The Family Business Association of California today issued the following statement expressing disappointment in Gov. Gavin Newsom’s decision to support Proposition 15, the measure on the November ballot that would create an $11.5 billion tax increase on businesses.
“The Family Business Association is composed of family-owned businesses that have been investing in California for decades. Our members have a long-term view. We create jobs and opportunities for thousands of Californians. COVID-19 has hit us hard. Global, offshore competition has narrowed our margins. Asking us to now pay in many cases two or three times the amount in property taxes that we have historically paid means higher wages will be deferred and what limited job growth there is will stop and any new jobs likely will be created in other states. Proposition 15 is a terrible idea, especially during these difficult times. We are very disappointed by Governor Newsom’s endorsement of this proposition that will seriously harm our businesses and our employees’ job security.”
The Family Business Association of California, the only organization advocating exclusively for California’s thousands of family businesses, has named Sen. Jim Nielsen, R-Tehama, as its Outstanding Legislator for 2019.
FBA Executive Director Robert Rivinius said the veteran lawmaker was selected because he’s always been a strong advocate for family businesses.
Robert Rivinius, left, and Sen. Jim Nielsen.
“Sen. Nielsen grew up in a family business and has always been a strong advocate for family businesses during his years in the Legislature,” Rivinius said. “We need more lawmakers who understand the unique issues facing family businesses and who recognize how important family businesses are to the state’s economy and the fabric of our communities, and we thank him for his support.”
Nielsen said he was proud to receive the recognition.
“California needs strong family businesses because they’re the cornerstones of their communities and the foundation of our state’s economy,” Nielsen said. “I want to thank the leaders and members of FBA. It is an honor to be recognized.”
Nielsen was first elected to the Senate in 1978, serving until 1990. He returned to the Legislature in 2008 as a member of the Assembly and was elected to the Senate in 2012. He represents all or portions of Butte, Colusa, Glenn, Placer, Sacramento, Sutter, Tehama and Yuba counties. He serves as Vice Chair of the Budget & Fiscal Review and Elections & Constitutional Amendments committees and is a member of the Governmental Organization, Governance & Finance and Veterans Affairs committees.
He has been recognized by numerous taxpayer and small business groups for his leadership on state budget issues and for his unrelenting fight against profligate government spending. He is also a leader in protecting and strengthening private property rights and for reforming state regulations and out-of-control spending.
Founded in 2012, the Family Business Association of California is the only organization working exclusively at the Capitol to educate lawmakers and regulators about the importance of family businesses to the state’s economy and to their communities and to advocate positions on legislation and regulations. FBA has also taken the lead to defeat recent proposals to impose a state inheritance tax, which would make it much more difficult to keep businesses family-owned from generation to generation.
Senate Richard Pan, D-Sacramento, has agreed to carry legislation sponsored by FBA that will provide a definition for family businesses in California.
SB 483 will be amended to assist state and local governments in identifying family businesses that meet the requirements. This bill will define California family-owned businesses as:
companies domiciled in California
in operation for 10 years or more
and owned and controlled by related persons or a partnership of related persons that have passed the business through a generation or have a plan for future generational succession.
Sen. Richard Pan
This standardized definition of “family owned business” will provide one definition of family businesses across codes and policies.
Family-owned businesses have unique characteristics that distinguish them from other businesses; however, there is currently no standardized definition of a family-owned business. Having a standard definition across state and local jurisdictions will allow policy makers the opportunity to reference one definition across jurisdictions and codes as policies are considered.
During the last legislative session, for example, tax policy was considered in legislation that inadvertently removed the “surviving widow exemption” that excludes these intra-family property transfers from reassessment.
In response, the entire definition of a family business had to be amended into the proposal. The absence of a uniform definition creates difficulty in determining the exact measure of their contribution and leaves policy makers without accurate data when implementing specific policy issues such as tax and estate succession.
Senator Pan will be amending the legislation soon with FBA’s proposed definition that is substantially similar to AB 1260 (Medina) from 2014 that passed both houses of the Legislature unanimously but was vetoed by former Governor Jerry Brown. With the new Governor and administration, FBA has initiated conversations with the hope Governor Gavin Newsom will approve the measure if it makes it to his desk.
