Utah is hovering at just over 4% unemployment. It seems the economic crisis skipped over their state and landed in Nevada, Arizona and California. How did they do it? Here’s a hint; it took leadership and years of planning. Utah leaders embarked on a multi year project, Envision Utah. The Southern Arizona Leadership Council brought in organizers of the Envision Utah program about a year ago. A crowd of about 500 heard how Utah navigated through the wide variety of interests to come out with a comprehensive plan that would set their state on the path to prosperity for the next generations.

A project mirrored after “The Envision Utah” is well underway here in Tucson. The local effort, coined “Imagine Greater Tucson”, is  lead by local land use attorney Keri Silvyan. I was in the audience and impressed with the concepts and the plan Utah embarked on. What Utah did, and what Silvyn is mirroring locally, is Utah leaders called together a large number of stake holders from varied backgrounds to build relationships and discuss their common future. T

The Envision Utah process put business, politicos and community activists together, discussed each groups particular needs and then used computer models to show what would happen over 20 years if certain paths were taken by the community.  For example, if the community wants more open space then the land values would increase, dense population and infill would have to occur and mass public transportation would be required. If the community wanted more growth related industries (housing and sprawl) then the cost of supporting the infrastructure and finding water would have a cost to the entire community.

What’s important is that if Arizona as a state or Pima County as a region starts moving towards a Utah model, their must be voices from all sides being heard and respected. In southern Arizona the environmental voice is organized and focused and the business voice is unorganized and somewhat scattered.

What Happens If That Happens?

Environmentalists ability to influence our community is well documented. We are right in the middle of one of the largest movements in our history to combine water and waste water delivery. In the desert, the people that control water have the power. A large part of the comprehensive water plan included riparian re-establishment of the Santa Cruz. The plan calls for a whopping 25% of reclaimed waste water being sent to the Santa Cruz for creating a river that hasn’t flowed in a generation. The committee that has worked on the process for the past 20 months isn’t exactly ‘fair and balanced’. The business community had one seat on the board and isn’t happy with the results. This debate is the classic growth, no growth debate Tucson has been waging for 60 years.  The no growthers are winning and that might not be that bad.

From this weekends Arizona Republic:

Faced with high population growth in the 1990s, Utah civic leaders became concerned about how to accommodate so many new residents without disrupting the state’s high quality of life.

Traditionally, elected officials would have taken the lead to manage growth. But residents of the libertarian-leaning state resisted that kind of top-down control.

So reformers in Utah instead started from the bottom up, building a grass-roots movement that led to the voluntary adoption of measures that observers say improved the state’s economy and helped it weather the current recession.

Compare that approach to Arizona’s, where reform organizers have so far limited public involvement to surveys and a few public forums.

To align the visions of elected leaders with the people they serve, Arizona may have to become more like Utah.

 

The Utah model

 

Although managing growth, not government reform, was the Utah initiative’s goal, the process did lead to change in how elected leaders work. In fact, the approach has become a model for problem-solving throughout the U.S. and even in some foreign countries.

Envision Utah was created in 1997, and together with state government, it developed tools to help communities plan. It educated the public on how to accommodate growth through higher-density zoning, the expanded use of mass transit and other strategies.

That education led residents to support proposals they might have once rejected.

The key to reform efforts that work, organizers said, is a bottom-up approach that makes citizens champions of the process. The core of Envision Utah’s model is to ask residents to reflect on their values and hopes for the future and then translate their thinking into action through interactive workshops. In its early days, Envision Utah would hold 50 public meetings for each step of the process.

Large-scale public participation is a catalyst for action, participants say. Tom Jensen, an architect from Logan, Utah, says political candidates in his region now compete with one another over who better supports the vision developed by residents for the Cache Valley.

“This has a greater chance to be implemented because it’s a grass-roots vision,” said Jensen, who also has an office in Tempe. “It gives political leaders cover.”

One example: Grass-roots support led elected officials in nine different communities around the Great Salt Lake to adopt a plan limiting development on the lakeshore.

While focused on growth issues, Envision Utah also has used its model of public engagement to create disaster-preparedness plans for the state and address issues related to higher education.

“We think that this is a process that can be used to address a number of issues in a community,” said Alan Matheson, a Tempe native and attorney who now serves as Envision Utah’s executive director.

