California losing good jobs to other States

OUR ECONOMY NEEDS A SHOT IN THE ARM, NOT TO BE SHOT IN THE FOOTBy Assemblyman Houston — In recent weeks both AAA and Toyota have announced they are closing or relocating because of the high cost of doing business in California—a loss of more than 3,000 jobs. Why? Because it is simply cheaper to do business in other states.

AAA has decided to close its three call centers in California and move them out of state—a loss of over 900 jobs. The Livermore AAA call office will be closing by September 1st meaning more than 300 people will lose their jobs. The Elk Grove office will also be closing, leaving 500 more Californians unemployed. Arizona has already opened a new call center and Oklahoma will be opening the second call center to make up for California’s closing centers.

Earlier this summer, Toyota was considering expanding their Bay Area plant in Fremont to increase their ability to manufacture their Prius hybrid cars, but coincidentally, or maybe not, not long after California Democrats proposed to raise billions of dollars in new taxes, Toyota has announced they are moving over 2,000 jobs to a more pro-business state. They will not be expanding their facilities in the Bay Area, but instead they will be building a brand new facility in Blue Springs, Mississippi.

What Mississippi gains and California loses: Toyota’s $1.3 Billion investment in the facility; 2,000 direct jobs once the plant is in operation; another 4,900 jobs within five years of the plants’ opening; an annual payroll of $328 million; and loss of revenue to the state of $693 million.

Large companies are not the only ones hit hard by new taxes—small businesses are having trouble keeping their doors open in California too. There are over 3.2 million small businesses in California and they operate on very narrow profit margins, sometimes as low as three percent. A majority of businesses in the state are small businesses. California can’t afford to have more of them leave the state or go out of businesses because they can’t cover their costs and turn a profit.

Our state’s high taxes and extensive government regulations have led to an over 40% increase in spending over the past ten years. If this number isn’t troubling enough, California home prices have fallen 28% from last year. The cost of gas per gallon has skyrocketed over the last year. Now the Democrats in the Legislature have proposed to raise your taxes billions more.

California has one of the highest tax rates in the nation, second to only New York City. The Democrat budget proposal includes $9.7 Billion in new tax hikes—which would give California the prestige of levying the highest taxes in the nation. The proposal includes $5.6 Billion in new income tax revenue, $1.1 Billion will come from eliminating deductions for research conducted by businesses, $215 Million by reducing the dependent-care credit for families with income of $150,000 or more, and $815 Million from not adjusting current tax brackets for inflation—hitting hardest middle income taxpayers with joint incomes of $97,000 or more.

Enough is enough, now is not the time to increase taxes on hardworking families or businesses. Now is the time for the state to reign in and cut wasteful spending so more California businesses and jobs are not lost to other states.


  1. JesseRoth says

    Toyota was already building the Blue Springs plant, and they moved the Prius there because of cheaper land and labor costs, not because of taxes or a "bad business climate" in CA. They're paying their workers $32/hr in Fremont and they're going to pay $20/hr in MS, plus land is $1500/acre in MS.

    Public Policy Institute of CA debunked the "job exodus" myth last year. They showed that businesses move in and out of California in roughly equal levels, and that "the small number of California jobs moving to other states due to business relocation is relatively inconsequential—about 11,000 jobs per year out of more than 18 million (.06 percent). Business births, deaths, contractions, and expansions have a much greater effect on employment."

    Small businesses are having trouble keeping their doors open because the recession is taking money out of people's pockets. The Republican solution – massive spending cuts that throw people out of work and take more money out of their pockets – will only make it worse.

    As Nobel Prize-winning economist Joseph Stiglitz reminds us: "In a recession, you want to raise (or not decrease) the level of total spending – by households, businesses and government – in the economy. That keeps people employed and buying things…"

  2. Renegade GOP says

    Well it is very sad to see AAA closing its call centers and moving them out of state. That said AAA is moving its headquarters out of the Peoples Republic of San Francisco to Pleasant Hill. So I guess that is a win for Contra Costa.

    I agree the Governator's one cent sales tax increase is balony. He should call Pete Wilson up and get his advise. When Wilson had a 15 Billion dollar defecit left to him by Willie Brown and "the Duk" Conservative Republican Governor he cut spending $1.80 for every dollar in taxes he had to raise. And he took the political heat from everyone and marched to a grand reelection victory 3 years later. That is leadership. Frankly Arnold could not hold Pete Wilson's shorts.

    From everything I have seen California does not want manufacturing jobs here. The business climate here is just like France. Things are not going to get any better soon.

    You guys kill me "cut spending and waste." When where? It is never going to happen unless we can get leaders with guts back you might as well move to a low tax state.