California

'California's stifling taxes, regulations and environmental mandates won't be revamped to more reasonable levels anytime soon'

|

Red tape
Ross Grove / Foter / CC BY

A group of California business people gather last month at a confab hosted by the San Gabriel Valley Economic Partnership to discuss the challenges of operating in the state. What's the takeaway in a news story about the meeting? "Cynthia Kurtz, president and CEO of the San Gabriel Valley Economic Partnership, acknowledged that California's stifling taxes, regulations and environmental mandates won't be revamped to more reasonable levels anytime soon."

Jesus fucking Christ. Why not just throw in the towel, already? Or at least load up the trucks and head for the state line.

The rest of that San Gabriel Valley Tribune story is just as cheery as that quote above suggests.

When asked how California's regulations are affecting their operations, Mike Mulhausen, president of California Custom Fruits & Flavors, was quick to respond.

"Since 2009 our workers comp insurance has gone up 300 percent," he said.

Strict regulations, high taxes and tough environmental laws have made day-to-day operations increasingly costly and tough to navigate.

That was the consensus of a group of local business leaders who met Wednesday in Walnut to discuss the challenges they face. …

Wayne Ratkovich, president and CEO of The Ratkovich Co., said construction projects are frequently bogged down by California Environmental Quality Act (CEQA) regulations and the litigation that often follows. His company's mission is to profitably build developments that improve the quality of urban life.

"It's had a dramatic impact on the ability to build facilities that are needed," he said. "It's rare to find an institutional investor who will invest in California condos because of all the litigation."

Sounds like a great environment for masochists—which might well be a good description of those who continue to bang their heads against the wall if they sincerely believe "that California's stifling taxes, regulations and environmental mandates won't be revamped to more reasonable levels anytime soon."

That low opinion of the California business climate isn't confined to a room full of depressed busines executives. Chief Executive magazine has ranked California as the single worst state in which to do business for ten years in a row. The magazine quotes a CEO saying, "California's attitude toward business makes you question why anyone would build a business there."

The Tax Foundation isn't quite so harsh; it puts California at 48 out of 50 in terms of state business tax climate—New Jersey and New York fare worse. "The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates."

Forbes is less tough still, putting California at 39—thought that's 43 for regulatory environment. The upwards adjustment seems to be largely due to an optimistic perception of growth prospects in what remains a ginormous economy with lots of venture capital for those willing to stay put.

But those who do stay put might want to keep an exit option in mind. The state just imposed new regulations on farmers markets, of all things. That's after tightening the screws on the contracting industry. State officials also see opportunities coming up to make "temporary" tax hikes permanent.

That should do wonders for the business environment.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

62 responses to “'California's stifling taxes, regulations and environmental mandates won't be revamped to more reasonable levels anytime soon'

  1. And J.D. makes another strong entry in the run for KING OF ALT-TEXT…

    1. It’s a slam dunk. TooChilly is KING OF ALT-TEXT!

      1. I blew coffee through my nose.

    2. That is just full of awesome.

    3. I can’t see it on my phone, what does it say?

      1. “It’s not what you think. We’re going to cut his fucking head off.”

      2. “It’s not what you think. We’re going to cut his fucking head off.”

      3. I do wish there were a way to view alt-text on the phone. Someone needs to give the server squirrels a few extra nuts to make this happen.

  2. My brother was planning to expand his business into the US and thought that California would be the logical place to do so, given that it is the most populous state.

    After three months of trying to weave his way through the California regulatory environment, he gave up the idea.

    1. If he decides to try again, tell him to check out TX or FL.

        1. BWAHAHAHAA!! 😎

    2. This is always appropriate:

      Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded ? here and there, now and then ? are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

      This is known as “bad luck.”

      ~ Robert Heinlein

  3. Jesus fucking Christ. Why not just throw in the towel, already? Or at least load up the trucks and head for the state line.

    Because a change like that is a huge, life-altering move that could also be expensive. If it were easy they’d probably have already left. But it will seem more appealing as the business climate continues to get worse.

    It takes a long time to wreck an economy, because for all the shit the government does, the participants in the economy don’t want it to be wrecked and so find all kinds of ways to keep going.