Jeff Edwards, president and CEO of the Economic Development Corporation of Utah, said the state’s reputation for collaboration has helped officials lure businesses.

“Envision Utah has been a great tool for us in communicating to companies that this is a community that works together,” Edwards said. “We kind of take it for granted. They say, ‘Trust us, this is not the way it happens in other states.’ ”

While no group can take sole credit for a state’s economy, lately Utah has had plenty for Arizonans to envy. The state’s unemployment rate is 6.7 percent, compared with 9.1 percent in Arizona.

The key to success, Matheson said, is not only involving the public from the beginning but also keeping it involved until the end. Persistence, he said, also is critical.

“We’ve all seen examples of good plans that sit on the shelf,” Matheson said. “But nothing happens in the public realm without public support. The way you get public support is by giving people ownership in that plan.”

 

Arizona’s effort

 

In Arizona, would-be reformers have made some efforts to involve the public.

The Arizona We Want, an initiative of the Center for the Future of Arizona, aims to take the results of the October Gallup poll and translate Arizonans’ goals into concrete steps to achieve them. The extensive poll of 3,606 Arizonans was designed to produce “actionable insights” into residents’ thinking. Using questions tested in dozens of other communities, Gallup found Arizonans are highly engaged in civic life compared with residents in other states.

Despite that engagement, polls regularly find dissatisfaction with elected leaders.

“The endgame is still the endgame: to get citizens and leaders working on the same things, to start pulling together on the things that we need to do,” said Pat Beaty, director of the initiative and a senior fellow at the Center for the Future of Arizona, the group led by former ASU President Coor.

Beaty said the institute needs to move beyond abstract goals to engage citizens about issues affecting their communities.

“You can talk about the Arizona we want,” Beaty said. “But it has to become embedded in the Flagstaff we want, the Yuma we want, the school we want.”

Coor has toured the state for the past three months, meeting with elected officials and civic leaders and soliciting their ideas and support. And the center plans to send questionnaires to candidates for elected office so citizens can see where they stand on those topics.

O’Connor House Project participants have taken their ideas for reform straight to the Legislature. A spinoff group, Government for Arizona’s 2nd Century, is working with lawmakers to support bills that will ask voters to create a lieutenant governor’s position, eliminate term limits and end taxpayer funding of candidates.

To date, the group’s efforts at public involvement have been limited to an invitation-only town-hall meeting for business and civic leaders. The approach has raised questions about how the group will develop the support necessary to succeed.

The bills cleared the Senate Judiciary Committee and are scheduled to be heard in the Rules Committee this week.

Michael Bidwill, president of the Arizona Cardinals and chairman of the government-reform effort, said the time is ripe for change. “We have a unique chance to improve the way our government works,” he said. “When you look at any public-opinion poll, a lot of people are looking for government to work better.”

Organizers acknowledge reform in Arizona has had a spotty history. Many efforts lose steam before any real change is accomplished. Still, the state’s current crisis has brought a rare opportunity for real change.

“I see this groundswell starting to build,” said Sue Clark-Johnson, executive director of the Morrison Institute of Public Policy at Arizona State University and the former chairman and CEO of The Arizona Republic. “In the decades I’ve lived here, I have seldom seen such a compassion and a caring and a concern for the future of this state.”

But concern alone won’t be enough to reform state government.

“You can’t just do a vision and walk away,” said Brenda Scheer, dean of the University of Utah’s College of Architecture and Planning and an Envision Utah board member. “People have to own it, and they have to be champions of it.”

George Will weighs in on California liberalism. We’ve covered in this blog many many times. Arizona is faced with similar choices. Which way will be go?

It took years for liberalism’s redistributive itch to create an income tax so steeply progressive that it prompts the flight from the state of wealth-creators: “Between 1990 and 2007,” Voegeli writes, “some 3.4 million more Americans moved from California to one of the other 49 states than moved to California from another state.”

And the state’s income tax — liberalism codified — intensifies the effects of business cycles on the state’s revenue stream: During booms, the stream surges and stimulates government spending; during contractions, revenues dwindle but the new government spending continues. Voegeli says that if California’s spending had grown no faster than population growth and inflation from 1992 to 2006, it would have been $65 billion less in 2006, and per capita government outlays then would have equaled not those of Somalia or Mississippi but of Oregon, which is hardly “a hellish paradigm of Social Darwinism.”

