Small businesses key to California’s economic health

The start of the new year also brings a new governor and a new Legislature, which provides opportunity for Californians to set new goals and expectations of our elected leaders in Sacramento. Small business owners, especially, have much at stake in the halls of the state Capitol, with many new opportunities and challenges ahead in 2019.

Members of the National Federation of Independent Business offer a unique and important perspective on policy, making since our membership is comprised entirely of small business owners who represent nearly every industry imaginable, from automotive repair shops to financial advising firms.

Although California boasts low unemployment numbers and a high gross domestic product, or GDP, we consistently rank near the bottom in a number of other metrics.

And our advocacy positions are a product of annual member balloting, which means we can provide clear and current insights to policymakers on some of the biggest issues facing our state, such as health care and tax reform.

While small business owners had a number of victories last year in preventing additional mandates and costs to their operations, there were also a number of missed opportunities in California we hope will be remedied in the new year.

Last year, AB 2596 (Cooley, Kiley) represented a bipartisan effort to create a statewide economic development plan so that California may become more competitive at retaining existing businesses and attracting new ones to California.

This is an important goal. Although California boasts low unemployment numbers and a high gross domestic product, or GDP, we consistently rank near the bottom in a number of other metrics, such as taxation and regulation. This bill passed both houses but was vetoed by former Gov. Jerry Brown.

AB 2671 (Fong) also represented a missed opportunity to take a serious look at California’s expansive regulations and eliminate outdated and duplicative ones, which would help small businesses better comply with the law.

Additionally, AB 2481 (Voepel) would have provided greater flexibility to full-time hourly employees by allowing them to request four, 10-hour work days per week rather than the traditional five, eight-hour work days per week, if it better suits their lifestyle.

Looking ahead, there are three key legislative issues that NFIB members say may have the greatest potential impact on owning, operating and expanding their small business in California.

Paid Sick Leave
Just three years ago, California required all employers provide employees three days of paid sick leave, unless employees are part of a collective bargaining agreement.

The existing three-day mandate has brought new costs and complications to comply, including fraud which employers cannot combat. Recent efforts have sought to expand this three-day requirement to five days, which could create significant new burdens for small businesses.

Sales Tax on Services
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. However, one idea – a new sales tax on services – could cost small businesses tens of billions of dollars in taxes annually.

Split Roll Property Tax
Proposition 13 provides both residential and commercial property taxpayers important protections, including a uniform 1% property tax rate and limited yearly increases in assessed value to no more than 2%.

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.

Beyond these specific policy issues, small 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.

And while employers face many of the same issues such as increased litigation concerns or greater costs to comply with regulations, we hope the Legislature and Gov. Gavin Newsom (who has a background in small business) recognize that small businesses face these challenges differently than much larger business, and we must do everything to support their success in the Golden State.