Preventing local overreach and blocking employer mandates continue to be top priorities.
According to the November 2018 NFIB Small Business Optimism Index, small businesses are still feeling good about the nation’s growing economy, recent tax and regulatory relief, and their renewed ability to invest in and expand their businesses.
Here’s a look at some of the specific issues expected to be tackled by eight state legislatures next year.
With two-thirds Democratic supermajorities in both legislative chambers and a new Democratic governor, the state will test many big ideas with big price tags in 2019, says NFIB’s California Policy and Communications Director Shawn Lewis. In particular, Lewis anticipates three key issues: single-payer healthcare, a sales tax on services, and a split roll property tax.
A healthcare change of this magnitude could cost $200 billion to $400 billion annually, more than double the state budget, while a sales tax on services could cost small business owners and consumers at least $100 billion per year.
A split roll property tax would remove Proposition 13’s property tax protections from commercial properties to bring their annual assessments to current market value, resulting in cost increases to small business owners who own or rent commercial space.
In Colorado, Democrats now maintain all three branches of power, but NFIB’s Colorado State Director Tony Gagliardi expects a mixed bag of proposals. Legislators will likely pursue state-run retirement plans for private-sector employees and laws allowing local governments to set their own minimum wages, he says, but positive reforms to the state’s sales and use tax, business personal property tax, small group/individual insurance markets, and regulatory system could also be in play.
Republicans hold the majority in both chambers of the state Legislature, and NFIB-endorsed Ron DeSantis won the governor’s seat, so NFIB’s Florida Executive Director Bill Herrle expects that legislative work in 2019 will continue to bolster the state’s strong small business economy.
Gov.-elect DeSantis campaigned on cutting small business taxes, most notably Florida’s unique sales tax on commercial rents and leases, which affects almost all NFIB members in the state. This tax has already dropped from 6 to 5.8 percent.
Gov.-elect DeSantis will also appoint three new justices to the state Supreme Court, which could mean a more small business-friendly court.
The governor’s house flipped from Republican Bruce Rauner to Democrat J.B. Pritzker on Nov. 6, and Democrats gained supermajority in the Illinois House of Representatives, winning 72 seats—a party needs to win 71 seats for three-fifths supermajority. As a result, NFIB’s Illinois State Director Mark Grant says small business owners are likely to see a slew of labor proposals, such as a $15 minimum wage, predictive scheduling, and mandated paid sick leave for all workers, as well as a push to change the state tax structure from a flat rate to a progressive style.
Republicans maintained control of the state House and Senate, but Democrats picked up five seats in each chamber and won the governor’s house. As a result, Michigan will return to a divided state government. NFIB’s Michigan State Director Charles Owens anticipates that a new sales tax on services as well as changes to the NFIB-backed 2011 tax reforms could be pursued. These reforms eliminated the Michigan Business Tax and made thousands of S-corps and LLCs exempt from the 6 percent corporate income tax, so a rollback would mean significantly higher costs for small businesses. Owens also notes that labor policies, such as a $15 minimum wage, right-to-work repeal, and reinstatement of the prevailing wage law, will likely be on the table.
Gov. Andrew Cuomo retained his position, and Democrats saw massive gains in the New York State Senate and four new seats in the state House. NFIB’s New York State Director Greg Biryla says the biggest concerns are single-payer healthcare, implementation of a carbon tax, increasing estate taxes, and a rash of employer mandates and labor proposals, including predictive scheduling, elimination of the tipped wage system, and allowing farm workers to collectively bargain and unionize.
Following the midterms, Republicans will keep control of Ohio’s three branches of government, and Roger Geiger, NFIB’s Vice President and Executive Director in Ohio, expects the Legislature to proactively pursue reform measures to the state’s unemployment compensation system, workforce development programs, health insurance mandates, and regulatory practices. Geiger also says it will be a priority to preserve the $250,000 deduction for pass-through businesses.
Despite the Republican stronghold in Texas, NFIB’s Texas State Director Annie Spilman notes that NFIB fights an array of progressive labor causes—ban the box, paid sick leave, $15 minimum wage, and predictive scheduling—each session. In 2019, the top priority will be passing legislation that pre-emptively prohibits local governments from passing ordinances that regulate private employers’ business practices, including hiring, scheduling, and employee benefits and paid leave.
Additionally, Spilman says tax relief and reform—specifically, the state’s business personal property tax and franchise tax—will be a top-five issue, along with legislation that would prohibit Texas from collecting dues on behalf of national labor unions.