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Friday, Sep 29, 2023




Staff Reporter

Businesses don’t have to worry about mandatory ridesharing programs any longer. But employees better start carrying proof of insurance on their way to work.

With the new year comes myriad new laws taking effect this month. They are among 1,174 bills approved by the state Legislature and signed by Gov. Pete Wilson during 1996.

Besides the elimination of carpooling programs and a new law that requires motorists to carry proof of automobile insurance in their cars, there are many sweeping legal changes that will impact business and mainly in positive ways, according to business leaders.

“We saw nothing really negative from the Legislature, and believe the laws will only help the economy continue to grow,” said Kirk West, president of the California Chamber of Commerce. “In 1997, new laws won’t stand in the way of the economy.”

Among the newly enacted legislation is a major reduction in business taxes, a law that will allow the beginning of competition in the electrical utility market, and the creation of an earthquake insurance authority.

Laws were also approved to make health insurance plans more patient-friendly, and some will begin the process of softening environmental protections.

Although the impact of most of these laws is expected to be good for business, there will be no sweeping changes in government policy. The relatively minor reshaping of the state’s legal landscape by last year’s political leaders can be attributed in part to the Legislature’s partisan split with Republicans controlling the Assembly and Democrats holding the Senate.

(In the new legislature, both houses are controlled by Democrats, leading to concern among some business groups that the agenda might change.)

“There are some very political reasons for this year’s new laws,” said Ray Remy, president of the Los Angeles Area Chamber of Commerce. “You have a Republican and Democratic Legislature, with a Republican governor who is business-oriented. With that, you have a reasonably good balance, with the pendulum not swinging too far to the left or the right.”

Perhaps the biggest impact on business will stem from the numerous tax law changes.

A 5 percent reduction in the state’s corporate tax took effect last week, cutting the rate from 9.3 percent of taxable income to 8.84 percent.

Intended as a boost for business, the cut will cost the state treasury an estimated $85 million in the 1996-97 fiscal year. Over the next three years, the law will result in $610 million of reduced tax revenue.

Another new law would increase the tax credit for businesses conducting research and development. The credit is formulated by taking a percentage of a company’s research expenses and deducting the resulting amount from its taxes.

The percentage will jump from 8 to 11 percent.

Small businesses get an increase in deductions for expenses, from $10,000 to $12,500. The statute also lowers the Minimum Franchise Tax for new businesses, and exempts small business from the Alternative Minimum Tax.

“Small businesses did well this year,” said Scott Hauge, president of the California Small Business Association. “There was nothing really spectacular to come through Sacramento on behalf of the small business owner but more important is that nothing came through the pipeline that will hurt them.”

Other legal changes include:

– The California Earthquake Authority, a publicly run, privately financed agency, went into operation on Dec. 1. The agency offers homeowner coverage for quake damage throughout the state. It also boasts a claims-paying ability with funds backed by municipal bonds, private companies and policyholders.

– The state’s ridesharing program is now voluntary for businesses.

– Californians must provide proof of automobile insurance when renewing their driver’s licenses. Police may also ask for proof when stopping a motorist for any infraction, and cars may be impounded for non-compliance.

– Health care plans are prohibited from telling doctors to conceal various treatment options, including care that patients could obtain outside the health plan.

Also, each health care organization must have a clear policy stating its guidelines on when patients may seek a second opinion.

– The temporary exemption given to bars and game rooms from the state’s workplace smoking ban has been extended for another year.

– Banks must provide point-of-transaction disclosure of surcharges and fees for automated teller machine use.

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