California: Worst Place For Business, 11th Year In A Row

California’s economic recovery might be a little over stated, at least according to the people who actually create jobs.

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Chief Executive Magazine has released its annual Best and Worst States for Business Survey and California ranked last – for the 11th year in a row. In the annual survey, completed by 511 CEOs across the United States, states are measured across three key categories to achieve their overall ranking: taxes and regulations, quality of the workforce and living environment, which includes things like, quality of education, cost of living, affordable housing, social amenities and crime rates.

California again placed 50th on the list, joining New York, Illinois, New Jersey and Massachusetts at the bottom. Texas remained in the number one slot followed by Florida, North Carolina, Tennessee and Georgia.

One CEO was quoted as saying, “the good states ask what they can do for you; the bad states ask what they can get from you.” Another CEO was quoted, “California and Oregon are essentially anti-business, whereas Texas and Tennessee do everything possible comfortable and more successful.”

Litigation and a state’s legal climate are one of the things weighing on the minds of CEOs as they consider states in which to do business and create jobs. California continues to be a “Judicial Hellhole,” and is tepid at best in its willingness to stop lawsuit abuse. Businesses will be discouraged from expanding and creating jobs in a state in which the lawsuit system mainly serves the interests of lawyers rather than ordinary people.

A single abusive lawsuit can cost a business tremendously. California’s leaders need to make this connection and make it a priority to enact meaningful reforms to our lawsuit system.

Via: California Political Review

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STATES SAYING 'NO' TO CITIES SEEKING TO REGULATE BUSINESSES

JEFFERSON CITY, Mo. (AP) -- Alarmed about cities trying to outlaw plastic bags, the director of the Missouri Grocers Association decided to do something about it. So Dan Shaul turned to his state legislator- himself - and guided a bill to passage barring local governments from banning the bags.

Shaul's dual role in state government and business may be a bit out of the norm. Yet his actions are not. In capitols across the country, businesses are increasingly using their clout to back laws prohibiting cities and counties from doing things that might affect their ability to make money.

In the past five years, roughly a dozen states have enacted laws barring local governments from requiring businesses to provide paid sick leave to employees. The number of states banning local minimum wages has grown to 15. And while oil-rich states such as Texas and Oklahoma are pursuing bills banning local restrictions on drilling, other states where agriculture is big business have been banning local limitations on the types of seeds sown for crops.

Via: AP

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How Much More Will Obamacare Cost This Business?

Larry Patterson will face up to a 72 percent increase in his costs if he wants to continue offering health insurance to his employees in 2014.

Patterson, a North Dallas businessman, operates a franchise called the Glass Doctor that repairs auto glass, windshields, windows, and shower doors. Because Patterson wants to attract the most qualified people to work for him and ensure their safety, he’s made sure to provide affordable health insurance options to all employees since inception.

But thanks to Obamacare, health insurance costs are set to skyrocket. When we met with Patterson in late September, he said his company was “frozen” waiting to find out if his ability to continue providing his employees affordable coverage was in jeopardy.

>>Watch our interview with Patterson here.

Now, just a few weeks later, Patterson’s worries are proving true. He received a letter from his insurance company that details high cost increases on the insurance he offers employees.

The letter detailed an 18 percent increase in premium costs for his annual health insurance renewal if he renews before the end of 2013. However, once the health insurer and reinsurance fees kick in, the increase will actually be 23 percent. This is on top of a 20 percent increase in 2011 when many of Obamacare’s provisions first kicked in.

Via: The Foundry

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California: Business Scores the Legislature and Governor

A mixed record for business in this year’s legislative session got a bit of a boost when the governor signed a slew of bills intended to help business. While the latest flurry of bill signings is good news, big issues still concern the business community.

The ballyhooed effort at the beginning of the legislative session to improve the California Environmental Quality Act (CEQA) ended in a whimper. What CEQA reform was achieved came about because politicians in Sacramento wanted to make it easier to build a basketball arena in downtown Sacramento. Broader CEQA reforms were benched.

Minimum wage was increased against business opposition as businesses, especially small businesses, struggle to recover from the recession. Business is still battling the burdens of heavy taxes and regulations, which has prompted some businesses to consider relocating outside the state.

But there were some steps forward.

Among the bills signed by the governor was AB 227 that would allow businesses in violation of Proposition 65 anti-toxic regulations to have a couple of weeks to fix any problems. This bill will reduce the threats of bounty-hunter lawsuits and give businesses a fair chance to correct honest mistakes.

Some regulations were swept away for California’s high-tech companies. New laws will make it easier for digital retailers to deal with smart phone payments.

