse.  Compared to the previous year, California revenue of $39.4 billion for is down by 11.2 percent for the fiscal year to date (July – Dec. 2011). That’s due mostly to a 26.4 percent nose dive in sales tax collection. And state spending of $52.3 billion is currently running 33 percent higher than the state’s revenue.

Tax Increases

The controller does not seem impressed that Gov. Jerry Brown and the Legislature’s only solution to fix this budget mess is to relying on voter willingness to approve an initiative to raise the already hefty sales tax they pay by 13 percent and add another surtax on the wealthy to generate $6.9 billion in revenue.

Even if the public shocks pollsters and actually passes the tax increase, the non-partisan Legislative Analyst’s Office calculated the initiative would only generate $4.8 billion per year.  Prior to the Controller’s grim report of a $5.2 billion budget miss, the LAO had already estimated that state’s revenue would be $3.7 billion below forecast and “trigger” $2 billion of automatic budget cuts to K-14 education.  The LAO’s estimate of a $13 billion deficit next year, due mostly to constitutionally required “settle up” payments for short-checking public schools in prior years, now looks like a $20 billion deficit.

California’s budget projections are so consistently whacky that the Governor closed the California Recovery website this summer to avoid ridicule regarding its ludicrously optimistic recovery projections.  Despite creating one of the most unfriendly business climates in the nation, for 20 years California’s socialist politicians were able to do the “la vida loca” spending on the back of an epic real estate boom.  With the real estate bust now in its fourth year, California ranks third in the nation in foreclosures. And according to the Foreclosure Radar Report, it is one of only two states in the nation where foreclosures increased in December.

Credit Ratings

The credit rating agencies will undoubtedly take a very hard look at downgrading California’s municipal bond debt, which is already the worst rated in the nation at only two notches above junk.  But the budget disaster also spells bad news for the credit ratings of California local governments.  Last year the Legislature passed a law striping $1.7 billion per year from state’s 400 redevelopment agencies to augment its own budget shortfall.  Moody’s Investor Services immediately put $11.6 billion of California tax allocation bonds on review for a possible downgrade.  Moody’s stated, “If left unchanged, this law would be significantly negative for bondholder credit.  This legislation could result in multi-notch downgrades on bonds of the dissolved redevelopment agencies.”

Perhaps California’s budget problems can be best understood from a Fox Television interview of Joseph Vranich, president of the Business Relocation Coach. He makes his living moving companies out of California. (See video below.) He said businesses leave to avoid “high businesses taxes and excessive regulations imposed on commercial enterprises of all types.  Costs are illustrated by the fact that a business leaving the city of Los Angeles for a nearby county can save up to 20 percent in costs while moving to another state can save up to 40 percent in costs.”

Vranich pointed out that, in the first half of 2011, there were 129 companies with 100 or more employees that moved out of the state.  This averages 5.4 larger companies leaving for “greener pastures” per week, versus 3.9 per week in 2010 and only 1 per week in 2009.  The top relocation destination is not China, but  the neighboring business-friendly states of Texas, Arizona, Colorado, Nevada and Utah.

Other People’s Money

British Prime Minister Margaret Thatcher, in a TV interview in 1976, famously said, “Socialist governments traditionally do make a financial mess.  They always run out of other people’s money.  It’s quite a characteristic of them.”  If she were to move to California 35 years later, she would add, “Or else the other people will take their money and just leave!”

Feel free to forward this Op Ed and or follow our Blog at www.ecoservativenews.com or www.chrissstreetandcompany.com  Thank you also for the success of Chriss Street’s latest book, The Third Way, available in hard copy or for Kindle at: www.amazon.com

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Joseph Vranich video:

Why Businesses Move Out of California: MyFoxLA.com

By JOHN SEILER

California is suffering what I call a “Zombie Recovery.” The state economy is walking, but dead.

Today the U.S. Bureau of Labor Statistics released new numbers for June 2011 showing that California’s unemployment rose to 11.8 percent from 11.7 percent in May. That reversed slight declines in unemployment in recent months. That means the state is staggering, brainless, through the night of the American economic nightmare.

California’s unemployment rate remained the second worst in the nation, after Nevada’s 12.4 percent.

California’s unemployment increase of 0.1 percentage point mirrored the national increase of the same amount in June, in that case to 9.2 percent. The “green shoots” of economic recovery that Vice President Biden once said he saw growing have been trampled underfoot, especially by the Zombie Army march of California’s economy.

North Dakota Leads the Way

The BLS numbers also showed the contrast heavily taxed and regulated California with North Dakota, whose 3.2 percent unemployment rate is the lowest in the nation. The sweltering summers and frigid winters haven’t stopped businesses from moving to the Peace and Garden State to enjoy its pro-business climate.

According to the ALEC-Laffer “Rich States, Poor States” survey released in May, North Dakota ranked fourth of the 50 states in Economic Performance, with a reasonable tax and regulatory climate. By contrast, California ranked a dismal 46th in Economic Performance due to its punitive tax and regulatory climate.

Of course, some areas of California are booming. On June 19, Apple released a report showing its earnings surpassed analysts’ expectations for the ninth straight quarter. Its popular iPad has propelled sales to record levels.

