California remains in the bottom third of Forbes.com's The Best States for Business rankings, which relies partially on PRI's U.S. Economic Freedom Index and U.S. Tort Liability Index.  Despite moving up from 36th to 34th place, the state's regulatory climate is still extremely hostile to business.

It ranks dead last in business costs (cost of labor, energy and taxes) and only 39th in regulatory environment (regulatory and tort climate, incentives, transportation and bond ratings).  These rankings are no surprise given the legislature's marked propensity to regulate and tax businesses, spend obsessively, and rack up Everest-sized sums of debt.  Contrast this with another Pacific Coast state. 

Washington State jumped from 12th place last year to fifth in this year's rankings, including a top five ranking in the regulatory environment, labor, and growth categories.  Washington Governor Christine Gregoire touted, "We've made improvements to get out of the way and let innovation and creativity take over."  This laissez-faire attitude has benefited Washington in other ways as well. 

In Forbes.com's 2007 Best Places for Business and Careers, three of Washington's metro areas rank in the top 50 and five rank in the top 75.  To the contrary, California has only one metro area (Santa Ana) in the top 75.  California lawmakers would do well to learn from their northern neighbors.  Get out of the way and let businesses innovate and create.