Assembly Passes Paid Sick Leave Mandate That Makes Small Business Ill

John Kabateck
NFIB State Director in California

Last week, the California State Assembly passed yet another mandate bill that is bad news for small businesses around the state.  AB 2716 by Assembly Member Ma passed with a 45-33 vote and will force all employers to provide paid sick leave regardless of their ability to pay and would expose small businesses to yet another round of lawsuits.

And to add insult to injury, when did this vote take place?  On the very day that California has set aside to honor the best and brightest small businesses around the state – California Small Business Day.  Dozens of legislators voted against the interests of California’s economic powerhouse – small business – by supporting a multi-billion dollar job-killing mandate, then walked across the street to proclaim their undying support for the very businesses they had just crushed.  To say the least one must question their motives for attending the event.

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Proposition 13 works

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Proposition 13, California’s famous property tax limitation initiative, will be put under the microscope this week as it reaches its 30th anniversary. Jon Coupal, president of the Howard Jarvis Taxpayers Association and I, wrote a piece detailing the success of Prop 13 for the Los Angeles Times in response to Times Contributing Editor Bill Stall’s article last week calling for a "face-lift" for Proposition 13.

You can read Stall’s article here, and the Coupal-Fox article here.

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So-Cal Jobless Rate Worst in Nation

Michele Steel
Orange County Supervisor (2nd District) and Former California State Board of Equalization Member

California’s budget situation is simple to understand.  Revenue is less than spending.  Members of the Legislature will have to grapple with the culture of overspending so prevalent at the Capitol.  The Board of Equalization is tasked with collecting sales, use and property tax.  The Legislature isn’t making this easy.

Sure, they love it when we act aggressively to find and collect tax dollars.  Sadly, they make it difficult for taxpayers to accumulate earnings to be taxed.  Our State’s prosperity is tied to the prosperity of its people.  Nowhere in history has anyone ever been taxed into prosperity.

The United States Department of Labor just released their unemployment statistics.  California, once a leader in innovation; is now a leader in desperation.  According to the Bureau, eight areas, seven of which are located in California, recorded jobless rates of at least 10 percent.

The largest over-the-year decrease in employment occurred in Detroit-Warren- Livonia, Mich., followed by Riverside-San Bernardino-Ontario, and Los Angeles-Long Beach-Santa Ana.

Southern California accounted for the second and third worse decrease in unemployment in the nation.  It is this same region that the lion share of non- farm related jobs are located.

Increasing taxes will only serve to slow economic recovery.  How many small businesses will go under as a result of the additional burden of new taxes?

Instead, California needs to unleash its potential and reduce its tax burden which is already one of the highest in the nation.  This is the only way to revive our economy and get people back to work so they can pay taxes.

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The unforeseen impact of the Gay Marriage ruling

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

Will the California Supreme Court decision on same-sex marriage have impact beyond the issue of marriage? Much of the current debate is focused on the decision’s legalization of same-sex marriage and a November ballot initiative whose sponsors seek to reverse its effect by putting a ban on gay marriage in the state constitution.

But the future of gay marriage in California is not really in doubt. Same-sex Polling shows that those of us under 40 overwhelmingly support legalization of gay marriage; this generational view is so strong that it won’t be denied.

The unknown is whether the decision will impact other issues.

I’ve read the court’s decision three times, and it has left me with more questions than answers. The court decided the case with very broad language, extending new legal protections on the basis of sexual orientation. One imagines that the decision will be decided in other cases to expand the rights of gay people, but exactly how is hard to guess.

What’s most puzzling about the decision is that the court grounded its legalization of gay marriage not in anti-discrimination law, but in an unwritten right it identifies in the state constitution: the right to receive respect and dignity for the family you form. Here’s how the court put it:

"These core substantive rights include, most fundamentally, the opportunity of an individual to establish — with the person with whom the individual has chosen to share his or her life — an officially recognized and protected family possessing mutual rights and responsibilities and entitled to the same respect and dignity accorded to a union traditionally designated as marriage."

A right to respect and dignity? Perhaps that’s how the world should work, but as a legal matter, such a right would be difficult to enforce. I’m no lawyer (though my wife will tell you I enjoy practicing law without a license), but it seems likely that plaintiffs in other court cases will attempt to gain legal sanction for all kinds of family structures and personal behavior.

If opponents of gay marriage wanted to make mischief and score political points this fall, they could encourage folks to file legal claims citing the court’s decision to demand respect and dignity for family structures that wouldn’t be very popular.

However the decision is employed, bet on this: the gay marriage ruling will keep the courts busy for years to come.

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Steinberg: Put $20 million in the bank if you’re serious about changing Prop 13

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Senate pro-tem in-waiting Darrell Steinberg thinks any attempt to change Proposition 13 will require a $20 million dollar investment in a bank account — to indicate that interests are serious in changing the landmark taxpayer protection initiative with a ballot measure.

Steinberg told callers to a Courage Campaign Conference call that there is a desire to change the two-thirds vote and other provisions of Proposition 13. However, he acknowledges it would be difficult in the legislature unless all legislators understood there was a serious effort to make the change. How would he prefer they convey that? Open a bank account and put in $20 million to see the fight through to the end.

Given that Proposition13 still shows the same two to one support in recent polls that it passed with in 1978, I’d say $20 million is not nearly enough. The two-thirds vote change was shot down by the voters when Proposition 56 was defeated in 2004 by about a two to one vote. In fact, I don’t think you can buy a major change in the voters mind on Proposition 13 at any price seeing all the tax increase proposals out there.

