California: A Business Kind of Town

Remember that part in “True Lies” where Harry Tasker, as played by Arnold Schwarzenegger, tells his family he’s leaving for a technology conference in Europe? Later in the movie, his wife is talking to a friend, explaining how talk of the tech business is incredibly boring. Yet the audience knows that Harry Tasker is no businessman, but is actually the world’s number-one spy. Well, California’s number-one executive just went to Europe for a business conference, too… or did he?!

Yes, he did.

On March 3, Gov. Arnold Schwarzenegger returned from what his office’s press release classified as a “successful international trip promoting California business [and the] state’s leadership in technology.” The governor had been attending CeBIT 2009, a business technology conference in Germany. According to CeBIT, “a majority” of the 69 invited countries showed up to take part in the technology and businesses networking expo.

With rampantly high taxes, it’s no surprise that businesses have been leaving California in recent years. However, this trend might be turning, with the combination of big-time federal stimulus dollars arriving in California, and the efforts by elected officials to bring business back to their regions by rebates, tax breaks and other special financial incentives.

While businesses are being wooed by a number of high California officials looking to boost both the state and local economies, active businesspeople from around California (including a 200+ delegation from Southern California) are looking to entice politicians, to drive business back to where it belongs: the trend-setting, fifth-largest economy of the world: California.

Schwarzenegger’s trip to Germany was just one stop on his journey to bring business back to California.

The CeBit conference is organized by Deutsche Messe AG., and describes itself as “the world’s largest trade fair showcasing digital IT and telecommunications solutions for home and wok environments. The key target groups are users from industry, the wholesale/retail sector, skilled trades, banks, the services sector, government agencies, science and all users passionate about technology.” The entire state of California is a partner with CeBIT. With somewhere between about 4,000 and 5,000 companies at the show, the state was a major player, both with 51 “small and medium-sized businesses” including “green technology, entertainment, Internet-based services, TeleHealth, security, consumer electronics, digital content generation and distribution, aerospace,” which are California-based, exhibiting their works, and with the governor’s hope for California collaboration with entire nations.

Business may be lured back to California through new transportation projects as well, as funded by the federal American Relief and Recovery Act signed into law by President Obama last month.

According to a recent study by the non-profit California Budget Project, $50 billion of economic aid may be collected by California from the federal act, some of which will be going toward new infrastructure projects.

The Legislative Analyst’s Office, another non-profit analyzing California politics, estimated that bare minimum, the state will receive more than $31 billion in “state aid,” plus billions more in further grants. The organization’s report summarizes the findings: “California will receive over $31 billion in monies that can be used to address budget shortfalls and supplement existing state spending and billions more in competitive grants.”

Caltrans says that about $2.57 billion of the funding received by California will go toward “highways, local streets and roads, freight and passenger rail and port infrastructure projects.”

On March 11, the governor applauded the money being sent to California, saying in a statement that he applauded the investing of “our nations ailing infrastructure — and I made sure California was prepared to jump on this opportunity” as it may serve to better the ailing state economy.

The California Transportation Commission reported on March 11 that $625 million in federal funds would be used to bankroll 57 new projects related to transportation. Once the Federal Highway Administration clears the way, the director of Caltrans, Will Kempton, said in a statement that Caltrans plans to start the first of the 57 projects within the next two months. The hundreds of millions of dollars in federal funding may also be used to buffer “other state resources,” and assist in the funding of “hundreds” of other projects throughout California, Kempton’s statement read.

According to Caltrans, just some of the projects include $50 million to update San Francisco’s Doyle Drive, $16.8 million to build two additional lanes on Chula Vista’s Interstate 805, $46.7 million to “replace two aging bridges” on Merced’s Highway 99 and $75 million to repave Los Angeles’ Interstate 710, for “goods movement.” Los Angeles can certainly stand to gain by any road improvement, certainly on the older, narrower and curvier roadways constructed decades ago.

In San Francisco, Mayor Gavin Newsom has been working to bring business innovation to the City by the Bay. Newsom has been working to push green technologies and their innovators, recently applauding an electric car charger company, which has installed a handful of chargers near City Hall.

Grease recycling programs and pro-business tax incentives and incentives for businesses to hire more employees, have been recent topics in SF as well. During the first week of March, the mayor proudly announced the decision by NBC to film a television pilot on San Francisco’s Treasure Island. The San Francisco Film Commission has also been working to adopt measures to attract the film industry back to the Northern California city with its own Sunset Boulevard, namely by tabling propositions to offer greater latitude for financial rebates for film crews, and by commissioning a report tracking the film industry trends of the last decade, and how to best bring the entertainment industry back to San Francisco.

So exactly how to bring business back to California? The California Budget Project notes that “which basic economic demonstrates that carefully chosen tax increases are preferably to spending cuts when the economy is weak, prominent economists argue that ‘tax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits.'”

But what about tax increases on middling income families and residents, and businesses? Various indexes and polls taken recently on small businesses have appeared to reflect a somewhat pessimistic attitude of the present, but optimism for better times ahead, sooner rather than later.

During the second week of March, more than 200 politicians and businesspeople from Southern California descended on Washington to push for pro-growth measures for Southern California, as organized by the Los Angeles Chamber of Commerce. The March 9 – 12, 2009 delegation is part of the “Southern California on the Hill – Access Washington, D.C.,” which advertises Southern California as “America’s recovery engine,” the nations’ “leading center for the entertainment, manufacturing and emerging green industries” and the region that is “poised to create and preserve more than 1 million jobs and generate significant economic activity through its airports and ports, which serve as the top entry point for all goods and visitors entering the United States.”

This year’s trip’s mission is to advance “policies and investments that create jobs and accelerate economic recovery for the nation.”

Some of the “priority issues” to be discussed by the delegation included trade, healthcare, aviation-related business, Transportation & Goods Movement, Small Business and Water. The latter two categories have been especially pressing issues in California today, which faces both the fact that businesses will continue to leave without more favorable measures, and the parched weather, which has led to a statewide drought. The Small Business section has three primary goals: 1.) The passage of the “New American Jobs Tax Credit” and 2.) To “Ensure Full Funding for the Small Business Administration (SBA)” and 3.) “Support Small Business Liability Reform Act of 2009.”

The tax credit is explained as a positive measure for the following reasons: “Create a new temporary tax credit to companies that add jobs in the United States. During 2009 and 2010, existing businesses should receive a $3,000 refundable tax credit for each additional full-time employee hired. The tax credit will benefit all companies creating net new jobs, even those struggling to make a profit.”

Straight from the heart of Southern California’s business world: to bring back jobs and help businesses, small and large alike, the answer is threefold: offer business tax credits to buoy businesses and create jobs, support the Small Business Administration to continue to fund innovation and business and back up small businesses by limiting the scope of frivolous lawsuits.

Business can come back to California: as a center for innovation and the creative process, there is little reason business won’t come back, and if they do, they will thrive more than ever. California officials just need to give a vote of support for business by offering businesspeople a way to benefit personally and, thusly, allow the state of California and its citizens, to benefit as well.