Family businesses are the backbone of California’s economy, employing millions of people and anchoring communities around the state. Yet these businesses are being increasingly suffocated by a regulatory system that has grown far beyond reason.
When the Family Business Association of California (FBAC) surveys our members about their biggest problems, overregulation comes out on top. Now, a recent report from the nonpartisan Public Policy Institute of California confirms how bad the situation is. On paper, California’s regulatory burden looks comparable to many other states. But when you dig into the details, it’s anything but.
The report found that California is by far the most regulated state in the nation in terms of occurrences of “shall,” “must,” “may not,” “required” and “prohibited” within the regulations. In total, California businesses must comply with 420,434 of these regulatory constraints – nearly three times the national median and far more than any state.
California doesn’t just have more constraints than any other state, we have an order of magnitude more. Even the states with the second- and third-highest number of constraints – New York and New Jersey, hardly models of business friendliness – impose “only” roughly 300,000 regulations each. California exceeds that level by about 40%.
The least-onerous state, by the way, is Idaho, which only has 31,000 regulations on the books, which really seems like it’s more than enough. We know of many businesses that have moved there, and it’s not surprising.
FBAC has proven that something can be done about excessive regulations, but it is costly and takes a lot of work. AMAROK, an FBAC sponsor, provides electrified security fences for industrial, manufacturing, and commercial companies along with public agencies that have open yards for equipment, supplies, vehicles and inventory.
These fences are safe, effective and commonly used, yet in California, getting a permit to install them took an average of over 370 days. In one city, it took five years!
Many of our members need security fences, so we sponsored legislation that basically said that if certain criteria were met, you could quickly obtain a permit and install your fence.
During the legislative committee hearings, a Salinas truck dealer testified that while in the fifth month of waiting for his permit, a criminal trespasser broke in and burned down the entire facility, putting 24 people out of work overnight.
After a great effort, the bill unanimously passed and was signed into law. And it worked. Since the law was changed a year ago, more than 800 electrified security fences have been installed statewide, in an average of just 19 days. Standardizing and streamlining these permit requirements have saved a lot of money that would have been lost to theft or vandalism.
If lawmakers and local governments relaxed more of their excessive regulatory demands, many more businesses could enjoy similar benefits. One legislator tried, introducing a bill each year requiring the state to review all regulations and eliminate those that are onerous, too costly, overlapping or out of date. The bill never got out of the first committee.
What is sorely needed is a commitment to eliminate overreaching regulations and be more cautious about adding new ones. The PPIC suggests that the state might examine old regulations or those that are contradictory or complex in order to begin streamlining.
This state needs to become more business-friendly or we will continue to lose more businesses. With more than 420,000 regulatory constraints, the state is not protecting Californians and supporting our family businesses but rather driving them away. If lawmakers are serious about preserving jobs and local economies, reducing overregulation must become their goal.
Robert Rivinius is president of the Family Business Association of California, which has members throughout the state. He lives in Sacramento. This op-ed originally appeared online in the Orange County Register and other papers in the Southern California News Group on March 12, 2026 and in print the following day.
Editor’s note: This column first appeared in Comstock’s magazine in Sacramento. It is part of a package of articles about family businesses, including several profiling FBA members.
The line from “The Godfather,” “It’s not personal, it’s strictly business,” does not apply to the members of a family business. For us, there are a wide range of emotions that start at an early age as we realize that we are part of something that consumes our parents’ time, including conversations at dinner and the holidays. These emotions continue into adulthood and certainly drive many decisions regarding our futures.
But the one emotion that stays with us whether we join the family business or choose another profession is pride and the desire to see the family business prosper into the next generation.
How does pride drive operating a family business? That depends on your generation. For the founding generation, your heart and soul goes into building a business that you hope will stand the test of time and attract the next generation to participate in keeping it going. For the next generation, you want to make the previous generation proud of your decisions and the direction you take the business. But you also seek to create the opportunity and atmosphere to entice the next generation to join the business.
