Running a small business in California (in Los Angeles County), I can speak to the rather extreme degree of regulation placed on businesses. I've heard people argue that it's the regulations and red-tape that drive businesses out of California. I have also heard that the relatively high tax rate on business does it.
I'm not sure what the real explanation is and I am not actually sure if businesses are migrating out of the state.
I can say this for certain though - property values and property taxes are quite high in California. This is not an easy thing to change in a downward direction without damaging the economy. However, if some cap were placed on upward estimates, on increases in related taxes, etc., maybe this out of control trend can be corrected.
The housing bubble burst in a major way in California for reasons that are certainly related to housing prices being so out of control. In the last two years, prices have steadily risen, climbing back toward where they were in 2007. That seems potentially problematic.