By Senator Tony Strickland

As California struggles with a lingering budget deficit and rising unemployment rates, a lot of rhetoric is spent on promoting business growth and keeping skilled workers from moving to other states.

At the same time we are regulating businesses to the point that they cannot afford to exist, let alone be competitive. Our state cannot afford to see more businesses close or move to neighboring states with the promise of lower taxes and less restrictions.

A recent report by two business professors from California State University, Sacramento, concluded that the total cost of regulation to the State of California is $492.994 billion. That is almost five times the State’s general fund budget, and almost a third of the State’s gross product.  In terms of business growth, we are headed in the wrong direction.

It’s no secret that California is an expensive place to live and do business when compared with other states. However, small businesses with little start-up capital have little chance of surviving in such an unfriendly business climate. On a per-business basis, the total cost of regulation was $134,122.48 per business in 2007, according to the Varshney Study.

In terms of employment this total output loss is equivalent to the loss of 3.8 million jobs for the state each year. A loss of 3.8 million jobs represents 10% of the total population of California.  In terms of labor income, the total loss to the state from the regulatory cost is $210.471 billion. Finally the indirect business taxes that would have been generated due to the output lost arising from the regulatory cost is $16.024 billion.

These findings underscore a fundamental disregard on the part of our state for keeping jobs and attracting new businesses to California. As legislators re-examine revenue sources in our state, keeping small businesses afloat needs to be a priority. We must remember that 99.2% of the employers in California are small businesses and employ over half of our workforce.

I have worked hard this year to eliminate waste, fraud and abuse in California. Now we must work to protect our greatest asset, the very businesses that drive our economy, provide jobs and generate revenues for our state.

Businesses do need regulation to the extent that consumers, employees and our state are protected from fraud. But if we simply pile on excessive regulations, businesses will close or move, people will lose jobs and our state’s budget will be strained even further.

California has been lucky enough to host some of the most innovative and important new businesses sectors to materialize in our nation’s history. We should fiercely protect these assets by extending incentives to do business in our state, not cost prohibitive regulations.

Every neighborhood in our state depends on local small businesses like Papalino’s Restaurant, Charmaine’s Bouquet Canyon Florist, and Minnie Max Cleaners. These small, individually owned businesses in Santa Clarita may not be the giant corporations we read about in the business section of the newspaper or whose commercials dominate television, but they are the very people building our economy.

As I work with my fellow lawmakers to solve the ongoing budget issues in our state, I will continue to fight for small business owners by encouraging a hospitable environment in California for businesses to flourish.