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The Best and Worst States for Business, According to CEOs

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For CEOs, who naturally favor “pro-growth,” low-tax states, southern states present an undeniable bastion for business, according to Chief Executive magazine’s 2015 “Best and Worst States for Business” survey.

In this year’s survey, Texas remained the best state for business for the 11th year in row, followed by Florida, North Carolina, Tennessee and Georgia. Since the recession began in December 2007, 1.2 million net jobs have been created in Texas, while 700,000 net jobs were created in the other 49 states combined, the magazine reported. This job creation contributed toward unemployment rates 1% lower than the national average, an advantage rounded out by extremely favorable taxation and regulation, strong workforce quality, and very good marks for living environment.

Despite notably low unemployment, two of the greatest hubs for business drew particularly unfavorable marks from CEOs: California ranked last in the survey, preceded by New York. Illinois, New Jersey and Massachusetts completed the bottom five. CEOs gave these states the lowest ratings because of their high tax rates and regulatory environments. One CEO told the magazine, “The good states ask what they can do for you; the bad states ask what they can get from you.”

Compared to the 2014 rankings, Idaho has made the largest improvement, rising 10 spots to number 18, primarily due to high growth rates in GDP, while South Dakota dropped eight places, “even though quality-of-life attractions enhance the state’s low-tax bona fides,” the magazine reported.

Check out the full rankings below:

Best States for Business rankings

 

Napa Quake Economic Loss Estimates at $1 Billion

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A state of emergency was declared in California yesterday by Gov.

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Edmund G. Brown due to the effects of a 6.1 magnitude earthquake that rocked the Napa Valley area in northern California. The U.S. Geological Survey estimates that economic losses from the quake could top $1 billion and said there is a 54% likelihood of another large quake, magnitude 5 or higher, within the next week.

As of 4:15 p.m. Sunday, six aftershocks had been reported, four centered near Napa, ranging 2.5 to 3.6 magnitude. Two others, a 2.8 and a 2.6 were reported near American Canyon, according to the USGS.

The Napa quake is the largest in the Bay Area since the 1989 Loma Prieta quake, which was magnitude 6.9. That quake resulted in $1.8 billion in insured claims (in 2013 dollars) being paid to policyholders, said Robert Hartwig, Ph.D., president of the Insurance Information Institute.

In the Napa region, widespread damage has been reported to infrastructure, including roads and utilities and public buildings such as the Napa Post Office, the county’s administration building and numerous homes. The City of Napa reported that as of Sunday afternoon 120 patients had been treated or are being treated. Three patients—two adults and one child—suffered critical injuries, Gov.

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Brown’s office reported., adding that power outages also occurred, affecting 69,000 people across the region.

The costliest earthquake in United States history, was the Northridge Quake, with insured losses totaling $24.1 billion (in 2013 dollars). The U.S. has about 20,000 earthquakes annually, mostly small, and 42 states are at risk of quakes, according to the U.S. Geological Survey.

Despite the known high potential for earthquakes and resulting damages in the state, however, only about 12% of California homeowners purchase earthquake coverage, the I.I.I. said.

Of concern are business interruption (BI) losses, as the Napa region is a popular tourist destination. Many businesses that attract visitors, including wineries and restaurants, have sustained damage, both non-structural and structural, according to EQECAT.

According to the I.I.I.:

Earthquakes in the United States are not covered under standard homeowners or business insurance policies. Coverage is usually available for earthquake damage in the form of an endorsement to a home or business insurance policy. However, insurers that don’t sell earthquake insurance may still be impacted by these catastrophes due to losses from fire following a quake.

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These losses could involve claims for business interruption and additional living expenses as well. Cars and other vehicles are covered for earthquake damage under the comprehensive part of the auto insurance policy.

California Seeks to Limit Pro Athlete Workers Comp Claims

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Over the past few years, several former NFL players including Deion Sanders, Marshall Faulk and Michael Irvin have filed workers compensation claims in the state of California despite playing their careers outside of California. On September 9 the California legislature passed a bill intended to prevent these types of claims.

