Environmental Storm Troopers

Patrick Dorinson
Host of The Cowboy Libertarian Radio Talk Show in Sacramento

While almost every politician in America was stumbling all over themselves to be photographed with a shovel or some other tool of manual labor on Earth Day, a California company announced that after 65 years it was closing its doors effective immediately.

Gregg Industries is a foundry in El Monte and it has been in operation since 1944 when California was a critical player in FDR’s “arsenal of democracy”. They didn’t make planes or tanks. But they made some of the critical engine pieces that drove tanks in war and the bulldozers and heavy equipment that built postwar California.

They were due to close on April 30, but decided to close today, a week early.

Why? What was the rush?

Enter the Environmental Storm Troopers of the South Coast Air Quality Management District (SCAQMD).

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Improved State of Competition

Charles Crumpley
Editor and Publisher of the San Fernando Valley Business Journal

Top executives like having their headquarters in Los Angeles. They say they enjoy the fine weather and the celebrity glam. But expansions? New plants? They say put ’em in Nevada or someplace else where taxes are lower and regulations are lighter.

That’s why the single-sales factor of taxation that the state Legislature recently passed is important. It kills a lot of the incentive for businesses to site their expansions and new plants in other states.

As reported in the Business Journal last week, the current formula makes each company pay state taxes based not only on the amount of sales the company makes in California, but also on the payroll and the value of the property in the state. The new formula eventually eliminates the tax on the payroll and the property, relying instead on in-state sales. That means a company could add a string of plants and double its employee count in California and theoretically pay no additional state tax.

In short, the Legislature told businesses to come on in, the water’s fine.

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Dan Walters misses what’s important in California’s Economy

Gino DiCaro
Vice President of Communications for the California Manufacturers & Technology Association

The Sacramento Bee’s Dan Walters opined on Monday that there is no evidence of job-migration out of California and generally that any concern over our business climate is unfounded.  He focused on the following two points:

  1. A 2008 PPIC report that found limited amount of job migration out of California. 
  2. The notion that California’s business climate is unchanged from many years ago when the state experienced an economic boom.  I assume he meant the 90’s.

At this blog, we focus on the massive opportunities that come from high paying manufacturing jobs for workers, the economy and the state budget — and how manufacturing employers can succeed in California.  It should always be noted that a manufacturing wage pays approximately $20,000 more than a service job and provides the needed tax base for bold state government programs.  Here are three facts that should be considered in response to Walters’ piece:

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Main Street Menace of the Week: AB 1000 (Ma) – Mandatory Paid Sick Leave

John Kabateck
NFIB State Director in California

While the legislature is in session, the National Federation of Independent Business/California will be profiling anti-small business bills and the adverse effect they would have on California’s job creators. This is the third column of that series.

It seems that our state legislators continue to experience a chronic case of short-term memory. It would be the only logical reason that they continue to propose bill after bill every year that add additional burdens and mandates to small businesses in California. The latest in the string of these “Menaces” is Assembly Bill 1000, by Assembly Member Fiona Ma.

This is an identical twin of last session’s AB 2716 by the same author – same bad policy, new bill number. It would require every California employer to provide each employee with paid sick leave. Once an employee works only seven days in California, they would start to earn paid sick leave benefits, and within 90 days they would be able to begin taking time off for themselves or relatives. This mandate covers seasonal and part-time employees and would be required regardless of an employer’s ability to pay. Furthermore, as a “gimme” to the trial lawyer lobby, it would include fines, penalties and the right to sue if an employer is unable to comply with this one-size-fits-all mandate.

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They’re Going to Do It Again

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977; www.dswlawyers.com

Michael Hirsch’s recent story “Wall Street Digs In,” in Newsweek, is unsettling, to say the least. He warns that Wall Street has not learned their lesson from the economic debacle last year which continues this Spring amid a stock market rebound of sorts – if you can call leveling off at a mark some 40% below the highs of several years ago, a “rebound.” Specifically, he reports that some of the Wall Street Heavyweights have banded together in a new lobbying effort under one of those charming newspeak names that usually mean the opposite of the title: “Coalition for Business Finance Reform.”

