In a time of massive criticism of its business climate from inside and outside the state, California steadily continues its many policies of corporate largesse — big handouts to private companies.
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Which outfits get the money depends a lot on what a particular company does and who owns it. That makes these gifts political, designed to push the agenda of whomever is governor at any moment.
This is nothing unique. Other states do it all the time; in fact, government handouts in the forms of cash, tax breaks or free land are some of the driving forces behind California’s loss of about 1% of its populace over the last three years.
When Toyota Motor Co.’s U.S. headquarters and its more than 6,000 employees moved from the Los Angeles suburb of Torrance to Plano, Texas, free land and 10 years of tax breaks were at least as big a factor as the Dallas suburb’s more central location in the country, even though the location was all Toyota talked about. Similar factors were at work when Nissan USA moved from Carson, south of Los Angeles, to Tennessee. Nevada’s growth also has been fueled by land and tax giveaways.
California gives plenty to businesses, though. There are minority-owned business grants, often amounting to hundreds of thousands of dollars each. There are tens of millions of dollars in small business grants annually, even when the state runs a deficit.
There have been thousands of COVID-19 pandemic-related grants lately, many to outfits that retained employees despite vastly reduced profits during the pandemic. This is not to mention tax benefits regularly given to film and TV producers, which have brought billions of dollars worth of production back to California from places like Georgia, North Carolina and Canada’s British Columbia, all of which had used tax exemptions to wrest away a lot of California production.
There is no sign of this phenomenon abating. Just take a look at the agenda from one meeting of the state Energy Commission, whose members serve at the governor’s pleasure. Under Gov. Arnold Schwarzenegger, car dealers got tax breaks and the state Air Resources Board gave many millions to automakers trying to comply with California’s tough smog standards, which aim for zero emissions from new cars by 2035 and now will require new trucks sold after 2036 to be electric.
New grants on the consent calendar (where staff-proposed ideas are usually adopted without discussion by commissioners at their formal meetings) in May were focused on getting rid of fossil fuels like natural gas in food production.
It’s not that the Energy Commission has expert knowledge of food production, but the May 10 agenda included a $1.2 million grant to America’s Best Beverage Inc. for installation of electric coffee roasters to replace gas-powered ones at the company’s Oakland facility. The grant was specifically designed to be exempt from the California Environmental Quality Act, so no one will ever know if the new roasters are environmentally better or worse than the old ones.
Not to be partial to one coffee producer over others, the commission also handed $600,000 to the somewhat smaller Red Bay Coffee Co., also in Oakland. Red Bay also will substitute electric roasters. Said the grant resolution: “The project is expected to provide benefits to priority populations through pollutant emission reductions.”
Translation: This was intended to benefit the health of the mostly-Black populace around the Red Bay plant. Then there was $890,000 for Pacific Coast Producers to reuse waste steam condensation to cut energy consumption at a tomato processing plant in Woodland. This one was also intended to reduce greenhouse gas emissions, a priority of Gov. Gavin Newsom but not one likely to be funded by many Republican governors.
Yet another grant, this one $500,000, went to the E&J Gallo winery for use in three facilities in the Central Valley, where aging and inefficient electric refrigerating systems will be replaced by newer ones using less power.
These grants are very like the ones given to new hydrogen-fueling stations under former Gov. Jerry Brown, which neatly fit his priorities. So folks claiming California is anti-business have it wrong. This state is not anti-business, but rather is plenty friendly to businesses — so long as they’re the correct businesses.