California, despite being the world’s fifth largest economy, has a long history of increasing burdensome regulatory and tax requirements on California’s businesses and economy, giving California the shameful distinction of being the 3rd worst state for small businesses, ranking 48th in terms of “Cost of Doing Business” and “Business Friendliness”, and 47th in the Tax Foundation’s State Business Tax Climate Index Rankings. Not to mention that California has one of the highest costs of living.

One of the incredibly frustrating things about being a California resident or business owner is the continually dismissive and ignorant attitudes on the part of policy and law makers towards California’s increasingly oppressive business environment. A perfect example of this is the Port of Long Beach unanimous commissioners’ vote yesterday to impose a $35 per TEU (twenty foot equivalent unit) on local drayage moves effective June 1, 2008, despite the strong public opposition from shipper trade groups. Via Logistics Management:

In an interview with Logistics Management last evening, Kanter noted that the commissioners considered arguments by shippers against the measure, but were determined to advance the process, nonetheless.

“The West Waterfront Coalition was one group that voiced its opposition,” he said, “and I’m sure there will be others when the Port of Los Angeles considers the same kind of action on Friday.”

Indeed, other shipper associations–including the National Industrial Transportation League and the Retail Industry Leaders Association–have publicly stated why the action will be harmful to their constituents.

The tax would apply through 2012 when all trucks must meet 2007 emission standards. Marine terminal operators will be made responsible for collecting the tax from cargo owners. These monies would then be turned over to the port—where they will be placed in a special port-established fund. This fund would be used to finance the replacement and retrofit of the drayage fleet.

I wish I could say this is unique, but this kind of thing happens all the time in California. I’d say that the port of Oakland should thank Long Beach (and eventually Los Angeles) for the increased business over the next few years except that I am quite sure that Oakland will follow suit one day as well. I don’t know enough about this proposal, but I would be very suspicious of any “tax” that gets deposited into a port controlled fund that will supposedly be used to retrofit drayage trucks in the future. Cargo owners may try to absorb the extra costs in the beginning, but as they will figure into importers’ total landed cost it’s likely they will eventually be passed onto the consumer. Already the ports of Long Beach and Los Angeles have seen their container volumes decline from 2006. No one is disputing the need for environmental improvements in and around the ports, in fact there is enthusiastic support from all participants, but California seems intent on ignoring business’ concerns and continuing to come up with ill-advised policies to further drive business from the state.

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