According to this article from the AP, the top 10 highest unemployment rates in the Country are:

El Centro, Calif. 26.8
Yuma, Ariz. 23.1
Merced, Calif. 18.7
Yuba City, Calif. 18.1
Visalia-Porterville, Calif. 16.2
Fresno, Calif. 16.2
Modesto, Calif. 16.1
Stockton, Calif. 15.9
Hanford-Corcoran, Calif. 15.3
Ocean City, N.J. 15.1

Eight out of those 10 are in various California Enterprise Zones.

On the other end of the spectrum, none of the 10 cities with the lowest unemployment rates in the Country are even in California.

Siskiyou County Enterprise Zone manager is one of the voices featured in this news story about the assault on business in that county:

The “Business Relocation Coach” details a fascinating story of how an iconic California employer packed up and left without anyone knowing:

Ridiculous but true – California has a surplus of politicians who are contemptuous towards business and refuse to admit that the state’s policies are causing companies to move to other states and foreign countries. Some policy makers grudgingly admit that companies leave the state, but assert that the numbers are “exaggerated.” However, for every out-of-state move found in newspaper stories, press releases, and SEC disclosures, dozens “go quietly in the night” because doing so makes the relocation less nerve-wracking to company officials who already feel beleaguered.

This posting will help illustrate how company departures are under-reported by focusing on one legendary California company that vanished – Thomas Brothers Maps – without a single media report appearing about the event nearly a year after it occurred. Hence, consider this the first public notice that Thomas Brothers Maps is no longer a part of California’s landscape.

Read the whole thing.

Maybe that’s why it’s an Enterprise Zone. From the Sacramento Bee:

Tulare County’s three biggest cities collectively have the lowest quality of life in the 109 mid-sized American metropolitan areas in new survey by Portfolio.com, a website of local business newspapers – and the main reason are their lack of college-trained professional workers.
…
The Portfolio. Com article can be found here while the complete rankings are available here.

Here is an editorial that appeared in today’s San Bernardino Sun by the owner of Cannon Safe. Cannon Safe was the venue for Meg Whitman’s tour of the Enterprise Zone back in March.

I recently took a trip to Sacramento to talk to state legislators about the pressing economic issues facing the state of California. I was part of a delegation of business owners who were invited to Sacramento by the San Bernardino Valley Enterprise Zone. Our goal was to educate legislators and their staff members as to the importance of the enterprise zone.

An enterprise zone is an area that has been deemed economically depressed by the California Department of Housing and Community Development. Businesses located in an enterprise zone qualify for special tax incentives. The goal of the enterprise zone program is to stimulate business and job growth in economically challenged areas of the state.

I found the trip to be frustrating, because it seems that many legislators are not aware of the difficulty of doing business in California. When I travel around the country for business meetings, I am constantly met with the question, “Why are you still in California?” Business leaders look at California’s high state taxes, workers’ compensation costs, and red tape regulations and they think I am crazy to keep my business in the state.

State legislators need to understand that there is fierce competition for California companies from other more business-friendly states. A few years ago, when I was considering relocating my business, I was heavily recruited by New Mexico Gov. Bill Richardson, who is very pro-business. I was also recruited by other states such as South Carolina, West Virginia, Texas and Arizona. Most of these states had attractive offers for companies interested in relocating. For example, West Virginia offered to give my company 20 acres of land and also construct a building, which I would later own. Arizona offered to pay my employees’ wages for a year, at the prevailing state wage. In addition, many other states have low state taxes compared to California’s state tax which is 10 percent.

When people ask me why I stay in this state, I tell them that I love California, and I am committed to raising my family here. But a major factor for me staying here is being in a California enterprise zone.

My company, Cannon Safe, originally started in El Monte in 1965. We moved to Pico Rivera in 1968 and eventually decided to relocate in 1999. We were attracted to San Bernardino because of the tax credits and other assistance offered by the San Bernardino Valley Enterprise Zone.

However, even with the benefits offered by the enterprise zone, it is still less expensive to do business in other states. If I moved my company to Utah or various other states, I would see as much as a 20percent increase in profits.

I realize that moving my business would have a devastating impact on the local economy. Cannon Safe employs 200 workers and our 2009 payroll contributed $7.2 million to the local economy. Manufacturing companies like Cannon Safe have a ripple effect on the local economy, because we also employ hundreds of local support businesses.

Cannon Safe also employs 500 vendors who provide trucking, freight, steel, legal and accounting services. Seventy percent of our gross sales goes back to the local economy, and that accounts for millions of dollars.

