Syndicate
Tim Johnson
Tim Johnson is founder of the California Business Minute and has been involved in economic development for nearly 25 years.
CONGRESS CREATED DUST BOWL?
WHAT DOES SMALL BUSINESS WANT?
CALIFORNIA: Here is an Approach
While the majority of small businesses would recommend their geographic location to others,
they also say their local government could do much more to support them. Seven out of 10
businesses responding to the latest Ouch Point survey from Opinion Research Corporation
say tax breaks would be the most effective measure, followed by “cutting red tape.”
“The majority of small businesses are looking to their local governments to help them succeed –
with tax cuts, fewer regulations and better marketing,” said Rebecca Elmore-Yalch, Senior Vice
President, Opinion Research Corporation. “At the same time, most municipalities are strapped,
with declining revenues and increasing demand for services. One solution may be to focus on
reducing red-tape to support businesses without adding new strains to local budgets. These
businesses just want to see that local government is on their side.” Survey results pointed to a
few lower-cost options. When asked what government action would be most helpful, keeping
businesses better informed topped the list (56 percent). Reducing the number of regulations
followed closely (55 percent). Despite the challenges many businesses are facing today, most
are satisfied with their location. Nearly three quarters (72 percent) would recommend their city to
other businesses. The greatest support came from the largest companies ($750,000 to $2+ million
in sales), with backing from four out of five respondents. When asked to identify the primary business
advantage of their location, local customer loyalty and location were at the top of the list, with
22 percent each.
Interesting trends also emerged by comparing responses across the four regions of the United States.
Among the highlights:
- Business owners in the Midwest cite customer loyalty (31 percent) as the most important advantage,
compared to just 16 percent of those in the South and 19 percent in the West.
- One-third of business owners in the West cite location as the primary advantage, compared to just
16 percent in the Midwest and 19 percent in the Northeast.
- 62 percent of business owners in the Northeast think that their local government could do a better job
of promoting their town, compared to 44 percent of those in the West.
- The South is the only region in which a majority of business owners (53 percent) indicated that improving
the quality of the work force would be most effective. By comparison, only 38 percent of those in the West
agree.
- Nearly a third (30 percent) of business owners in the West say that they would definitely not or probably
not recommend their town to someone looking to start or relocate a business. By contrast, more than
three-quarters (78 percent) of those in the South would probably or definitely recommend their town.
- In the Midwest, 75 percent rank tax breaks as their highest priority, compared to the West at 64 percent.
"The majority of small businesses are looking to their local governments to help them succeed, with
tax cuts, fewer regulations and better marketing," says Rebecca Elmore-Yalch, Senior Vice President,
Opinion Research Corporation. "At the same time, most municipalities are strapped, with declining
revenues and increasing demand for services. One solution may be to focus on reducing red tape to
support businesses without adding new strains to local budgets. These businesses just want to see
that local government is on their side."
"Local governments can do a lot to facilitate entrepreneurial growth by helping to create conditions and
policies that make it easier for small businesses to succeed," Yalch added.
2dexhk9pft
A Response to the Question: Enterprise Zones
Enterprise Zones: To Eliminate or Not to Eliminate, that is the Question
The Selling of California -Literally
The following is a list of the state owned facilities Gov. Schwarzenegger has proposed
to sell in the effort to help close California's $24.3 billion deficit:
Estimated value: $1 billion
- Del Mar Fairgrounds, Del Mar
Estimated value: $350 million to $650 million
- Orange County Fairgrounds, Costa Mesa
Estimated value: $96 million to $180 million
- Cow Palace, Daly City
Estimated value: $40 million to $75 million
- California Exposition and State Fair, Sacramento
Estimated value: $80 million to $150 million
- Ventura County Fair, Ventura
Estimated value: $37 million to $70 million
- Los Angeles Memorial Coliseum and Sports Arena, Los Angeles
Estimated value: TBD
- California Department of Justice Building, Sacramento
Estimated value: $132.2 million.
