California’s economy has taken its fair share of hits over the last few years, and it appears the road to economic recovery continues to be an uphill battle. California ranked 34th in real GDP growth in 2011, and we continue to have one of the worst unemployment rates (10.9 percent) in the country.
The reasons are complex and multi-faceted, but one thing is clear. Our environmental regulatory system is obsolete, duplicative and burdensome in many areas, which is hurting our business community’s ability to thrive and compete in a global marketplace. A 2009 study, commissioned by the California legislature, found that state regulations cost almost $500 billion per year or five times the state’s general-fund budget. And for the eighth year in a row, Chief Executive ranked California the worst state to conduct business, largely due to onerous environmental regulations.
This burdensome regulatory environment doesn’t exist in a bubble. It directly impacts hard-working families, entrepreneurs and the business community throughout California. According to Spectrum Location Solutions, more that 254 businesses moved some or all of their operations and employees out of the Golden State in 2011, up from 202 in 2010 and 51 in 2009. In other words, California lost approximately five businesses every week, largely because the cost of opening, operating, growing or expanding a business is simply cheaper in neighboring states.
And Californians are starting to catch on. A recent Public Policy Institute (PPIC) poll found that 50 percent of likely voters believed government regulation caused “more harm than good” – while only 43 percent thought that government regulation was “necessary.”
In 2011 Sen. Fran Pavley (D-Agoura Hills) and Sen. Ron Calderon (D-Montebello) introduced SB 617, which required state agencies to review regulations with an estimated $50 million economic impact or more on businesses to consider how they impact investment, innovation and jobs. It received widespread bipartisan support, and Governor Jerry Brown signed the bill into law in October 2011.
But more action and leadership is needed, which is why I’m sponsoring AB 1850. Key provisions of the legislation would require the California Energy Commission (CEC) to use the most current methods of calculating regulatory costs and data possible; allow the CEC to eliminate regulations no longer necessary; and ensure the CEC only retains independent consultants and expertise.
This legislation is greatly needed because the CEC, without legislation, has interpreted appliance efficiency standards – refrigerators, washing machines – to now cover consumer electronics. The CEC’s authority regarding appliance efficiency standards has not changed significantly in more than 30 years, but the energy-using product and equipment landscape certainly has. For example, today’s average television set uses less energy than a 100-watt incandescent light bulb. Furthermore, a recent study by the Berkeley Research Institute found that the CEC used outdated data and flawed methodologies for its television and battery charger regulations.
AB 1850 would help ensure that regulatory standards do not harm employment, competition or product innovation.
It’s important to note that the consumer electronics industry has a long record of commitment to socially and environmentally responsible business practices in everything from green design and manufacturing of new products to electronics recycling.
If we expect industry to demonstrate good environmental stewardship, government must demonstrate a sound and reasonable regulatory approach. California must also be a good partner by not adding an unnecessary layer of regulation to hamper California businesses in a challenging economy. It’s the same reason I sponsored AB 155, which helped even the playing field for retailers throughout California by closing a legal loophole, created by laws in the 1930’s, that allowed Internet retailers to avoid collecting state sales tax. Likewise, we need to ensure that California retailers are not losing business to those selling products not compliant with CEC regulations.
With federal funds dwindling and the economic horizon not looking substantially brighter anytime soon, we must solve the problem ourselves through legislation like AB 1850. We have the tools and the power to improve our business climate – now is the time to act.