by Ken Monroe | Dec 18, 2022 | Blog, Top News
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.
by Robert Rivinius | Dec 3, 2022 | Blog, Top News
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.
by John Frith | Nov 29, 2022 | Blog, Top News
At the 10th annual Meeting of Members, the Family Business Association of California adopted the following public policy goals for 2023.
- State tax issues – FBA will remain diligent in the debate to maintain fair and equitable business and personal taxes in California:
- Continue our leadership role to maintain prohibition on Estate Tax in California.
- Continue to oppose efforts to enact a wealth tax.
- Be wary of all proposals to increase business and personal taxes.
- Regulatory and lawsuit relief continues to be a top priority for FBA members but regulations surrounding labor relations and human resource management provide additional challenges to our members. FBA will focus on opposing legislation and regulations that impact labor and our workforce and support the ballot initiative for relief from PAGA lawsuits against family businesses. Also, continue work to broaden AB 5 of 2019 to exempt more types of contractors who should not be employees and soften the blow from this onerous legislation.
- Workforce development - identifying a qualified and available source of labor is an increasing challenge. FBA will work to support workforce development opportunities that help provide a trained workforce.
- Explore opportunities to introduce legislation that would benefit family businesses, encourage more to stay in California, and recognize the value of family businesses to California’s economy.
- Publicize FBA policy, legislative and regulatory positions.
- FBA will work to achieve coverage of our positions and opinions in the news media.
- Continue to explore opportunities to assist the transfer of ownership and property between family members and through successive generations and oppose efforts to make that more difficult.
- Continue to build relationships with key legislators, new legislators and new administration officials and:
- Produce the 11th Annual Family Business Day and Legislative Conference.
- Meet one-on-one with key legislators, new legislators, and officials in the Governor’s Office to educate them on the importance of family businesses and the issues that are critical to family businesses.
- Encourage FBA members to call on their legislators and engage employees in both education and advocacy to illustrate the impacts state government has on family businesses and their employees.
- Participate in coalitions, public events, and hearings advancing the importance of the family business model and family business issues.
by John Frith | Nov 15, 2022 | Blog, Top News
Mike Betts is the chairman and CEO of one of FBA’s oldest members — the Betts Company, a sixth-generation family-owned manufacturer and supplier of springs and heavy-duty truck parts in Fresno, founded in 1868. At the 10th Annual FBA Meeting of Members on November 9, he introduced members to a new organization — the New California Coalition.
The New California Coalition is the non-partisan political home and voice for over 6.5 million “Common Sense” voters across California who want results. The group is organizing everyday voters, business leaders, and community organizations from across the state into a movement to demand change and action.
Betts provided copies of a white paper, Seizing the Semiconductor Opportunity in California-Oct20, on how California could increase competitiveness and capture federal CHIPS Act funding recently sent to the Governor, along with an op-ed published in the Fresno Bee, OP-ED NCC Heartland Chapter Final, about why Betts and other Central Valley business leaders have signed on.
by Robert Rivinius | Sep 7, 2022 | Blog, Top News
We are deeply disappointed by the Governor’s veto of our sponsored bill, AB 2611 (Daly). The legislation would have created a definition of a family business in state law. As we may be the only organization working to keep family businesses in California, we thought that such recognition in state law would be a good foundation for our efforts. We did have plans to expand on the legislation, but unfortunately, before vetoing the bill, the Governor did not ask us about that.
There seems to be denial at the State Capitol about family businesses and family business owners leaving the state, but we know it is happening. When last we surveyed our members, 50% of those responding said they were either planning to move to a friendlier, more affordable state with less onerous regulations, or were at least considering it. On most national business surveys, California comes up as the most difficult state in the nation in which to do business. Our family business members find it very difficult to deal with the onslaught of new regulations that are signed into law every year.
We want to thank each of our members that have stayed the difficult course of keeping Californians employed, keeping the lights on and families and the world fed. Though this administration did not recognize your contributions, we always will. You are the real heart and backbone of our economy. You are great employers who value your employees and are very philanthropic within your communities.
While the veto of our bill feels like just one more nail in the coffin of family businesses in California, be encouraged that this bill made it to the Governor’s desk with unanimous, bipartisan support and zero opposition. This is a foundation we look forward to building upon.
by John Frith | Jun 8, 2022 | Blog, Top News
We have a new member, Friedman Family, LLP. The company was founded by Morton Friedman, who was a prominent Sacramento-area attorney, in 1962. Second generation Mark Friedman now runs the company and has developed many high-quality projects under the name Fulcrum Property. The company also does real estate investments and management. Thanks once again to Dave Lucchetti for bringing another member to FBA.