PRICES, JOBS TIE AT ISSUE.

Byline: Gregory J. Wilcox and Harrison Sheppard Staff Writers

Contrary to critics of state government, business costs in California are not driving out large numbers of companies and company relocations aren't a major factor in job loss, according to a study to be released Wednesday.

The Public Policy Institute of California analyzed statistics between 1992 and 2002, and found that out-of-state moves constituted less than 4 percent of business moves.

And when businesses did move, most stayed within the state, the study found.

The conclusions contradict claims by some politicians and business groups that California's taxes and high costs are driving large numbers of companies to other states.

``Given our finding that the role of interstate business relocation in employment change is negligible, arguments about a hostile business climate based on anecdotal evidence of businesses leaving California should be treated with caution,'' the researchers said.

But some of those critics point out that the institute's study doesn't reflect what's happened in the past three years, such as soaring housing costs here.

Jack Kyser, chief economist at the nonprofit Los Angeles County Economic Development Corp., said that the institute's findings don't reflect the reality of the executive suite or shop floor.

``This is the oldest of news, to be very blunt. And I say this as we are busy trying to retain the North American headquarters of Nissan,'' he said.

The company is considering relocating to Nashville or Dallas to trim costs and it will be a loss of 1,300 high quality jobs, he said.

Two years ago Kyser began keeping a list of companies that fled Southern California because of high business costs and it now numbers 41. Probably double that number have left the state unnoticed.

Especially hard hit are manufacturing and entertainment.

For example, of major films currently in production, 17 are being shot in the Los Angeles area, nine elsewhere in California, 36 elsewhere in the United States and 32 in foreign countries.

Kyser also notes that the institutes study is somewhat outdated because the time frame ended just as housing prices began spiking in most areas of the state.

``When you are fighting for survival, in some cases it does make a difference,'' he said of the high cost of doing business here.

``As the saying goes, Houston, I think we have a problem.''

Gov. Arnold Schwarzenegger's office and the California Chamber of Commerce both criticized the study, saying it was based on old data and didn't track figures such as how many California businesses chose to expand in other states.

Schwarzenegger campaigned during the 2003 recall partly based on criticism that the state's policies were driving out businesses.

David Crane, the governor's special adviser on jobs and economic growth, said the state's business climate reached its worst point after the study period.

``That report goes to the end of 2002,'' Crane said. ``It doesn't include 2003, which I think was the worst year for worker's compensation costs. You clearly had employers deciding to add jobs outside the state that if everything else had been the way it was before, they would've added them inside the state.''

He said the loss of jobs that should have been added is no different than losing jobs that were already in place. Those jobs were lost because workers' compensation costs, among other problems, were making it too expensive here. Last year Schwarzenegger and the Legislature worked out a workers' compensation reform package that has reduced those costs.

Crane said by the end of 2003, workers' compensation was costing businesses $30 billion a year, but the figure has been reduced to a projected $15 billion this year.

The Associated Press contributed to this story.

Greg Wilcox, [phone]

greg.wilcox(at)dailynews.com