It took years for liberalism’s mania for micromanaging life with entangling regulations to make California’s once creative economy resemble Gulliver immobilized by the Lilliputians’ many threads. The state, which between 1990 and 2007 lost 26 percent of its factory jobs and 35 percent of its high-tech manufacturing jobs, ranks behind only New York, another of liberalism’s laboratories, in the number of outward-bound moving vans.

It took years for compassionate liberalism to make California’s welfare menu contribute to the state becoming an importer of Mexico’s poverty. It took years for servile liberalism to turn the state into what Voegeli calls a “unionocracy,” run by and for unionized public employees, such as public safety employees who can retire at 50 and receive 90 percent of the final year’s pay for life.

Friend reports that when the seven-hour meeting ended, the protest moved to the UC president’s house. Two buses carried “some hundred Berkeley students and members of AFSCME.” Perfect.

The American Federation of State, County and Municipal Employees is one reason why California’s government employees — their numbers grew 24 percent between 1997 and 2007 — are the nation’s most highly compensated. And why California’s economy is being suffocated by the weight of government. And why the state’s budget has little left over for Berkeley.

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Published on Friday, November 20, 2009

 
The results of this month’s Tucson city council election shows the electorate is not happy with the status quo. A large part of the campaign focused on incompetence and a lack of economic opportunities. It’s time for Tucson and its leaders to start making the changes that voters and the business community called for during the campaign, and they deserve.

So we thought, alright big-talking radio guys, what would we do if we were kings for a day? Here is what the Wake Up, Tucson Kingdom would look like:

1. The employment mix would have fewer government jobs. The largest employment sector in Southern Arizona is  government — 21 percent of our region’s workers are military, schools or universities and city or county government. By comparison, Phoenix, Denver and Seattle weigh in at between 13 and 15 percent. Tucson’s second largest regional employment sector, at 17 percent, is the service sector. Low on the list are tech jobs, manufacturing and financial service. Not a great stat for a city that isn’t even a state capital.

These lopsided numbers demonstrate that Tucson does way too much handing money back and forth. Fresh capitalist dollars are what we desperately need to grow our economy. Gone are the days when we can just rely on construction jobs to raise the tide. A focus on industries that make things, move things or sell things is needed now more than ever.

2. Roll out the welcome mat to business. An anti-big box ordinance, hostile neighborhood interactions, NIMBYism run rampant and a maze of rules discourage all but the most committed entrepreneurs. Sprinkle in years of regulations, a culture of saying “no” along with zoning and land-use codes designed to discourage the entrepreneurial spirit and you get enterprise exoduses. Businesses are leaving the city or worse, they’re leaving the region altogether.

Last week, we had a prominent local guest on our radio show who talked of how it took 14 development plan reviews and more than nine years to launch his projects. He went so far as to suggest California can be a more business-friendly environment than Tucson. California? Wasn’t Tucson Regional Economic Opportunities (TREO) targeting California companies to try to persuade them to relocate here? How’s that for irony?

3. Less of Pima County would be unincorporated. Pima County has 36 percent of its population living in unincorporated areas outside of cities and towns. In Maricopa County it’s only 6 percent. These are important numbers because our region’s portion of state shared revenues are calculated using these population numbers. These numbers cost our region $60 million to $80 million per year that goes to our friends up north. That pays for a lot of over-budget underpasses.

Annexation and incorporations have been attempted over the decades in Pima County. With minor exceptions, it appears we are at a stalemate. To fix this, the Legislature will have to go against the powerful League of Arizona Cities and Towns to amend state law requiring approval of a jurisdiction to start a new municipality within 6 miles of an existing one. Adjust the law and watch for the Town of Vail to be the first to incorporate. Followed by renewed efforts in Tortolita, Casas Adobes and Catalina Foothills. Even Green Valley might go for it.

4. More competition among cities and towns. Maricopa County has 16 municipalities compared to Pima County’s five: Tucson, South Tucson, Marana, Sahaurita and Oro Valley. More cities translate into more competition as each fights for tax dollars. As Tucson fiddles over Rio Nuevo and rainwater harvesting, Oro Valley, Sahuarita and Marana are picking off businesses and creating places where people want to live. Marana’s now the home of professional golf’s Accenture Match Play Championship, a new Ritz-Carlton Resort and, possibly, a world-class sports stadium.