Democratic supermajorities were sworn into both houses of the Legislature in December and the New Year brought in a sweep of Democratic statewide office holders being sworn into office, the most notable being Governor Gavin Newsom. The success of Democrats was of little surprise in a state where GOP registration has fallen to a third-party level, trailing registration of decline-to-state voters.
Dennis Albiani and Faith Borges
However, what was surprising was that within a few hours of taking the oath of office, the new Governor took to Facebook Live to sign a number of first-in-the-nation executive orders. Subsequently, within just a few days being sworn into office, Governor Newsom departed from the brief remarks of his predecessor and gave a lengthy presentation of the largest proposed budget in the state’s history.
Press releases, tweets, and a 280-page budget summary has affirmed speculations carried over from a long campaign trail that the new administration has a pretty long wish list of policy priorities for the coming months and years. How to fund this list will be the topic of debate before a final state budget must be passed on June 15th. Here are a few of the big-ticket items that are likely to be the focus for business community engagement.
One of labor’s top priorities this year will be codifying the state Supreme Court’s Dynamex decision, which made it tougher for businesses to rely on independent contractors. Businesses fear that the decision will hurt the growing gig economy and will hinder their ability to hire temporary staff or part-time employees. There is currently placeholder legislation from both sides of the aisle that will be amended in the coming weeks with partisan efforts to tackle the issue.
The Governor’s budget proposes efforts to expand the paid family leave (PFL) program, which allows employees to take time off to care for a new child, an ill family member, or to recover from a serious illness and receive 60- to 70 percent income replacement, which is funded through deductions from employee paychecks. Assembly Member Loren Gonzalez Fletcher, D-San Diego, has introduced placeholder legislation to extend the use of the state’s PFL program from six weeks to six months and guarantee 100 percent wage replacement for workers earning up to $100,000 per year. The budget will go through several months of reconciliation in the Legislature and there are still several weeks before the deadline to introduce policy bills.
Taxes are sure to be on the agenda of the Legislature and new administration. Imposing a sales tax on services has been proposed for several years. California’s boom-and-bust revenue cycle can make it difficult to provide consistent funding for state programs, including education and social services, and this has created many discussions on how to reform our tax code. Some legislators propose that a sales tax on services will “modernize” the tax code, more properly representing the state economy and flattening out the cycles. However, it could cost small businesses tens of billions of dollars in taxes annually.
Proposition 13 provides both residential and commercial property taxpayers important protections, including a uniform 1 percent property tax rate and limited yearly increases in assessed value to no more than 2 percent. In an effort to raise billions of dollars in new taxes, a new “split roll” would split commercial properties from residential and bring those property taxes to current market value, causing drastic cost increases for small-business owners who own and rent commercial property space. A split roll initiative has already qualified for the 2020 ballot and there is speculation that proponents will leverage the legislative process with the existing initiative.
Beyond these specific policy issues, business owners are more broadly hoping for a more receptive audience among legislators and the new governor in the new year. We hope policymakers view the employer community as a partner — not an adversary — in accomplishing many of our shared goals, and we hope there is a deeper appreciation for the many challenges employers face in the state.
The Family Business Association of California remains poised to represent family business to the Legislature to encourage positive reforms and to defend against hostile, unfavorable legislation. If you would like to participate in these legislative efforts, please plan to attend the Capitol Conference on May 14th and email Executive Director Bob Rivinius. Thank you for your membership and investment in family businesses.
While family businesses are the bedrock of California’s economy and its communities, keeping a business going for decades is extremely difficult. Studies show that only 30 percent of family businesses survive into the second generation, 12 percent to the third, and only 3 percent to the fourth generation and beyond.
But in 2018, eight family businesses that are members of the Family Business Association of California celebrated milestone anniversaries, demonstrating that despite the difficulties of running a successful business in California well-run companies can thrive for generations, said FBA Executive Director Robert Rivinius.
