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First option 1, 40% is just covering the benefits you will have to pay for that your permanent job most likely is covering. Also, no company who is hiring a person on contract will tell you it was extend or turn permanent. There are lots of reason to hire someone under contract and very few times it is because they want to turn it permanent later. I personally done temp to hire, and most time was one we did not have time to find the absolute right person so we hire someone under contract and if they sucked they were gone the next day, but if the person truly was good we would keep them to the end of the contract and then hire so we did not have to pay the finders fee. Most times we just keep looking as we had the contract person do what we needed.
For Calif you would need more than 30% bump in pay coming from South Florida, It expensive out there housing is hard to come by. I lived out there and everything cost more. My son just moved to Tampa for a Job from the Northeast and his pay there was higher than he got offered in the Northeast coming right out of college, he is renting a 3 bedroom house with a nice size yard and 2 car garage for $1500, you could not tough anything close to that in northeast at that price, that gets you a one bedroom apartment.
In this day and age companies are having a hard time finding people they should pay full relocation. If they are not willing to help relocate then it may not be worth it. At least now it cheaper to relocate to the Calif or northeast since more people are leaving.
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