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.
Four more businesses recently joined the Family Business Association of California, the only organization exclusively working to protect the interests of family businesses in Sacramento.
Mag Bay Yachts was founded in 2013 by father and son Michael and Barrett Howarth in Adelanto. The company manufactures fiberglass fishing boats and sells them in the U.S., Mexico, and the Caribbean. They employ 15.
Longhorn Meat Company was established in 1976 and is now owned and operated by second- generation Phil Kattenhorn, who took over when his father retired. The company is a retail meat processor and seller located in Auburn and employs nine. The company has been awarded Best Butcher Shop by the Auburn Journal, and featured in Comstock’s Magazine.
Western Engineering Contractors was founded by Don Carroll in 1982 and has grown the general engineering construction company to 135 employees. The company does grading, paving, and underground construction within a 100-mile radius of Sacramento.
Medina McKelvey LLP is a Roseville-based law firm founded by Alex Medina and Brandon McKelvey in 2014. The firm specializes in wage and hour defense (Private Attorneys General Act, or PAGA lawsuits), employment law, and general litigation.
FBA Executive Director Robert Rivinius said the owners of the four companies recognize the challenges of doing business in California, especially for family-owned firms.
“California’s family businesses create the bulk of new jobs, look at the long-term, treat their employees as extended family and stakeholders, and are far more responsive to local needs than corporations headquartered thousands of miles away,” Rivinius said.
“Yet the state’s ever-increasing tax and regulatory burden makes it harder and harder for these firms to remain strong. During the recently concluded legislative two-year session, FBA led a coalition to defeat a dangerous plan to impose a California inheritance tax that would have jeopardized the future existence of many of these companies, and these four businesses recognize the need for family businesses to band together.”
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.
Firms in Petaluma, West Sacramento, Chico, and Salinas seek to protect family business
Four businesses recently joined the Family Business Association of California, the only organization exclusively working to protect the interests of family businesses in Sacramento.
Clover Sonoma has joined FBA as a founding member, the highest level of membership. The company was founded in1916 as the Petaluma Cooperative Creamery and remained a cooperative until the mid 1970s, when the biggest fire in Petaluma’s history destroyed the processing and bottling operations. Clover Stornetta Farms was born in 1977 when Gene Benedetti purchased the wholesale distribution business after the co-op decided not to rebuild. Gene’s son, Dan, succeeded him as president in 1986 and the company was an early entrant into organics. Third-generation president Marcus Benedetti became president in 2006, and added the title of chairman of the board in 2015. They are a major dairy products company with 240 employees headquartered in Petaluma. The company rebranded as Clover Sonoma in 2017.
Three other businesses have joined as regular members.
The Sacramento River Cats, a Triple A baseball team affiliated with the San Francisco Giants, was founded by Art Savage in 1999 and has been one of the most successful minor league sports teams in the country. Art passed away several years ago after a brief illness, and his wife, Susan, is now CEO and majority owner, and son Jeff is president of the team. The team is headquartered in West Sacramento where they play baseball at Raley Field. They have 60 full time employees.
Chico-based Northgate Petroleum Company was founded in 1922 with a two-horse-drawn tank wagon. It also established Chico’s first Shell gas station. Bud Caldwell and a partner purchased the company in 1988 and they provide fuels and lubricants in Northern California and Central Nevada.
And Corral De Tierra Cattle Company is a first-generation Monterey County ranch raising grass-finished Angus cattle and providing land management services. The first-generation company owned by Mark Farr focuses on raising premium beef while incorporating regenerative land stewardship into its day-to-day management.
FBA Executive Director Robert Rivinius said the four companies recognize the challenges of doing business in California and seek to remain family-owned in the years to come.
“California’s family businesses are the pillars of their communities. They create the bulk of new jobs, look at the long-term, treat their employees as extended family and stakeholders, and are far more responsive to local needs than corporations headquartered thousands of miles away,” Rivinius said.
“Yet the state’s ever-increasing tax and regulatory burden makes it harder and harder for these firms to remain strong. This year, FBA led a coalition to defeat a dangerous plan to impose a California inheritance tax that would have jeopardized the future existence of many of these companies, and these four businesses recognize the need for family businesses to band together.”
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.
Recognize need to be part of only statewide group focusing solely on family businesses
Five more companies have recently joined the Family Business Association of California, the only statewide organization that solely focuses on the impacts of new laws and regulations on family businesses.