Hirsch says this new lobby with the misleading name, comprised of Citigroup (whose stock has finally cleared 4 iTunes’ songs in value per share and who announced a profit, based on some accounting tricks), Goldman Sachs and JP Morgan, has now dedicated itself to the mission of opposing the kind of regulation that would corral, reign in and tame, for once and for all, those dangerous and wholly inscrutable collateralized debt obligations and credit default swaps which swamped and crashed the world’s economies in the first place. In Hirsch’s words: “Its goal: to stand against heavy regulation of ‘over-the-counter’ derivatives, in other words customized contracts that are traded off an exchange,” which, if achieved, virtually insures a repeat of the nightmare we have all been living through.

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A Constitutional Convention Q&A with Jim Wunderman

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

The Bay Area Council’s Jim Wunderman kicked off a whirlwind of activity and interest around the possibility of calling a California Constitutional Convention with an op-ed piece he published in the San Francisco Chronicle last August. Since then he has held a summit on the idea in Sacramento and has traveled around the state generating interest for the idea of a Constitutional Convention.

Fox and Hounds Daily caught up to Jim recently to ask him what progress he sees in this quest eight months later.

Q. Your idea for calling a constitutional convention garnered a lot of attention at first. Has that interest grown since August?

A. The interest in holding a constitutional convention has grown substantially since the Chronicle first printed our op-ed piece calling for it in August. The longer the budget debacle played on, the more groups, individuals and the media became interested, many excited. Over the months we’ve had the chance to make quite a few presentations and many of those groups have signed on or are likely to do so.. We’re by no means alone in this, we get lots of pats on the backs from the strangest places.

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International Tourism Marketing Critical to Boosting Industry and State Economy During the Recession

Caroline Beteta
President and CEO of Visit California

Despite gloom and doom travel predictions in the news, California’s tourism industry has an incredible opportunity to boost its economy by continuing to invest in lucrative international markets.
Preliminary statistics for 2008 confirm that although international travel is expected to be down 4% due to the global recession, and some markets will struggle in 2009, it strategically makes sense to think of these markets over the long term, rather than panic and just focus on in-state or regional domestic marketing.

Why? Because international long-haul travelers tend to stay longer and spend more money in California. And, even though there is a global recession, some markets are less affected than others. China’s economy, for example, is growing, and their visitation to the Golden State grew 24 percent. Additionally, the strength of the euro has helped visitation boom from the United Kingdom (+4%), Germany (+21%) and France (+29%). Closer to home, although Mexican travel was down 9% due to economic challenges, Canadian travel grew approximately five percent, boosted by a more stable economy and a relatively strong dollar against ours.

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Hurry-up, California: Fix all of our problems with green directives

Gino DiCaro
Vice President of Communications for the California Manufacturers & Technology Association

I recently watched an employer focus group unfold.  An executive was asked, "Is there anything positive about conducting business in California?"  The employer replied, "Yeah, investment barriers to new competitors in California."  Another respondent replied without hesitating, "There is no way we would invest anything more in California."

These realities play out in so many ways — notwithstanding California’s tremendous quality of life advantages — while so many unfounded and rushed policy directions tip economy-altering board room decisions against our working families.

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Is SEIU Setting Fire to the House of Labor?

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

After all the rumors and build-up and speculation about how much the Service Employees International Union might campaign against Prop 1A, the SEIU state council came out strongly against the rainy day fund proposal last week because… well, let’s look at the press release from SEIU and its coalition of anti-1A unions.

1A is disturbingly long…. (“close to 3000 words”)… and full of “confusing information”… and “complex formulas.” Who, the unions ask, would responsibly vote on such a document?

Of course, such a description – long, confusing, full of complex financial formulas — could apply to other documents. For example, union contracts. Except those union contracts would be closer to 30,000 words than 3,000. But I appreciate SEIU’s newfound devotion to simplicity. In the name of consistency, I’m sure the union will renounce its support for collective bargaining and ask the legislature and governor not to approve Local 1000’s new contract. After all, who would vote responsibly on such a long and confusing document?

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Dreadful employment picture

Loren Kaye
President of the California Foundation for Commerce and Education

You may have heard that the California unemployment rate for March was reported to be 11.2 percent , an increase of 0.6 percentage points from February, exceeding even the peak unemployment rate of the 1981 recession (11 percent).

California may not have seen such a high monthly unemployment rate since the 1950s or even the 1940s. But recall that during the 1981 recession, which was relatively short, the unemployment rate stayed at or above 10 percent for 12 consecutive months.

But the picture gets even worse when you compare the job losses for this recession with the three previous recessions over the past 30 years. The chart below shows that California job losses (as a percentage of total nonfarm employment at the peak of the cycle) in this recession have been deeper and accelerated faster than during any of the previous recessions.
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