8 reasons to leverage California's venture capitol with a competitive environment

Posted by Gino DiCaro, Vice President, Communications on July 22, 2010

California receives a majority of U.S. venture capital (VC). Always has, hopefully always will. Our state produces brilliant creative minds and ideas because of its University power and its sheer size of 35 million people. This unique outcome alone does not however equate, by default, to the meaningful job growth necessary for our many workers whom are unemployed and under-employed (a term becoming all too common for the folks forced to take any job they can find).

We must leverage our built-in VC advantage to ensure that emerging green and other products are actually produced here. California's wealth will be multiplied once VC cash gets beyond the investment board room offices and into the bank accounts of our very own hard working, middle class families.

Recently the LA Times wrote a piece about VC growth in California and the notion that it does, and will, open the floodgates to new green jobs. Often the state's VC numbers are used to support bold California-only mandates and policies, without regard for the state's competitive disadvantage. Now the impressive amount of VC investment is being used to justify opposition to Proposition 23 -- the ballot initiative to suspend AB 32 until our economy is in better shape and unemployment numbers are reduced.

I offer eight recent independent examples and statistics that refute the notion that VC and seminal green projects automatically produce the type of job growth this state needs for its economic recovery.

Silicon Valley-based Solexant solar systems raised $41.5 million in VC but uses a $25 million loan and Oregon tax credits to build 200-employee manufacturing facility in Oregon. Daily Finance article
California-based Fisker automotive purchases manufacturing facility in Delaware to produce it's $90k and $40k plug-in hybrids. (Why didn't these guys get the same deal Tesla got?) Wired article
Orange County-based Amonix has big list of VC investors but purchases 214,000 square foot facility in Nevada for 300 workers to manufacture its solar power systems. Las Vegas Review-Journal article
Oceanside-based biotech firm International Stem Cell Corp. using VC in India to site facilities over there. SD Business Journal article
Richmond-based Vetrazzo recycled glass countertop manufacturer receives $2 million in VC, but only if they move production where they can compete. SF Business Times article
California movie mogul Kevin Costner has spent the past 15 years developing an oil-cleaning centrifuge machine. It's being made in Carson City, Nevada. article
California's overall portion of U.S. new and expanded manufacturing facilities was 1.3% over last five years, while close to half of the country's venture capital continues to funnel to the state. chart
Lastly, a reminder of some other companies that went with more competitive manufacturing locations that were mentioned in our "Why not California" series.

VC might have translated into regional job growth in times long past, but now the world is too mobile, too competitive, too global. California must find a way to compete so we can leverage our VC dollars, creative minds and ideas into broad wealth for all working families.

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A common global warming conversation leading up to California's November election

Posted by Gino DiCaro, Vice President, Communications on July 14, 2010

I received the following e-mail from a cousin and one of my closest friends last night regarding AB 32 as he ponders his position on November's Proposition 23 to suspend California's global warming law. He was kind enough to let me use our communication as a potential window into a few of the living room "carbon" discussions that will occur in our state in the coming months.

For demographic purposes, he is a 33 year old married business owner living in Long Beach. Socially he is a smart, influential, politically independent, community-focused individual. Overall a well-rounded person who is a good snapshot of a percentage of our voting public for whom the Proposition 23 campaign needs to make a solid case.

Here are his questions (in quotes and non-bold) and my overall responses (in bold):

"If possible, I’d like a quick take from you on this bill, AB32. I see similarities between this bill and what happened back in the early 80’s with the auto industry when we didn’t demand improved MPG. I think we would be in a far better position today had we pushed for better MPG over the years. I would guess there would be less demand for oil, less pollution, not having to bailout car companies, etc."

Remember, California has 1.2% of the world's GHG emissions according to the World Resources Institute ... and more importantly, of the world's GHG emissions, only 5.53% are man-made according to the U.S. Energy Information Administration. This means California can't affect meaningful global reductions on its own.

