Daily Business Report-March 11, 2019
The state Department of Finance projects that the corporation tax will grow another 6.4 percent this year, to reach $13.1 billion.
Commentary
Tax hikes are not needed;
California businesses already pay their fair share
By Robert Gutierrez | Special to CALmatters
With news of California companies moving to states where taxes and other operating costs are lower, it’s difficult to believe that some groups want to hit in-state employers with another tax increase.
But that is precisely the pitch made by special-interest groups trying to convince voters that California’s business taxes are too low. Taxes must be increased so businesses will pay their “fair share,” the argument goes.
What tax-increase proponents don’t mention is that the corporation tax is a growing and vibrant source of state revenue. From 1960 to 2018, California’s corporation tax revenue grew from $272 million to $12.2 billion – an increase of more than 4,500 percent. Even after adjusting the 1960 number for inflation, the growth was 535 percent.
Gov. Gavin Newsom’s Department of Finance projects that the corporation tax will grow another 6.4 percent this year, to reach $13.1 billion.
The tax is one of the big three sources of state revenue, along with the personal income tax and the sales tax. Businesses of all sizes pay the tax. Revenue generated by the franchise tax and the income tax on incorporated businesses pays for schools, public safety, medical assistance programs and much more.
Businesses also pay local taxes that fund local government services, and annual property taxes. Businesses, unlike homeowners, pay property taxes not just on land and buildings, but also on office furniture, computers and other equipment.
California’s state budget reserves have grown to $19.6 billion under this tax structure. With the state on solid fiscal footing, tax hikes are unnecessary, and likely will backfire.
California has the second-worst business tax climate in the United States, above only New Jersey, according to the Washington, D.C.-based Tax Foundation’s annual analysis. This severely hinders our ability to attract and maintain jobs and investments that fuel economic growth.
In 2016, 1,800 companies left California, according to the Dallas Business Journal’s review of the most recent available data.
The result: Californians missed out on their fair share of employment opportunities, as 275,000 jobs and $76.7 billion in capital funds were diverted to other states. Corporate income tax revenue won’t continue to grow if more corporations compare the costs of doing business and decide to leave the Golden State.
California’s problems would not be limited to job losses. Negative impacts of a business tax increase would be felt far and wide, because business taxes get passed on to consumers and shareholders, and have a negative impact on wages for jobs that are preserved.
The last thing middle-class Californians need is an even higher cost of living, wage stagnation or more risk for their retirement investments.
The principles of sound tax policy say a tax structure should generate sufficient revenue while keeping rates as low as possible, to improve economic competitiveness and minimize the impact on taxpayers’ behavior.
With the state enjoying a record-setting state budget reserve, and competition for jobs already at a fever pitch, tax increases on California employers should be off the table.
Robert Gutierrez is the president and chief executive officer of the California Taxpayers Association, Rob@caltax.org. He wrote this commentary for CALmatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.
___________________
Viasat teams with Facebook to help
bring community Wi-Fi to rural Mexico
San Diego Union-Tribune
Viasat’s Community Wi-Fi – which brings satellite Internet access within walking distance of more than a million people in rural Mexico – has gotten the attention of social media giant Facebook.
Last month, the Carlsbad satellite Internet provider said it has begun working with Facebook to expand the deployment of Community Wi-Fi service to rural towns that lack landline or reliable cellular Internet service.
___________________
San Diego County jobless rate
rises to 3.8 percent in January
Nonfarm employment down 23,700 over the month; up 22,300 over the year
The unemployment rate in the San Diego County was 3.8 percent in January 2019, up from a revised 3.1 percent in December 2018, and above the year-ago estimate of 3.6 percent, the state Employment Development Department reported. This compares with an unadjusted unemployment rate of 4.8 percent for California and 4.5 percent for the nation during the same period.
NOTE: Labor Force and Industry data contained in this release differ from previous information due to the U.S. Department of Labor’s annual revision process.
