All of the noise and chaos coming from Washington, D.C. and the Federal
Government in the past 4 months, has made it very difficult for businesses
to focus and know what steps to take to plan for their future. However,
if you will take a breath and step back you will see that what is really
happening is that Congress will continue to move slowly and that any major
legislative changes will take significant time. In fact, if any significant
measures are to pass I expect it will be the result of COMPROMISE, the
word the partisans on both sides of the political spectrum hate. Yes,
President Trump will continue to attempt to make significant changes through
the issuance of Executive Orders. However, these are limited and some
of them are already facing serious legal challenges.
Instead of focusing on the Washington D.C. circus, I would suggest that
California businesses focus their time and effort on how California State
Government will impact their business. I venture to guess it will be far
more than Federal Government.
Since the 2017-2018 two year Legislative Session began in January, the
California Legislature has the business community, and economic development,
in its cross hairs. If you own a business, want to start a business, or
want to develop housing and job centers, the Legislature is targeting you.
In spite of the fact that the Democrat Party regained 2/3 majorities (the
Super Majority) in both the Assembly and State Senate in the November,
2016 election, the issues of economic growth and job creation should be
bi-partisan issues. Unfortunately, they frequently are not.
Since this is the beginning of the 2 year Legislative session, new legislation
is just beginning to work its way through the State Legislature. Any bill
must pass its house of origin (either the Assembly or State Senate) then
pass the other house before returning to its house of origin for agreement
on any changes which had been made. This process will include at least
2, but frequently 4, policy committees in each house along with their
respective Appropriations Committee. If a bill makes it through this gauntlet,
then the Governor can sign, or veto, the bill and it will become law on
January 1 of the next year.
Due to this process, there are many opportunities for you and your business
to participate in advocating for or against a bill. Let me highlight just
a few of the potential bills which are likely to have the most serious
impact on your business and the economy.
AB 199 (Chu D San Jose) would have imposed the requirement to pay prevailing wages on all development
projects whether public or private. Prevailing Wage adds at least 30%
to the cost of a project and is already applicable to most public works
projects. AB 199 would have extended this requirement to private commercial
and development projects. Fortunately, due to the mobilization of California
businesses, AB 199 was amended on April 6 and no longer poses such a threat
SB 224 (Jackson D Santa Barbara) would potentially require developers to not only mitigate the impacts
of a proposed project, but also historical activities which the applicant
has no legal liability or control over, by establishing new California
Environmental Quality ACT (CEQA) guidelines regarding the baseline for
CEQA analysis. This bill is strongly opposed by the Chamber of Commerce,
Building Industry Association and the California Association of Realtors.
It passed the Senate Environmental Quality Committee on April 19 with
a vote of 5 to 2. It is currently on the Senate Appropriations Suspense
File until the cost of the program and the source of the funding can be
SB 562 (Lara D Bell Gardens) Creates a new single-payer government run, multibillion-dollar health
care system. Currently the financing for this "revenue Plan"
is unspecified and undeveloped. Many employers expect that the business
community will be looked at to fund a great portion of this plan as it
is developed. With the State already dealing with billions of dollars
of long term debt, and the increasing cost of our Medicaid expansion,
it is hard to understand how this proposal could be sustainable. The Non-Partisan
Legislative Analysist's office has calculated that this would cost
$250 billion per year and require significant tax increases on businesses
and individuals. In spite of very strong opposition from business and
health organizations, the bill passed the Senate Health Committee with
a vote of 5 to 2; however, 2 Democrat Senators abstained. SB 562 is now
in the Senator Appropriations Committee and due to its high cost will
not move until specifics on the financing of this program are amended
into the bill. Although California voters have twice voted against a similar
plan during the last two decades, the uncertainty of the Affordable Care
Act will continue to provide the impetus behind this proposal.
AB 1356 (Eggman D Stockton) Proposes increasing the personal income tax rate to 14.3 % on the highest
individual earners, including sole proprietorships. Currently this group
of taxpayers pay over 50% of the income tax received by the State's
General Fund. If this measure passes, this group of taxpayers will find
ways to decrease their burden, which could include leaving the State,
resulting in the State losing long term revenue stability. While currently
being held in the Assembly Higher Education Committee, this bill could
be resurrected at any time.
SCA 6 (Wiener D San Francisco) Would allow local governments to enact special taxes, including parcel
taxes, on commercial, residential and industrial property by decreasing
the voter requirement from 66.67% to 55%. It passed the Senate Governance
and Finance Committee on April 4 with a 5 to 2 vote, and the Senate Transportation
and Housing Committee on May 9 by with a 8 to 3 vote, with 2 abstentions.
As indicated above, these bills are just a few of the bills that may have
a significant impact on your business and/or the local economy. The California
Chamber of Commerce has even gone so far as to label these bills "Jobs
Killer Bills." For more information on these and other bills that
may impact your business visit www.calchamber.com. The best way to make
you voice heard is to get more involved with your local business organization,
such as the Santa Clarita Valley Chamber, Valley Industrial Association
or Valley Industrial and Commerce Association as these organizations work
to help educate your legislators and fight these types of measures.