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California Business Leaders Speak Out on the Economy

The California Federation of Commerce and Education released its 2012 survey of business executives. Business executives are slightly more optimistic about the State’s economy as well as the prospects for their own businesses. But they continue to have a poor outlook on the long-term California business climate, mainly citing overregulation as the main problem. Eighty percent stated California was “on the wrong track” while only 19% felt that California is “going in the right direction.” While businesses are slightly more upbeat about the short-term improvement in the California economy, they are decidedly more negative about the long-term prospects for the State. About half of business executives say that the economy is in poor shape improved from 61% saying the same thing a year ago. Nearly one-third of businesses reported adding jobs in 2011, compared with only one-quarter reporting new jobs added in 2010. Looking ahead, 31% of businesses plan to add employees in 2012 up from 27% saying that they would add people in 2011.

Sixty-four percent said that California is a very difficult place to do business due to “too much government regulation.” Regulations included California’s complicated workplace regulations. The next concerns were high state and local taxes, and the state budget deficit.

Climate, weather and quality of life were identified as the top advantages to doing business in California. Some state business leaders were identified as positive as was the State’s culture for innovation.

Business leaders believe that State elected officials should be focused on the economy and job creation. The other high priority issues to be addressed should be labor regulations governing overtime, wages and rest periods, and the quality of public schools and higher education.

Fifty-nine percent of business leaders believe that the State’s budget problems should be resolved mostly through budget cuts. Thirty-eight percent say that they would prefer a combination of budget cuts and higher taxes. Top spending priorities or business leaders remained: K-12 education should be most spared from budget cuts, followed by economic development and job creation, higher education, and courts and public safety. Top change is to reform public pensions to more resemble private sector 401(k) plans.

Since education makes up half of the State’s budget, business leaders want to reform the education system to strengthen the role of the principal, expand teacher training, ease termination of incompetent teachers, and pay higher salaries to teachers who improve student performance. The business leaders would like to guarantee funding to the University of California and California State University systems in order to ensure a continued innovative and skilled workforce.

To see the complete survey response, go to www.calchamber.com/businessclimate.