State’s Study on Impact of Regulations on Small Businesses Doesn’t Have Many Surprises
It felt a bit like Christmas yesterday afternoon when we finally received the long overdue study on the impact of regulations on small businesses in California. And while the news wasn’t good, it also wasn’t a surprise, like opening a gift that you picked out for yourself.
We hear from our members over and over that regulations in California are strangling them. One thing that this study proves is that what we’ve been saying is true – it accurately portrays the totality of the problems that small businesses face in our state when it comes to regulations. Don’t misunderstand – some regulation is needed to have a fair and balanced market, but there needs to be a reality check about how regulations will affect small businesses. Just like the saying that there is no free lunch it is equally true that compliance with regulations, particularly for small businesses, does cost money.
California finds it self in the midst or on the way out of the worst recession in decades, but in this dark time we can more clearly see that actions we have taken to hamstring our small businesses, the economy, and state revenues. More and more leaders, including the Governor and a number of legislators, are calling for action to right the ship and get our economy back on course.
Part-time Legislature Brings Back Problems
Anyone interested in the potential problems of a part-time Legislature should take a look at the bust of former San Francisco Mayor John Shelley, just inside the main entrance at City Hall.
The words carved into the stone call Shelley “A True Representative of the People,” and list his single term as mayor from 1964-68, his seven terms in Congress and his service in the state Senate from 1939 to 1946.
Since those were the years of a part-time Legislature, it also lists his full-time job as president of the San Francisco Labor Council from 1937 to 1948. After he left the Legislature, Shelley was president of the California State Federation of Labor until he was elected to Congress.
So you have a state legislator who at the same time was drawing a full-time salary as one of California’s most powerful labor leaders.
Anyone see the potential for conflict there?
Privatization in California
Although the 2009 budget drama has subsided, the 2010 budget is just around the corner. It promises to be no less dramatic. While legislators work to break the snowballing budget cycle, they should consider new innovations such as privatization of some California infrastructure and functions.
For proof of success, look no further than The Reason Foundation’s recent findings in its Annual Privatization Report, which presents alternatives to the age-old battle over whether to raise taxes or cut spending. Instead, governments have the opportunity to reduce liabilities while modernizing and streamlining procurement practices, creating more transparent and simplified processes, and encouraging a new level of competitiveness among local businesses.
While California has barely dipped its toe into privatizing waters, many other states have jumped in with both feet.
One good example is West Virginia, whose privatization of its workers’ compensation insurance program. The move was considered a success in terms of handling of claims, lowering rates, and reducing the state’s liabilities.
The Way to Win on Split Roll
Seeking to change Prop 13 is usually political suicide. And so far, it appears that San Francisco County assessor Phil Ting and others who want to create a so-called split roll (by eliminating some of the Prop 13 protections on commercial property) are unlikely to get very far.
Ting has the language right. He’s arguing that he’s merely closing “corporate loopholes” that protect older businesses and allow corporations to postpone reassessments of their property. Fixing loopholes polls well, but the advantage will melt away once voters understand that Prop 13 is at risk.
To win, a split roll initiative needs more than clever rhetoric and framing. It needs a tax cut.
Ting and split roll advocates point out that Prop. 13 “shifted the tax burden to individual homeowners while dramatically reducing California’s tax base.” Commercial property owners often structure transactions to avoid the reassessment that would increase property taxes. In San Francisco, Ting writes, most of the property taxes were on the commercial side 30 years ago; now the opposite is true.