“This year’s list of anniversaries includes a wide range of companies, including two that marked their 100thyear in business,” Rivinius said. “The families who have these businesses growing for 50 year or more deserve recognition for their hard work and their ability to navigate the state’s difficult tax and regulatory regime.”
Gorrill Ranch, Durham, was founded in 1918 by Ralph Gorrill, an engineer who was part of the team building what became U.S. 99. He purchased 2,400 acres along Butte Creek from the Leland Stanford estate. Teaming up with a colleague, Gorrill learned the rice industry and today the ranch is a small but prominent grower of rice and orchard crops. The ranch is now run by the fourth generation of family members. http://gorrillranch.com/our-story
Pini Hardware, Novato, was also founded in 1918, by a Swiss immigrant who opened a general store which within a decade became one of the largest employers in town. The Young family became involved in ownership in 1968 and today the store is operated by the third generation of the family. http://www.piniacehardware.com/about-pini/
Shubert’s Ice Cream and Candy, Chico, was founded in 1938 by Leonard C. Shubert, who left Montana at the age of 54 to find a location in California for an ice cream shop. When he drove into Chico, he knew he’d found his location and since then the shop has become a community institution. The fourth generation of the family now make ice cream and candies on the premises. https://shuberts.com/our-story/
Lippow Development, Martinez, was officially formed in 1948 – 44 years after Leo Lippow arrived in the United States as a penniless immigrant. Now run by the third generation of the family, the company owns and operates a diverse portfolio of commercial and industrial properties in California and Arizona. https://www.lippow.com/about
Lund Construction, North Highlands, was founded 1958 by George and Alta Lund out of their garage. Now in their third generation, the company specializes in pre-construction, earthmoving, and pipeline services. https://www.lundconst.com/company/
Vanella Farms, Chico, began in 1968 when 23-year-old Bob Vanella purchased his first almond huller. Today, the company grows and processes almonds, walnuts and other crops on 3,000 acres and is a wholesaler that sells nuts to customers around the world. https://vanellafarms.weebly.com/about.html
Jim Dobbas, Inc., Newcastle, began its heavy equipment contracting business in 1968 and today specializes in emergency and derailment response services for class 1 railroads. The company is now run by the second generation of the family. http://www.jimdobbasinc.com/about/company-overview
Rivinius noted that the state’s 1.4 million family businesses employ 7 million people and tend to pay their employees better, train them better, and provide more generous benefits than nonfamily companies.
About the Family Business Association of California (FBA): Founded in 2012, the Family Business Association of California is the only organization working exclusively at the Capitol to educate lawmakers and regulators about the importance of family businesses to the state’s economy and to their communities – and to advocate positions on legislation and regulations. For more information, visit www.myfba.org.
Asm. Adam Gray, right, receiving FBA award from legislative advocate Dennis Albiani at FBA’s Annual Meeting of Members
The Family Business Association of California, the only organization advocating exclusively for California’s thousands of family businesses, has awarded its first Outstanding Legislator Award to Assembly Member Adam C. Gray, D-Merced, for his record on legislation crucial to family businesses during the recently concluded session.
The award was presented at FBA’s Annual Meeting of Members this month in Sacramento.
“Gray is a member of the influential New Democrats caucus – lawmakers who are committed to a pragmatic approach that promotes the interests of hard-working Californians alienated by the extreme partisanship of both the left and the right,” said FBA Executive Director Robert Rivinius.
“He had a 100 percent voting record on FBA’s key bills this session and played an influential role in advancing business-friendly bills and amending or blocking bills that would have harmed family businesses. That’s not surprising since he comes from a family business background.”
Gray’s grandfather, Ernest Denault, established Merced Dairy Supply to serve the Central Valley’s growing dairy industry and the company continued to thrive under Gray’s father, Robert. In fact, Adam Gray’s first job was washing storage barrels and loading feed bags for the family business.
After graduating from UC Santa Barbara, Gray went to work for then-Assembly Member Dennis Cardoza, focusing on agricultural issues and later owned a small public affairs and communications firm while also serving as a lecturer at UC Merced. He was elected to the Assembly in November 2012.
