Survey Ranks Calif. Cities by Cost of Doing Business

Costa Mesa is the least expensive city in California in which to operate a company and San Francisco costs the most, according to a survey that measured local business, property, electricity and telephone taxes.

Orange, Fullerton and Anaheim trailed Costa Mesa as the least expensive among cities with populations of more than 100,000, according to the ninth annual Cost of Doing Business Survey. The study is prepared by Los Angeles-based Kosmont Cos. and the Rose Institute of State and Local Government at Claremont McKenna College.

Los Angeles, Oakland and Inglewood followed San Francisco in the ranking of the highest-cost cities, the survey said. The survey compares tax burdens on businesses in 194 cities and counties in California. Some companies won’t be subject to all the levies, and state and regional tax rates aren’t included in the comparisons, the survey said.

Many cities face budget deficits because of a slowing economy, and some are expected to consider tax increases on businesses “to the extent they can get away with it,” Larry Kosmont, president of the real estate consulting firm that bears his name, said in a statement. In the nine years of polling “we have never encountered such uncertainty” over deficits, he added.

Cities are more apt to use borrowing as an alternative to new or increased taxes, the survey said. Convincing voters to approve bonds to finance libraries, streets and other public projects is easier than asking “for a blanket increase in general taxes,” Kosmont said.

The index also tracks business tax burdens for 40 cities and counties in other states, plus Washington, D.C. San Diego ranked as the least expensive to operate a company among cities with populations of more than 250,000, and Philadelphia ranked as the most expensive, followed by Phoenix and New York.