    1. I remember Robert Townsend’s aphorism in Up The Organization: “One move equals two fires.”

      1. Benjamin Franklin said that three moves equals one fire.

    2. Exactly.. And no matter how fucked up it is, a lot of people benefit from it and don’t want to leave the security of it. Even in the worst places like Venezuela, some people are doing well.

      1. “….some people are doing well.”

        Systems like that are set up for that purpose. The connected and favored always do well. Everyone else, not so much.

    3. It takes a long time to wreck an economy, because for all the shit the government does

      And as long as California has Germany to keep pumping them up, they’ll remain viable.

  4. I manage a small wastewater laboratory in CA. The EPA and Water Board are out of control, every year more regs and more fines handed down by Sacramento. The good news is that the enforcement arm of these bureaucracies can’t keep up with the ever changing rules and regulations. At this point we are ignoring half the crap they send out, however I have a bad feeling it’s all going to catch up with our company eventually.

    1. What was your old handle?

      1. Bataan Deathmarch.

  5. California’s stifling taxes, regulations and environmental mandates won’t be revamped to more reasonable levels anytime soon.

    How many California politicians have lost reelection for failure to do such revamping?

    1. Same number that have actually attempted to do any such revamping?

      (Effectively zero)

    2. Well that’s because the bad results are all the fault of the rethuglican obstructionism. (Yes, a lot of Californians really believe this, even though democrats essentially hold super majorities.)

      1. There will always be wreckers and kukaks to blame.

      2. even though democrats essentially hold super majorities.)

        That’s why prop 13 is such a punching bag. It’s irrelevant to current budget problems, but makes a nice scapegoat because they don’t have to own it like they do with everything else.

  6. lots of reasons for why not throw in the towel:
    –the devil of staying is known; the one that would come from leaving is not.
    –pulling up stakes is neither easy nor cheap, and would all the staff move, too?
    –most people hate the losing and, in some sense, closing shop and moving is admitting some sort of defeat.
    –the longer you stay some place, the more difficult it is to move.
    –it’s a beautiful state and people enjoy the lifestyle.
    –it’s easier to to bitch than to act.

    1. “pulling up stakes is neither easy nor cheap, and would all the staff move, too?”

      The one good thing Townsend (see note above) did say about a move was that it was an opportunity to get rid of deadwood. (Though I suspect California regulations might have something to say about that as well.)

      1. A deadwood disposal tax – that’s brilliant!

        1. Al Swearingen takes care of his own fucking disposal!

          1. He’s got Wu’s pigs for that.

            1. “Cocksucka!”

    2. All of this, and all my family and most of my wife’s family is here. She has some in Arkansas as well, but we would not be moving there if we pulled up stakes.

      1. On the plus side, you do have some experience with being crucified.

    3. I think you can add on the fact that moving/not moving is a decision made under uncertainty. If you’re in that position, it’s easy enough to kid yourself that “this shit’s got to break eventually”. As you say, moving is expensive. And if you do move, and things turn a corner, well, you’ve made a lousy decision.

  7. There’s no path to it getting better given the current stranglehold of progressive politics. Our best bet is the six-state solution, if you can call a 200-1 long-shot bet “best.”

  8. Or at least load up the trucks and head for the state line.

    There’ll be a tax for that soon enough.

    1. Kinfolk said “Jed, move away from there, and they loaded up the truck and moved back to Tennessee…”

  9. Interesting that they quote an urban condos developer to say that the regulatory situation is tough for him. That would seem to be the one area California is bending over backwards to entice. Recent CA policies and laws to encourage “smart growth” include such things as exemption from CEQA review to streamline more building of housing near transit stations — and there are coercive policies that if your town doesn’t build enough new condos and low-income housing, you can be cut off from all state transportation funding.

    Live in a small CA town that is completely built out? Too bad, you may have to eminent domain some of your private homes near your downtown BART station so that a developer can build hundreds of new apartments that will change your town forever. Yet the leftists-developer alliance keep claiming the laws are “all about local control.” Yes, you have to tear down existing homes, and build the new condos, but you can have local control over the color scheme of the new buildings!

    Look up “Plan Bay Area” if you don’t believe me. Similar coercive “smart growth” plans may be coming to your neck of the woods next.