My family is part of a multi-family business that sells and services tractors as a primary line. My grandkids don’t ask if Grandpa or Mom or Dad are at work; they ask if they are at the “tractor farm.” Those thoughts are cute and make us want to work even harder to cultivate a business that they will have the opportunity to operate someday.
What traits make up a successful family business? Family Business magazine’s editor-in-chief Amy Cosper recently identified five traits that I think are core parts of every successful family business:
Stability. We generally adopt a long-term perspective, focusing on legacy and generational continuity.
Authenticity. We thrive on personal relationships and genuine connections. Most of us are unapologetic and crystal clear about what we stand for.
Values. We are guided by core values and principles established by founders and embraced by generations and branches of a family tree.
Employee focus. We prioritize employees’ well-being and consider them a part of our extended family.
Community. We have deep-rooted connections within our local communities.
To be successful, we need advisors who can provide clear-eyed advice to family members about how best to maximize the value of their share of the family business. Unfortunately, this also often includes recommending if we would be better off financially by selling the business and moving out of California.
In many cases we would be. But what our advisors often do not recognize is that the emotional attachment to seeing the family business prosper and be passed on to the next generation is stronger than the desire to just make money and move on.
In our region, there are two organizations that really understand the emotions of being part of a family business. One is the Family Business Association of California, the only organization solely representing the interests of family businesses at our Capitol. As FBA’s chairman, I often meet with legislators, many of whom will fondly comment about coming from a family business even as they enact new laws and regulations that make it more difficult for their family to run their business. I imagine that must make for some interesting conversations at their family gatherings.
Another is the Capital Region Family Business Center, a nonprofit run by family businesses trying to figure out how to perpetuate their business to the next generation. Both organizations have clear missions, and I encourage all family businesses in our region to strongly consider joining them.
There is a lot of talk today about the purpose of business. The classic viewpoint is that it’s to maximize the return on investment for the shareholders. But others argue that businesses must expand their purpose to include multiple stakeholders — not just shareholders but also employees and their community.
The funny thing is, family businesses have been doing both for ages. The only way to perpetuate a family business is to make decisions that make sense for the long term. The business must be profitable and beneficial to the shareholders today, but it can’t just satisfy the stock market or a private equity partnership in the short term. The same logic applies to taking care of employees, customers and the communities that we serve. We must create an environment that allows for long-term success in all those areas.
Family businesses are the rock of our state’s economy and its communities. FBA will continue doing everything we can to educate our officials that they need to keep that in mind when devising new laws and regulations that, when you add them up, make owning a successful family business more and more difficult.
A wide range of emotions run deep within family businesses, from the anxiety about keeping it running to the simple pride of being part of a history. But in the end, it is worth every drop of emotion to create a future that benefits so many.
Ken Monroe is the president of Holt of California, a family-owned business since 1931 and a Caterpillar dealer for 16 counties, from Yuba City to Merced. He is also chairman of the Family Business Association of California.
Our guest contributor says that many family-owned businesses may leave California or sell out to larger corporations if Assembly Constitutional Amendment 1 becomes law.
California is notorious for being one of the worst places in the nation to do business. For years, businesses have dealt with the high cost of living, onerous and expensive regulations, complex employment laws and, of course, high taxes.
In fact, Chief Executive magazine consistently ranks the Golden State as having the country’s worst business climate, while the Tax Foundation ranks California 48th, ahead of only New York and New Jersey.
But thanks to Proposition 13, property taxes at least remain in the relatively moderate range and are predictable. In addition, local governments must obtain approval from two-thirds of the voters in most cases to raise local sales taxes, parcel taxes and general obligation bonds that are repaid via property tax bills. However, a proposal to make it easier to raise those taxes is quietly gaining momentum in the Legislature. Assembly Constitutional Amendment 1 last week was placed in the suspense file by the Assembly Appropriations Committee but is still very much alive and is scheduled for a hearing on Sept. 1. Should this constitutional amendment become law, it may well be the straw that breaks the back of many California family businesses. The California Taxpayers Association estimates that ACA 1 could increase local taxes by $255 million a year.
