California governor Arnold Schwarzenegger has vetoed legislation that would have banned the state from contracting with companies that did work outside the US.
In all, Schwarzenegger vetoed three bills that would have prohibited state agencies from using state funds to award outsourcing deals to offshoring companies.
Under the bills, state agencies could have outsourced work only to contractors who could prove it would all be performed in the US by US workers. California is currently using call centre workers in India for its food stamp and welfare programmes.
The bills' supporters argued that taxpayer money should only go to companies that generated work in California or the US. Schwarznegger disagreed, saying that California needed to remain part of the global economy to fully recover from the recession that had hit many of the technology-rich state's residents.
"In today’s global economy, the best approach to create and enhance job growth in California is to provide a competitive business environment," he said.
"In order to improve their competitiveness in a global market, California businesses cannot be penalised with punitive policies restricting their ability to make decisions on how to best perform and provide goods or services for state government and our consumers."
Although the governor's vetos can be overriden, the California legislature has adjourned for the year, so any attempt to pursue a similar measure will have to wait till next year.
Tom Krazit writes for IDG News Service