So your MPG analogy illustrates the problem with AB 32. Like GHG reductions, improved MPG can only come from two mediums: market demand or national policies -- not California-only mandates. This is precisely why AB 32 will get the country and the world nowhere in terms of global GHG reductions.

"Restricting emissions will require us to become more innovative with clean energy and a world leader for clean energy corporations. And as someone who lives and breathes next to two of the largest ports in the world, I am very interested in seeing that take place."

California already has the strictest environmental laws in the country and the state is one of the most efficient GHG emission states per capita (we were that way far before AB 32 passed), and Co2 is not something harmful to breath, but necessary. There are laws for pollution. AB 32 is not one of them.

'Restricting emissions' in only California will not make the state more innovative but drive out of state the most important contribution California can make to addressing climate change -- the people, suppliers and companies that will produce the green and other products to serve the market. Think of the state's past innovations, too. Was the state's information technology boom mandated and created by regulation? Was the state's manufacturing leadership created by regulation? Was the massive entertainment industry hub created because of regulation? No, they were all a result of innovation and a friendly business climate for growth in California.

"I completely understand the argument regarding how unfriendly our state is towards business (there are so many taxes that are so lame it’s hard to believe). However, I want to know if you would support this bill in a vacuum. Or better yet, would you support it if you were in the friendliest state to do business (Delaware)?"

It's a bad idea for any single state to adopt a firm AB 32-like target even if the business climate is otherwise friendly -- it adds to costs of doing business and pushes economic activity to other states (this is leakage -- bad for the environment, bad for jobs). It must be done nationally for any of this to work. California shouldn’t sacrifice entire industries and its economy only to see GHG emissions go to other states. It is a global problem.

One more note. California passed this bill on the premise that we would lead others to follow our example and that it would not burden our economy. So far the leadership is in doubt due to failed global warming legislation at the federal level. And no one can guarantee that California consumers and employers will not pay more than the rest of the country, both in costs and jobs.

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New Jobs, Not a New Jobs Tax

Posted by Greg Hines, Legislative Director, Tax & Corporate Counsel on June 24, 2010

What do you need when you don't have a job? You need a job. That seems pretty obvious. And with 2 million Californians still out of work, what California needs is a lot of jobs.

Instead, what we now have on the ballot in November is the Jobs Tax Initiative. A proposal that would cost us jobs, a lot of jobs. A proposal that would punish with higher taxes, businesses that want to hire Californians and create new jobs. That would push existing jobs out of the state. That heaps new burdens on already struggling small businesses. That goes right after high tech and bio tech, the very industries that we are expecting to create the next wave of good jobs.

What seems pretty obvious about the Jobs Tax initiative - is what a bad idea it is.

That's why the opposition to the Jobs Tax Initiative includes the California Small Business Alliance, TechNet, California Taxpayers' Association, Industrial Environmental Association, California Manufacturers & Technology Association and many other small businesses, high tech, bio tech and taxpayer groups.

Now the proponents of the Jobs Tax Initiative say they are out to close corporate tax loopholes - that only a handful of big corporations would be affected - that schools need the money they say their initiative would bring in.

In fact, this initiative doesn't close a single loophole - it doesn't guarantee that a single cent would ever reach our classrooms - but it would affect more than 120,000 California businesses - and it does close the door on the jobs we need to get out of this recession, 144,000 new jobs, according to a new economic study of just one part of this initiative.

Here's how the Jobs Tax Initiative wreaks its havoc with our jobs and our economy.

Federal tax law allows businesses to level out their losses over time, which is especially important in this recession. Our laws were recently reformed to more closely mirror that same sensible policy. The Jobs Tax Initiative would undo that reform - taking away a lifeline for our small businesses.

Another state tax reform, would allow companies that do business in more than one state - to be taxed in California based on their sales in California. The Jobs Tax Initiative would return us to an outdated formula that means higher taxes on a business, whenever that business creates a new job, or opens a new facility here. That's a formula that penalizes job growth. No surprise then, that almost half the states in the country have moved away from that sort of jobs tax, to keep their jobs at home.