Importantly, investors who received notices following a court decision that they must pay a total of millions in back taxes got relief from the legislature who passed a bill to overturn the decision. The governor signed the bill.

During the session, the legislature moved to drastically reduce the time to approve business filings at the Secretary of State’s office. The issue highlighted California’s slow paper filing system to get businesses up and running. The average waiting time was 43 days. The legislature demanded the time be trimmed to five days and quickly passed AB 113, signed by the governor.

The California of Chamber of Commerce also had a successful session in opposing its list of Job Killer bills. Of the 38 bills the Chamber tagged as Job Killers, 37 did not become law.

The governor also signed SB 12 by Senator Ellen Corbett, which will enhance the state’s marketing effort with a newly created “Made in California” label to highlight the state’s reputation for creating innovative products.

Via: California Political Review

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What’s Next For Business In California?

It’s too early to assess all the bills of concern or hope for the business community given the last minute flurry of action as the legislature closed down for the year.

With bills whipping through the legislature in the closing day of session, small businesses are always on edge but there were minuses and some pluses for the business community.

The most high profile measure of concern to small business was the bill to raise the minimum wage. It’s out of the legislature and endorsed by the governor. John Kabateck, executive director of the National Federation of Independent Business, thoroughly examined the position of small business on this bill in yesterday’s Fox & Hounds while beseeching the governor to veto it. Sorry, John, that’s not going to happen.

While the emphasis here is the concern the minimum wage bill will have on small businesses’ economic calculations as many struggle to sustain their enterprises, there is also a direct affect on entry level workers who may miss an opportunity to get into the work force or see their hours cut back.

On the plus side for small business, AB 227 flew through the legislature. The measure is intended to protect small businesses by reforming potential minor Proposition 65 violations against predatory lawsuits.

The 1986 environmental law intended to protect consumers from exposure to toxic chemicals by requiring advance warnings has often been abused. Lawsuits have been filed against small businesses if a posted sign is the wrong size or the list of products in question at a business establishment is not all-inclusive.

AB 227 takes a sensible approach allowing business owners a short period to fix any defects before the business is subject to legal action.

While more time is needed to assess the influence of this legislative session on business and small business in particular, it must be noted the disappointment in not getting real CEQA reform out of the legislature. Yes, Sen. Steinberg got his CEQA exemption for a Sacramento arena project but statewide CEQA reform is an important issue to improve the state’s economy. The governor was behind substantial reform and much time was spent over the last few months urging the legislature to act in a responsible way.

Via California Political Review

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THE BIG FAIL: Obama Said That “Some Of The Businesses We Encourage Will Fail” But His Investments With Taxpayers’ Dollars Have A Dismal Record Of Success

Today, Obama Said “Some Of The Businesses We Encourage Will Fail.” OBAMA: “Today, there are thousands of workers building long-lasting batteries and wind turbines and solar panels all across the country. Jobs that weren’t there four years ago. And sure, not all technologies we bet on will pan out. Some of the businesses we encourage will fail. But I promise you this, there is a future for manufacturing here in America. There’s a future for clean energy here in America. And I refuse to cede that future to other countries.” (President Barack Obama, Remarks At A Campaign Event, Green Bay, WI, 11/1/12)

OBAMA TANKED MILLIONS OF TAXPAYER DOLLARS ON FAILED COMPANIES

A123 SYSTEMS: In October 2012, Taxpayer-Backed A123 Systems, A Maker Of Rechargeable Lithium-Ion Batteries For Electric Cars, Filed For Bankruptcy. “A123 Systems Inc. (AONE), a maker of rechargeable lithium-ion batteries for electric cars, filed for bankruptcy after failing to make a debt payment that was due yesterday. The company listed assets of $459.8 million and debt of $376 million as of Aug. 31 in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Chapter 11 is the section of the Bankruptcy Code used by companies to reorganize.” (Dawn McCarty and Craig Trudell, “Electric Car Battery Maker A123 Systems Files Bankruptcy Papers,” Bloomberg Businessweek, 10/16/12)

ABOUND SOLAR: Abound Solar Was Given A $400 Million DOE Loan Guarantee For “Plans To Open A Massive Solar-Panel Plant In Tipton,” Indiana. “Abound Solar Inc., a Loveland, Colo.-based manufacturer that plans to open a massive solar-panel plant in Tipton, has raised $110 million from investors and closed on a $400 million government loan guarantee to increase its production capacity, the company announced Tuesday.” (“Abound Solar Completes Financing For Tipton Plant,”Indianapolis Business Journal, 12/15/10)

