Blaming state regulations, Bing takes Florida’s offer
Neil Nisperos, Staff Writer
Created: 02/21/2011 08:41:31 PM PST
CHINO – A high-tech company that originated in this city expects to employ hundreds of people in a bid to create a new kind of energy.
Unfortunately, Bing Energy has opted to do business in Florida rather than the Inland Valley.
“I just can’t imagine any corporation in their right mind would decide to set up in California today,” said Dean Minardi, the chief financial officer for Bing Energy.
Numerous business leaders and publications have voiced contempt for the Golden State due to its heavy regulation, high taxes and high labor costs. So, taking a page from the Republican playbook, Democratic legislators promised last week to streamline state regulations to boost business in California, a move that in part is intended to attract Republican support for extending tax increases.
They hope the legislative effort will lead to job creation and more tax revenue for the cash-strapped state, which faces a $26.6 billion budget deficit.
Speaking during a capital news conference, Senate President Pro Tem Darrell Steinberg said California should eliminate redundant, inconsistent or outdated regulations. The bill introduced last week, S.B. 366, would require state agencies to review regulations within six months and create a faster permitting process for businesses looking to start or expand operations.
“We are not going to cede this ground to anyone,” said Steinberg, D-Sacramento. “We are serious and committed to making government more nimble.”
Republicans, who regularly accuse Democrats of making California’s business environment more hostile to companies, reacted cautiously to the plan.
Sen. Bob Huff, R-Walnut, introduced a similar bill, S.B. 396, requiring state departments to review all regulations established before 1990 and report them to the Legislature for further action.
“I am encouraged that some of my Democratic colleagues appear to be serious about looking into regulatory reform,”
Huff said in a statement.
The quicker permitting portion was described as setting up a “one-stop” process in which business proposals would be reviewed simultaneously by three state agencies: Business, Transportation and Housing; Natural Resources; and Environmental Protection.
“I think it’s a step in the right direction” as negotiations continue, said Matthew Mahood, the president and CEO of the Sacramento Metropolitan Chamber of Commerce.
The move in Sacramento wasn’t done quick enough to save the hundreds of jobs that Bing Energy could create.
Bing Energy was incorporated in Chino in 2009 and had considered setting up manufacturing operations in the city. But after considerations of corporate taxes and permit difficulties in California, company officials decided to relocate to Tallahassee.
“In the end, it was cheaper to be in Florida,” Minardi said. “They wanted us to be here, and now we have our tech lab, corporate headquarters and our first production facility here. It’s probably 15 percent less cost to do business here than in California.”
The firm aims to manufacture cheaper, more efficient hydrogen-powered fuel cells, which would be used in newer cars and to supplement power stations.
Florida Gov. Rick Scott welcomed the high-tech company this month. Scott’s office even sweetened the pot for Bing by awarding the company a $1.9 million tax refund.
Chino Mayor Dennis Yates said Bing’s loss was a disappointment for the city.
“I understand completely why they left, with a Democratic governor elected, plus all the environmental restrictions, workman’s comp, sales tax and licencing fees on vehicles, the list goes on and on,” Yates said.
“Companies are leaving in droves, and the recession compounds the problem.”
Assemblyman Curt Hagman, R-Chino Hills, was even more blunt about the business climate in the state.
“I believe California is one of the worst places to do business,” Hagman said. “When all the factors are put together, we have a really aggressive tax system that really penalizes businesses, we have very heavy regulations on our businesses, and we have very little support when it comes to economic development.”
Hagman said other states have done a better job recruiting businesses and presenting what they can do to help the firms succeed.
But recent data does not indicate any mass exodus of employers from California, said Brad Kemp, the regional research director for the San Rafael and Los Angeles-based economic analysis firm of Beacon Economics.
Kemp said he wants to dispel the notion that, across the board, California is a bad state for doing business.
“We had all the same regulations and taxes that were in place during the boom period (of the mid-2000s) so why weren’t businesses leaving, and why would the state boom?” Kemp said. “It just doesn’t make sense.
“As long as we keep talking about California as a bad business state, businesses start to believe it, and it becomes a self-fulfilling prophecy.”
Other economists have taken issue with the idea that the state’s business climate is the main reason for the job losses. They say more powerful forces include increased productivity and automation, as well as the shipping of jobs overseas – a problem for all states, not just California.
“We’ve lost a lot of manufacturing jobs, but a lot less than in other states,” said Christopher Thornberg, a leading economist for Los Angeles- based Beacon Economics. “California (manufacturing) is weathering the storm better than the nation overall.”
A study released in September by the Public Policy Institute of California blames business closures and downsizing – not moves to other states – for most of the job losses.
“Only a small fraction of the state’s job losses are due to businesses leaving the state,” concluded the report, which tracked employment changes and business relocation from 1992 to 2006.
Business leaders and advocates blasted the research, with politics and business website Fox and Hounds Daily calling the study “useless.”
“Manufacturing can’t compete in California,” said Gino DiCaro of the California Manufacturing and Technology Association.
The Sacramento-based group says little more than 1 percent of the nation’s new or expanded manufacturing facilities has been created in the state over the past five years. That, the group said, is despite California being the source of nearly half of the country’s venture capital.
Sen. Fran Pavley, D-Agoura Hills, said the state can ease regulations and speed permits without endangering the environment, public health and welfare or worker safety. She is carrying the bill introduced last week as an urgency measure with Sen. Ron Calderon, D-Monterey Park, meaning it must pass the Senate and Assembly with a two-thirds vote but would take effect immediately.
The move comes as majority Democrats try to show they care about the state’s business climate as they try to persuade Republican lawmakers to approve a special election in June that would ask voters to extend income, sales and vehicle taxes for five years. The tax increases were approved in 2009 and are due to expire this year.
If Democrats can deliver more reforms, Mahood said the chamber will support Democratic Gov. Jerry Brown’s call for a special election. Brown has called for a balanced approach to closing the budget shortfall that would include about $12.5 billion in spending cuts and borrowing.
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