ACA 1 would reduce the two-thirds requirement for any “infrastructure” project with an easier-to-obtain 55% threshold. And the way infrastructure is defined, most tax increases would be covered. A fact sheet released by proponents makes it clear that raising taxes is the goal. It points out that just half of the tax proposals requiring a two-thirds vote are enacted, compared to 80% of school bonds, which can be approved with a 55% majority. Additionally, it notes that nearly 80% of tax measures needing a two-thirds vote received more than 55%.
While all businesses are affected by actions taken by lawmakers and regulators in Sacramento and at city hall, family businesses are often impacted especially hard. Most California family businesses are in the small to medium-sized range. Most don’t have the revenues that large corporations have to hire teams of lawyers and accountants to figure out the best way to cope with higher taxes and expensive regulations.
Family businesses should be supported, not burdened further. We are focused on the long term, not the next quarter. We are deeply rooted in our communities. And seven out of 10 family businesses have more than one generation of employee families working for us ⏤ loyalty few major corporations can match.
This isn’t the first time this measure has come before the Legislature, and in past years it failed to gain traction. This year, however, proponents of higher taxes seem to have momentum – even newly installed Assembly Speaker Robert Rivas is a coauthor.
As the Howard Jarvis Taxpayers Association puts it, “ACA 1 is a tax increase, and worse — it’s an engine to raise taxes over and over again in every local election, just by calling any government spending ‘infrastructure,’ even if it’s really for salaries, programs or to free up existing revenue to cover pension liabilities.”
If we lose the protections against higher property tax bills, on top of all the other factors that drive up the cost of doing business, you’re going to see more businesses leaving California or at least moving operations to more business- friendly areas. Family businesses that can’t move will be more likely to sell to larger companies that won’t necessarily have the same commitment to their communities and their employees.
And that would be a blow to communities supporting the measure that would be far greater than any increased tax revenue they might receive. We urge lawmakers to keep that in mind and defeat ACA 1.
Local governments want to make it easier to raise your taxes by reducing the majority needed from voters from two-thirds to just 55%. If passed by the Legislature this month, ACA 1 could appear on the 2024 statewide ballot. In an op-ed in the Sacramento Business Journal, I warn that if this measure becomes law, it could be the final straw for many California family businesses, in addition to all the other taxes, fees, and regulations the state imposes. FBA will always continue fighting to protect California family businesses at the state Capitol and we are urging lawmakers to vote no. You can read it here. (subscription may be required).
Ballot measure would help parents pass their family business along to their childre
The COVID-19 pandemic hit many family-owned businesses hard. Now as California emerges from the crisis, those businesses are still struggling to stay afloat.
There are 1.4 million family businesses in California. They provide jobs for seven million Californians. These businesses improvised, innovated and gave their blood, sweat and tears to keep their doors open during the height of the pandemic.
It’s now been four months since Gov. Gavin Newsom lifted pandemic executive orders and reopened the state. Yet despite what we all hoped would be a return to normal, California family businesses continue to face more uncertainty.
First, the labor shortage is causing many businesses to cut operating hours or delay expansions that could grow their business. Then the Delta variant hit — spreading throughout the state and causing renewed alarm. And supply chain shortages that are so frustrating for consumers are squeezing businesses who are already under strain and now are unable to restock shelves.
Through all this, family businesses have been learning the full effects of Prop 19, which narrowly passed in November 2020 and brought the Death Tax back to California.
Prop. 19 had some good elements, but it took away voter-approved constitutional protections that allowed families to keep a business or home they worked so hard to acquire.
Now when a parent passes away and leaves behind a family business or home, their children are hit with the Death Tax — reassessment to current market value, triggering a massive property tax increase in the midst of grieving a parent’s death.
The Death Tax is cruel and unfair. When the children can’t come up with the cash to pay the new annual property tax bill, they are forced into an unwanted sale. Lost are California family businesses that took decades of hard work to build along with the dream of passing on a legacy to children and grandchildren.
