Month: September 2012

California Defies High Business Tax Rates with Boost in Job Creation

Job-creation-300x200California, which sent a delegation to Austin, Texas last year to find out how the Lone Star State had beat it in employment growth, surged ahead of Texas to lead the nation in job creation for the last two consecutive months.

Texas led California in job creation in 18 of the last 24 months, since August 2010, the first month both states posted employment gains following the longest recession since the 1930s.

Texas’s economic performance impressed California Assemblyman Dan Logue enough that the Republican from Linda organized a delegation of California lawmakers and Lieutenant Governor Gavin Newsom, a Democrat who was San Francisco mayor, to Austin in April 2011.

California added 365,100 nonfarm jobs in the year ending in July, a 2.6 percent increase and the state’s largest 12-month gain since 2000. Texas picked up 222,500, or 2.1 percent, according to U.S. Labor Department statistics. California also outpaced Texas the prior month.

California’s job picture reflects the depth of the recession in the state, where the economy relies more on housing and construction than energy-dependent Texas, said Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles. “California got hit a lot harder than Texas during the downturn,” Thornberg said. “We hit the ground pretty hard, so you’d expect more of a bounce back.”

The increase runs counter to the notion that growth favors states with lower taxes. California, the world’s ninth-biggest economy, has the highest statewide sales tax in the U.S., at 7.25 percent. That would rise to 7.5 percent if voters approve a November ballot initiative. The income tax rate for those making $1 million or more a year, now 10.3 percent, would rise to 13.3 percent, the most of any state.

For information on California Business Law, contact a professional California Business Attorney. In the San Jose area or within California, call Amiel Wade at Wade Law Group at(888) 909-9430.

California Clears Way for Facebook Acquisition of Instagram

facebook-buys-instagram-for-1-billion-0-300x236Facebook was cleared by the state of California to issue stock for its purchase of Instagram. State officials declared the transaction was “fair, just and equitable” at the conclusion of a hearing in San Francisco before the Department of Corporations. The decision was expected.

The hearing was unusual but not for California. California is one of six states that allows for companies to seek permission to issue stock rather than dealing with the Securities and Exchange Commission.

Facebook agreed to buy popular mobile photo-sharing app Instagram in April for $300 million in cash and nearly 23 million Facebook shares. The shares were valued at $31, making the purchase worth at the time a cool $1 billion.

The transaction is no longer worth as much after Facebook’s bungled initial public stock offering in May. The social networking giant priced its shares at $38. Since then the shares have dropped below $20.

The deal drew huge headlines because the company was so young (launched in late 2010), has only 16 employees and, as Systrom acknowledged during Wednesday’s hearing, does not make any money. Asked how Instagram makes money, Systrom said: “That’s a great question. As of right now, we do not.” Systrom, like many in Silicon Valley, said he wasn’t focused on generating revenue, just on making “something that people really loved.”

But in the end, the company that had “defaulted” to remaining independent decided the Facebook acquisition was “the right thing to do for everyone involved” considering prevailing market conditions and competition from major players, Systrom said.

None of the details that emerged at the hearing were new. Facebook Chief Executive Mark Zuckerberg negotiated the deal over Easter weekend with Systrom. Systrom said Instagram had talked with potential acquirers big and small but never received a formal offer. The final valuation of Instagram before the Facebook deal was “just south” of $500 million at the end of March, Systrom said.

For information on California Business Law, contact a professional California Business Attorney. In the San Jose area or within California, call Amiel Wade at Wade Law Group at(888) 909-9430.

California Court Mistakenly Posts Secret PG&E Settlement with Teen Girl

PGE-300x201Pacific Gas & Electric Co. agreed to pay more than $2 million to a teenager burned in the 2010 San Bruno gas pipeline explosion that killed eight people and destroyed dozens of homes, according to secret settlement documents mistakenly posted by a California court.

The documents provide the first glimpse at settlements reached by the utility in lawsuits filed by victims of the blast. Details of settlements reached with more than a quarter of the roughly 400 plaintiffs have previously been confidential, the San Mateo County Times reported on Wednesday.

The documents posted on the San Mateo County Superior Court website show the company paid the teenage girl $1.8 million and an additional $677,700 to cover her attorneys’ fees and $19,400 for medical expenses. The girl suffered second and third-degree burns in the blast that was blamed on an inferior pipeline weld. Her injuries required extensive treatment and will likely leave her with permanent scars, the lawsuit states.

The documents, sealed by court order, were filed on July 18. It was not immediately clear how they got online.

“From the clerk’s office to the IT department, something happened,” said Judge Steven Dylina, who is presiding over the girl’s case. “I don’t know where the glitch is.”

The page on the court’s website connected to the San Bruno blast was briefly shut down but was back up on Thursday.

PG&E would not say if the disclosure would impact other civil cases. Some victims have complained that lack of information about other settlement amounts has made it difficult for them to evaluate offers from the utility.

“The contents of any settlement remain confidential but we stay committed in our efforts to resolve these matters as quickly and fairly as possible,” PG&E spokeswoman Brittany Chord said last Thursday.

For information on California Business Law, contact a professional California Business Attorney. In the San Jose area or within California, call Amiel Wade at Wade Law Group at(888) 909-9430.

California Lawmakers Seek Restrictions on Environmental Lawsuits

enivronmental-law-300x144Four Orange County Republican state lawmakers have signed on to co-author last-minute legislation that would restrain litigation under California’s environmental-protection laws.

The proposal, Senate Bill 317 by State Sen. Michael Rubio, D-Bakersfield, seeks to scale back lawsuits faced by construction projects under the California Environmental Quality Act, a 42-year-old law that requires state and local agencies to analyze and require mitigation for the environmental impacts of proposed developments.

CEQA, as the law is known, has long been a source of contention among Republicans, who say its provisions, particularly those that allow for litigation by environmental-protection groups, dramatically increase the cost of doing business in California.

Every year, it seems, the Legislature approves a handful of bills that create CEQA exemptions for specific projects, like the one approved last year for the proposed Farmers Field football stadium in downtown Los Angeles. Republicans, however, have pushed for broader reforms and some said Wednesday that the Rubio bill might just be the solution they’ve been looking for.

“It’s closer than we’ve ever been to real CEQA reform,” said Assemblyman Don Wagner, R-Irvine, one of the Orange County co-authors.

Joining Wagner as co-authors is Assemblyman Chris Norby, R-Fullerton, and state Sen. Mimi Walters, R-Laguna Niguel, and Senate Republican Leader Bob Huff of Diamond Bar, whose district includes a piece of Orange County.

“It’s still percolating,” Norby said, “but I think if we’re going to have a bipartisan vote on it, it will pass.”

The proposal is likely to face opposition from the environmental lobby as well as some Democrats in the Assembly and Senate. Earlier this month, more than 30 Democratic lawmakers sent a letter to Assembly Speaker John A. Perez, D-Los  Angeles, and Senate Leader Darrell Steinberg, D-Sacramento, saying they’re concerned about proposals to weaken CEQA.

For information on California Business Law, contact a professional California Business Attorney. In the San Jose area or within California, call Amiel Wade at Wade Law Group at(888) 909-9430.