California flunks small business report card

East Bay Times - Editorial

We have gotten quite accustomed to reports about California's terrible business climate and companies moving to, or expanding in, other states that offer greater economic freedom and fewer crazy regulations and taxes. Add another one to the list.

According to the fifth annual Thumbtack Small Business Friendliness Survey, based on the responses of more than 12,000 small business owners who utilize the website to offer their services, California is failing small businesses, earning a grade of "F" and ranking 33rd of the 35 states evaluated. Only Connecticut and Illinois scored worse.

As is also a common theme among such evaluations of states' business friendliness, Texas topped the list, followed by Utah and Tennessee, which also earned "A-plus" grades, and Georgia and Colorado, which each received an "A."

"Tax rates are less important than regulatory complexity," the study concluded. "For both cities and states, tax rates still matter far less than either tax-related regulations or the burden of complying with tax-based regulations."

California received an "F" in eight of the 10 categories analyzed -- ease of starting a business; regulations; health and safety; employment, labor and hiring; tax code; licensing; environmental; and zoning. It earned middling scores in ease of hiring ("C") and training and networking programs ("B-minus").

California cities did not fare well, either. None received better than a "C" grade, earned by Anaheim, Oakland and San Diego. Los Angeles, Riverside and San Jose each received a "C-minus," while Sacramento got a "D" and San Francisco earned an "F," racking up the third-worst scores of the 78 cities analyzed.

"State fees make it very difficult for new businesses to thrive," a home theater specialist responded. "Doing business is never easy, but the regulations and red tape make it much harder than it needs to be, especially at the city level," added a door installer.

Often, those regulations are unnecessary and counterproductive, particularly when it comes to licensing laws, of which California has among the most burdensome rules in the nation.

To take one example, "State licensing is not an indicator of professionalism or competence in the tree service business," a tree trimmer reported. That's right. California is one of a small number of states that requires a license for tree trimming.

California lawmakers need to wake up and smell the moving vans. This may come as a shock to them, but many other states do not view businesses as the state's personal piggy banks to be plundered or playthings to be micromanaged to fit our overlords' ideologies, and they are all too willing to welcome our entrepreneurs and hardworking employees, willing and able to offer new and better goods and services to their citizens.