Joining the Association during the first quarter of the year were Pini Hardware, a 100-year-old retailer based in Novato; Shubert’s Ice Cream and Candy, a Chico-based store marking its 80th anniversary this year; Peter Boysen Realty of Linden, established in 1979; Rediger Labor Law, a Sacramento firm founded in 1999; and Hemphill Solutions, a Carlsbad-based commercial real estate consulting and engagement firm established in 2001.
Pini Hardware: The company was established as a small grocery in 1918 by Swiss immigrant Henry Pini. The Young family became the third family to own Pini’s when they purchased what was by then a hardware store in 1968. The second- and third-generation of Youngs now own and manage the business. Russ Young, the CFO and treasurer, said like most family businesses, the company is deeply involved in Novato.
“We are a community-based business and are heavily involved in local events and give back to our community and schools. Some of the events we do are a Christmas Tree lighting, Scream on the Green on Halloween, and School Fuel, a fundraiser for public schools. And we pride ourselves on being one of the last full-service hardware stores around,” he said.
“Family businesses, big or small, are the cornerstone of this nation. We are what keep the economy strong and growing, and family businesses have been mistreated and misunderstood by today’s society and our local, state, and federal government for far too long. It is time for a change, which is one of the reasons that we joined the FBA to see how we can help make that change.”
Shubert’s Ice Cream & Candy: Leonard C. Shubert left Montana in 1938 at the age of 54 to find a location in California for an ice cream store. Highway 99 led him to Chico and he decided it was the right place. The company has been in the same location since it opened and even still uses one of Leonard Shubert’s original ice cream-making machines. In 2008, as the store was marking its 70th anniversary, it was named one of the two best ice cream stores in the country by ABC’s Good Morning America.
Kasey Reynolds and her brother, Nathan Pulliam, are the fourth-generation owners of the store. Like many sons and daughters of a family business owner, Reynolds at first wasn’t interested in staying at home. “I did go off and do corporate America for a while and it made me appreciate what we have in a family business,” she said.
She joined FBA because she believes small businesses need a bigger voice. “I decided I needed to get involved and do what I can to preserve family businesses for the future,” she said. She also announced in January that she will be a candidate for the Chico City Council this year.
Peter Boysen Realty: The Linden-based firm was founded in 1979 and now has 10 agents, including Peter and Rance Boysen, Peter’s son. As is often the case, for many years while growing up Rance wasn’t interested in joining his dad’s company.
“I never wanted to be in real estate. I said ‘never’ many times growing up,” he recalled. But after a few years as a farm manager after graduating from Cal Poly San Luis Obispo in 1997, he reconsidered. “I wanted to be more than just an employee. I wasn’t having fun. My Dad said he could use some help,” and he soon discovered he enjoyed the new career.
He decided to join FBA after hearing the Association’s Chairman, Ken Monroe, owner of Holt of California, talk on a podcast about the challenges facing family businesses. “I got to thinking, you know – we are a small family business. I think it’s important to do what can be done to help family businesses succeed. Family businesses should be helped in whatever way possible.”
Rediger Labor Law: Attorney Robert Rediger had been a successful labor and employment law attorney for nearly 20 years when he decided to start his own firm in 1999 – and he has since inspired a second generation of family members to join the firm. The firm focuses on traditional labor law, employment law, and related litigation, including defending companies against wage- and-hour class-action lawsuits.
He said daughters Candice and Arielle and son Justin decided on their own to join the firm after graduating from UC Berkeley and from three different law schools. “They said, ‘you’re always excited about your profession and enjoy your job.’ They studied a variety of different areas in law school, but found they enjoyed labor and employment law. When they graduated, I said ‘our firm could use some excellent attorneys,’” he recalled.
Advantages a family firm have include being able to trust people you’re working with and the opportunity to discuss ideas and brainstorm legal strategies with each other outside of the workplace. “Family businesses are also more solid and stable,” he added. “They’re often more conscientious because they have the family’s reputation on the line.”
Hemphill Solutions: The firm was established in 2001 and advises independent businesses on the real estate component of their enterprises, helping clients develop real estate solutions that save costs, reduce liabilities, and maximize operational flexibility.
Ralph Hemphill has more than 30 years’ experience in real estate and private equity and is the firm’s senior advisor while his wife, Katherine, is the broker/manager. He said they joined FBA to share expertise with other family business owners about issues they face.
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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.