California enterprise zones also provide a significant economic impact to local communities. According to information from the California Association of Enterprise Zones (CAEZ) website:

Enterprise zones have generated more than 700,000 jobs in a 10-year period.

Wages and salaries in enterprise zones grew 3.5 percent more than the rest of the state.

Poverty decreased 7.35 percent in enterprise zones compared to the rest of the state.

I love California, but I can’t continue to throw my money away.

Without the enterprise zones, there is little reason for me, and other entrepreneurs, to keep our businesses in California.

Aaron Baker is president and owner of Cannon Safe, a manufacturer of home safes and other security products headquartered in San Bernardino within the San Bernardino Valley Enterprise Zone.

Can be found here: http://www.calchamber.com/Headlines/Pages/CalChamberReleases2010JobKillerBillList.aspx

SB 974 is on the list, while AB 2476 is not.

The Business Relocation Coach has updated his list of companies that have fled California from 114 to 129.

The Business Relocation Coach provides some more examples of employers leaving California in recent years that he has compiled:

Events prove once again how difficult it is to assemble a list of companies that have left California. After a recent radio appearance, I was inundated with information about company departures that I’ve not previously listed. Below are additional moves that within the last week I’ve verified are accurate. (I’ve left off the list those that I’m unable to confirm through an online search or when company personnel refuse to discuss the information I received.)

2010 Moves – 4 New Moves Discovered

* Hayden Automotive, which makes auto parts in Corona, Riverside County, is relocating its entire operation to SMP-owned Four Seasons Manufacturing facilities in Grapevine and Lewisville, Texas. According to today’s Orange County Register “Hayden has 97 employees. The company notified the California Employment Development Department that it will lay off 73 people between April 1 and Oct. 1.” The move will be completed during the 2010 calendar year. See “Manufacturer leaves state for Texas.”
* Workforce Management — a magazine that focuses on human resources issues — will move from Irvine to Chicago in mid-2010.
* Malibu Boats is moving from Merced to Knoxville in 2010. Details are difficult to come by except that I know some Merced employees are buying houses in Knoxville.
* Dimensional Fund Advisors moved its headquarters from Santa Monica to Austin, Texas, with the move to be completed in 2010.

2009 – 2 Moves Discovered

* Deutsch Industrial Products Division closed its Banning, Calif., facility and moved the jobs to Tennessee in 2009.
* BRP Billet Racing Products moved from Laguna Hills to Colorado Springs, Colorado in 2009.

2008 – 1 Move Discovered

* The Hershey Co. closed its chocolate plant in Oakdale, in Stanislaus County, Calif., and 600 jobs were lost by February 2008. Hershey’s kisses with almonds and Hershey’s syrup were transferred to a plant in Pennsylvania and Hershey’s miniatures to a plant in Mexico.

Last July I posted a video of a meeting of the Oakland City Council where there was a passionate appeal to expand Oakland’s Enterprise Zone into part of the City of Berkeley in order to prevent Bayer Health Care from relocating a major facility out of the country.  In September word came that Bayer had decided not only to stay, but to expand its Berkeley operations.

The State has really made this effort a priority, and as of December 1, that expansion was made official by HCD.  Here is a video of the Berkeley City Council meeting of  12/8/09 where the City manager announces the approval to a round of applause:

Berkeley City Council Meeting 12/8/2009 from Max Shenker on Vimeo.

KQED‘s John Myers, in his Capital Notes Blog, discusses the background and implications of a new study released this week, “Cost of State Regulations on California Small Business Study.” The 85 page study is posted on the State’s Small Business Advocacy page here:

Cost of State Regulations on California Small Business Study –

The Executive Summary is pretty chilling:

This study measures and reports the cost of regulation to small business in the State of California. It uses original analyses and a general equilibrium framework to identify and measure the cost of regulation as measured by the loss of economic output to the State’s gross product, after controlling for variables known to influence output. It also measures second order costs resulting from regulatory activity by studying the total impact – direct, indirect, and induced. The study finds that the total cost of regulation to the State of California is $492.994 billion which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. The cost of regulation results in an employment loss of 3.8 million jobs which is a tenth of the State’s population. Since small business constitute 99.2% of all employer businesses in California, and all of non-employer business, the regulatory cost is borne almost completely by small business. The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $4,359.55 per small business, indirect business taxes not generated or lost were $57,260.15 per small business, and finally roughly one job lost per small business. This study provides the most comprehensive and complete analysis of the total regulatory burden in California.

