California narrowly edged out New York in what the survey called "the ninth circle of business hell," sharing the bottom five spots with Illinois, Massachusetts and Michigan.
Once one of the strongest economic performers in the country, the Golden State has lost some of its gleam, by some measures, though it remains by far the strongest magnet for venture capital investment.
Its 10.9% unemployment rate is only lower than Nevada's and Rhode Island’s. A third of U.S. welfare recipients live in California, the report noted. High state taxes and bundles of red tape make operating a business in the state unaffordable to many companies, critics say.
Last year, 254 California companies moved some or all of their work and jobs elsewhere -- 26% more than 2010. Most chief executives in Silicon Valley said they won't expand in the state, according to the survey.