Individuals Leaving California, and Now, Sweet Lady Jane Closes Seven Stores

For the fourth year in a row, U-Haul said more people were driving one-way out of California.

U-Haul, a self-moving company, has noted that for the fourth year in a row, California showed the largest net loss of one-way movers. The company compiled data from more than 2.5 million one-way rentals in the United States and Canada.

Texas saw the largest net increase of movers for a third straight year, followed by Florida, North Carolina, South Carolina and Tennessee. Idaho, Washington, Arizona, Colorado and Virginia round out the top 10.

That should come as no surprise to California residents, who have lost a representative in the United States House of Representatives after the 2020 census was taken because of declining population.

According to the U.S. Census Bureau between July 2021 and July 2022, the state lost a net of 407,000 residents to other states.

Stanford University’s Institute for Economic Policy Research wrote that “California’s high cost of living has spurred many businesses and residents to leave the state, posing serious consequences for the state’s job market and fiscal outlook.”

Most likely high-income residents are leaving to states where there is no income tax and the cost of living, is lower.

Sweet Lady Jane closed seven stores, including the one on Montana Avenue in Santa Monica, citing the high cost of business in California.

In a January 4 story in the Santa Monica Observer January 4 story (“Sweet Lady Jane Closes Bakery on Montana Avenue, And It’s Other Six Locations”) that all seven of the bakery’s locations were closed December 31, including its location at 17th Street and Montana Avenue in Santa Monica.

The chain issued a press release: “We did not come to this decision lightly nor quickly. While the support and loyalty of our customers has been strong, sales are not enough to continue doing business in the state of California, allowing us to service our lease obligations and pay our treasured employees a living wage without passing those costs directly on to you.”

What costs are California business facing?

A piece in the January 4 Daily News (“Many increasing Costs of Doing Business in California”) explained that employers will see an increase in the Federal Unemployment Tax Act (FUTA) rate.

During Covid, more than $32 billion was made in fraudulent payments here and 22 states, including California borrowed money from the Federal Government to cover unemployment. States are required to pay the government back, with interest and most have – but not California, which now owes $18.9 billion.

In 2022-2023 California had a budget surplus and some businesses asked the governor to start paying its debt to the Federal government.

Governor Gavin Newssom originally agreed to make a $1 billion payment, but now wants to cancel that because of the shortfall in this year’s budget.

As a result of the nonpayment, the state will now have an increase in FUTA at .6 percent – and it is retroactive to 2023—small businesses will be asked to cover that.

Not only the “rich” will be called on to help fund the California budget, but starting in 2024, all wage income will be subject to payroll tax. (In the past 1.1 percent was taken only from only those earning up to $153,164.)

According to the California Legislative Analyst’s Office, “California Faces a $68 Billion Deficit. Largely as a result of a severe revenue decline in 2022-23, the state faces a serious budget deficit. Specifically, under the state’s current law and policy, we estimate the Legislature will need to solve a budget problem of $68 billion in the upcoming budget process.

“The state’s reserves are unlikely to be sufficient to cover the state’s multi-year deficits – which average $30 billion per year under our estimates. These deficits likely necessitate ongoing spending reductions, revenue increases or both.”

To see more from the Analyst’s office about the state budget https://lao.ca.gov/Publications/Report/4819#Solving_the_Budget_Problem

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