California can’t afford to lose more family businesses who are uniquely connected and invested in the success of their local community.
That’s why it is so important that we pass the Repeal the Death Tax Act, which will soon be gathering signatures for the November 2022 statewide ballot.
The Repeal the Death Tax Act will restore the constitutional taxpayer protections that California family businesses relied on for nearly 35 years.
The measure brings back the ability of Californians to transfer a family business, farm or other non-primary residential property, valued up to $2.4 million and indexed for inflation, to their children upon the property owner’s death without triggering reassessment and a huge property tax increase.
The measure will also allow parents and grandparents to again transfer their homes to their children and grandchildren upon death and maintain the property taxes at current level.
In essence, the Repeal the Death Tax Act will help to preserve the long-term wishes of parents to pass on their family business or home to their children.
Please think of the family businesses that you rely on. They may have been in operation for generations, not only serving customers but giving back to the entire community. We need these family-owned businesses in California. So when you see signature gatherers in front of stores, please sign the petition for the Repeal the Death Tax Act or visit HJTA.org/RepealTheDeathTax to learn how you can help.
This op-ed originally appeared in the Mercury News.
In recent months, there’s been a lot of attention paid to some high-profile California businesses who have decided to move some or all of their operations to lower-cost states.
Oracle, the second-largest software maker in the world, is moving its corporate headquarters from Silicon Valley to Austin, while Hewlett Packard Enterprise – whose founders launched the tech revolution from a Palo Alto garage in 1939, is decamping to Houston.
But it’s not just tech companies heading for the door. Between 2008 and 2019, some 18,000 companies left for states with better tax and regulatory policies, according to Spectrum Location Solutions, a firm that specializes in helping California companies move elsewhere.
As the president and CEO of a family business launched in 1931 and chairman of the Family Business Association of California, my fear is more large companies will decide that our state’s ever-increasing taxes and regulations have reached the breaking point and follow suit – and that state officials will look at family businesses to make up the difference.
There are about 1.4 million family businesses in California. Nationally, family businesses employ 63% of the workforce and create 75% of all new jobs. The members of our association are a broad mix of businesses, ranging from two employees to over 20,000, but on average they employ about 700 people. And we’re committed to California. 13 of our members have been in business for more than 100 years, and the median for all members is 54 years in operation.
But even for California companies profitably run by families since the Beatles topped the charts, there comes a point where the costs become too much.
Take our taxes. California has the highest corporate income tax in the West, at 8.84%. And for members that are S corporations, partnerships or sole proprietors, they pay their business taxes at the rates for individuals, which top out at 13.3% - again the highest in the nation.
California’s extremely progressive income tax structure means that the top 1% of taxpayers pay nearly half of the tax. So if more big corporations and their top executives move operations to low- or no-tax states, state revenues will plummet. Since our progressive Governor and Legislature believe no government program should be reduced or – heaven forbid – eliminated, that means they’ll be looking for higher taxes from the businesses and business owners who remain.
In fact, they’re already trying. Bills were introduced last year would have raised the top rate to a staggering 16.8% and established the nation’s first wealth tax on individuals’ net worth. Supporters said the two measures would have raised over $14 billion and while neither passed last year it’s likely both proposals will be reintroduced this year.
And those taxes are on top of sales taxes, which are 7.25% at a minimum and top out at 9.5% in many cities and counties and in a few extreme cases are 10% or more. And don’t forget our 50.5 cents per gallon gas tax, again the highest in the nation – and that doesn’t include the additional 11 cents per gallon California’s climate change efforts increase gasoline prices.
California family businesses do not want to leave. We have deep roots in our communities. But if our policy makers keep driving giant companies and their executives out of state, we know they’ll be looking to us to fill the void in the treasury. And if that happens, many of our companies will have to take a hard look at pulling up those deep roots and replanting themselves in more fertile soil.
This op-ed originally appeared in the Orange County Register and other Southern California News Group publications on February 15, 2021
