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Economists, leaders disappointed in Waste Connections move from Folsom to Texas

By: Art Garcia, Telegraph Correspondent
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Waste Connection Inc.’s recycling of its Folsom headquarters to a suburb of Houston, Texas, puts more than a small dent in the local and regional economies, local officials and economists contend. “The company is critical to the Sacramento region and Folsom and El Dorado Hills because even though we are a very large area economy, we have no other Fortune 500 companies headquartered here,” said Sanjay Varshney of El Dorado Hills, who’s an economist and the dean of the College of Business Administration at California State University, Sacramento. “Compare that with Omaha, Neb., where there are five Fortune 500 companies headquartered in a city in the middle of nowhere,” he said. “The departure of Waste Connections, the largest New York Stock Exchange listed company in the region, is a blow because it is a successful $1.3 billion company in revenues.” Waste Connections expects its relocation to begin before this year is over and to extend to next September. “Every corporate employee has been offered the opportunity to relocate and almost all are expected to move,” said chairman and CEO Ronald Mittelstaedt. Folsom Mayor Kerri Howell said the issue hasn’t been with local government, but rather the state. “Obviously, we hate to see the company leave but on a personal note, I appreciate that it has been very clear in all its communications with the media that its issues are not with the city of Folsom, Sacramento County or the region in general,” she said. “It’s just Waste Connections’ ability to operate at far less expense, based on no corporate or personal income taxes in Texas. … I’m sorry to see the company and the 100 to 120 jobs it’s taking with it leave.” Howell said she wished there was some way the city could have helped the company remain based in Folsom “but that was not going to be the case, given the dramatic cost differential for it to operate in Texas versus in California.” California’s business environment, often harshly criticized for not being sufficiently pro-business, was slammed by Varshney and Jeff Michael, economist and director of the Eberhardt School of Business at the University of the Pacific. Varshney called the move “yet another wake-up call that’s going unheeded because the people in charge at the state level are asleep at the wheel.” “Waste Connections certainly had real non-California reasons to relocate to Houston. The fact is, it’s become a national company whose executives travel a lot,” Michael said. “But the California business climate doesn’t help, there’s no doubt about that.” Joe Gagliardi, president and CEO of the Folsom Chamber of Commerce, said the fault lies with the state. “We’re obviously disappointed the company is leaving but it’s beyond local control,” Gagliardi said. “It really came down to issues at the state level that caused Waste Connections to relocate. When you think about the loss of 120 jobs, the payroll and the multiplier effect on the economy, the move certainly is a loss.”