Business has become the focus of Governor Jerry Brown’s efforts to line up support for his budget plan. But business is far from unified and does not speak with a single voice.
Yesterday, Allan Zaremberg, president of the California Chamber of Commerce, gave Brown hope that the largest, most influential business organization in the state may support his plan to deal with the budget. Zaremberg was careful with his words and did not give an outright endorsement to any budget plan saying that would have to wait until all details are in place and the Chamber board has an opportunity to meet on March 11.
What may accompany the five-year tax extensions on a special election ballot that Brown is pushing could have a lot to do with his securing support from different segments of the business community.
When the Los Angeles Chamber of Commerce recently endorsed Brown’s effort they did so with caution and recommendations advising the governor that the business leaders wanted to see regulation reform and a shorter period for the tax extensions.
Today, the governor continues his efforts to reel in business support when he meets with the Bay Area Council in San Francisco, a group prominent in the governance reform movement when it got behind a drive for a constitutional convention last year.
Most of the groups Brown has reached out to so far represent larger businesses. Small businesses could, and often do, have different concerns and that could show up on Election Day.
At the 2009 special election, many small business owners opposed the two-year tax extension while larger businesses were in support.
Small business owners don’t pay corporate taxes but rather pay taxes on their business income through their personal income taxes, one of the taxes targeted for extension in the Brown plan. Similarly, sales taxes and vehicle fees, also part of the tax extension proposal, often have a direct affect on small businesses’ bottom line. Small businesses living on the margin are concerned with even a small adjustment in tax rates.
Further complicating the problem in selling the tax plan to small business is that, in some cases, local governments have imposed new taxes to deal with their own budget problems. Just yesterday, I heard from a small manufacturer in Santa Fe Springs complaining about the burden of a new 3.5% utility tax the city imposed. Facing local tax increases; small businesses may seek tax relief by opposing extensions of state taxes.
As he reaches out to the business community for support, Brown will have to consider what reforms will convince small business that his overall plan is worth adopting.
Certainly, anything that will make California a more business friendly place is something small business wants and needs. Reforms in regulation, wage and hour overtime laws, and workers comp protections would all appeal to small business.
All business is looking for long-term certainty that the budget monster will finally be slain. Spending limits and budget reform dealing with pensions are high on the list.
Business support for a budget fix would be important for the success of a special election, but, as in 2009, there are chances the business community could splinter dooming the tax measure on the ballot.