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Prop 30 triggers business backlash Updated: 12:00 AM PST Feb 13, 2013
Mike Luery Reporter. SACRAMENTO, Calif. (KCRA
Two dozen California companies have said they are tired of the business-bashing in Sacramento, along with the high taxes — and they are now threatening to leave the state.
The day after Proposition 30 passed, triggering $6 billion in new annual taxes, Arizona launched a campaign to lure some of California’s top companies.
KCRA 3 has learned that 24 chief executives are flying to Phoenix, Ariz., to explore the land of lower taxes and a much friendlier business environment.
View photos — Ariz. launches campaign for Calif. businesses
“We can deliver the mayors, we can deliver the CEOs, we can deliver the legislative support,” said Barry Broome, president of the Greater Phoenix Economic Council.
Broome launched his campaign to recruit California CEOs one day after voters in the Golden State approved Prop 30 last November, and the campaign is working.
Broome said 24 CEOs already have committed to leaving California.
“You start sending the wrong message to those folks and they start voting with their feet,” Broome said.
Dave Albertson is one of the people who found greater opportunities in the Grand Canyon State.
Albertson recently moved his marketing and technology company, Wholesalefund, from California to Arizona, where he now does business in a Scottsdale office park.
“Certainly when we were weighing the pros and cons, the operating costs and certainly some of the benefits of Arizona, (it) looked favorable,” Albertson told KCRA 3.
The Greater Phoenix region grew by 50,000 jobs last year.
Meanwhile, many California companies are thinning their ranks.
Chevron is moving 800 jobs from their Bay Area headquarters to Texas, and Waste Connections shifted more than 100 jobs to Texas from Folsom.
Other California firms are also on the move.
Business relocation expert Joe Vranich has been counting.
“I tracked for 2011, that 254 companies of all sizes and shapes and kinds left the state for primarily other states,” said Vranich, the president of Spectrum Location Services in Irvine.
He told KCRA 3 that companies leave California for three primary reasons: “High taxes, excessive regulations and the threat of really ridiculous lawsuits.”
And they are leaving for places such as Arizona, a state that means business.
The state is big on streamlining business regulations and cutting through bureaucratic red tape.
In Phoenix, the emphasis is on granting business permits very quickly.
Arizona’s fast-track permitting allows certified architects and engineers in Phoenix to get building permits in a single day.
By contrast, Duane Woods told KCRA 3 that California’s process is painfully slow.
As a former executive at Waste Management, the largest recycling company in the world, Woods moved his regional headquarters from California to Arizona.
“We started trying to permit a major recycling facility in LA at an old landfill site, mind you. That site is still not permitted to this day,” the former VP told KCRA 3.
Woods said the permitting process has taken more than 10 years, and there still is no facility in California.
Yet, it took just two years to build the same plant in Arizona.
“If you took a white board and said, how can we make it difficult, how many agencies can we layer on, California is just as complex as it can be,” Woods said. “It’s not an employer-friendly state. And to that end, it’s more difficult — definitely more costly to operate in.”
Of all the states, California ranks dead last for policy friendliness, with key negatives for high taxes, high workers compensation costs and high electricity costs, according to the most recent report from the Small Business & Entrepreneurship Council.
But the Brown administration denies that California is bleeding jobs to other states, despite the 254 companies counted by Vranich.
“Well, we know businesses are concerned about tax policy,” said Kish Rajan, the director of the Governor’s Office of Business and Economic Development, or GO-Biz for short.
“But at the same time Mike, I have to tell you — we see companies that are coming here, that are expanding here. Great names like Caterpillar, Amazon, Samsung, Sutter Health up here in the Sacramento area, VSP in the Sacramento area,” Rajan told KCRA 3.
But the former executive of Waste Management believes it’s too little, too late.
“Denial is not a strategy,” Woods told KCRA 3.
The California legislature is now considering a bill to add yet another paid holiday for state workers.
Meanwhile, Arizona has placed a moratorium on future regulations for business. The contrast exemplifies how Arizona and California have radically different values when it comes to business and labor.
California used to be a magnet for people to move from other states, but U.S. census data shows the population patterns have reversed.
Nearly 100,000 more people moved out of California than moved in, with the prime destinations being Texas and Arizona.
Of course, there are multiple reasons for people to leave a state, including family issues — so, not all the migration is job related.
But the trends continue to show California as a net exporter of people to other states.
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