The November 6, 2018 Statewide Election just occurred and the voter turnout
was the highest in recent memory with millions of ballots either turned
in on election day or received in the mail by the November 9 deadline.
The results show that the Republican Party once again elected no statewide
office holders and the lone candidate with No Party Preference (NPP),
former Republican Assemblyman Steve Poizner, barely lost his bid to become
Insurance Commissioner. In the Legislature, the Republicans lost 3 State
Senate seats returning the Democrats to the Super Majority. In the Assembly,
the Democrats gained 5 more seats and defeated Assemblyman Dante Acosta
from Santa Clarita. While there were some close elections, the Republican
Party will now have only 20 State Assembly members, which is even lower
that the 25 Assembly members they had in 1974 after the Watergate scandal
and the lowest number in 100 years.
What impact will this have on the next session of the State Legislature,
which begins in January 2019? Can businesses and individuals expect more
regulation and higher taxes? While anybody’s crystal ball is probably
a little cloudy, a look at what happened in 2018, when the Democrat had
a super majority in the State Assembly and were just one seat short in
the State Senate, might provide at least a small glimmer of hope that
there are opportunities to continue to defeat what the California State
Chamber has been calling for years “Job Killer Bills.”
In 2018, the California Chamber identified 29 bills as Job Killers and
all 29 were either defeated, amended to delete the job killer provisions
or vetoed by the Governor. Among these bills were:
AB 1745 (Ting) which would have banned the sale of combustion engine vehicles
after 2040 which died in the Assembly Transportation Committee.
AB 2351 (Eggman) which would have further increased the top income tax
rate from 13.5 to 14.3% on a category of Californians that already pay
over 50% of State Income Taxes.
AB 3080 (Gonzalez Fletcher) which would have banned settlement agreements
for labor and employment claims as well as banning arbitration agreements
as a condition of employment. This would have added significant costs
to businesses. Fortunately, Governor Brown vetoed this legislation.
SB 993 (Hertzberg) would have imposed a 3% tax on services purchased by
businesses in California. This would have applied to professional services
such as legal and accounting. While this billed died in the Senate Governance
& Finance Committee, Senator Hertzberg has indicated a desire to reintroduce
this legislation next year.
With the Democratic super majorities, there is certainly some concern that
the Legislature will now be emboldened to revisit previous legislation
to increase taxes on specific individuals or businesses, along with enacting
restrictions and regulations which will increase the difficulty in doing
business in California. However, that might not be the case.
Business organizations like the California Chamber have been active for
years in cultivating Democrats who are more “business friendly”.
In the State Senate, the Chamber and other Business PACS were instrumental
in electing Bob Archuleta of Pico Rivera and Susan Rubio of Baldwin Park
in races where the November election was between two Democrats as a result
of California’s top two primary system. Two of the Senate Seats
that the Democrats picked up are in the Central Valley where farm and
water policy are much more important than in the urban districts represented
by Democrats. The biggest surprise was the defeat of Senator Janet Nguyen
in Orange County by former Assemblyman Tom Umberg. Senator Nguyen was
negatively impacted by the millions of dollars spent on the Democrats’
campaigns, which flipped all 4 Republican Congressional seats in Orange County.
Some analysts have begun describing the new Legislature as containing different
shades of blue. As a result, we could see labor backed members in conflict
with those members who support tech companies (sometimes called the gig
economy), which, while progressive on social issues, might be pushing
a change in the limits on the use of independent contractors that were
recently enacted by the California Supreme Court. In addition, it is likely
that there will be a renewed effort, either in the Legislature or through
an initiative, to change Proposition 13 to remove Commercial Properties
from its protection. This would have a great impact on every business
which leases property.
Regardless of your political beliefs, you should focus on the issues which
impact your business and work with like-minded companies and individuals