Why Not California #7: California-based company banking on Las Vegas solar manufacturing

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

Read this Las Vegas Sun article on why a California-based company, Ausra, is changing its core mission to manufacturing solar supplies (as opposed to building solar generation facilities) and producing those supplies in a neighboring state.

Here’s the abbreviated version:
1.    Ausra abandoning most of its large solar facility projects in the west and now manufacturing solar equipment in existing Las Vegas facility to supply medium sized operations in California and the region.
2.    Company will supply limited new renewable supply for utilities struggling to meet California’s 20-soon-to-be-33-percent renewable standard
3.    Company’s only viable option is manufacturing in a cost competitive state and supplying into California’s smaller energy markets
4.    Lack of funding for — and expensive nature of — big solar projects.
5.    "Not in my back yard" problem for new big solar sites.
6.    California’s high costs put their high wage manufacturing facility in Las Vegas in the first place

Solar power is an expensive means to reduce our coal fired energy consumption but it likely will play an increasing role in California’s aggressive hunt for a growing renewable power supply.  Hopefully research will innovate cheaper (and smaller) ways to produce and transmit photovoltaic power so consumers and businesses in California won’t have to pay largely increased costs.  The flip side of the solar movement was the almost-guaranteed new manufacturing jobs as an additional benefit.  Remember, each megawatt of solar power generated creates 20 manufacturing jobs per year, but we’ve already seen three solar manufacturers pop up in Oregon and one here in California, Opti-Solar, recently layed off 105 of its employees.

As high operational costs persist, venture capital dries up and unrealistic environmental goals prevail, Californians will reap few of the purported economic and environmental benefits we’ve heard so much about in the renewable power arena.   Just ask Ausra in Nevada, Opti-Solar in California or 3 solar manufacturers in Oregon.

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Surprise! California Can Improve Its Tax Climate

Loren Kaye
President of the California Foundation for Commerce and Education

Californians have been treated to a bruising debate over the wisdom of raising taxes to resolve the budget deficit. But recent actions to improve the state’s economic competitiveness have mostly played out behind closed doors, leaving citizens with the incorrect impression that making tax policy in pursuit of economic development is too messy or obscure for democracy.

When the California economy begins its eventual recovery, our best hope for a strong resurgence in job creation will be to ensure we can compete for high-value, high-skill jobs that are in demand on the world market. But for companies who make decisions based on the tax climate – which include much of the high tech, biotech and entrepreneurial sectors – California has not been in the game.

The national, nonpartisan Tax Foundation regularly reports on California’s dismal ranking on business tax climate; this year we rank 48th among all states. We have the highest corporate tax rate in the West, the highest personal income tax rate on capital gains and investment income, and zealous tax collectors. As part of last year’s short-lived budget deal, negotiators suspended two of California’s only business tax incentives: credits for locating in enterprise zones and conducting in-state research and development activities. Mercifully, the suspension of those credits was only temporary.

But on a more hopeful front, the recent state budget compromise found room to address a key source of California’s lackadaisical efforts in business climate improvement. The Legislature agreed to provide a tax incentive for many companies to invest in new facilities and new jobs in California by reducing the weight that those two factors contribute to calculating a company’s tax liability. The current law creates the perverse situation where companies that simply invest in more jobs or property in California can see their tax bills increase. Known obscurely as the single sales factor (SSF) apportionment formula, this change will make California more attractive for growth and investment.

How do we know this? When Massachusetts adopted this change in 1995, it helped stem job loss in the manufacturing sector.  A 2003 study found "(t)he sales-only apportionment formula is an efficient tax incentive. Massachusetts gains over $7.00 of additional net personal income for each dollar of reduced state corporate excise tax revenues. This is a significant long-run return in terms of new jobs and higher incomes as a result of the state’s investment."

The California-grown biotech powerhouse Genentech cited Oregon’s adoption of the SSF factor in its decision to build a state-of-the-art biotherapeutic "fill/finish" facility in a community outside Portland.