5. Bureaucracies would be shook up. Doing the same thing over and over again just doesn’t cut it anymore. The world is moving too fast and is too competitive not to change. As the late Gerald Burrill, retired Episcopal Bishop of Chicago, said, “The difference between a rut and a grave is the depth.”

Southern Arizona suffers from a  lack of accountability and vision from a many of the important business groups that represent the rest of us.  While these hand-picked, resume building boards may ensure that things keep humming along, it is at the expense of the rest of that are lower on the food chain. Not all these are bad some do great work. You be the judge based on the actions and results.

Those of you in leadership roles on these chambers, bureaus and associations; take a hard look at who you’re helping and who you’re hurting.  You have a fiduciary, financial and social responsibility to all of us to ask the tough questions, demand transparency, hold your group accountable. 

For the common business owners, it’s time to really reflect on whether you’re continued support is manifested in a thriving business environment.  It’s time to bring accountability one check at a time.

Contact Joe Higgins at joe@joehigginsinc.com or Chris DeSimone at provenpartners@comcast.net. They’re the hosts of “Wake Up Tucson,” which airs 6 - 8 a.m. weekdays on The Voice KVOI 1030-AM. Check out their blog at www.TucsonChoices.com.

AUGUST 11, 2009, 6:27 A.M. ET

Arizona’s Budget Breakthrough

An alternative to California’s tax and spend model.

Perhaps states are starting to learn the right fiscal lessons from the red-ink blowouts in high-tax California and New York. Today, the legislature in Arizona will vote on a tax reform designed to entice more employers and high-income taxpayers to the state. Sponsored by Republican Governor Jan Brewer, the plan would cut state property taxes, the corporate tax and personal income taxes, in exchange for a temporary rise in the sales tax.

Most economic studies agree that states have more jobs and higher income growth when they tax consumption rather than savings, investment and business profits. This explains why most of the nine states with no income tax at all-such as Texas, Florida and Tennessee-have been economic high-flyers in recent decades.

Ms. Brewer’s proposal reflects this economic logic. Effective January 1, 2011, her plan would reduce the state’s corporate income tax rate to 4.86% from 6.97%, which would be one of the largest business tax cuts in the nation in recent years. The proposal also cuts all personal income tax rates by 6.6%, thus lowering the top marginal rate to 4.24% from 4.54%. A hated statewide tax on commercial and residential property would also be abolished.

Arizona has been hit especially hard by the housing slump, and its budget woes were compounded thanks to former Governor Janet Napolitano’s spending spree before she joined the Obama cabinet. On her watch the budget grew by more than 50% in five years-to $10.2 billion from $6.5 billion in 2004. The state now has a $1 billion budget gap, and to close it the legislature will also vote on a one percentage point increase in the sales tax to 6.6% in 2010 and 2011; in the third year the sales tax would fall to 6.1%, and in the fourth year would revert to its current 5.6% rate.

We’d rather see the legislature cut more spending than raise the sales tax, but on the other hand the sales tax would only take effect if it is approved on the November ballot. The political class is giving voters a say in the matter. The sales tax increase also has the advantage of a built-in expiration date, while the tax cuts are permanent.

Democratic opponents are calling this a tax giveaway to big business. But lawmakers needn’t apologize for trying to retain Arizona’s status as a business-friendly state-particularly when jobs are so scarce. Small employers also benefit from the lower property tax rates and the personal income tax reductions. Lower tax payments will enable them to reinvest more in their enterprises.

The opponents should consult a new study of state business taxes by former U.S. Treasury economist Robert Carroll for the Tax Foundation. He examined 50 states and found that states with lower corporate tax rates have higher wage gains and more productivity over time. This tax cut sounds like a high-return investment.

Republicans control both houses of the Arizona legislature, and as we went to press the main obstacle to passing the reform was the Arizona Senate’s antitax conservatives. They oppose the higher sales tax. These Republicans should look to one of the triumphs of the Reagan Presidency, the 1986 tax reform, which broadened the tax base but substantially lowered tax rates and thus sustained the 1980s expansion.

