NFIB California Main Street Minute

For the legislative and political week ending March 19

Welcome to the March 15 edition of the NFIB California Main Street Minute from the NFIB small-business advocacy team in Sacramento.

Blockbuster News! And you thought it couldn’t get any bigger than Oprah’s interview with Megan and Harry. But $1.9 trillion – trillion! – also has a way of commanding attention. That is how much moolah will wash across the land after President Biden signed the American Rescue Plan Act 2021 into law March 11.

What small-business owners immediately need to know about the Rescue Plan:
- Thanks in part to persistent lobbying by NFIB and others, the provision calling for a $15 minimum wage nationally was removed by the Senate. Only a handful of cities in California have a higher rate, but most still abide by the official state rate of $13 an hour for businesses with fewer than 25 employees and $14 an hour for businesses with 26 or more employees
- The employee retention tax credit was extended until the end of the year (it had been set to expire at the end of June)
- The paid leave tax credit was extended until the end of September (it had been set to expire at the end of March)
- If used wisely, the Rescue Plan could lessen or eliminate the need to boost unemployment insurance taxes (see below)

Also, nationally, there’s $25 billion for restaurants and bars, grant money up to $10 million per entity or $5 million per location, and $1.25 for shuttered venue operators. Check out the Small Business Provisions section on this very handy National Conference of State Legislatures web story.

The Rescue Plan Act was very generous to California, giving the Golden State $42.6 billion, the most of any state. Twenty-six billion dollars goes directly to the state, with the $16 billion balance going to cities, counties, and state capital projects.

There are stipulations on the use of the money, however. Sorry, local governments, but you can’t use it to backfill pension obligations.

The Rescue Plan allocates more Paycheck Protection Plan (PPP) money, $7.25 billion, but does not extend the March 31 PPP-application deadline. NFIB is leading the charge to extend the March 31 deadline, as explained in this four-page letter it sent to Congress.

So how will California use its Rescue Plan money? The state currently has a $20 billion outstanding advance balance with the feds for unemployment insurance loans, which would wipe out most of the discretionary money it has, were it to pay the feds in full. But paying it off also might lessen or negate the need to raise UI taxes on small-business owners. Caution: There’s some uncertainty about whether some restricting language slipped into the bill creating the Rescue Plan at the last minute may limit the amount states can spend on their UI debt. Stay tuned.

Beware of the late Friday afternoon news release. The Assembly Budget Committee had been expected to take up Assembly Bill 80, today, March 15, which aims to align state tax law with the federal government’s regarding PPP loans. But an afternoon news release issued by the governor’s office also on behalf of State Senate President Toni Atkins and Assembly Speaker Anthony Rendon announced, “The legislation that would conform to the federal tax treatment of these grants will be delayed temporarily while we seek detailed guidance from the U.S. Treasury Department regarding provisions in the American Rescue Plan Act signed yesterday by President Biden.”

One measure that will be taken up this week is Senate Bill 95, which “Reestablishes the COVID-19 supplemental paid sick leave requirement for employers, as defined under existing law, who have more than 25 employees,” according to Senate staff analysis. SB 95 is a budget trailer bill. “In the jargon of the Capitol, ‘trailer bills’ are measures that accompany the annual state budget – in theory making the changes of law necessary to implement the budget’s fiscal policies,” writes Dan Walters, longtime state government reporter in the Orange County Register. These measures are early budget items so that they become effective upon signing or date of implementation as written in the bill.

So how will all that dough from the Rescue Plan be spent? Funny you should ask, because NFIB California has invited a few guests to your Small Business Day at the Capitol event on April 21 who might have some answers. The guests include Dee Dee Myers, a senior adviser to Governor Newsom and director of the Governor’s Office of Business and Economic Development (GO-Biz); Assembly Member James Ramos (D-Rancho Cucamonga); and Sen. Scott Wilk (R-Santa Clarita). For more information, send an email to NFIB Grassroots Manager Taylor Criddle.

A special thank you goes out to NFIB member Lorraine Salazar, owner of Fresno-based Sal’s Mexican Restaurants, for helping spread the small-business message with her guest editorial in Eureka, the Hoover Institution’s policy blog, “… as we move past the one-year anniversary of the governor’s executive order declaring a state of emergency, I’d like to ask a simple question: what we have learned? To contribute one thought to the discussion, the spread of the pandemic was not the fault of small businesses, but they have borne the economic brunt of a vicious cycle of mandated closures, costs of reopening, more mandated closures, and another round of reopening costs.”

State Director John Kabateck was all over the news prior to Gov. Gavin Newsom’s State of the State address, telling the Associated Press for a story that ran statewide, “The last thing we need are new laws and rules that are going to send small businesses and consumers into a flurry of uncertainty and fear.”

The political industry in Sacramento may have lost one of its last preferred places to do business with the passing of Simon’s owner, Simon Chan. The Torch Club, David’s Brass Rail, Ellis’s, Posey’s, the Capitol Tamale, The Broiler, all gone. Only Frank Fat’s hangs in there. NFIB California chief legislative advocate Kevin Pedrotti described Simon’s as “a throwback to a more personable era when legislators of both parties could sip or chug, chow down on Chinese American fare, towel-snap one another, laugh, and was the second home to the Karaoke-lovers who ultimately formed the popular Karaoke Caucus. Seriously.”

Nationally

NFIB’s next webinar, PPP, ETRC, and COVID-19 Relief Updates from the American Rescue Plan Act, is this Wednesday, March 17. Register here.

The bad news out of D.C. was House passage of H.R. 842, the Protecting the Right to Organize (PRO) Act, NFIB members can still take action here and let their senators know to oppose the bill. Read more here. For information on NFIB Key Votes read here. Among other horrendous things, the PRO Act would:
- abolish right-to-work laws
- restrict an employee’s ability to reject union representation
- adopt California’s notorious ABC test for independent contractors.