Between December 2018 and January 2019, total nonfarm employment decreased from 1,505,900 to 1,482,200, shedding 23,700 jobs. Total farm employment was unchanged at 8,100.
Trade, transportation, and utilities recorded seasonal losses totaling 9,800 jobs. The majority of this decline came from retail trade (down 8,900), followed by transportation and warehousing (down 1,100). However, wholesale trade (up 200) registered a job increase over the month. Utilities remained unchanged.
Leisure and hospitality dropped by 4,100 jobs. The employment decrease was concentrated in accommodation and food services (down 3,100), with 84 percent of the drop focused in food services and drinking places (down 2,600). Similarly, arts, entertainment, and recreation (down 1,000) saw cutbacks in jobs over the month.
Construction (down 2,600), government (down 2,000), educational and health services (down 1,900), professional and business services (down 1,500), manufacturing (down 1,000), information (down 300), other services (down 300), and financial activities (down 200) logged job reductions over the month. Mining and logging remained unchanged.
Between January 2018 and January 2019, total nonfarm employment increased from 1,459,900 to 1,482,200, adding 22,300 jobs. Total farm employment decreased by 300, from 8,400 to 8,100.
Educational and health services noted the largest gains over the year, adding 6,900 jobs. Health care and social assistance (up 4,000) accounted for approximately 58 percent of the gains, with the job boost mostly concentrated in social assistance (up 2,500). Educational services added 2,900 jobs over the year.
Employment advanced by 6,300 in leisure and hospitality, 4,700 in professional and business services, 3,200 in government, 2,900 in manufacturing, 1,600 in other services, and 400 in financial activities over the year.
Trade, transportation, and utilities (down 2,000), construction (down 1,300), and information (down 400) reported job losses over the year. Mining and logging remained unchanged.
___________________
Oncternal and GTx to merge, form
new company based in San Diego
BioSpace
San Diego-based Oncternal Therapeutics, a clinical stage oncology company, is merging with Tennessee-based GTx, a drug discovery firm. The newly-merged company will be headquartered in San Diego. Under terms of the deal, shareholders of Oncternal will become the majority owners of GTx common stock. With the merger, the new entity will create a publicly-traded, clinical-stage oncology company. The new company will be named Oncternal Therapeutics Inc. and plans to change its ticker symbol on the Nasdaq Capital Market to ONCT upon closing of the transaction.
___________________
USS Zumwalt departs San Diego
for its first operations at sea
Guided-missile destroyer USS Zumwalt departed San Diego on Friday for its first operational underway. Zumwalt’s crew recently completed a post-delivery maintenance availability designed to thoroughly evaluate the ship’s systems and equipment to include radars and engineering plant.
“My crew has been looking forward to continued testing and operations at sea, leveraging the newly installed capabilities of this platform,”said Capt. Andrew Carlson, Zumwalt’s commanding officer. “Our primary focus is executing a safe underway, while building both competence and confidence in operating Zumwalt across the spectrum of naval warfare.”
Zumwalt is 100 feet longer and 13 feet wider than the Arleigh Burke-class destroyer at 610 feet long, providing the space required to execute a wider array of surface, submarine, and aviation missions. Observers will also notice the angular design of Zumwalt’s hull and superstructure.
Zumwalt is under operational control of U.S. 3rd Fleet. Third Fleet leads naval forces in the Pacific .
The broad-based curriculum is the first of its kind in San Diego.
___________________
SDSU to offer new Bachelor of Arts
degree in Islamic and Arabic studies
San Diego State University will offer a new Bachelor of Arts degree in Islamic and Arabic studies beginning in fall 2019.
The interdisciplinary program is designed for students planning to pursue careers in which knowledge of Muslim-majority countries is essential; and for students intending to pursue advanced degrees in disciplines related to Islamic and Arabic studies. No other university in the region offers this type of degree.
“The major is very timely,” said Ahmet Kuru, political science professor and director of SDSU’s Center for Islamic and Arabic Studies. “The number of our students with Middle Eastern backgrounds has expanded given increased migration from the region and interest from international students.”