Arizona has the chance to be the anti-California, closing the budget deficit by growing the economy, not by raising taxes. We hope legislators don’t blow it, because the U.S. desperately needs an alternative to the tax, spend and tax again philosophy of Sacramento and Albany.

Brewer needs to be out there

By Emil Franzi, Special to The Explorer

Published:

July-29-2009

I haven’t evaluated Governor Jan Brewer’s performance until now. I like her and her record as a state senator and Maricopa County Supervisor. As Secretary of State, I questioned her position on the Pima County RTA election, but that’s no deal breaker. If experience matters, she has plenty.I waited to see which bills she’d sign. Those peripherally restricting abortion and expanding self-defense, none of which would have gotten by dogmatic liberal Janet Napolitano, had her support. That leaves the budget as the sticking point between her, GOP legislative leaders, and conservative voters.

They don’t want a tax hike. She does, but it’s on the right tax (sales), requires a vote of the public (unlikely to pass) and could be structured to sunset automatically. If the ballot choices also include repeal of the idiotic measure passed by voters a few years back that doesn’t allow the legislature to change anything ever passed by the voters, many conservatives could at least support putting it on the ballot.

That measure was then Prop 105. Those defending it make the absurd assumption that the voters were so prescient when they passed certain initiatives that those measures should never be touched by representatives chosen by the same or newer voters who suddenly are dolts for making those other choices. It’s irrational. Worse, it leaves billions in the state budget off limits, and forces cuts elsewhere.

Governor Brewer is aware of the problem but does not seem to frame it as part of her push for a higher sales tax. In a recent appearance before the Tucson Rotary Club, she mentioned “Prop 105″ as part of her agenda but never explained it.

I’d like to ask her more about it, but this governor’s real problem isn’t the sales tax or even the inordinate amount of time she wastes talking to the education lobby and some others who would close a public school before they’d lay off one of its vice principals.

Her problem is lack of accessibility to folks she needs on her side.

I am not the only talk show host in town or in Arizona who cannot get her to make an appearance. While Tom Danehy and I are rather casual in our interviews of pols and have been known to renovate the pompous, we’d treat the governor - any governor - with respect at least the first time and throw her some beach balls. No deal. Her handlers are apparently scared to death to let her out alone.

Worse, she cannot meet one-on-one with legislators she needs to pass anything. Even key members of her own party find a staffer sitting between them in private meetings. She could try making book with the Democrats, but their budget plans are incoherent. They oppose raising sales taxes because they’re “regressive.” Next page they offer a list of items they want to add to that tax. Cognitive dissonance? Why is taxing my shampoo regressive, but taxing my haircut OK?

We don’t know if she’s running. Republicans need to. Democrats are focusing on Attorney General Terry Goddard and other viable candidates. Republicans have viable options, too. State Treasurer Dean Martin, recovering from the personal tragedy of losing his wife and child, may not be ready yet but is still on the board. Congressmen Trent Franks and Jeff Flake have both made subtle noises. Tucsonan and former GOP State Chair John Munger would be available. All of them do talk shows.

If there is any hope for Governor Brewer’s staff to keep their jobs past 2010, I suggest they at least lengthen her leash.

Breaking news! You’ve heard it here first - Senator Al Melvin, vice chair of AZ Senate Appropriations broke the news on this mornings WakeUpTucson show that a potential deal has been struck with  Govenor Brewer on the budget impass. The details are as follows:

The voters will get an up or down vote on all of the following. The items will not be individually voted on but the voters must up or down the entire package:

The package will be called the Arizona Budget Recovery Plan

- A sales tax increase (a sticking point for the Gov.) which would be 1 cent for year one, .3/4 of a cent year two and 1/2 of a cent year three. The Governor wanted 1 cent for all three years.

- Suspend the Prop 105 voter approved mandates to increased spending on education and many other state programs.

- Permanent repeal of the $250 million commercial property tax assessment.

- 2012 reduction of $200 million in personal income tax

- 2012 reduction of $200 million in corporate income tax.

Arizona’s corporate tax burden ranking nationally will move from 23rd to 7th.  Maybe that will bring in some new businesses and revenue…..from California!

