National Survey Reports Many California Cities Continue to be Most Expensive in the U.S.
Claremont McKenna College's Rose Institute of State and Local Government released this week the 15th annual Kosmont-Rose Institute Cost of Doing Business Survey (Survey). The Survey reports that many California cities continue to be some of the most expensive locations in which to own and operate a business in the United States.
The 2009 Survey provides a complete ranking of 411 cities across the country in terms of their relative cost to business, and divides this ranking into five groups called "Cost Ratings." The Cost Ratings are categorized as Very Low Cost ($), Low Cost ($$), Average Cost ($$$), High Cost ($$$$), and Very High Cost ($$$$$).
The Survey is known best as a "tie-breaker" for companies that are contemplating a move or an expansion and have already determined the best combination of factors important to them, such as the quality of the labor force, the cost of housing, and the proximity to their suppliers and customers.
The ten most expensive cities in 2009, in alphabetical order are Akron, Ohio; Chicago, Ill.; Jersey City, N.J.; Los Angeles, Calif.; New York, N.Y.; Newark, N.J.; Philadelphia, Pa.; Phoenix, Ariz.; San Francisco, Calif.; and Tucson, Ariz. The ten least expensive cities in 2009, in alphabetical order are: Austin, Texas; Cheyenne, Wyo.; Dallas, Texas; Eugene, Ore.; Everett, Ore.; Fort Worth, Texas; Gresham, Ore.; Houston, Texas; Portland, Ore.; and Reno, Nev.
California cities such as Los Angeles, Oakland, San Francisco, and Santa Monica received "Very High Cost" ratings. As in past years, Los Angeles County continues to be the location of the Survey's most expensive jurisdictions with 11 of the 50 most expensive cities being in the County. Communities in western states such as Washington, Colorado, and Nevada consistently provide low cost areas in which to do business.
"California and many of its cities are now grappling with the triple witching hour of property tax losses, sales tax recession, and income tax losses," said Larry Kosmont, president and C.E.O. of Kosmont Companies and founder of the Survey. "Even well-run cities are having a hard time fending off tax increases, particularly since the financially faltering State wants to take back local redevelopment money and gas tax from their local cities and counties. However California should not raise anymore taxes at a time when businesses are already suffering, unless we want to see the exodus continue of companies leaving the State to other more business friendly locations."
Since the Survey's inception, California has consistently been one of the most expensive states in which to operate a business and as a result the state has earned a mixed reputation for its treatment of businesses. Recent trends support these conclusions. State workers' compensation costs are once again on the rise after some years of stability, and a new one percent increase in the sales tax went into effect for the state of California on April 1, 2009. Further, several California counties and cities have recently increased their local sales tax rates. As a result, the California sales tax ranges from 8.25 percent in counties without add-on sales tax to a hefty 10.75 percent in some cities in Los Angeles County.
To assist businesses in clarifying the collective impacts of these various issues and trends, the 2009 Kosmont-Rose Institute Cost of Doing Business Survey uses a proprietary basket of costs approach to compare state and local government fees as determinants of what drives businesses' location choices. The Survey objectively compares 411 cities nationwide based on the array of taxes and fees cities impose on businesses and that significantly affect business interests such as sales, utility, income, property, and business taxes. Two of the biggest determinants of a city's cost of doing business tend to be business license fees and property taxes.
To view the full press release, please visit http://www.claremontmckenna.edu/rose/kosmont/WireRelease2009.pdf.