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Thursday, May 17, 2012
Department: August 2006
California’s CEO
Bill Hauck dissects Alabama, interns and $3 gas
Story by Rich Ehisen
As president of the California Business Roundtable, Bill Hauck has a mission to steadily improve the state’s often-shaky business climate. To do that, he and the CBR, which is composed of many of the state’s leading private-sector CEOs, take a big-picture, proactive approach to key business issues as they make their way through the dangerous waters of the Capitol. We sat down with Hauck recently to talk about the year’s biggest issues: infrastructure and education.
Comstock’s: Assess the state’s current business climate.
Hauck: I think the business climate is generally good. The only cloud on the horizon is that in our research, when we ask voters whether the state is going in the right or wrong direction, we’re getting a substantial number saying ‘wrong direction.’ That’s a little troubling at a time when unemployment is as low as it’s been in a long time and when the economy is doing as well as it is. But the business climate overall at this point is certainly better than it has been for some time.
Comstock’s: Workers’ comp reform in 2004 was a major step toward easing some of the regulatory burdens of industry here. What should now be our top priority for closing California’s competitiveness gap?
Hauck: There probably is a litany of things, but clearly the state’s infrastructure issues are right up there, and hopefully we will begin to address those in November. I think between now and then we’re going to focus on the transportation, levee and school bond proposals, because if we don’t improve those basic physical facilities in a state like ours, which is growing at about 500,000 people a year, the economy is going to come to a halt. If people can’t move, goods can’t move.
Comstock’s: How in favor are you of the $37 billion bond package on the November ballot?
Hauck: First, it’s important to say that we don’t view this as the answer to the state’s infrastructure needs. This is only a jump-start. The state’s transportation needs, for example, are far, far greater than what is contained in the bond package. The bonds, however, are a reasonable way to get this process going.
The broader issue is finding ongoing revenue sources that permit a continuous, steady, reliable investment in roads and water systems, facilities that are required for people’s lives. That’s where we’ve dropped the ball.
Thirty years ago, this state was devoting almost 20 cents of every general fund dollar to these kinds of investments. Today it is probably two or three cents. That is nowhere near enough, given the growth of the state.
In transportation, where we have long depended upon gas tax revenue for funding, vehicle miles are increasing and gas tax revenues are decreasing, all while population is increasing. That’s not a formula for success, but nobody wants to talk about a gas tax increase at a time when gasoline costs $3 a gallon.
Comstock’s: There has been debate over whether or not businesses are really leaving the state. The Roundtable’s position is that it is not so much how many businesses, but what kinds of businesses are leaving or growing elsewhere. Can you clarify that?
Hauck: When you see reports in the media about jobs leaving California, there is no segmentation about which kinds of jobs are leaving, even though that has a huge effect on the economy.
One example was a small manufacturing company north of Sacramento which had always been in California and wanted to stay in California, but looked at what they would save if they moved to Alabama, South Carolina or Nevada. As I recall, either the South Carolina or Alabama options for this company meant an additional $2 million in net income. That raises a significant question for a small company: Is the quality of life here so much better that you can afford to forego $2 million?
We’re also concerned with the high-tech world, where a lot of the job growth in California has come in the last 10 years, because those companies can move. That is tough because those jobs tend to be higher-paying and also tend to create even more jobs.
There are also companies that are headquartered here but expanding elsewhere. We’ve seen a lot of the shift from California to Texas, for example, where companies have moved jobs because it’s less expensive for the company, it’s less expensive for the employees, transportation is better and overcrowding in urban areas is not as severe.
Comstock’s: The Roundtable recently released a report that said the state’s need for highly educated workers will grow significantly over the next few decades. What should business be doing?
Hauck: One of the ways they can get more involved, for example, is in sponsoring scholarships and internships so students who are in college can work for a summer and get acquainted with a particular kind of job and get mentoring from people who actually are in the workplace.
I think we could reach a lot more young people if that was an organized statewide effort. We could help them financially, we could get them better-acquainted with the kinds of jobs they think they would like to have, and we could eventually produce a workforce that is better-educated and better able to go right to work when they get through with the necessary education. By just doing something simple like that, businesses could produce a major impact in the state.
