Check back later today for an update on this story, with thoughts from Economists, and other local businesses. Also, check back later this week for our follow-up on this topic from Texas reporter Amy Sorter.
SACRAMENTO-Texas Gov. Rick Perry recently released a radio ad in California criticizing the Golden State’s business climate and encouraging businesses to relocate to Texas. It seems that other states are following Gov. Perry’s lead as unidentified industry sources tell GlobeSt.com that the Governor of Oklahoma is reportedly working on scheduling an L.A. event to try to lure businesses to his state as well.
But Kish Rajan, director of the CA Governor’s Office of Business and Economic Development, says not to worry. “I understand why Perry is interested in California,” he says. “We were the national jobs leader for most of the last year with 257,000 new private sector jobs.”
According to Rajan, business relocations only account for 0.03% of annual job losses in the State. “At that rate of growth it would take 20 years to lose just 1% of our businesses to relocation.”
But not all locally-based employees share Rajan’s viewpoints. Los Angeles-based Sandy Sigal, chairman and CEO of NewMark Merrill Cos., tells GlobeSt.com that the State of California has done almost everything it can to make it more attractive for businesses to locate elsewhere or relocate out of our State.
“If it isn’t topping the list of highest sales and income taxes, we have the lack of investment of infrastructure resulting in a totally dysfunctional environment for employees to commute between the various cities, the approval process as impacted by an outdated Environmental Review Process which can add years to the timeline to open new business,” Sigal says. “Then add a real prospect of further increases in operating costs by a potential elimination of Proposition 13 protection for commercial businesses, and you have a state which provides a poor lifestyle for employees, a very high cost structure for business owners, and an unrealistically long and unpredictable development process, and you have to really, really love our weather to pick California over some of the other great states in our Country.”
Sigal also points out that California is one of only two states in the Union that now has no redevelopment agency to provide incentives for employers and developers to “risk investment in this market.” He points out that the last three deals his firm has done were in other states that all had elements of redevelopment incentives. “California needs leadership before it becomes a symbol of how one state can take the advantages of weather, resources, and a solid employment base and throw it all away.”
Los Angeles-based Peter Belisle, market director- Southwest region for Jones Lang LaSalle, agrees, telling GlobeSt.com that the State of California does need to create some incentives. “The State needs to create the right type of value-add incentives to keep thriving businesses from leaving,” he says. “With technology end entertainment industries continue to grow in Los Angeles, current incentive programs like job training are not preventing this exodus as workforce housing and transportation costs are far more important and crippling to the younger talent pool.”
Additionally, Belisle notes, “the State needs a hands-on approach with eye-to-eye connections with the leading corporations, finding solutions to their key issues. The state needs to provide a concierge level of service as companies are having a difficult time navigating through the bureaucracy.”
Finally, Belisle says, “the State needs to invest in higher education because many students who attend college out of state don’t return to pursue their career,” a point he previously details in a recent GlobeSt.com story covering Jerry Brown’s State-of-State address.
**To hear the live radio advertisement from Texas Governor Rick Perry, click here.
**To see a live video response from California Governor Jerry Brown on Rick Perry’s actions, click here.