L.A. area businesses are optimistic about business conditions this year and plan to sharply ramp up capital spending, according to a survey to be released today from the Los Angeles County Business Federation, or BizFed.

But businesses are still concerned about high taxes and fees, red tape and government regulations, especially the prospect of a citywide hike in the minimum wage, according to BizFed’s annual survey of nearly 600 local business owners.

Specifically, the survey found that 35 percent of businesses located in the city of Los Angeles say an increase in the minimum wage would force them to cut jobs or employee hours.

“That’s really scary,” said attorney David Fleming, a co-founder of BizFed. “If this passes, there will be a lot more unemployment.”

The Los Angeles City Council later today is expected to order City Attorney Mike Feuer to craft an ordinance to raise the minimum wage citywide to $15 an hour by 2020 for large companies and by 2021 for small companies.

The expected hike in the minimum wage may be holding down hiring a bit among local firms, said Ken Tiratira, chief operating officer of the Employers Group, one of BizFed’s 135 member organizations. The survey found that while 66 percent of companies expect business conditions to improve this year, only 40 percent of business owners plan to hire additional employees.

Still, 59 percent of business owners surveyed said they plan to make capital investments, much of that in new technology designed to further automate the workplace. That’s up from 46 percent who said they planned such investments at this time last year.

“That’s the biggest surprise,” said BizFed Chief Executive Tracy Rafter. “It shows a desire to invest in new technology and equipment to make businesses less reliant on human capital – to grow the business with fewer people.”

Among the top concerns of local businesses, high taxes and fees and government regulations have consistently ranked among the top three concerns in recent years. But moving up sharply on the list this year is the cumbersome local permitting process.

“With the economy improving, businesses are now looking at expansion and relocation within the region,” Tiratira said. “They must head straight to governmental agencies and file for permits, which is where they encounter the red tape and delays.”

Another major concern is healthcare: 65 percent of business owners surveyed said they expect higher healthcare costs as employer mandates under the federal Affordable Care Act kicks in later this year. Owners said they plan either to reduce employee hours or to increase employee copays to offset higher costs.

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