Category: San Francisco/California

Daniel Weintraub reports on buyers’ remorse over the California state prison guard contract. Remorse is one thing; finally taking action to fix it is quite another. [Update]

Sam Zuckerman reports in this morning’s San Francisco Chronicle on the results of a study by Bain & Co. to be released later this week on California’s climate for employment.

The cost of doing business in California is about 30 percent higher than in the average Western state, largely because of higher wages and benefits, according to the study.

Bain also attempted to measure the cost, uncertainty and complexity of California’s environmental, labor and other regulations. It constructed what it called a regulatory hassle index that took into account such factors as compliance costs, the threat of lawsuits and delays in obtaining permits that hamper operations.

The index showed that “California is far worse than any other state in the union, by a very significant margin,” said Jeff Melton, a partner in Bain’s San Francisco office.

It’s blowing like crazing outside today — no rain yet, just gusty high winds all morning. Apparently we’re in for this kind of weather — including heavy rain eventually — through tomorrow. At least when it blows around here, it’s still 64 degrees outside!

As far as the hotel (and presumably restaurant) industry is concerned, Silicon Valley remains in not just a recession — but a real depression

The federal government dropped its per-diem rate for Silicon Valley on Oct. 1 by 30 percent — to $106 a night to reflect the lower costs. Only nine areas nationwide saw the federal per-diem rate drop while 23 were elevated and the rest remained the same.

Here’s an excellent article on the pension crisis in California that’s sapping significant funds out of local government budgets as a result of dramatic increases made to municipal employee pension plans during the height of the bubble.

More on the pension mess in California — this time in San Diego — from the Sacramento Bee’s Daniel Weintraub.

Sacramento Bee columnist Daniel Weintraub identifies one of the key issues with California’s current economic crisis: the California rich aren’t getting richer. The economics are pretty amazing:

The million-dollar earners peaked in 2000, when 44,000 of them — about enough to fill your average baseball stadium — reported incomes totaling $172 billion and paid more than $15 billion in taxes. The tax take from that relative handful of returns accounted for more than one-third of all income tax paid in the state.

The next year, the number of returns reporting incomes that high slumped to 29,000. Their combined income also declined, by nearly half, to $95 billion. And here was the killer: Their tax liability dropped from $15 billion to just under $8 billion. The money lost to the treasury that year would have been enough to pay for the state’s entire commitment to higher education, or most of the cost of the Medi-Cal system that provides health care to six million of California’s poorest residents.

It was a fascinating transfer of wealth — from investors in dot.com companies that got public into the coffers of the State in Sacramento. A 100-year flood. As Weintraub concludes:

California’s treasury is highly dependent on taxes from the state’s most affluent residents. When they do well, their wealth is shared with the rest of us. When they do less well, we also pay the price.

Weintraub noted earlier this week that a bill (AB 1815) has been introduced to increase income tax rates on top income taxpayers in California.