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Analysis: Early this year, Texas Gov. Rick Perry launched a public campaign to lure businesses from California to what he hailed as the lower tax environment of his home state.
Perry made a small radio ad buy of and string of media appearances bashing California’s business climate — and eventually provoked dismissive responses from California Gov. Jerry Brown and San Diego Mayor Bob Filner.
At a public debate Friday, a Republican state Senate candidate running to fill now-Rep. Juan Vargas’ vacated seat seized on the dispute to make the case for his candidacy.
Hector Gastelum, a Chula Vista real estate agent, said businesses were fleeing California for Texas at a rate of three per week, according to NBC 7 San Diego reporter Wendy Fry, who reported the comment on Twitter.
Since the state and local business climate is always a contentious political issue, we reached out to Gastelum to learn the source of the number he cited.
That’s when he delivered the quote we’re vetting here. He attributed the number to a recent story in U-T San Diego, and reiterated the need to lower taxes and repeal regulations in order to keep more companies from heading to Texas.
“The business climate here in California has made it so difficult on job creators and corporations that they say, ‘Look, I’m spending more money on taxes, and on keeping up with regulations, that my business is less profitable,’” he said. “And on top of being less profitable, we get to keep less money because of the higher taxes, and when you factor in that it’s more expensive to live in California, well it’s a no-brainer to me.”
Gastelum pointed to a Feb. 16 U-T San Diego story that compared the Texas and California business environments. It referenced a decades-long project by Don Walls, a consultant with Oakland’s Walls & Associates, which sells the business research information culled in its National Establishment Time-Series database, which claims to include every significant business relocation since 1990. It includes more than 4.2 million moves.
That’s where Gastelum found his numbers on businesses heading from California to Texas.
The database does show that of 36,000 corporations to leave California from 1990 to 2010, 3,300 ended up in Texas. That works out to 3.14 businesses per week.
But that’s only half the story.
Over the same period, 1,800 companies relocated from Texas to California, according to the same study. The U-T story that was Gastelum’s source noted this information. That means the net migration of businesses from California to Texas during the 20-year period was actually 1,500, for a statewide loss of 1.44 businesses per week.
But Gastelum said he just wanted to convey how many businesses wanted to leave California.
“My emphasis was on the jobs and corporations we’re losing,” he said. “And even with the ones that are coming here, we’re still losing. Both numbers are horrible. That’s why California is in the situation we are.”
Our definition of a “misleading” statement is one that takes an element of truth and distorts it or misrepresents it to give a deceptive impression.
That definition fits Gastelum’s statement. It’s true that three companies left California for Texas every week from 1990 to 2010, but by failing to give the full picture by mentioning the number of companies that relocated to California, Gastelum gave the impression that the phenomenon of losing companies to Texas was much more drastic than it is.
If you disagree with our determination or analysis, please express your thoughts in the comments section of this blog post. Explain your reasoning.
Correction: An earlier version of this story did not credit Fry for reporting Gastellum’s initial comment on Twitter.
I’m Andrew Keatts, a reporter for Voice of San Diego. Please contact me if you’d like at email@example.com or 619.325.0529 and follow me on Twitter:
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