Recognizing the importance of encouraging new job-creating investments, more than 20 states have adopted the SSF formula substantially or completely, each with the knowledge that a short-term reduction in corporate tax revenues would be easily overtaken by increased investment and business activity that directly produces more property and income taxes, as well as other state and local income.

After many years of ignoring our deteriorating tax climate, California policy makers have finally sent a signal to investors worldwide that we want our share of new, high-value jobs and investment.

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On the California State Budget

Tom Campbell
Tom Campbell served five terms as a congressman and two years as a California state senator. He was also finance director of California.

The state budget has now been passed. It is far from perfect. (Indeed, I’m still not sure where about 11 billion of borrowing comes from; and I’m skeptical about assuming any particular value for enhanced earnings from the California Lottery.) But that has not been the focus of the intense criticism of those Republican legislators, and our Republican Governor, who supported it. Rather, they are being criticized because the budget deal includes about 15 billion of higher taxes. That’s matched by about 14 billion of cuts in spending.

Back in December, public works stopped in our state, because of this budget crisis. In the midst of a recession, we stopped building freeways, water storage, schools, airport improvements, port facilities. That was suicidal to California’s recovery. These are good projects, that will make California more competitive for years to come; and in the short run, they will give Californians jobs. We needed them to continue, months ago.

So, I wrote an article for the San Francisco Chronicle, in December, and posted it on my web site, suggesting that an immediate budget deal be forged with 50% cuts in spending matched by 50% increase in gas taxes. A 50:50 deal was, to my lights, the only way to get a budget done, and start public works again. With gasoline falling from its high of above $4 a gallon last summer, I thought it was the least damaging tax to raise.

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Gubernatorial Primary Prequel: The Special Election

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)

What’s the real opponent of the package of budget deal ballot measures in the May special election?

The 2010 governor’s race.

The package is an unsightly, unpleasant group of measures put together by an unpopular governor and an irresponsible legislature that deserves little respect. (And I say that as someone who has been consistently supportive of passing the package). Politically, the package makes an irresistible target for every single person running for governor of California.

Look for those candidates – Republicans and Democrats – to compete with each other in the fury and frequency of their denunciations of the package and the budget deal that spawned it.

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Summit Considers Constitutional Convention

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

The main issue many of those who attended the California Constitutional Convention Summit yesterday in Sacramento had on their minds was eliminating the two-thirds vote to pass the budget and raise taxes. That item came up over and over from Lt. Governor John Garamendi to panelists to members of the audience.

Of course, a simple amendment to the constitution can change the two-thirds vote, a constitutional convention is not needed to do that. The question that was not answered at the meeting spearheaded by the Bay Area Council and hosted by a number of organizations: Is there a need for a California constitutional convention?

Presumably, the 400 or so attendees to the conference thought so, or were at least curious about the possibilities. Of course, the meeting was held in Sacramento, which is a “company town” involved with government. There seemed to be a lack of political diversity in the room. However, Bay Area Council president Jim Wunderman promised to extend the exploratory effort and reach out to other parts of the state and other points of view.

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Return of the Open Primary: A Midnight Miracle

Tony Quinn
Editor, California Target Book

In the dead of night last week, Sen. Abel Maldonado managed to pull off an incredible coup: getting a two thirds vote to place the open primary on the June 2010 ballot in exchange for his vote on the budget. In the light of day partisans of all stripes are howling their heads off, but it too late. The measure is on the ballot.

A little history. In 1996 voters enacted an open primary constitutional amendment that allowed all voters to vote for all candidates for each partisan office in the primary. The parties hated this, and sued in federal court. In 2000, the US Supreme Court declared the California open primary unconstitutional as a violation of “parties associational rights” (whatever they are) because Republicans could help choose the Democratic nominee for office, and vice versa.