• In July 2012, Abound Solar Announced It Would File For Bankruptcy And Lay Off 125 Employees. “Abound Solar, which filed for a Chapter 7 liquidation in U.S. Bankruptcy Court in Delaware, had said last week that it planned to shut down and would lay off 125 employees.” (Caroline Humer, “Abound Solar Files To Liquidate in Bankruptcy,” Reuters, 7/2/12)

AMONIX SOLAR: In July 2012, “Amonix Solar Manufacturing Plant In North Las Vegas, Heavily Financed Under An Obama Administration Energy Initiative, Has Closed Its 214,000-Square-Foot Facility 14 Months After It Opened.” (Hubble Smith, “Amonix Closes North Las Vegas Solar Plant After 14 Months, Heavy Federal Subsidies,” Las Vegas Review-Journal , 7/18/12)

• Since Obama Took Office, Solar Company Amonix Has Received Over $20 Million In Combined Stimulus Grants, Tax Credits, And DOE Funding. (The White House, Accessed 11/1/12; Department Of Treasury, Accessed 11/1/12; Department Of Energy, Accessed 11/1/12)

Via: GOP.com

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Looming Tax Hike Motivates Owners to Sell

A looming increase in the capital-gains tax rate next year is fueling sales of some privately-held businesses.

Many business owners—mostly founders who could gain a lot from a sale—are looking to close deals before next year, when the maximum tax on investment income is scheduled to rise from 15% currently to at least 23.8% on most capital gains, at least for higher-income households. Many sellers intend to convert their equity into retirement funds or just start anew.

Eddie Seal for The Wall Street Journal

Bert Wolf of Acetylene Oxygen in Harlingen, Texas, says he plans to sell his compressed-gas business before 2013. Many business owners are looking to close deals by year's end.

"It just made more sense for me to take my chips off the table and go do something else," said Bert Wolf, 60 years old, who has an agreement to sell his compressed-gas business, Acetylene Oxygen Co. of Harlingen, Tex., before year-end.

Mr. Wolf added that if he waited until after the tax increase to sell, he would have to expand the business at the current rate "for at least 3 or 4 more years to achieve the same after-tax sales dollar." He is profiting on the sale of his business to Praxair Inc., PX +2.15% a public company.

"There's a kind of a panic on to get things done," said Beatrice Mitchell, co-founder of Sperry, Mitchell & Co. Inc., a New York investment bank that is advising Mr. Wolf on the sale.

To be sure, the weak economy has been difficult for many small-business owners across the board. The median selling price for U.S. small businesses in the quarter ended Sept. 30 was $174,000 down 8.2% from four years earlier, according to BizBuySell.com, an online small-business marketplace. The firm's findings are based on sales, reported voluntarily by business brokers and mostly of less than $1 million, in 70 major markets.

In the three quarters so far this year, 3,536 small businesses exchanged hands, down 34% from the first three quarters of 2008, when sales of small businesses were at a record high, it found.

Via: WSJ

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ObamaCare Work Disincentives: 4 Cliffs Hit Employees

In the time of Caesar, all roads led to Rome. In the time of ObamaCare, seemingly every path heads straight for a cliff.

The health law is filled with cliffs where the returns for more work take a nose-dive.

The Congressional Budget Office has estimated ObamaCare will "reduce the amount of labor used in the economy by roughly half a percent" — about 800,000 full-time jobs. It seems likely that four especially steep cliffs — including two where marginal tax rates can approach 100% or more — will factor into work and hiring decisions.

The 50th employee: For companies with 49 workers that do not offer its employees health coverage, the hiring of just one more worker would carry a penalty of $40,000.

A firm with at least 50 workers that doesn't offer coverage must pay a $2,000 fine per worker (minus the first 30 workers) if even one of its employees receives ObamaCare subsidies.

Likewise, even if a business with 50 employees offers coverage, it would still face up to a $3,000 charge for each worker who nevertheless claims Obama-Care subsidies.

The law gives workers this option when employer coverage is deemed unaffordable because it costs more than 9.5% of the worker's household income.

France has 2.4 times as many firms with 49 employees as with 50 due to labor regulations that take effect with the 50th hire, BusinessWeek has noted.

How many firms will institute a hiring freeze to avoid ObamaCare penalties is unclear, but the risk is that the U.S. will go down a similar path as France.

The low-income cliff: At 200% of the poverty level is a dividing line. Deductibles for married couples on one side may be $300 vs. $3,500 on the other, according to one estimate provided to the Kaiser Family Foundation by Towers Watson.

In addition, a family at 200% of poverty would pay $830 less for subsidized insurance than a family at 225% of poverty, The Kaiser Family Foundation's health subsidy calculator shows.

Via: IBD

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