Google, Intel, Facebook, Twitter and other high-tech companies are growing fast as well. But those companies provide only a small portion of the state’s gargantuan work force.

And even in Silicon Valley, not all is well. Just last month, Apple located a vast, $1 billion server farm in North Carolina after that state improved its tax structure. “North Carolina continues to be a prime location for growing and expanding global technology companies,” said Governor Beverly Perdue. “We welcome Apple to North Carolina and look forward to working with the company as it begins providing a significant economic boost to local communities and the state.”

That boost will not be coming to California.

And just last Monday, Cisco Systems announced it was laying off 11,500 workers. The company makes routers and switches for the Internet. Back in April, Cisco also axed the Flip camera, shedding another 550 jobs.

Meanwhile, California keeps assaulting jobs creators. Back in April, Gov. Jerry Brown signed a law mandating that 33 percent of California electricity must come from “renewable” sources. Critics said it could double the cost of electricity.

AB 32’s expensive Cap and Trade scheme was delayed last month to get beyond next year’s election. But it still looms as another assault on businesses and jobs.

And although Brown signed into law a budget that didn’t include tax increases, he, the Democratic Legislature and their government-union controllers remain obsessed with heaping even higher what already is one of the highest tax burdens in the nation. The uncertainty on future taxes is a big negative for businesses.

Business Exodus Continues

Meanwhile, back in the real world, Relocation Coach Joseph Vranich keeps reporting record departures of California businesses for other states. Here’s just one of them:

Calif. Co. Disinvestment Event #110  

Fisher Investments 

California Community HQ: Woodside

California County: San Mateo

Information: Fisher Investments is building a 120-acre campus in a community near the Columbia River. CEO Ken Fisher has said earlier that that “he’s looking to move his corporate headquarters into a friendlier business climate than Woodside, Calif., where the company is currently based.”

Source: OregonLive.com June 7, 2011 story, “Ken Fisher: Clark County should bang on corporate doors in California, focus on ‘knowledge workers’.”

More Information: The Columbian said that “The $30 million campus could become Fisher’s new corporate headquarters” and that it’s a “$43 billion advisory asset management firm.”

Washington has no state income tax. California’s top income tax rate is 10.3 percent, but it could go much higher if Brown and the Democratic Legislature have their way.

What do California-based companies Adobe Systems, eBay, Electronic Arts, Oracle and Twitter have in common? All have expanded over the past two years not in the Golden State, but in neighboring Utah.

Utah Gov. Gary Herbert makes no apologies for pursuing California companies. “We are lowering taxes and making the state business friendly,” he told Forbes magazine, “while California is doing the opposite with higher taxes and regulations that are nonsensical.”

The flight of five of California’s best known tech companies is not an aberration, according to Joseph Vranich, an Irvine-based business relocation expert. Companies are “disinvesting” in California at a rate five times greater than two years ago, he estimates.

That includes companies leaving the state altogether, establishing divisions elsewhere or choosing not to set up operations within California.

“California is such fertile ground, ” Vranich relates, “that representatives for economic development agencies are visiting companies to dissect our high taxes, extreme regulatory environment and other expenses to show annual savings of between 20 and 40 percent after an out-of-state move.”

The disinvestment trend Vranich identifies has risen to a level where it has gotten the attention of high-level state officials. Indeed, Lt. Gov. Gavin Newsom, chair of the state’s Economic Development Commission, currently is developing a plan to address California’s unfriendly business climate, which he will unveil by month’s end.

“California has got to get its act together,” he said this week, “when it comes to economic development and job creation.” Toward that end, he added, the state will establish a new agency later this year devoted to those purposes.

But what can Newsom do, what can a new agency accomplish, when lawmakers in Sacramento continue to enact legislation that raises the cost of doing business in California far beyond competing states like Utah?

The ‘Amazon Tax’

Just last month, for instance, Gov. Jerry Brown signed a state budget that forces online retailers to collect California sales taxes by expanding the definition of having a physical presence within the state.

Previously, “physical presence” meant bricks and mortar. It applied to retailers with actual (rather than virtual) stores that customers could visit in some shopping center or another.

Now, if a retailer even has affiliates in the state — individuals or companies it contracts with to steer prospective customers to its web site — the Franchise Tax Board considers that a physical presence subject to taxation.

The immediate result of California’s new law is that Amazon.com, one of the nation’s leading online retailers, severed ties with thousands of affiliates it had here in the Golden State, business partners that earned commissions of as much as 15 percent of each sale they brought to Amazon.

That is but one example of the kind of laws California has added to its books that are driving California businesses to states that don’t impose the higher taxes and nonsensical regulations to which Utah Gov. Herbert referred.

Jobs Killer Bills

Even now, the California Chamber of Commerce is tracking dozens of what it refers to as “job killer” bills, proposed legislation that threatens to hurt the state’s job climate and hamper its economic recovery.

Among the job killers are measures that would mandate an automatic annual increase in the state minimum wage, authorize the state’s 58 counties and more than 1,000 school districts to impose or increase taxes on products and services (subject to voter approval), ban food vendors from using polystyrene foam food service containers and eliminate the right of businesses to appeal court orders denying or dismissing petitions to compel arbitration.