But the court left a loophole. If you did not have party nominees, you could have a “blanket” open primary. The state of Washington had long had the blanket primary, and to meet the Supreme Court mandate, Washington in 2004 enacted a blanket primary, top-two runoff with no party nominees. (Candidates can show that they “prefer” a party). This new law was upheld by the US Supreme Court in 2007 and Washington used it for the first time in 2008.

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Say It Ain’t So, Joe.

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

Joe Mathews–you can’t possibly believe that without the two-thirds vote requirement to raise taxes, California taxpayers would not be buried under even more taxes than they already are. Just because the state is in difficult shape living under a two-thirds vote requirement doesn’t mean it wouldn’t be in worse shape without it.

Yesterday, Mathews took on my column of last week in which I defended the two-thirds vote against coming challenges. My point was to focus the two-thirds vote argument on raising taxes.

A two-thirds vote for the budget would allow the majority party to set priorities. If this debate were simply about the budget my concern would not be as high. But we all know that the goal to create more programs and grow government can’t simply be accomplished by budget votes. The power to tax is essential to the goal setting and that’s what this debate comes down to.

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Why the Open Primary is Worse Than Bad

Tom Del Beccaro
Former Chairman of the California Republican Party and current candidate for U.S. Senate

It is said, philosophically, that there are no new thoughts, no unexplored concepts – just new ways of expressing what has been previously thought. That is the historical equivalent of saying that History repeats itself only in different detail.

You see, for nearly as long as there has been representative government, people have gravitated toward factions or parties. We know England once had Whigs and Tories and is now dominated by a Labour Party and a Conservative Party. For the pre-Renaissance Florentines, there were the Guelfs and the Ghibellines. In time, the Ghibellines were driven out and the city was dominated by the Guelfs who, unable to live with success, internally feuded and brought partisanship to a new height with the formation of White Guelfs and their sworn adversaries: the Black Guelfs – so stark can be the differences of partisanship.

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Leaving Economics to the Economists, Not the Politicians

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

Politicians explaining economics to the general populace is like having baseball stars explain theoretical physics for the masses (or, A-Rod, explaining the joys of natural foods to baseball fans). There is nothing simple or sound bite-sized, or easily understandable, about the complex tangle of interwoven threads that make up the current economic crisis – the fact that the world’s most gifted economists, people who have spent their life toiling in that vineyard, are having real trouble getting their collective arms around exactly what needs to be done to fix a painfully obviously, broken economic system, should tell us something about the presentation of economics issues for the average layperson by the average politician.

Most people are on the level of having trouble balancing their checkbooks. Indeed, dare I say in this era of on-line banking, most people don’t even balance their checkbooks anymore at all. We use calculators instead of all the fun math some of us stayed awake in class and listened to, back when, and we don’t even have to remember telephone numbers anymore because our snappy cell/PDA/smartphones remember hundreds of numbers so well that we are now totally divorced from that aspect of our memories. Is it any wonder, therefore, that, when faced with an implosion of our financial institutions and world economies, which some have compared to the Great Depression of the 30’s, that few, if any, can really follow the economics issued presented?

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Two Thirds: California Republicans and the Stockholm Syndrome

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)

Joel Fox, a native New Englander, channeled Paul Revere on this site to warn of the coming invasion of Democrats and others seeking to overturn the state’s requirement of a two-thirds vote in the legislature before a budget may be passed or taxes raised.

I have to laugh whenever I hear Fox and other Republicans and anti-tax activists praise two thirds. Their logic is simply ridiculous. These are the folks who tell us over and over that California has gone to hell, that taxes are too high and that spending is out of control. Then they tell us that if we don’t protect the two-thirds requirement, taxes will be too high and spending will be out of control.

(Yes, you may scratch your head now.)
Which is it, guys?

The reality is that the two-thirds requirement is at the heart of the system that they denounce. Californian legislatures have operated under the two-thirds requirement for budgets since the 1930s and the two-thirds requirement for taxes since Prop 13 passed in 1978. And it is this two-thirds system that has produced the taxes and spending they complain about.

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