Should Your Company Stay or Leave California?



Much has been written recently about why people are leaving California. Writers and analysts look at the number of people leaving the state versus the numbers coming in. Not everyone agrees on what trends show, and the numbers are somewhat confusing, but the state’s population is definitely down, and you might wonder what’s really going on?

Some Studies and Statistics

Let’s look at four views on California migration.

Joe Delaney, the Managing Director at Lifeguard Wealth, who has been advising Northern Californians on taxes and investments for 35 years, did some research and quoted the following statistics in an article he published about California Taxes.

“In 2019, 653,000 California residents left the state, likely in search of more affordable housing, significantly outpacing entry with just 480,000 coming in. While that’s a bit less than in 2018, the overall trend for the last decade has been a steady increase of leavers.
In 2018 and 2019, 765 commercial facilities left California, following a decade of about 13,000. Some big names left in 2020, including Oracle, Palantir, and Hewlett-Packard Enterprise. Charles Schwab is packing up to leave San Francisco for Dallas. Notable wealthy individuals have also left recently, including the world’s richest man, Elon Musk.”

According to Delaney’s research, people are moving to states like Nevada, Florida, and Texas because of lower taxes and housing costs.

According to a Public Policy Institute of California study, the population has declined partially because more people have died, fewer babies are being born here, and international migration has fallen. According to the survey, people moving to California are usually of working age, employed, and earning high salaries. They are less likely to be in poverty and tend to have higher levels of education than those moving away.  Many 20 somethings are moving to California after college to start their careers. People moving here see California as a great place to work and live.

An article published in CalMatters says “California is losing residents to other states and as the population ages, but those losses are being more than offset by new births and foreign-born immigration. The number of Californians is still increasing, but our once-robust growth rate has slowed.” According to a report by ABC online, another study by USC San Diego found that the percentage of Californians thinking of leaving was lower in 2020 than in 2019 (based on numbers gathered for 2019 in a UC Berkely study).

The bottom line is some people are leaving, and many for economic reasons, but according to the Public Policy Institute, most Californians still believe it’s a great place to live, and new citizens move here every day.  Californians leave because of taxes, the high cost of housing, and weather and environmental issues, but what should they consider before deciding? Joe Delaney has a suggestion.

Thinking of Leaving?  

In Delaney’s article, he wants readers who consider leaving California to first consider how state taxes are spent.  By studying the spending breakdowns and deciding if the state’s priorities align with their own, Californians can make a more informed decision.

California’s 2019-20 Budget was broken down as follows:

Category

Budget

Percentage

Description   

Education

$103.4B

49.5%

Includes early education, pensions, and state universities

Health and Human Services

$26.4

12.6%

Healthcare through Covered California, Medi-Cal, Senior Nutrition, and other assistance programs

Transportation

$23.5B

11%

Department of Transportation infrastructure work, Highway Patrol, DMV, and High-Speed Rail

Judiciary

$15.4B

7.4%

Judiciary and Criminal Justice, Corrections

Natural Resources

$2.9B

1.4%

Natural Resources and Climate Change Initiatives

Housing

$1.9B

.9%

Housing and Homelessness Programs

Debt and Liability

$18.9B

9%

Debt repayment and pension payments

Other Programs

$16.5

7.9%

Various programs from disaster preparedness to substance abuse prevention

Surplus

($21.5B)

n/a

Spent on Debt &Liability and other programs

Total Budget

$208.9B

100%

Almost twice Texas’s Annual Budget

Popular destinations are Texas, Nevada, and Florida. Compare California budget choices to those states. One good source for information is a List of U.S. state budgets – Wikipedia. You can see what state budgets are and how much is spent per citizen. The list shows, for example, that California spends $5,430 per citizen whereas Texas spends $3,759 per person, Nevada $8,782, and Florida $4,277 per person.

State budget’s aren’t always broken down the same way but the following numbers for Texas, Nevada, and Florida should help you compare.

Texas’s total budget for 20-21 was $251B
Education (both K-12 and Higher Ed) $77,319 or about 31% of the total budget
Transportation $30,936B or 12.3%
Health and Human Services   $84,137B or 33.9%

Nevada’s total annual budget 20-21 $29.4B
Education $7.1B or 24.2%
Infrastructure $2.6B or 8.9%
Health and Human Services $12.7B or 43.2%

Florida’s total 20-21 budget $92.2B
Education    $ 26.27B or 28.5%
Transportation and Environment $ 15.4B or 16.7%
Health and Human Services   $38.6B or 41.86%

After studying the numbers and making some comparisons, Californians must decide whether they agree with how their taxes are being allocated. If they do, great. If they don’t,  Delaney suggests they have three choices:

  • Freeze – Stay in California and live with things as they are.
  • Fight – Stay in California and fight for what they think is right.
  • Flight – Move to a state that they think does better.

For more on valuation, see Veristrat, or my YouTube channel

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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An open minded personality.. fun to be with, because of my positive vibes. God fearing, for without God I am nothing.. Moved with compassion when dealing with you, not selfish or self-centered...

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