CA Could Use a Border Fence to Keep Business In

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Maybe we should build a fence around California not to keep people out but to keep businesses in now that the Tesla decided that the battery gigafactory would set up shop across the border in Nevada.

There were declarations of disappointment from government officials after the decision leaked out. Along with disappointment were reassurances from the governor’s Office of Business and Economic Development that the state will continue to work closely with businesses, including Tesla.

But lawmakers will eye the benefits Tesla already received from California like tax breaks to build a plant in the Bay Area and tax credits for rich people to buy $70,000 cars and ask why Tesla should be awarded advantages from California when the company chooses to expand elsewhere.

Will legislators be more decisive in putting together incentives programs in the future? The one designed for Tesla stalled in the closing days of the recent legislative session. Or will they express disgust and feel used by businesses playing states off against each other as different industries vie for taxpayer handouts?

Senator Ted Gaines, who joined with Sen. Darrell Steinberg in crafting the stalled incentive plan to convince Tesla to make California the factory’s home said, “It’s a clear indictment of our business climate that Nevada is pulling this huge investment away from its natural home. I’m not sure there could be a stronger signal to legislators about how hard they have made it to operate here.”

Whatever Tesla’s reasons for choosing Nevada it is another knock against California and its reputation as a difficult place to do business.

The gigafactory was supposed to bring with it 6500 jobs. California certainly could use them. However, the key to overall economic growth isn’t with big job creators, as important as that is, but with developing small businesses.

On the day the word came out on the Tesla factory, U.S. Small Business Administrator Maria Contreras-Sweet was in Southern California telling Town Hall Los Angeles that the “future of the country is on the backs of small business.”

Contreras-Sweet, who served as California’s Secretary of Business, Transportation and Housing during the Gray Davis administration, said two out of three jobs are created by small businesses and many of the small businesses are owned by women and minorities.

While government officials are thinking about the state’s business environment in light of the Tesla decision, they should concentrate on how to improve the landscape for small business to help California grow. It would be nice to add 6500 jobs in one fell swoop but it is just as important to get that many and more one job at a time.

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