    1. Don’t tell me; let me guess. Once the new apartments are built, locals complain about “vertical sprawl” that is plainly the fault of not enough regulations on development.

      That’s the way it plays out where I live. Everything is the fault of not enough regulations, even the direct and foreseeable results of regulations.

    2. As soon as that developer said this “His company’s mission is to PROFITABLY build developments”, he was done for.

    3. And when this building boom all comes crashing down, it will be blamed on greedy capitalism. Yes, in California they can have it both ways: government induced housing bubble blamed on the free market.

  10. The upwards adjustment seems to be largely due to an optimistic perception of growth prospects in what remains a ginormous economy with lots of venture capital for those willing to stay put.

    There may actually be advantages in this for venture capital driven business.

    California regulation is ridiculously expensive, but it’s roughly fixed cost per employee. Hence VC-started businesses, which pay high salaries, are better able to tolerate it. Moreover, as state and local laws and regulations make it more difficult for low-cost and middle-cost companies to operate in California, that leaves more housing, highways, etc. available for higher-cost companies.

    So we may be able to thank state regulation — regulation ostensibly to protect the middle class — for the continued hollowing out of the middle class in California.

  11. “California’s stifling taxes, regulations and environmental mandates won’t be revamped to more reasonable levels anytime soon.”

    You need to understand, this is exactly what many Californians want. It’s a badge of honor for them.

    1. You need to understand, this is exactly what many Californians want. It’s a badge of honor for them.

      You also end up with the odd alliance of progressives and spiteful “conservatives” who think “if I could do it, then so can you” (when in fact they are comparing now to a time of different, laxer rules or they simply bypassed the rules through political connections).

  12. How many of the business critters have established businesses and see the rules as a barrier to competition?

  13. California is a corrupt oligarchy run by and for the benefit of a few entertainment and tech billionaires and the public employees’ unions. It is an orgy of looting and billionaire self indulgent ignorance and superstition. It should be the richest most productive and wonderful place in the world. But it isn’t and likely won’t be for a long time or ever again. The socialists have gotten their fangs way too deep in it.

  14. A group of California business people gather last month at a confab hosted by the San Gabriel Valley Economic Partnership to discuss the challenges of operating in the state.

    IOW, a group of oligarchs met up in secret to discuss how they would revolutionize California in their ongoing effort to destroy the middle class and enrich the 1%.

    /ThinkProgress

    1. And destroy the environment. Don’t forget destroy the environment.

      1. Good point. I also assume that there were security guards armed guards wherever this took place.

  15. ‘California’s stifling taxes, regulations and environmental mandates won’t be revamped to more reasonable levels anytime soon’

    Good.

    1. You forgot the “/TX and FL” tag…

      1. We are benefitting as well.

        /LA

  16. “our investment in education, investment in our decimated court system, investment in our tattered social safety net ? these are the things that are at risk if we don’t debate this and hopefully agree that this revenue is needed, in one form or another.”

    You know, a lot of guys would not call those things “investments”.

    1. The guy who’s getting the money tends to think of them that way.

  17. Government is just protecting the people from predatory businesses. You see, if left unchecked, businesses will make their owners rich by ripping off both their customers and their employees as they rape and pollute the land. Government is there to force businesses to treat their customers and employees properly, and to preserve our natural resources. And, of course, to prevent people from becoming too rich.

  18. Chief Executive magazine has ranked California as the single worst state in which to do business for ten years in a row.

    And yet everyone wants to go there to build… an app or something.

  19. My wife and I moved to San Diego last year. After 14 months here, and in spite of how much we love the ocean and weather, we’re gonna get the heck out as fast as we can make it happen. We’re distinctly middle class and even a “good salary” here ($65,000 in our case) simply isn’t enough to afford more than a one bedroom apartment in a decent area and our one older model car. The cost of living resulting from all the taxes at every level and all the regulation is exorbitant. It’s insane. Truly the only way to survive here is to make six figures, and even then you’ll have a hard time getting ahead. I’ll miss the beach, the sun, and the warm weather, but being darn near broke all the time really stinks. Where will we go? Probably back to Salt Lake City. The economy was much saner there… Even if they don’t have a beach and temperate weather year round.

Please to post comments

Comments are closed.