The hits just keep on coming in the Texas v California debate. I love the fact that the Texas legislature only meets in odd number years and for 140 days at a time. If they aren’t meeting they can’t pass laws. From Tom Patterson of the  The East Valley Tribune:

Why does Texas thrive while California flounders? Gov. Rick Perry sums up the Texas philosophy as “Don’t spend all the money.” This governor, unlike the tax-and-spendaholic Gov. Arnold Schwarzenegger of California, added to his hard-line reputation by recently vetoing a pre-kindergarten spending bill. While California grovels for money, Texas recently turned down a $556 million unemployment fund subsidy from the feds because the expensive strings attached would have boosted state spending long after the “stimulus” money left.

Spending discipline is the key to Texas’ low, economy-boosting taxes. Not only do Texans lack steeply progressive taxes, they pay no state income tax at all.

Yet somehow, in spite of a penurious government, the state not only survives but prospers. As Perry explains, economies grow when governments “don’t spend all the money, keep taxes low, have a fair and predictable regulatory climate, keep frivolous lawsuits to a minimum and fund an accountable education system . . . then get the hell out of the way and let the private sector do what the private sector does best.”

Even Perry admits that’s easier said than done. In Texas, government is intentionally hobbled. The constitution permits only limited, specific powers. The governor’s powers are few and he must share authority with the lieutenant governor. Legislators’ salaries are a measly $7,200. The Texas Legislature meets only in odd-numbered years with a firm limit of 140 days. California legislators are the nation’s highest paid and they meet year-round. Texas’ state government is simply not able to be as intrusive and oppressive as are many other states.

The moment of truth for Texas came after the 2002 election, when outgoing Democrats went on a spending binge that left the state with a $10 billion deficit. Many clamored for a tax increase (sound familiar?), but Perry told the Legislature to not bother sending him one. Instead, they made deep across-the-board spending cuts. The results speak for themselves. Today, Texas has a $9 billion surplus to help it through the revenue shortfall all states are experiencing.

Now Arizona is facing crunch time. We can continue the tax-and-spend slide into economic decline. Let’s hope our leaders make the tough decisions that will keep our private sector strong and eventually get us out of this morass.

Couldn’t resist - Inside Tucson Business ran a story on another list that we really don’t want to end up on. We are in the top 10 most expensive cities to do business in ….NATIONWIDE. Apparently there is a recalculation on how cities are measured and we as a region didn’t fair too well.

We are going to find out how if there is a typo in this statement…. “small businesses saw their annual taxes jump from $744 to $200,000, Jensen said in an e-mail.” Seems a little to big to make sense. Maybe $744 to $2000?

We made a similar list a year ago when ASBA ranked Tucson as the most unfriendly city in the state to do business in.  ASBA has over 3000 members statewide that apparently aren’t afraid to point out that Tucson needs to clean up it’s act.

Tucson among 10 most expensive to do business

Published on Saturday, July 25, 2009

A new study ranks Tucson among the 10 most expensive cities in the United States in which to do business.

The 15th annual Kosmont-Rose Institute Cost of Doing Business Survey released July 20 puts Tucson and Phoenix in an alphabetical list that also includes Akron, Ohio; Chicago; Jersey City, N.J.; Los Angeles; New York; Newark; Philadelphia; and San Francisco.

The survey, done by Claremont McKenna College, Claremont, Calif., ranked 411 cities in terms of their relative cost to do business. Categories include taxes, fees, economic incentives, transportation amenities, the existence of special enterprise zones, and public-private partnerships. Survey officials said two of the biggest determinants of a city’s cost of doing business tended to be business license fees and property taxes.

Research associate Brad Jensen said what caused Tucson to jump so much was a 2007 change in the way taxes are calculated setting an annual tax of $200,000 for the first $10 million in receipts of the first 100 employees and doing away the old system that was graduated based on the number of employees. Under the change, small businesses saw their annual taxes jump from $744 to $200,000, Jensen said in an e-mail.

The survey was originally developed to compare costs among 250 cities in California but has been expanded to include 161 cities outside the state.

The 10 least expensive cities in the survey were Austin, Texas; Cheyenne, Wyo.; Dallas; Eugene, Ore.; Everett, Ore.; Fort Worth, Texas; Gresham, Ore.; Houston; Portland, Ore.; and Reno, Nev.

