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CA small businesses spent $134k each on regulatory costs in 2007

Posted by Gino DiCaro, VP, Communications on Sept. 22, 2009

Governor Arnold Schwarzenegger released a study today on the cost of state regulations on California small businesses.  The research, conducted by Sanjay Varshney, concluded that on average, each small business spent $134 thousand on regulations in 2007.  The report also concluded that the total cost of regulation to the state is $493 billion and 3.8 million jobs.

Over the past few years of California's manufacturing and economic decline, the state's regulatory environment has been pinpointed as a primary reason for the high costs and unpredictability that makes the state an uncompetitive place to do business - small or large.  One producer of construction aggregates in the state, Vulcan Materials, testified in an Assembly Jobs Committee hearing in June that it "is not uncommon for the permitting process to involve millions of dollars and in some cases to take as long as 10 years to secure the necessary permits, many of which address duplicative regulatory aspects."

California's premise must be economic growth.  This report reveals one of the major impediments to protecting and growing the economy. 

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Comments: 4

Breaking Bad: CA vs. the Other States

Sept. 29, 2009 1:30 am

Breaking Bad: California vs. the Other States by Richard Rider, Chairman, San Diego Tax Fighters Version 1.491 Revised 19 September, 2009 Here’s a depressing comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (I keep updating this article): California has the 4th highest state income tax in the nation. 9.55% at $47,055. 10.55% at $1,000,000 By far the highest state sales tax in the nation. 8.25% (not counting local sales taxes) Corporate income tax rate is the highest in the West (our economic competitors). 8.84% 2009 Business Tax Climate ranks 48th in the nation. Fourth highest capital gains tax 9.55% Highest gasoline tax (averaging 64.5 cents/gallon) in the nation (July, 2009). When gas hits $3.00/gallon, we are numero uno – because unlike many states, we charge sales tax on gasoline purchases (built into the price). Fourth highest unemployment rate in the nation. (August, 2009) 12.2%. National rate 9.7%. One of the highest state vehicle license car taxes. 1.15% per year on value of vehicle, up from 0.65% in 2008. California’s 2009 “Tax Freedom Day” (the day the average taxpayer stops working for government and start working for oneself) is again the 4th worst date in the nation – up from 28th worst in 1994. To offset lower state revenues, 29 states are proposing 2009 state tax and fee increases totaling $24 billion. California, with 12% of the nation’s population, is proposing 47% of that increase (6/5/09). 1 in 5 in LA County receiving public aid.,0,4377048.story California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA. California prison guards highest paid in the nation. California teachers easily the highest paid in the nation. (CA has the second lowest student test scores) California now has the lowest bond ratings of any state, edging out Louisiana. California ranks 44th worst in “2008 lawsuit climate.” In 2005 (latest figures), for every dollar Californians sent to D.C. in taxes, we got back 78 cents – 43rd worst. America’s top CEO’s rank California “the worst place in which to do business” for the fourth straight year (3/2009). But here’s the interesting part – they think California is a great state to live (primarily for the great climate) – they just won’t bring their businesses here because of the oppressive tax and regulatory climate. Consider this quote from the survey (a conclusion reflected in the rankings of the characteristics of the state): “California has huge advantages with its size, quality of work force, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster.” California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is by far the lowest in the nation. How low? Nationwide, the average community college tuition is 4.5 times higher than California CC’s. This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no tuition at all – filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition. On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense. California residential electricity costs an average of 35.4% more than the national average. For industrial use, CA electricity is 56.2% higher than the national average (2007). It costs 38% more to build solar panels in California than in Tennessee – which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state. Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed in 2008 only because people couldn’t sell their homes. These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods), and retirees seeking to make their pensions provide more bang for the buck. The irony is that a disproportionate number of these seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions. As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This spiral must stop NOW. NOTE: If you would like to receive my free periodic “Richard Rider Rant” e-newsletter with more of this type of information and analysis, just drop me an email at To see the latest version of this “Breaking Bad” column, plus samples of my free “Richard Rider Rant” e-newsletter, go to my blog at This report also is available as a 2 page Word file for formatted printing.

Breaking Bad: CA vs. the Other States

Sept. 29, 2009 1:33 am

The article "Breaking Bad" is essentially unreadable on this website as there is no formatting in the comments. If you'd like to read this informative post, go to:

Breaking Bad: CA vs. the Other States

Sept. 29, 2009 1:34 am

OOPS. Try:

Breaking Bad: CA vs. the Other States

Sept. 29, 2009 1:35 am

Hmmm. There's an "r" on the end of the URL above, but it doesn't allow me to post it. "It's "Rider"

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