- California Office of Emergency Services, Sacramento
Estimated value: $33.6 million.
- Capitol Area East End Complex, Sacramento
Estimated value: $463.9 million.
- Elihu M. Harris Building, Oakland
Estimated value: $166.7 million.
- Franchise Tax Board Complex, Sacramento
Estimated value: $396.7 million.
- San Francisco Civic Center (Earl Warren/Hiram Johnson building),
Estimated value: $357.6 million.
- Junipero Serra State Building, Los Angeles
Estimated value: $76.4 million.
- Justice Building, Sacramento
Estimated value: $34.1 million.
- California Public Utilities Commission Building, San Francisco
Estimated value: $124.9 million.
- Judge Joseph A. Rattigan Building, Santa Rosa
Estimated value: $7.8 million.
- Ronald Reagan State Building, Los Angeles
Estimated value: $181.9 million.
Even if these actions occur, it will only make up $3.5 billion to $4 billion of the needed deficit.
Is it worth it? What's your thoughts? Let's us know!
tjohnson@CaliforniaBusinessMinute.com
2dexhk9pft
State Budget: Voters to Legislature- It's Your Job
The May 19th election has forced the state lawmakers to face the unevitable - dealing with a budget
deficit projected to balloon to $24.3 billion, following Tuesday’s special election in which voters
soundly rejected five ballot measures that would have cut that number to about $6 billion.
With the votes counted, here are the unofficial results:
• 1A, which would have created a “rainy day” fund was rejected with 65.9 percent of the votes against
it and just 35.1 percent in favor.
• 1B, which would have changed how education was funded, providing more money for public schools,
lost with 62.6 percent against, 37.4 percent in favor.
• 1C, which was have let the state borrow money from future state Lottery profits, had no winning numbers,
losing 64.6 percent voting “no” and 35.4 percent voting “yes.”
• 1D, which was have taken money from children’s services, lost 65.8 percent against, 34.2 percent in favor.
• 1E, which would have siphoned off money meant for mental health care, was rejected with 66.4 percent
against, 33.6 percent in favor.
Only one measure passed: 1F, which will prohibit granting state lawmakers pay raises when the state is
running a deficit, was approved by 73.9 percent in favor and 26.1 percent against.
"The longer we wait, the worse the problem becomes and the more limited our choices will be," said Governor
Schwarzenegger in a written statement. In a statement to the Sacramento Bee, State Treasurer Bill Lockyer
said," Another prolonged, embarrassing political stalemate would further damage California’s credit reputation,
hurt our ability to sell bonds, notes or warrants, and inflict unnecessary harm on taxpayers and crucial public
services.
“I think the message is pretty clear,” says state Sen. Sam Aanestad, R-Grass Valley. “Voters are basically telling
the Legislature to do the job that they were elected to do in the first place.
So, it appears that the budget goes back to the Legislature.
IS CALIFORNIA TO BLAME FOR THE RECESSION?
Sacramento Bee columnist, Dan Walters wrote an interesting piece this week (May 17, 2009)
raising the question - Does California get the blame for creating the recession?
Walters makes his case by stating-
“A very good case can be made that California's developers, mortgage lenders and house-hungry
but income- deficient residents, with state and local officials as enablers, created an unsustainable
housing bubble. And when that bubble burst, leaving holders of mortgage bundles – many of them
overseas banks – with little more than toilet paper, it created a banking crisis that spread to virtually
every other segment of the global economy.”
Of interest, Walters took no time to explain the origin of the loan products that were created such as the
zero down and interest only products that help to ignite this disaster. Nor did he discuss the lack of
review by regulators or by bond raters that could have interceded preventing the caustic nature of these
bundled portfolios. Nor did he discuss the issues of credit swaps and derivatives; the very products that
help bring down the financial markets, products that should have been examined by both government
regulators and by the marketplace which were unfortunately ignored by both.
Sorry Dan, but it was good ‘ol’ greed and not just Californians greed either that caused this debacle.