This reminds me of language used to describe the purpose of the Enterprise Zone Program in the Government Code: “The health, safety, and welfare of the people of California depend upon the development, stability, and expansion of private business, industry, and commerce, and there are certain areas within the state that are economically depressed due to a lack of investment in the private sector. Therefore, it is declared to be the purpose of this chapter to stimulate business and industrial growth in the depressed areas of the state by relaxing regulatory controls that impede private investment.”

Breaking news from the Contra Costa Times:

BERKELEY — Bayer HealthCare announced Wednesday it will invest more than $100 million to upgrade and improve its manufacturing capabilities here, a decision that dispels fears the pharmaceutical giant would exit this city.

The decision by Bayer HealthCare to manufacture future versions of its hemophilia drug Kogenate isn’t just about the patients.

It’s also a major relief for Berkeley and Oakland. Earlier this year, Bayer hinted it was considering a move out of Berkeley.

This is the largest investment ever made by Bayer on the Berkeley site, said Joerg Heidrich, head of Bayer HealthCare’s product supply biotech organization.
“I’m very pleased and excited to invest more than $100 million in the Berkeley site to manufacture a new process for hemophiliacs,” Heidrich said.

Berkeley’s largest private employer will seek to expand its facility, giving a boost to both the Bay Area and the East Bay. With 1,300 employees on the 43-acre campus, Bayer is the second-largest biotech employer in the Bay Area behind Roche/Genentech.

Officials in Berkeley’s economic development department said Bayer will have to spend $100 million to retool its labs to start making the new drug.

If the Berkeley City Council and the state of California approve the expansion of an enterprise zone that includes Oakland and Berkeley, Bayer will benefit from $13.6 million in tax credits.

The city council is due to take up the enterprise zone issue next Tuesday.

Here is an editorial by CAEZ President Craig Johnson in Capitol Weekly:

n the wake of the overwhelming rejection of the package of budget-related ballot measures crafted by the Governor’s Office and the Legislature, and the seriously flawed budget deal that really nobody is happy with, now is a good time to examine exactly what the problem is with the budget and the state’s finances in general.

Governor Schwarzenegger arrived in Sacramento amid great fanfare and promises to “blow up the boxes” in California governance and return California to it’s former glory as a business friendly state. Unfortunately, those “boxes” are still intact and California ranks near the bottom of national business destinations.

The question of, “how did we get into this mess?”, has been asked many times during the past few years, yet the answer is painfully obvious. Early in this new century the state’s coffers were overflowing with revenue. The dot com and real estate booms were in full swing, new businesses were opening their doors at a record pace and overnight millionaires were popping up with regularity.

The state leadership, instead of recognizing this monetary windfall for what it was, a generous, but temporary spike in revenue due to unique economic circumstances, used it to justify ongoing and increased levels of spending that were revealed to be unsustainable.

The solution to this revenue/spending dilemma is to create a business climate in California that stimulates and promotes business growth, job creation and entrepreneurship. We must return the Golden State to a place where those who are willing to risk, innovate, build and employ are provided with the tools to make that happen.

California is besieged by neighboring states and others, tempting California companies with incentives to pack up and take their businesses and their employees elsewhere. There is a successful economic development program that the Governor and Legislature can rely upon to stem the flow of companies exiting the state. That program is the California State Enterprise Zone Program.

The Enterprise Zone program is an essential tool for economic growth in California. The program delivers measurable benefits to our state by creating jobs and business growth opportunities, while reducing unemployment, increasing household income and lowering poverty rates. The state’s 42 Enterprise Zones are located in economically distressed communities across California, from Eureka to Calexico and points in between. The Enterprise Zone program has played a pivotal role in statewide job expansion, while creating job opportunities for those with barriers to employment.

Since it’s creation in 1984, the Enterprise Zone program has been vital to hundreds of businesses, spurring job creation, retention and attraction and making California a more attractive place to do business. Combined with the Enterprise Zone program, lowering taxes and fees, especially on California businesses, will increase revenues, so that fewer budget cuts will be required.

California does have a budget problem, but we can grow ourselves out of this dilemma, by providing businesses with reasons to stay, grow and expand. Small and medium-sized businesses have always been the backbone of California’s economy, yet the state faces an uncertain financial future unless we provide them with the tools necessary to promote business growth in California. Without it, the future will be bleak indeed.

From the Las Vegas Sun:

The Nevada Development Authority’s newest advertising campaign to lure Southern California businesses to Las Vegas says if they stay there they can “kiss their assets goodbye.”

The $1 million campaign, which breaks Friday in Southern California on television, radio and print, is the NDA’s latest attempt at enticing businesses to relocate.