And the Jobs Tax Initiative takes an extra shot at some of our most innovative industries - the high tech, the bio tech firms that are developing the technologies and medicines of the future. These businesses, which are all about researching and developing new products - would be prohibited from fully utilizing the credits they've earned for that research and development.

The Jobs Tax Initiative would overturn needed, common sense reforms. The groups behind this proposal are trying to dress it up in the rhetoric of closing tax loopholes, but the only thing this initiative would close, is the door on bringing new jobs to California. We need to keep the jobs we have, and we need to encourage the economic growth that creates new jobs and moves California out of this recession. In short, California needs jobs, not a Jobs Tax.

You'll find more information at www.StopTheJobsTax.com. Get the facts for yourself. Read this initiative. And then, please join us in voting no on the Jobs Tax initiative.

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Recasting AB 32 as a job creator is political snake oil and breathtakingly naive

Posted by Jack Stewart, President on June 16, 2010

CMTA released a new report on Wednesday -- The Truth About Green Jobs and California -- on how policies adopted for the purpose of growing green jobs can have counterproductive affects on the economy and cause overall job loss rather than job growth. The report was written by the California Lutheran University's Center for Economic Research and Forecasting (CERF) and is co-authored by CERF Director Bill Watkins and Joel Kotkin, Distinguished Presidential Fellow in Urban Futures at Chapman University.

Of late, AB32 is being promoted as a job creation tool rather than a costly environmental regulatory scheme to reduce greenhouse gas emissions. Recasting AB 32 as an economic development strategy is breathtakingly naive.

California should be the home of clean tech innovation and manufacturing. For that to happen, our state should focus on creating permanent green jobs, rather than short term jobs that survive only with government subsidies and damage the state's larger economy. The real solution to solving California's economic woes is to restore a healthy business climate by cutting job killer regulations and allowing the demand for green products to be translated into jobs in California rather than jobs in Texas and China.

Take the time to read through this report to help California get this thing right.

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What's the big deal? -- Economic Impact analysis bill stirs big fight on Assembly floor but not about the bill

Posted by Gino DiCaro, Vice President, Communications on June 16, 2010

A red herring is a "purposeful attempt to divert attention from an item of significance." It is exactly what some lawmakers decided to do earlier this month.

A bill to get better economic impact analysis for regulations (AB 2529) came to the Assembly Floor on Thursday, June 3. To put the bill's broad appeal in perspective, the city of San Francisco and the Clinton administration have supported similar efforts in the past.

The opposition was outraged that the bill was amended in Appropriations before passing to the floor for a vote. Trust me when I say that this process is regularly employed by this legislature as it moves bills. The problem this time is that lawmakers who are usually in charge of the process didn’t like the bill, but they decided to mostly bark about the process. The few times the opposition departed from their "shredding of integrity and deliberative process" complaints, they expressed fear that certain industries or stakeholders will be unfairly advantaged while others would be harmed by the bill. It begged the question that was left unanswered: What harm could arise from a more accurate economic analysis?

The rift in the majority democratic party didn’t stop the bill from moving out of the Assembly with 44 votes thanks to the bill author, Assemblyman Felipe Fuentes, Speaker John Perez, 15 other Democrats and almost all of the Republicans.

You can watch the debate here -- Part 1 | Part 2 -- to see for yourself. You can see the vote here . Once the vote was final, 35 legislators (33 Dems and 2 Reps) abstained or voted against the bill.

This lawmaking body also spent a half hour on the floor two weeks ago passing a California-only plastic bag ban -- all while California tries to dig itself out of a $19 billion deficit -- with no independent economic analysis to help themselves make an informed decision. In fact the bill was almost passed as an economic model for growth. Basically, the "California gets to lead" notion is enough and real economic information is just too scary to absorb.

Someone said to me this week, "It's nuts, they are fighting over marbles while the school is burning." Nothing was truer in legislative episodes this month.

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