While the legislature is in session, the National Federation of Independent Business/California will be profiling anti-small business bills and initiatives and the adverse effect they would have on California’s job creators. This is the second of the 2015 series.

The end of summer isn’t the only bad news in Sacramento. The Legislature is back in town beginning today – and they are attempting to increase fees and taxes yet again. One of the worst proposals from the regular session has been reintroduced in a special session dedicated to raising revenue for road repair: Senate Bill 1X 1 by Senator Jim Beall. The laundry list of tax increases and fees is unreal, and proves yet again that the majority of those representing small businesses have no clue about the impacts their proposals have on the economic engine of our state.

Some of the many increases that SB 1X 1 proposes include:

1) Adding an additional 12 cent per gallon tax to some of the highest gas taxes in the nation (California has the highest prices for gasoline in the country). For those who try to stock up on gas before an increase can take effect, the bill adds a 12 cent per gallon storage fee to ensure that the state gets the revenue from taxpayers.

2) Raising the cost of diesel by 22 cents per gallon, again with a 22-cents storage fee for earlier purchases.

3) Increasing the vehicle registration by $35, and by $100 for zero-emission vehicles.

4) Adding a $35 “road access charge” to everyone’s registration. Isn’t the ability to drive on the roads the reason we pay to register vehicles?

And where do all these fees and taxes go? Part – not all – are to be deposited into a Road Maintenance and Rehabilitation Account. Does anyone really believe that this additional revenue will be spent on what it is intended for, to improve roads? Maybe I’ve been in Sacramento too long – but I am a bit skeptical myself. Decades of inaction by the Legislature has led to this demand for more money and drivers are being told that they need to pay more because government failed to act, much like our current water crisis.

Small businesses have good reason to be concerned – all of the above fees and taxes will impact their bottom line and increase their cost of doing business. In recent years, California’s small employers have absorbed an increase in the minimum wage and increased costs for providing paid sick leave and health insurance as mandated by the Affordable Care Act. Elected officials always feel like their individual proposals aren’t overly onerous, but when combined with everyone else’s, they add up quickly and only serve to squash small business. I call this the “pancake effect.”

We start to sound like a broken record every time another cost on small employers is proposed, but the reality is that the only way to absorb any additional costs will be to lay off staff, raise prices or throw in the towel and close the doors. Small businesses operate on fixed budgets, and just because the state adds new taxes and fees, it doesn’t mean that business owners have the ability to pay those increases.

 

NFIB’s most recent Small Business Optimism Index showed no further decline from June, but that is the best that can be said. California was also ranked as the second hardest place to find full time employment – perhaps small business owners are nervous about hiring because of the onslaught of taxes and fees headed their way. And the state is consistently ranked as the worst place to do business.

In any case, the news isn’t good – and those returning to the Capitol today need to know that and act accordingly. Small business is watching and counting on you.

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For more than 70 years, the National Federation of Independent Business has been the Voice of Small Business, taking the message from Main Street to the halls of Congress and all 50 state legislatures. NFIB annually surveys its members on state and federal issues vital to their survival as America’s economic engine and biggest creator of jobs. NFIB’s educational mission is to remind policymakers that small businesses are not smaller versions of bigger businesses; they have very different challenges and priorities. Learn more at www.NFIB.com/ca.