David Dickinson is keeping a nervous eye on bills coming out of Sacramento these days.
As the executive responsible for much of the day-to-day operations at Delta Scientific Corp., a Palmdale maker of vehicle barricades, Dickinson is well aware of how laws in Sacramento affect his bottom line.
And news of bills that would raise workers’ compensation benefits, grant employees paid sick leave and lengthen the statute of limitations on lawsuits filed against employers has caused him even more concern.
These are just some of the 34 bills that the California Chamber of Commerce last week targeted in its annual “job killer” list of bills regarded as onerous to business. That’s up substantially from last year’s initial list of 23 bills.
“These bills increase our costs,” said Dickinson, whose barricades are installed at government embassies and other sensitive sites. “We do business across the globe and bills like these make us less competitive on a global basis.”
With the state facing a huge budget deficit estimated at nearly $16 billion next year, state lawmakers are eyeing a host of taxes and fees on business, several of which have made the chamber’s “job killer” list. Generating the most headlines has been a pair of bills by Assemblyman Charles Calderon, D-Montebello, that would impose taxes on transactions of goods and services conducted over the Internet.
Two other bills would raise personal income tax rates on high income earners. While this would seem to target wealthy individuals or families, business lobbyists point out that a lot of sole proprietors, partnerships, s-corporations and other entities report their revenues as personal income for the owners. So any new taxes end up as taxes on small businesses, many of which are struggling in the economic slowdown.
The remainder of bills on the chamber’s job killer list targets a huge swath of economic activity in the state, including development and commercial properties, oil companies and electric utilities, the banking sector and logistics companies.
“There’s a general theme to some of the legislation this year, of going after the industries that have money,” said Marc Burgat, the chamber’s vice president of government relations. “It all goes back to this huge budget deficit we’re facing, $24 billion over two years.”
Governor’s veto?
If some of these bills actually become law, Dickinson said that will prompt him to step up his research on moving the business to other states, like Texas or Nevada.
“In those states, businesses are valued. Here, the first impulse of legislators is to heap more costs on business,” he said.
The chamber also contends that even if the vast majority of business don’t pick up and move, the bills still reduce economic activity in the state.
“In some cases, companies do move their operations. But more often, it’s the expansions that go elsewhere, which means our economy is not expanding as fast as it could be,” Burgat said.
While the stated intent of the chamber’s list is to send a signal to state lawmakers that business interests will lobby hard to defeat these bills, the real audience is Gov. Arnold Schwarzenegger.
In recent years, the governor has heeded the chamber’s message: Since he took office in late 2003, he has vetoed all but three of the dozens of bills labeled as job killers that have made it to his desk though two of the three he signed have had big impacts: a law aimed at reducing greenhouse gases and another raising the minimum wage to $8 an hour.
In a May 21 breakfast speech to the chamber, Schwarzenegger promised chamber members that he would again veto bills labeled as job killers. “I can guarantee you that this year we will do exactly the same again, that if any job-killing bills come on my desk, we will say, ‘Hasta la vista, baby.'”
There may be one exception to this: a bill from state Sen. Alan Lowenthal, D-Long Beach, that would impose a $30 charge on each shipping container that moves through the state’s ports, with proceeds used to expand port infrastructure and reduce air and water pollution. Schwarzenegger vetoed an almost identical bill last year, but in his veto message said he supports the concept of a container fee.
But with the state’s huge budget deficit and indications that the housing bust may be morphing into a statewide recession, the stakes have been raised both for businesses which contend it’s absolutely the wrong time for any sort of new tax, fee or mandate and backers of the bills.
“It’s tough times for workers in this state and we need state laws to protect them. Working families today face a ‘tidal wave’ of risks: losing jobs, losing wages and losing homes,” said Angie Wei, legislative director for the California Labor Federation. “Show us the evidence that these bills and similar bills that passed in previous years have caused employers to shrink their payrolls or move out of state.”
As is typical for the bills on the list, all are authored by Democrat lawmakers. AB 2716 by Assemblywoman Fiona Ma, D-San Francisco, which would make California the first state in the nation to grant paid sick leave to workers.
Backers say the bill would ultimately boost workplace attendance by allowing sick workers time off, instead of forcing them to go in and infecting others or staying home and losing pay. Employers fear that workers would abuse the law for vacation purposes.
Another sweeping bill is SB 1717 by Senate President Don Perata, D-Oakland, which would hike workers’ compensation benefit payouts, following reform several years ago that lowered premiums and benefits.
“After general labor costs, workers’ compensation is our biggest cost factor. Anything that increases workers’ compensation costs is bound to be detrimental to our business,” said Delta Scientific’s Dickinson.
Environmental fees
Several of the chamber’s designated “job killer” bills touch on environmental issues, with the much-troubled real estate sector a prime target.
For example, three bills mandate energy or water conservation steps that owners of existing and future buildings must take. They include AB 2678 by former Assembly Speaker Fabian Nunez, D-Los Angeles, which requires energy audits of existing commercial buildings, and AB 2153 by Assemblyman Paul Krekorian, D-Burbank, which would impose a developer fee on new residential and commercial projects to finance water conservation measures.
Industry lobbyists say that in order to comply with these bills, developers or building owners would have to pass the costs on to homebuyers or to commercial building tenants. “This is precisely the wrong time to make housing even more expensive,” said Burgat, of the chamber.
But environmental lobbyists say the opponents to these bills are shortsighted.
“We don’t buy into any of this fear mongering,” said Tina Andolina, legislative director for the Planning and Conservation League, a leading environmental advocacy group in Sacramento. “First off, we don’t believe these measures will make homes more expensive up front. But even if they do increase the cost slightly, who’s going to buy a home where they can’t afford to pay the energy and water bills in the future? People want the most efficient appliances, the most efficient building design.”
