FBA is the lead plaintiff in a major court case designed to ensure that our members’ free speech rights and ability to support good government in their communities is protected.
The suit seeks to overturn SB 1439, a bill passed with little debate last year that has major implications. Under SB 1439, receiving a $251 campaign contribution would disqualify a local elected official from voting on any issue relating to whomever they received the contribution from - be it an individual or company. This would even apply to newly hired individuals that did not previously work for, or have any affiliation with, the company at the time of their individual contribution.
Making and receiving campaign contributions is an exercise of a constitutional right of free speech.
This law will also have a direct effect on many of our members’ ability to operate and expand their businesses. For example, if a business wants to expand its operations, they often seek zoning changes or conditional use permits that must be approved by the city council or the board of supervisors. Many restaurants operate under conditional use permits. And farmers and ranchers almost always require special use permits for activities such as agricultural processing facilities. These can be controversial even though the zoning permits them, so elected officials often have to make the final decision.
Accordingly, it would be risky for any family business owner to ever contribute to candidates for local office because it’s always possible that six or eight months down the road an issue will come up that would require elected officials to be involved.
It would also have a chilling effect on many family businesses that you wouldn’t think would be affected. Businesses that do engineering, accounting, legal and other work in the development sector may find themselves cut off from future work if they make contributions to local elected officials. Because their contributions, no matter how small, would be considered part of a prime contractor’s aggregated contributions, the contractor might have to bar them from future work simply because they exercised their constitutional rights.
FBA is pleased to announce that Breault Asphalt Maintenance has joined the Association. The company was founded in 2004 in Sacramento by siblings Jim Breault and Katie Little and operates in Northern California and Nevada with 13 employees. The company specializes in asphalt repair, sealcoating, parking lot striping, ADA upgrades, and concrete repair for commercial properties.
UCD is a premier retail, grocery, commercial, and residential manufacturer for some of the largest organizations in the world. From turning creative retail concepts into prototypes, to cost-effectively executing full-scale retail rollouts, UCD delivers flexible solutions at every stage of the process. The company was founded in 1999 by Daniel Hayes and his son is now very involved in the management of the company. They are located in Elk Grove and have 105 employees.
Californians for Fair Pay and Employer Accountability, the “Stop Small Business Shakedowns” committee, was established to find solutions for reforming the state’s Private Attorneys General Act (PAGA), either in the Legislature, through the courts, or on the ballot. The committee has filed an amicus brief at the California Supreme Court in the case Adolph v. Uber Technologies, LLC. FBA and other coalition members – prominent statewide associations – are deeply concerned that an overly broad interpretation of PAGA in this case would deal yet another blow to California companies already struggling to survive under the threat of PAGA lawsuits. A broad ruling could go beyond the Legislature’s intent and would not provide any meaningful benefit for California employees. It would, however, increase extortion opportunities for trial lawyers who look to leverage technical errors where there has been no harm to employees. Combating the widespread abuse of PAGA is a top priority of FBA.
The Family Business Association of California is celebrating its 10th anniversary this year. While that may not be a record for longevity compared to many of the highly effective trade associations that have advocated on behalf of large and small businesses in California for decades, it is unique in that the FBA is the only organization that solely represents family businesses that have operated in California for as many as 100 years or more.
Too often, the interests of California’s estimated 1.4 million family-owned businesses – a critically important and large sector of California’s economy – were not considered as state officials made decisions about taxes, laws and regulations affecting the business community. Too often, as the old political saying goes, because family businesses weren’t at the table when these decisions were being made, we were on the menu. That’s especially true when it comes to perhaps our top priority – the need to keep our businesses family-owned from generation to generation.
The primary difference between family businesses in California and other businesses is our desire to stay in California, provide stable employment, participate in our local economies and take the long view of success. Family businesses are not bound by driving quarterly results but instead are generally focused on long-term financial success, satisfied customers and engaged employees. However, bills passed by the Legislature often do more harm than good to those many family businesses committed to our communities.
During its decade of working to promote family businesses in California, FBA has achieved a number of significant accomplishments, including:
Killing legislation to create a new inheritance tax that would have inhibited the passing of family businesses to the next generation.
Introducing legislation to add a definition of family business to state law.
Stopping proposals to limit how families move assets.
And helping defeat the “split-roll” property tax initiative and “single-payer” health care proposal, both of which would have cost our members billions of dollars per year.