Similar previous campaigns have drawn heated responses from California government officials and business organizations and the new campaign, which is edgier than those produced in the past, is expected to get under the skin of loyal Californians.

Los Angeles’ ABC affiliate, KABC, already has told the NDA that it would not run the new spots.

The campaign, developed by Las Vegas-based Shonkwiler Partners, incorporates two basic themes, an apple-to-apple comparison of California and Nevada business climate in which the California apple shrivels and rots and another that compares the effects of California legislation on businesses to the shenanigans of a monkey. The ads incorporate the tagline “Kiss your assets goodbye.”

The NDA sells Southern Nevada for its lower personal and business income taxes, reduced workers’ compensation rates and decreased operational expenses, including its friendlier regulatory environment.

The campaign hits at a time when California faces a $26.3 billion budget deficit projected to reach more than $42 billion next year. The state began issuing IOUs for a variety of payments it owes, but several banks stopped accepting them in mid-July. To lampoon the IOU development, the NDA is issuing IOUs promising a better business environment in Nevada whenever a company makes an inquiry.

The ads were debuted to the media and NDA guests at Town Square’s Rave Theaters on Thursday. Las Vegas Mayor Oscar Goodman was in the crowd and gave the campaign a thumbs-up for creativity and he said he believes they will stir things up when they’re aired.

“They’re really great,” Goodman said after the screening. “They’re going to drive them (Californians) bonkers. This campaign is very Las Vegas.”

You can see the videos of all the ads here. They’re entertaining. Scary, but entertaining.

From the Tax Foundation’s Tax Policy Blog:

California is Not a Low-Tax State, Despite Proposition 13

by Joseph Henchman

Joel Kotkin at Forbes wonders what killed California’s economy:

It took some amazing incompetence to toss this best-endowed of places down into the dustbin of history. Yet conventional wisdom views the crisis largely as a legacy of Proposition 13, which in effect capped only taxes.

This lets too many malefactors off the hook.[...] To the surprise of many prognosticators, the state government did not go out of business. It has continued to expand faster than either its income or population. Between 2003 and 2007, spending grew 31%, compared with a 5% population increase. Today the overall tax burden as percent of state income, according to the Tax Foundation, has risen to the sixth-highest in the nation.

See our State-Local Tax Burdens rankings here. That California remains one of the highest-tax states in the country is a crucial point undermining the “Proposition 13 caused it all” thesis. That and a time lag of several decades. Other than property taxes, essentially every other California tax is among the highest of the states.

As we noted last month:

California is a high tax state. They are sixth highest in state-local tax burden as a percentage of state income. The sales tax is the highest state rate in the country even before the recent 1% increase, and numerous county rates keep them in the top 5 of state-local combined rates. Their individual income tax top rate is the second highest in the country, eclipsed only recently by Hawaii, and is sixth highest in the country in terms of collections. The corporate income tax is one of the highest in the country and sixth highest per capita in collections. Even the gas tax is the third highest in the country and the state Lottery has the fifth highest implicit tax rate in the country. Only on property taxes is California “low”: 28th highest in collections per capita.

The Tax Foundation’s annual State Business Tax Climate Index evaluates tax structures for business-friendliness, and the 2009 edition ranked California 48th, or third worst. The individual income tax ranked second to last, corporate income tax ranked 45th, and sales tax ranked 43rd. (Property tax structure was a bright spot, ranking 15th in the country.)

With these comparisons, and the enormous growth in state spending, it’s hard to say that California’s problem is insufficient taxation. Ultimately, California voters need to decide whether they are willing to pay the taxes to fund the programs they want. The tax system prevents this from happening now, due to the state’s overreliance on taxing capital gains, corporations, and high-income earners. Most Californians rightly think additional spending is a free lunch that they won’t have to pay for.

Read more Tax Foundation research and analysis on California here.

Read the rest of the Forbes piece here.

This is despite the California Budget Project regularly telling us that California is a “moderate” tax state.

Dan Walters at the Sacramento Bee alerts us to California’s new rank in business friendliness:

California has dropped from 34th to 40th place in Forbes magazine’s annual rankings of states’ business climates – just in time to help Republican legislators make their pitch for adopting business-friendly policies as part of any deal on the overdue state budget.

Here is the Forbes article, and here is the full rankings chart. It’s particularly interesting to note that California ranked dead last in the business cost category but ranked 12th in economic climate. Perhaps there is so much inherent opportunity in California that it continues to thrive despite the legislature’s attempts to stop it.