It’s the constant bugaboo of California politics: Republicans and business interests have claimed for decades that businesses will move out of state if taxes, home prices, and utility rates rise.
Maybe now it’s time at last to say, “Who’s afraid of the big, bad wolf?” and for once, reject the notion that big business will move elsewhere if everyone doesn’t cater to its every whim.
Here is today’s reality: Property values and property taxes and home prices are all down, but has there been any flood of business into California from other states? Was there, in fact, any mass exodus of businesses before the housing bust of the last year or so?
Answer: No, to both.
Those are important realities that should become factors as the state Public Utilities Commission considers a plan by the state’s three largest natural gas utilities to shift about $90 million in surcharges long paid by business customers onto residential consumers.
These fees subsidize the gas low-income customers use to heat their homes in the service areas of Pacific Gas & Electric Co., Southern California Gas Co., and the San Diego Gas & Electric Co. Costs are now split about evenly between residential and business gas users; the gas companies want to change that to about a 72-28 percent ratio, with residential customers paying the larger share – an increase of about $15 per year on the average residential gas bill.
The rationale for this proposed change is the usual pro-business claptrap that often emanates from the state Chamber of Commerce and many Republican politicians. “Businesses are leaving the state in droves,” was a constant campaign theme of candidate Arnold Schwarzenegger in 2003 and 2006, when he ran on a no-new-taxes pledge, long since abandoned.
Now it’s the utilities saying that if they don’t offer relief to business customers, those businesses will close or leave. A spokeswoman for SoCal Gas told a reporter the firm has had complaints from business users about paying a “disproportionate” share of the low-income subsidy.
But the fact is that despite constant whining by corporate lobbyists, there has been no gigantic exodus of businesses or jobs from California. For every business that left the state during the last decade, two new ones started up. Until recession set in last year, there had not been a year in the last two decades without job growth in this state.
As for business leaving, it’s true some corporations opened plants in other states, usually when local governments gave them free land, property tax exemptions, and other benefits. But only a few corporate headquarters have departed California over the last 20 years, since the alleged business exodus became a Republican campaign theme, and most of those happened because of mergers, where out of state companies took over California firms. The Bank of America and Pacific Bell takeovers by companies in North Carolina and Texas are examples.
The fact is that Shell Oil and Chevron Corp. will not be moving their huge refineries – which primarily serve the California market, out of state anytime soon. Their crude oil arrives by supertanker. Try landing one of those in Tucson. Sure, some movies will continue to be filmed in Canada, North Carolina and New York, but the editing and other post-production work that provides a major share of industry jobs will still be done here – because the skilled workers needed for that work enjoy life in California.
The largest part of the middle-class exodus from California in recent years has been real estate related: Prices were (and still are) so much higher here than in most other parts of America that many homeowners took the money and ran to buy luxurious manses in Idaho, Pennsylvania, Arkansas, and elsewhere, with plenty left over to invest or buy luxuries like boats and flat-screen T.V.s. That outflow has abated considerably in the last year, however, as home values dropped and non-foreclosure sales grew more difficult during a period of tight credit.
Then there’s the question of who needs price relief more: big businesses whose lobbyists win them subsidies and bailouts from government, or residential customers without representation in Sacramento or Washington, many of whom face layoffs, foreclosures, and worse as the recession deepens.
One of the PUC’s administrative law judges found the other day that the planned fund switch has no merit. “There is no evidence that the costs of (these) programs adversely impact the…competitiveness of California businesses,” he ruled.
But the PUC is not bound by that ruling and for more than 15 years has been a steadfast ally and booster of business interests over consumers. It will be both unfair and a travesty if commissioners continue that pattern in their upcoming decision and saddle residential consumers with more expense at a time when they can least afford it.