Chevron’s California Exodus: Jonathan Williams on KNZR
The departure of Chevron raises questions about the future of California’s economy.
Arlington, VA – Chevron’s decision to relocate its headquarters from California to Houston has become a focal point for discussions on business migration, state policies, and the future of the Golden State. In a recent interview on the Terry Maxwell Show on KNZR 97.7 FM, Jonathan Williams, the Executive Vice President of Policy and Chief Economist at the American Legislative Exchange Council (ALEC), offered his insights on why this decision was almost inevitable given California’s current policy environment.
“Chevron CEO Mike Wirth has been pretty honest about the fact that the move was about some very key policy mistakes California made as well as the cost of living, taxes, and regulation being too high,” Williams said. “It just makes it easier than to take the final step and and totally move the headquarters and all those executives to the other states.”
Chevron’s move is part of a larger trend of companies fleeing California for states with more business-friendly climates. For Chevron, which already had a significant presence in Texas, the decision to fully relocate was made easier by the state’s lack of personal income tax, a lower cost of living, and a regulatory environment more conducive to the energy industry.
“Texas is one of nine states with no personal income tax, and it offers a far more predictable regulatory environment,” Williams explained. “It’s good for the company in the bottom line, good for customers and shareholders, and it’s very good for employees who won’t be paying California’s ridiculously high-income tax rates.”
Thousands Leaving California for Better Opportunities
The ramifications for California are significant.
The state, once a beacon of innovation and economic opportunity, is now facing a potential economic downturn exacerbated by the outflow of both businesses and residents. According to Williams, more than 300,000 Californians have left the state in the past year alone, many seeking refuge in states with lower taxes and a lower cost of living.
“The broader concern is in the last 12 months, over 300,000 residents voted with their feet and left California for one of the other 49 states,” Williams noted. “Then you have these big corporate taxpayers like Chevron added to the mix and all of a sudden you run into the Laffer Curve in economics, which is with high taxes and anti-business policies, sooner or later, you’re going to lose economic activity and the revenue associated with that activity.”
Corporate Exits Puts Economy in Question
The departure of Chevron, along with other high-profile exits, raises questions about the future of California’s economy. With a current budget deficit in the tens of billions, and the loss of corporate taxpayers like Chevron, the state’s financial woes could deepen.
“Governor Newsom was going around boasting about a nearly $100 billion budget surplus,” Williams said. “But now that (surplus) has not only gone away but they are in the tens of billions of dollars of deficit.”
While California grapples with its economic challenges, the broader implications of Chevron’s move—and others like it—serve as a cautionary tale for policymakers across the country. The exodus of businesses and residents may be the result of a perfect storm of policy failures, but it also offers a stark reminder of the consequences of ignoring economic fundamentals. This new reality will force California policymakers to take a different path if the Golden State hopes to retain its position as a leader in the American economy.