Texas Gov. Rick Perry wrapped up his high-profile recruiting trip to California on Wednesday without having persuaded any businesses to relocate to his state — at least not yet.
On a conference call with reporters from Laguna Beach, the Republican said he spent his four days meeting with entrepreneurs and business leaders and held a reception for more than 200 California companies that have expressed interest in moving to Texas. His office later clarified, though, that the reception was actually with only 20 businesses.
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Such relocations can take time, but Perry also offered no details on prospects, much less concrete announcements.
In a heavily publicized media campaign last week, a privately funded marketing firm produced radio ads in California featuring Perry and denigrating that state’s taxes and regulation while touting the Texas business climate.
Perry said on the call that “this isn’t about bashing California; it’s about promoting Texas.” But he went on to offer a few digs. When asked if Texas’ light regulatory rules have contributed to a high number of worksite deaths, the governor said he thought it had more to do with high-risk oil and gas industry jobs prevalent in his state.
“Y’all in California are not very knowledgeable about the energy industry and that is a fairly dangerous workplace,” Perry said.
In fact, California is one of the nation’s top oil-producing states, with an industry dating to 1860. The state has ranked in the top five in production for 100 years and typically is third or fourth, said Don Drysdale, a spokesman for the California Division of Oil, Gas and Theothermal Resources.
In 2011, the last year for which figures are available, California produced 196.8 million barrels of oil and 244 billion cubic feet of natural gas. Unlike Texas and the other oil-producing states, California does not levy a state tax on the companies that extract the oil.
Perry, the longest-serving governor in the country, noted that he’s made similar business recruitment trips to California in the past, though often with far less fanfare. California Gov. Jerry Brown, a Democrat, last week dismissed the radio ads featuring Perry as a gimmick.
“Gov. Brown may call it poaching. I just call it giving people an option of where they can locate their business and be able to keep more of their money,” Perry said.
“You fish where the fish are,” Perry said Tuesday during an interview in Beverly Hills, his slow drawl emphasizing each point. “You’re at a tipping point in California from the standpoint of high-wealth innovators. Many are looking for somewhere else to go, and we’d like them to consider Texas.”
Perry’s not the only one who has come knocking.
The Arizona Commerce Authority recently opened offices in California staffed with employees to pitch businesses full-time. Nevada has hired recruiters as well. And Iowa Gov. Terry Branstad said last year that he was making calls to California companies looking to move.
Although interstate job poaching is nothing new, many states and cities have gotten downright aggressive about recruiting California businesses with promises of low taxes, loose regulations and a hard stance on organized labor. They’re betting that myriad new policies will push more corporations to look for a new home.
California voters in November approved Proposition 30, which raised income taxes for the state’s wealthiest residents and nudged up the sales tax.
They also voted yes on closing a corporate tax loophole for out-of-state businesses. And California’s cap-and-trade program requires businesses to pay for emitting carbon dioxide or other greenhouse gases above a certain threshold.
Gov. Brown dismisses the idea of firms fleeing the state. In a statement, his Office of Business and Economic Development noted that 257,000 private-sector jobs were added last year and that firms such as Samsung Electronics Co. and Amazon.com Inc. were expanding in the state.
“No state has ever poached their way to long-term prosperity,” the statement said. “This is something so many governors have done before and with the same ineffective results.”
Successful or not, poaching “does seem to have surged in the last few years,” said Greg LeRoy, executive director of Good Jobs First, a group that tracks government subsidies. “More public officials want to appear aggressive on the economy.”
Many economists say companies griping over higher taxes or new regulations is nothing new, but relatively few of California’s lost jobs can be blamed on businesses moving out of state.
From 1992 to 2006, for example, only 2 percent of job losses in the Golden State were because of firm relocations, according to a study from the Public Policy Institute of California. Fewer than 1 percent of the state’s jobs leave annually, and that has remained consistent through times of boom or bust.
“It’s a tiny percentage of the economy overall,” said Jed Kolko, co-author of the study. “But when a business does actually move, it does get a lot of attention and the public debate about businesses moving is very visible.”
After 15 years of being based in Northern California, trash and recycling firm Waste Connections Inc. moved its headquarters to Texas last year. Chief Executive Ron Mittelstaedt said the board also considered Nevada, Arizona and Colorado. But he said one thing was clear: California’s high taxes, pricey real estate and budget shortfalls meant that it was imperative to move.
“The overall cost of living and working in California just became too burdensome relative to other options out there,” Mittelstaedt said, pointing to the company’s top three rivals, which are headquartered in the low-tax states of Florida, Arizona and Texas.
Such tales don’t surprise Joseph Vranich, a business relocation specialist from Irvine, Calif. He scoffs at economists who insist that few companies are exiting California. He said the number of local firms seeking his advice for relocation has doubled since November.
“The number of calls is literally unprecedented,” Vranich said.
McClatchy Newspapers contributed to this report.
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