The new degree program offers a broad range of subjects, including economics, linguistics, women’s studies, history, religion, political science and culture. Students will discover a cohesive common core that represents both Islamic and Arabic emphases, Kuru said.
___________________
General Atomics demonstrates system
to remotely operate underwater vehicle
General Atomics Electromagnetic Systems (GA-EMS) said it has successfully completed the first end-to-end demonstration of its Aluminum Power System (ALPS), powering an underwater Remotely Operated Vehicle at a company test tank facility in San Diego. During the demonstration, a submerged ALPS provided hydrogen and oxygen to a Teledyne Energy Systems fuel cell, which provided electrical power to propel a remotely operated vehicle.
“This demonstration marks a major milestone for us, illustrating for the first time that ALPS can be successfully integrated to supply hydrogen and oxygen to fuel cells to generate electrical power and drive an underwater vehicle,” said Scott Forney, president of GA-EMS. “ALPS is a unique, high energy density system intended to provide up to 10 times the energy output of similar battery volume. With its unlimited shelf life, safe handling, and high energy density, ALPS can truly enable underwater “refueling stations” to support long-term underwater vehicle operations.”
___________________
Personnel Announcements
Staff changes at SDX:
Laurie Ganz leaves executive director’s post;
Georgina Forster becomes interim director
After four years working at SDX, formerly the San Diego Advertising Club, Laurie Ganz has left her director role to join the American Liver Foundation’s Pacific Coast Division in San Diego as special events manager.
In her new role, Ganz will coordinate three ALF fundraising events, including the Liver Life Walk San Diego on May 11 at Liberty Station NTC Park, Sip ‘n Savor Festival on June 2 at Liberty Station Barracks and Flavors of San Diego on Oct. 6 at the Fairmont Grand Del Mar. The events raise funds to support people living with liver disease and their families. ALF is the nation’s largest nonprofit focused solely on promoting liver health and disease prevention.
Succeeding Ganz as interim executive director is Georgina Forster with 15 years of advertising agency and digital marketing experience. Forster was previously with Mirum Agency in San Diego and New York. She has a degree in marketing from Lancaster University in Lancaster, England.
Founded in 1911, SDX is San Diego’s largest and oldest local networking and professional group for advertising and marketing executives with more than 100 companies representing about 300 members.
___________________
Cirque du Soleil exends its
VOLTA San Diego engagement
Cirque du Soleil has added one week of performances of VOLTA’s San Diego engagement this spring. The show will be presented under the Big Top at the Del Mar Fairgrounds, from April 3 through May 5.
The creators of VOLTA drew inspiration from the spirit of adventure that pervades the world of BMX, street sports and acrobatics. Whether they are on a bike, hopping from rooftop to rooftop, or double dutch rope skipping, urban sports enthusiasts constantly challenge themselves and defy convention.
A full-blown BMX park is mounted on stage in front of the audience for the breathtaking BMX finale as riders invade the stage to deliver a jaw-dropping, fast and furious performance of nonstop acrobatics on wheels. The riders go up the jump boxes and perform air tricks before landing and leaping off the ramps again, crisscrossing and spinning their bikes in midair in a spirit of brotherhood.
Energetic, urban and contemporary, VOLTA is a captivating voyage of discovery that showcases never-before-seen under the Big Top acrobatics in a visually striking world. Driven by a stirring melodic score and inspired in part by the adventurous spirit that fuels the culture of street sports, VOLTA is a story of transformation. It is about being true to oneself, fulfilling one’s true potential, and recognizing one’s own power to make it possible. Ultimate freedom comes with self-acceptance, and with the liberation of the judgement of others.
The name VOLTA refers to a sudden about-face, a change in emotion or idea often used in poetry. It also speaks to the jolt of energy delivered through the show.
Tickets, starting at $65, are available for purchase by visiting cirquedusoleil.com/volta or calling 1-877-9CIRQUE (1-877-924-7783).
___________________
