By Robert Rivinius, FBA Executive Director
In addition to the FBA priorities for 2018, here are some other issues that will impact businesses and the people of California in the coming year:
PAGA – the Private Attorneys General Act has been a disaster for many businesses in California. It can cost hundreds of thousands or millions of dollars to settle PAGA claims with the great majority of the money going to the state and the plaintiff’s lawyers while the supposedly harmed employees receive little. The Legislature has refused to deal with the issue, so a coalition of business leaders, including FBA, have been developing a ballot initiative to deal with it. Such initiatives are very costly including gathering qualifying signatures and then running an effective campaign. Fundraising is a major issue, as always.
Poverty – even though the published unemployment rate in California is around 5 percent, the gap between the “haves” and the “have nots” continues to widen, which is not a healthy situation for California. One gubernatorial candidate, Democrat Antonio Villaraigosa, has called for a revamping of California’s “Byzantine and bureaucratic regulatory framework” that impacts all businesses in the state. The hidden costs of doing business in California hits those below the poverty line especially hard.
Taxes – in addition to the proposed California estate tax measure, there will be other tax issues in play. There is never enough money for those in the public sector and they will be looking to weaken Proposition 13 by creating a “split roll” where commercial properties would pay taxes based on current market value. Such a scheme is estimated to create a $9 billion windfall and the costs would have to be passed on to consumers if businesses were to stay viable. In addition, much of California’s budget money come from the top 1 percent of earners through the personal income tax, which tops out at 13.3 percent. With the recent federal tax reforms, this will create yet another problem for California, with lots of creative solutions being kicked around, many of which don’t make much sense.
Housing – California needs hundreds of thousands of new housing units for its nearly 40 million residents. The recent efforts of the Legislature to solve the problem are more of a Band Aid than a cure. When you add in the new federal tax limitations on deductibility of property taxes and mortgage interest, you only exacerbate the problem.
Transportation – even though promising in his 2010 campaign that there would be no new taxes without voter approval, Governor Brown last year signed legislation that added 12 cents per gallon to the gas tax, 20 cents per gallon to the diesel tax, and created additional vehicle fees. There is an effort underway for a referendum on that legislation and polling for the repeal runs as high as 75 percent in favor of it.
Education – nearly half of California’s discretionary funds go to education, but there is still much to be desired in the ultimate success of students. Rather than push for reforms that would better spend the available funds, organizations like the California Teachers Association (union) just keep pushing for more money.
Public Pensions – With hundreds of billions of dollars of debt hanging over state and local governments due to the unfunded liability of public pension funds, something will have to give at some point.
In addition to all of this, we have other major issues like crime, healthcare, and the environment to deal with. It makes one wonder if California is a governable state, but organizations like FBA will keep fighting to make improvements for the business climate in the Golden State and do our best to kill proposals harmful to family businesses.