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The bill, AB 1309, would prevent professional athletes who have played less than 20% of their career in California, or have played seven or more seasons outside of California, from filing workers compensation claims in the state of California. Under current law anyone who pays state taxes in California are eligible for workers compensation benefits. This includes professional athletes who play for teams outside of California, but do pay state tax when they play away games in California.

Supporters of the legislation, including the National Football League and the Los Angeles Chamber of Commerce, claim that the legislation closes a loophole that is costing taxpayers money. “The state has a guarantee corporation, funded by taxpayers, that assumes responsibility for claims made and approved in the state, so out-of-state claims cause rates to be driven up for employers and taxpayers in the long run,” said Gary Toebben, Los Angeles Area Chamber of Commerce president and CEO.

The NFL Players Association (NFLPA) and AFL-CIO feel that athletes who play games in California, regardless of whether they play for a California team, should be entitled to benefits because they pay California taxes for the games they do play. The NFLPA claims that professional athletes pay $300 million per year in California income tax. Former NFL player Mel Owens, a county attorney for NBO Law who represents at least 1,000 retired football players suing for workers compensation in the state, claims that professional athlete claims in the state cost “one-tenth of one percent” of total losses to the California comp system. “Calling the California workers compensation law a ‘loophole’ is a fallacy—anyone that has played in California and got hurt in California pays state taxes and is entitled to benefits here,” said Owens.

According to state workers compensation records, there have been more than 4,400 claims filed by professional athletes in the state of California.

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Many of these are for head and neck injuries, with nearly 80% of them coming from former football players. By some estimates these claims could cost professional leagues as much as $1 billion to resolve. More than 2,300 of these claimants were also plaintiffs in the federal concussion lawsuit which the NFL recently settled for $765 million.

AB 1309 was passed by huge margins in both the California Assembly and Senate and is now on the desk of Governor Jerry Brown. The governor has until October 13 to sign or veto the bill.

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California Town Must Improve Risk Management or Lose Insurance Coverage

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Insured City

One southern California town has officially been warned that their insurance will be cut off if city officials do not adopt risk management policies.

Irwindale’s insurer, the California Joint Powers Insurance Authority, issued a performance improvement plan on August 28 and said city liability and workers compensation insurance will be terminated if it does not adopt the measures. Allegations of corruption have cast a pall over the police department and local government, and the city has been forced into almost $2 million in settlement payouts over the past five years, according to the Pasadena Star News.

“They’re on notice that they need to improve their risk management practices within the city’s operations, specifically in the police department, to maintain their insurance coverage with our agency,” JPIA’s risk management program manager Bob May told the paper.

Irwindale has been mired in controversy over the past few years. Of 24 police officers, three are on paid administrative leave and the department is conducting 14 internal affairs investigations. A local woman recently filed a $20 million lawsuit against the city, alleging that an officer sexually assaulted her during a traffic stop. Police Lt. Mario Camacho has been accused of retaliation by an officer under his command and of sexual harassment by a female cadet. Four city officials are charged with of misappropriation of public funds, embezzlement and conflict of interest resulting from a series of lavish trips to New York City that utilized over $200,000 of public funds.

Under the guidelines from JPIA, the city must hire a permanent human resources manager and council members must complete training on council relations and cooperation. If they do not complete the improvement plan, they risk losing coverage and will have to go to the open market or self-insure.

In September 2011, the JPIA issued a similar warning to the city of La Puente, Calif. As part of the “healthy members program” criteria, which outlines what members should do to stay within risk management guidelines, Insurance Journal reported that the town’s performance improvement plan required that La Puente “hire a permanent city manager, give notice of any harassment and retaliation complaints, and send council members to etiquette classes to learn how to get along.” The city recently completed the program and remains insured.

So far, the only town to be officially cut off by the California Joint Powers Insurance Authority is Maywood. The city was dropped in 2010 and the lack of insurance forced the local government to lay off almost all of its employees and disband the police department.