If you want to hear Senator Steinberg and Speaker Karen Bass on this issue for yourself, click play below to hear a clip from the call:

MP3 Player Loads Here

Prop 13’s 30th anniversary is Friday, so we’ll be hearing a lot about Prop 13 this week. I’ll be posting more as the week goes by.

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Here’s a head-scratcher

Loren Kaye
President of the California Foundation for Commerce and Education

The Brookings Institution just published a national ranking of metropolitan areas, based on their per-capita carbon emissions, and guess what?  Six of the 12 "cleanest" large cities are in California.  There’s more: when measuring per capita carbon emissions from residential energy use, 10 of the top 12 metro areas are in California.

Now this shouldn’t surprise anyone familiar with California’s tough residential energy efficiency standards and our reliance for electricity on natural gas, hydro and nuclear power (rather than coal).  And here’s one of the state’s best-kept secrets: our annual vehicle miles traveled per capita is the fifth-lowest of the 50 states.

All of which begs the question:  how in the world can California reduce its carbon footprint by another 29% by 2020 when our per capita energy use and carbon emissions are already relatively puny?  (Hint:  it won’t happen inside the borders of California!)

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Mandatory Sick Leave bill carries $22bil+ price tag

Chandra Sharma
Political Communications, Redistricting and New Media Strategist

Check out this post by the OC Register’s Jan Norman on her Small Business blog detailing the cost of the Mandatory Sick Leave bill that recently passed in the State Assembly:

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Proposed service tax is a dangerous prospect

Loren Kaye
President of the California Foundation for Commerce and Education

When politicians spend money as if the money was there, then they don’t have to raise taxes.  California leaders have practiced this sleight-of-hand for years, and now the bill has come due.

The California Legislature went on a spending spree that has nearly doubled outlays since 1998.  Now, faced with a $15 billion budget deficit, many elected officials and interest groups are advocating tax increases to pay for overspending.

With California sales and income tax rates among the nation’s highest, and its corporate tax rate in the top ten, the tax-and-spend lobby is reaching for more creative – and economically damaging – sources to feed the beast.

Topping the list is a new sales tax on services – an idea that has failed miserably when attempted in other states.  But the promise of a tax windfall is so alluring that the tax spenders cannot help themselves.

An elected leader of California’s top tax collection agency has prepared a list of services that when newly taxed would raise more than $8.7 billion, just for state purposes.  Another $5.8 billion would be raised for local government coffers.

Trouble is, these numbers don’t add up economically or politically.

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Cowboy Diplomacy, Cowboy Ethics and Cowboy Values

Patrick Dorinson
Host of The Cowboy Libertarian Radio Talk Show in Sacramento

Before the budget process swings into high gear and Sacramento becomes consumed by the back and forth haggling between the Governor and the Legislature, Big 5 meetings and press conferences decrying the coming catastrophe if we cut too much and the competing ones saying we need to cut more, I want to take a moment to talk about something that in my mind is every bit as important.

It is something that has been sticking in my craw for years, and I just have to spit it out. It has to do with not just "what" we are doing in politics, business and government, but "how" we are doing it. Because the "how" is every bit as important as the" what".

Now stay with me on this one and I hope it will make sense.

The other day I heard yet another jack-legged East Coast political pundit talk about President Bush and his "cowboy diplomacy" symbolized by his "reckless" foreign policy. What this person knows about real cowboys you could fit in a thimble. Barack Obama and Hillary Clinton also have this phrase in embedded into their political lexicon.

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Is California headed down the same road as Detroit?

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Sounding much like a gubernatorial candidate who wants to fix the way California government works, Insurance Commissioner Steve Poizner addressed an audience of a few hundred small business owners at the California Small Business Day in Sacramento.

California is headed down the same road as Detroit, and that’s not a good thing, Poizner said. Pointing out that, in 1950, Detroit was one of the richest areas in the country and led the world in automobile manufacturing, he said that people have fled Detroit in droves, the car industry has fallen behind Japan and Europe and Detroit registers on the bottom of nearly every measurable category of civic life.

Poizner sees California traveling down the same road. While population has increased because of immigration and births, he said 1.2 million California entrepreneurs and workers have left the state over the last eight years. He said California has dropped from the sixth largest economy in the world in 1999 to seventh in 2003 to eighth today.

And there’s probably more bad business news to come. Poizner said states like Nevada have created teams to raid California of its businesses. He cited ads run by Nevada that point out they has no income tax and no corporate tax, and a 30% smaller worker’s comp bill for businesses than California.

While the Insurance Commissioner noted that, due to the workers comp reform signed by the governor in 2004, workers comp dropped from 6% of payroll on average to 3% of payroll, California’s business workers comp bill is still above the national average of 2.5% of payroll.

Even the Silicon Valley economic engine shows signs of hedging its bet on California, he said. For the first time, sixty percent of the Valley’s research investment dollars are being placed outside of California.

Arguing that California must change to fight off stiff international competition Poizner said it was time to overhaul a dysfunctional state government.

Sounding a little like an early version of Governor Schwarzenegger who suggested ‘blowing up the boxes,’ Poizner said the state’s organizational chart follows a scheme established in the 1850s. It was time to bring it up to date.

To strengthen education, he argued that schools must be controlled locally, not from Sacramento. To improve the budget, he told the small business audience that the state must be more business-like and not budget from year to year, but instead use a multi-year budget and incorporate a rainy-day provision to set aside money during good times.

A number of people in the room commented after the speech that Poizner sounded like a candidate for governor.

Poizner did not talk politics or political ambitions during his speech, but there is no question that he has been given some thought to the way California government is faltering and what might be done to turn it around.

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