Throwing in the napkin on high-cost states

The cost and aggravation of meeting government requirements may be bad for restaurants, but they’re proving a boon for moving companies. The home office of Carl’s Jr. says it’s had enough of California’s regulatory and tax burdens and will carefully study brochures for a possible new home in Texas.

The pronouncement from Andy Puzder, CEO of parent company CKE Restaurants, follows the throw-up-his-hands gesture a few weeks ago from Jimmy John Liautaud, founder of the Illinois-based Jimmy John’s sandwich chain. The step-up in the state’s tax rate was the last straw for him. Now, he told the local media, he’s considering a relocation to a more business-friendly state.

The two may be starting a parade. Both their states are contending with huge budget deficits that have many observers fretting about insolvency (bankruptcy is not an option for states, so they merely default and stop paying their bills; Illinois has already reneged on costs like medical reimbursements to some institutions).

The list of other states in that plight is a long one. On Tuesday, for instance, Gov. Andrew Cuomo described New York as being functionally bankrupt.

Fortunately for those of us who live and work in the state, he’s emphasizing efficiency and cost cuts over tax increases. But the Empire State is unique in that respect. Consider, for instance, that Illinois raised its corporate income tax by 46%, to seven cents of every dollar in income. It makes you want to help Liautaud with the packing.

Some cities have tried to turn that situation into fertilizer, so to speak. Knowing how burdens can drive businesses away, they’re striving to streamline the permitting process and even cut some of the costs of doing business. New York, for instance, is trying to make the Big Apple an easier place for small businesses to reside. Mayor Bloomberg has also thrown such bones as promising not to wallop businesses with fines under the city’s new letter-graded inspection system.

Chicago, meanwhile, has a neat program that doesn’t get much attention: If a restaurant or other start-up businesses is set up to be green, the city will work with the entrepreneur to streamline the permitting process. As any operator who’s braved the Long Island market or many areas of California will attest, that’s a considerable enticement.