Laura Shaw, senior vice president of marketing and communications for the economic development agency Tucson Regional Economic Opportunities Inc., said she couldn’t comment specifically on the new study because she hadn’t seen it but said a Forbes study released in March this year ranked Tucson No. 105 out of 200 cities.

Once again, Texas cities came out looking pretty good. Four out of 10 cities are in Texas and four out of 10 are in Oregon of all places.

The press release from the Kosmont-Rose Institute took some pot shots at California.

California cities such as Los Angeles, Oakland, San Francisco, and Santa Monica received “Very High Cost” ratings, and as in past years, Los Angeles County continues to be the location of the Survey’s most expensive jurisdictions with 11 of the 50 most expensive cities being in the County. Communities in western states such as Washington, Colorado, and Nevada consistently provide low cost areas in which to do business.

“California and many of its cities are now grappling with the triple witching hour of property tax losses, sales tax recession, and income tax losses,”said Larry Kosmont, president and CEO of Kosmont Companies and founder of the Survey. “Even well-run cities are having a hard time fending off tax increases, particularly since the financially faltering State wants to take back local redevelopment money and gas tax from their local cities and counties. However California should not raise anymore taxes at a time when businesses are already suffering, unless we want to see the exodus continue of companies leaving the State to other more business friendly locations.”

Since the Survey’s inception, California has consistently been one of the most expensive states in which to operate a business and as a result the state has earned a mixed reputation for its treatment of businesses. Recent trends support these conclusions. State workers’ compensation costs are once again on the rise after some years of stability, and a new one percent increase in the sales tax went into effect for the state of California on April 1, 2009. Further, several California counties and cities have recently increased their local sales tax rates. As a result, the California sales tax ranges from 8.25 percent in counties without add-on sales tax to a hefty 10.75 percent in some cities in Los Angeles County.

Even more challenging to a healthy economy are finances at the State level. With the State bleeding red ink due to a 26.3 billion dollar shortfall, and the overall economy in a downturn, the California legislature will need to carve out a budget deal premised primarily on drastic service cuts. However, many worry that the budget will continue to ignore the unfunded programs that are not sustainable due to ongoing revenue deficits that make voter approved commitments such as Proposition 98 education mandates unachievable. This makes the State’s future appear dim to many business leaders.

“California faces tough choices and spending reforms that are needed to resolve budget deficiencies, sufficient for California to become financially solvent, will not be easy ones to accept,” said Kosmont. “Pension and In Home Supportive Service reforms could save the State billions of dollars, however these and other reforms can be perceived as harsh. Ultimately, the California legislature needs to decide if they want to bring credit stability to a system that the business and financial community views as unmanageable and less creditworthy as each day passes.”

As Arizona stares down a bigger looming budget than our neighboring state of California it’s encouraging to see the Golden State making some tough decisions. Remember their voters shot down any new taxes a few months back basically telling the politicians to figure it out.

Here’s a great opinion from WSJ about California’s next move.

The top points:

Democrats were even forced to implement welfare reforms that most of the rest of America put in place 15 years ago: a work requirement and a four-year limit. The agreement eliminates about $2 billion a year in automatic benefit increases and saves another $1 billion by auditing in-home health-care payments that are notorious for fraud. “Only in California,” says Mr. Schwarzenegger, “is welfare still a way of life.”

And

Earlier this year, when the deficit hit $40 billion, the governor and legislature raised sales and income tax rates, making the Golden State the single costliest place in America to operate a business. Right on time, sales and income tax receipts are down $10.47 billion so far this year even with the higher rates.

Even oil drilling off the coast of Santa Barabara!

Instead, the new budget deal sensibly allows more oil drilling off the shores of Santa Barbara, albeit only on “existing platforms.” This will bring in $100 million more a year and could be the first step in shaking the state from its antidrilling phobia despite huge offshore energy reserves.

Tax system overhaul…

California will only generate more tax revenues through new businesses and jobs, and that will require a tax rate much lower than its top marginal rate of 10.55%. With 50% of Golden State income tax revenues coming from the richest 1% of residents, the state needs lower rates to avoid revenue boom and bust. The liberal obsession with income redistribution has destroyed California’s tax base. (Memo to President Obama, if he’s paying attention.)