These victories were important because the success and continuation of family businesses are essential to our state’s future prosperity. Studies have shown that nationally, family businesses generate 57% of the nation’s GDP, employ 63% of the workforce and create 75% of all new jobs.
Furthermore, in addition to our economic impact, family businesses serve as the foundation for our communities. Studies show that we engage in higher levels of philanthropic giving, donate more to local causes and have better records of environmental stewardship than businesses as a whole. In addition, we tend to invest more in our employees’ training and benefits, are more likely to promote women to executive management and are less likely to lay off workers in tough economic times.
Unfortunately, our elected officials and regulators need to be working to make it easier, not harder, for these essential companies to grow and thrive. Too often, however, that is not the case. Over 2,000 bills were introduced during the most recent legislative session and, according to CalTax, those with a fiscal impact would have imposed more than $198.9 billion a year in higher taxes and fees. As the 2023 session draws near, the state is looking at a projected $25 billion budget deficit that would grow much larger if the state and nation enters a recession. It is inevitable that many lawmakers will seek to increase taxes and add more regulations.
It is well documented that these taxes and regulations drive many businesses out of California leaving the deeply rooted family businesses of California as an even more important foundation for supporting our local economies. However, while it is becoming more difficult for us to successfully operate, many legislators seem to think that we will always be here no matter what they do, making profits that can be taxed.
So FBA will continue working with partners in the business community and with business-friendly legislators from both parties who understand that adding more and more complex and expensive requirements will only further damage our economy and our quality of life.
And that’s why FBA will ensure that family businesses remain at the table, and not on the menu, in Sacramento
Monroe is president of Holt of California and Chairman of the Family Business Association.
Family businesses are the bedrock of our state’s economy. The state’s 1.4 million family businesses employ 7 million Californians. Nationally, they generate 57% of the GDP, employ 63% of the workforce, and create 75% of all new jobs.
At the same time, family businesses invest more in their employees’ training and benefits, are more likely to promote women to executive management, are less likely to lay off workers in tough economic times and engage in higher levels of philanthropic giving – while enjoying a better record on environmental stewardship.
With this track record, you would think the lawmakers and regulators in Sacramento would want to encourage family businesses to grow and expand. Unfortunately, our family businesses did not fare as well in 2022 as we would have liked. And with a recession potentially looming, we can only hope that lawmakers and the Governor are more willing to take steps to support family businesses when they return to the Capitol
The Family Business Association, and the broader business community generally, did achieve some victories. Perhaps most significant was the defeat of AB 2932, which would have imposed a tremendous cost on employers by reducing the weekly overtime threshold from 40 hours to 32 hours and mandating that employees’ base rate of pay be increased. The provisions of this bill would have been impossible to comply with, exposing businesses to innumerable lawsuits under the state’s misguided Private Attorneys General Act, thus discouraging job growth in the state and likely reducing opportunities for workers. Fortunately the bill quietly died.
Another win – at least for now – was the defeat of AB 1400, which would have created a government-run health care system, and its companion bill, ACA 11, which would have raised taxes by an estimated $162 billion the first year alone, with those taxes likely increasing every year to cover rising health care costs. Had these measures passed, it would have led to significant layoffs and relocations as employers would have been forced to cut costs to pay the higher taxes. However, proponents have already said they’ll bring the proposal back in 2023, so the threat continues.
However, family businesses also saw several bills enacted that will add to the cost of doing business in California. And two bills we supported were vetoed.
The first was AB 1951, which would have created a full sales and use tax exemption for the purchase of manufacturing equipment, which exists in 38 other states. The bill would have been particularly helpful for the 70% of manufacturers that have 20 or fewer employees and would have been a powerful incentive to create more high-wage jobs, ensuring that students being trained in STEM fields would have opportunities when they enter the workforce.
Governor Newsom cited the loss of tax revenue for local governments but did leave the door open to reconsidering the issue as part of the budget process next spring.
The other veto was particularly painful. AB 2611 was an FBA-sponsored bill that would have placed a definition of what a family business is into state law and would have been a good foundation for future legislative and regulatory efforts to help family-owned businesses that have called California home for generations.
The bill passed both houses of the Legislature without opposition, but the Governor – a family business owner himself – vetoed it.
Despite these vetoes, California’s family businesses are committed to the Golden State and to continuing to be the bedrock of their communities. We will continue our efforts in 2023 to enact legislation that supports family businesses and to oppose measures that would make it more difficult for them to thrive and be passed down to the next generation of family ownership.
