Make no mistake, small-business owner Jane Skeeter isn't happy about the heavy burden she says government regulations put on her architectural-glass manufacturing plant in Chatsworth.
She knows that plenty of other California businesses have left the state for cheaper locales with fewer costly rules.
Skeeter, who employs 28 people at UltraGlas, doesn't plan to follow them. It may cost her more than she'd like to buy the equipment required by state air-quality rules, for example. But she says the benefit of cleaner air, including lower health bills and fewer sick days for her workers and others, has to be counted to calculate the true cost of a regulation.
That's not an easy job. Trying to figure out the real cost of government regulations for California small businesses has been the Holy Grail for business advocates for years.
They hope that once they find that number, they can use it to persuade lawmakers and government agencies to think twice before piling on more rules. The issue has heated up as California's unemployment rate has climbed and the state's economy has tanked.
So hopes were high when the state recently released its long-awaited, first-ever comprehensive look at how much regulations cost California small businesses. But for many, the results fell short.
The report puts the tab for the state's economy at $492 billion a year in lower gross state product. That includes $177 billion in direct costs such as lost business revenue and sales tax. It also counts indirect costs such as missing spending in the community by workers when jobs were lost or never created because of the expense small businesses incurred complying with regulations. That's almost half the $1.1-trillion annual effect of federal regulations on the national economy, according to a study by the Small Business Administration.
The California study, required in a 2006 bill by Assemblyman Juan Arambula (unaffiliated-Fresno), counted as small any company with fewer than 500 employees, a measure often used by the federal government. The study was based on Forbes magazine's 2006 and 2007 rankings of the best states for businesses. Forbes compiled data from various studies and sources for the 30 measures it used to rank states in six categories. The California study extrapolated costs based on the state's rankings.
After the study was quietly posted on a state small-business website, some lawmakers and business groups seized on it as proof of the draconian nature of California regulations.