Those measures would mean higher labor costs, higher local taxes, the elimination of manufacturing jobs and more in-court cases (rather than less costly out-of-court mediation).

And while most of the several dozen bills deemed unfriendly to the state’s business community will not be enacted this year, some will. And many, if not most, of those that fail this year will be reintroduced in the Legislature next year.

All of this plays right into the hands of Gov. Herbert of Utah, and officials in such states as Arizona, Nevada, Colorado and Texas, all of which are poaching overtaxed over-regulated California businesses.

The Golden State’s loss is their gain.

— Joseph Perkins

By JOHN SEILER

As fast as was the business exodus from California last year, it’s even faster in 2011. The new Pharaoh, Jerry Brown, also is not relenting in his oppressions of business.

According to the latest update from Business Relocation Coach Joseph Vranich:

California is experiencing the fastest rate of of companies relocating to out-of-state or out-of-country locations since a specialized tracking system was put into place two years ago. The disturbing trend is reflected in a review of activity from Jan. 1 through April 12 of this year when 69 California company disinvestment events occurred, an average of 4.7 per week — greater than the 3.9 average per week last year….

Unfortunately, the stage is set for California to lose additional companies, capital and jobs in the future. That’s because the business environment worsened yesterday when Gov. Jerry Brown signed into law a requirement that utilities obtain one-third of the state’s electricity from renewable sources. California companies, which already pay 50% more for electricity than companies in other states, can expect costs to increase by another 20% or so.

Another factor is the continuing imposition of AB 32, the Global Warming Solutions Act of 2006. Backers, such as then-Gov. Arnold Schwarzenegger, said it would rejuvenate the state by creating new high-tech jobs. Critics said it would kill a million jobs. Looks like the critics are being proven right — assuming the critics haven’t left the state.

Vranich writes:

Such new burdens along with upcoming regulations stemming from the “California Global Warming Solutions Act” set potentially overwhelming obstacles to companies here as they try to meet competition based in other states and in foreign nations.

Top Ten Reasons for Leaving

Vranich also has updated his “Top Ten Reasons Why California Companies Are Calling the Moving Companies©.” Click on the link to see the full list. Here are a some of them:

The #10 Reason (New!) – Unprecedented Energy Costs: The California Manufacturers and Technology Association states that commercial electrical rates here already are 50% higher than in the rest of the country. However, a law enacted in April 12, 2011 requires utilities to get one-third of their power from renewable sources (e.g., solar panels, windmills) within nine years. Look for costs to increase by another 19% in many places to a whopping 74% in Los Angeles….

#9 – Severe Tax Treatment: The Tax Foundation in their 2011 State Business Tax Climate Index lists California at No. 49 for tax fairness. CFO Magazine ranked California the worst state for tax treatment. The Council on State Taxation ranks California as the only state to receive a D- grade (the lowest grade)….

#8 – Worst Regulatory Burden: The consulting firm Bain & Co. constructed a “regulatory hassle index” that found “California is far worse than any other state by a very significant margin.” The finding was echoed by Development Counselors International that found that 72% of surveyed corporate executives listed California as having the “worst business climate” in the entire United States. The newest survey, released in March 2011, found that 87.7% of California executives who also operate in several states say California is a harder place to do business than anywhere else….

#7 – Dreadful Legal Treatment: The Civil Justice Association of California said the state ranks 44th in legal fairness to business. Los Angeles was again named the least fair and reasonable litigation environment in the entire country.

#6 – Most Expensive Business Locations: The Rose Institute of State and Local Government reported in its 2010 survey that California cities continue to be some of the most expensive locations to do business in the United States….

#1 – The ‘Outpouring’ of Poor Rankings Continues: California ranked dead last in the latest Pollina Corporate Top 10 Pro-Business States for 2010 study. The finding was based on a composite of labor-related factors, business and personal taxes, the litigation environment, demographics, crime rates, school dropout rates, lifestyle and a multitude of other issues. There is little evidence that California’s business environment will improve considering that that the legislature in 2011 has voted down litigation reform, tax-increase plans are underway, and a host of new regulations are to be implemented that will increase costs for literally every business.

Unhappy California Campers

Vranich concluded:

When I speak with business clients I see that the cumulative impact of all this results in unhappiness. I wasn’t surprised when I saw LiveScience.com in 2010 report that California ranks 46th on a national “Happiness” list. The political culture — impacted by a radicalized, powerful, anti-business interest groups — causes many problems for those in California who attempt to attract and retain businesses.

And writing today on Fox & Hounds, Vranich explained how employees are begging their companies to exit the California Egypt:

Some time ago a decision-maker told me he had evaluated the benefits of moving his department out of Los Angeles. He said: “When I discovered how substantial the savings would be, I quipped in front of my staff, ‘We should move to Texas.’ I was surprised by what happened next – people approached me one by one, came in my office, closed the door, and asked that we move to Texas. Once I saw the employee reactions, I’d like for the relocation to occur.”

Last business left in California, please turn out the windmill-powered lights.