Cost of Regulation in California $493B a Year

A study purportedly done at the behest of California Governor Arnold Schwarzenegger shows that the Golden State inflicts a burden of $492,994 billion a year in regulatory mandates on business. This is nearly five times the state's general fund budget and almost a third of the state's GDP.

The "Cost of State Regulations on California Small Business Study," conducted by Sanjay B. Varshney, Ph.D and dean of the College of Business Administration at California State University, Sacramento, "uses original analyses and a general equilibrium framework to identify and measure the cost of regulation as measured by the loss of economic output to the State’s gross product," according to the author.

Varshney says the cost to each small business amounts to nearly $135,000 annually, on average, while small businesses account for 99.2 percent of all statewide enterprises. He writes:

The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $4,359.55 per small business, indirect business taxes not generated or lost were $57,260.15 per small business, and finally roughly one job lost per small business.

The result, he says, is the loss of 3.8 million jobs statewide, roughly one-tenth of California's population.

Now, you know why economic recovery in California will not only be slow but probably non-existent.