Income deficient Californians were not the problem. It was the lack of income verification of borrowers
by professionals from the investment communities of real estate and mortgage banking that wanted
more money and sought everyway to get it.
Walters continues;
”the state has been ground zero for the collapse of those mortgages as adjustable interest rates "reset"
upward, having recorded more than a half-million foreclosures and other symbols of distress. Currently,
another 400,000 home loans in the state are delinquent because the economic crisis that was spawned
by the banking crisis means hundreds of thousands of California families have lost their incomes – folks
who were reasonably good credit risks originally – and cannot make their mortgage payments.”
Walters has his facts correct, but the current number makes up less than 5 percent of the total homes
in the state. Keeping this in perspective it is important to understand that there are over 90 percent of
Californians that own homes that are current on their mortgages.
The real question is - Could California as the 8th largest economy in the world and comprises12%
of the nation’s GDP really have had that much impact on the global economy – such an impact that it
single handedly caused this recession? Doubtful
But, if history should prove this premise correct, then maybe California should be run as a nation rather
than a state. Let’s see if Walters addresses this topic in the future.
Tjohnson@CaliforniaBusinessMinute.com
www.CaliforniaBusinessMinute.com
What I Would Tell the MBA'S from the Class of 2009
To all 2009 MBA Candidates:
Dr. Robert Harmon
How many of you graduating today are getting a degree in finance?
Sorry about that.
Seriously, I suppose that you have heard that the market for MBAs this
year is one of the worst on record. That is certainly not great news.
However, as you undoubtedly learned in your program, necessity is the
mother of invention. It is during times of adversity that the foundation
for an economic recovery is created.
Whole areas of the economy are in upheaval. Industries are being destroyed.
But think of the positive. Yes, the positive. Competitive barriers have come
down, new business models are begging to be built. You are the class that
will do it. You are now on the ground floor for a new economy.
Whether it is the development of a green businesses, nanotechnology
breakthroughs in medicine and biotechnology; new definitions for social media,
collaborative information technology , location relevant mobile services,
or a new commitment to social needs and public service, and yes financial
innovation too, you will be the innovators. Your future is in your hands,
you have the right tools, you will make it happen.
Remember that opportunity is what happens when you are busy doing something
else.
You are now forewarned. Keep your eyes open and catch that wave to the future.
It is coming at you fast!
Cheers!
rh
Dr. Robert Harmon is a professor of Marketing and Technology. He is the other half of the team
that provides the California Business Minute and CalBizBlog courtesy of Harmon-Johnson
Bailing Out State and Local Governments
A SOJOURN INSIDE THE BELTWAY
Each year at this time, the Sacramento Metro Chamber of Commerce heads to Washington DC
with nearly 300 delegates in tow to advocate for California's Capital region in what is called
the Capital-to-Capital trip, or to the locals, Cap-to-Cap.
The effort brings together a team that includes local elected officials, public sector officials
and representatives from business and industry all in the effort to learn and share information
about opportunities to working with federal government officials in the nation's capital.
Matt Mahood, CEO
Sacramento Metro Chamber
This year the event is no different. Matt Mahood, CEO of the Chamber identified that there are 50
elected officials and dozens of staff members from various cities, counties and special districts
along with business and labor leaders on the trip.
Matt reports that in just 2 and half days the delegation has had nearly 220 individual meetiings
with members of congress, representatives from federal agencies and the administration.
The delegation has advocated 91 seperate policy issues and items associated with appropriations.
In addition, they have meet with at least four membes of the House of Representatives, Lungren,
Matsui, Thompson, McClintock.
They recieved briefings by Secrertary of Transportation, Ray LaHood and from National Economic
Councilmember Lawrence Summers.
Mahood identified that they have met with 33 separate congressional offices, 63 different federal
agencies and 20 different congressional committees.
While no definite information is available about the outcomes form the trip, previous trips have yielded
signficant return such as the 2005 retention of Beale Air Force Base during the Base Realignment
and Closure process and the acquisition of fedeal funds for the completion (recent) of the bridge
around the Folsom Lake Dam.
