Welcome to the May 16-20 edition of the NFIB California Main Street Minute from your NFIB small-business-advocacy team in Sacramento.
WARNING: Longer than usual Main Street Minute ahead.
- The biggest news of last week came at the very end of it: Gov. Gavin Newsom’s May revision of the fiscal year 2022-2023 state budget he proposed in January. The Legislature now has until midnight June 15 to make any changes it wants before passing the $300.6 billion spending plan back to him for his signature.
- Click here to go right to a snip of the two-page Small Business Investments section in the revision. Following this Main Street Minute are two charts from the revision showing where the state’s money will go and where it’s coming from.
- Minimum wage rate to increase sooner. The day before the big announcement, the governor teased out some of the elements of his revised state budget in a news release that had quite a jolt for small businesses.
- “California’s minimum wage is projected to increase to $15.50 per hour for all workers on January 1, 2023. The accelerated increase is required by a provision in the state’s existing minimum wage law when inflation exceeds 7 percent. The COVID-19 pandemic has resulted in persistent supply chain disruptions and labor market frictions have driven inflation to its highest rate in 40 years. These conditions have further been exacerbated by Russia’s war in Ukraine,” according to the release.
- When legislation was passed in 2016 increasing the minimum wage in steps up to $15 on Jan. 1, 2023, many had forgotten about the inflation provision that now boosts it to $15.50 because until this year, inflation had not been a problem.
- How times have changed—rapidly. “Inflation continues to be a problem for small businesses with 32% of small business owners reporting it’s their single most important problem in operating their business, the highest reading since the fourth quarter of 1980,” according to NFIB’s latest Small Business Optimism Index, which was released last week (May 10).
- “We recognize this is the law but this has the opposite effect on the people they’re trying to help,” NFIB California State Director John Kabateck told the Los Angeles Times, which reached out to NFIB for comment immediately after the announcement. “This just adds more pain to the struggle.”
- A bit of good news. In addition to a $439 million pause in the diesel fuel tax, the governor’s revised state budget calls for the “largest small businesses relief program in the nation,” according to Thursday’s news release from his office. “The Governor invested $4 billion in direct grants to California’s small businesses – on top of $6.2 billion in tax relief – putting more money directly into the pockets of hundreds of thousands of small business owners and helping them re-hire workers displaced by the pandemic.”
- Also last Thursday (May 12), the governor proclaimed May Small Business Month in California.
$15.50!!?? Big Joe Wants $18
- “On Thursday,” reported the Los Angeles Times, “the campaign led by wealthy L.A. investor Joe Sanberg submitted more than 1 million signatures on a ballot measure to raise California’s minimum wage to $18 an hour over a three-year period. The effort was one of the last ones to hit the streets for signature gathering and could be the last campaign to submit the petitions to elections officials — leaving less time for the verification process that must end before late June.”
- Also, in the above link to the Times story, reporter John Myers briefly explains why there are no ballot initiatives to decide on Primary Election Day, June 7.
Beware of Fiscal Cliff
- At the end of April the Volcker Alliance, named for legendary Federal Reserve Chairman Paul Volcker, warned states:
- “The use of federal aid to replace lost revenue may create a fiscal cliff for some states once SLFRF [State and Local Federal Relief Funds] money is spent by the deadline of December 31, 2026. That will, at least in part, depend on how the states use the funds … California is using a significant portion ($8.9 billion) of its SLFRF for revenue replacement in the general fund. This could lead to a fiscal cliff if the money is used to finance recurring costs and revenues are not sufficient to cover those costs in the future.”
- Sorry, Volcker Alliance, but California’s Legislative Analyst’s Office beat you to the warning a month earlier.
- “Under the Governor’s budget, the State Is very likely to face future, serious budget challenges. If the Legislature adopts the Governor’s budget proposals and the economy continues to grow, the state would not have surpluses large enough to pay for large and growing SAL [State Appropriations Limit] requirements in future years. If the economy does not continue to grow, the state would face budget problems due to revenue shortfalls.”
50-Year War Coming to an End
- With the Assembly’s May 12, 66-0 concurrence of Senate amendments, Assembly Bill 35 now heads to the governor for his expected signature. The issue: Medical malpractice awards.
- “Long-warring enemies have suddenly negotiated a historic compromise over how much money medical malpractice victims can be awarded for pain and suffering,” writes the Los Angeles Times’ George Skelton who provided some background.
- “On one side are trial lawyers and consumer activists. On the other are healthcare providers and insurers.
- “This war has been raging for 47 years, ever since the lawyer lobby victimized itself with political malpractice by not accepting a good deal offered by the sponsors of legislation to cap awards for pain and suffering. The lawyers miscalculated.
- “In 1975, doctors were threatening to retire or flee the state, and clinics were near closing, because malpractice awards and insurance premiums were climbing. New Gov. Jerry Brown and the Democratic-controlled Legislature overreacted by capping awards on pain and suffering at $250,000.
- “Trial lawyers messed up by not grabbing an offer to index the cap with annual inflation adjustments.”
- Reports Politico California Pro, a subscriber-only newsletter, “Starting Jan. 1, the bill [AB 35] would raise [the] pain-and-suffering cap for cases not involving a death … to $350,000, gradually growing to $750,000 over 10 years. The limit for cases involving a patient’s death goes to $500,0000 — and to $1 million over the decade. The maximum awards would then continue to bump up by 2 percent each year.”
Big Deadlines Ahead
- This Friday, May 20, is the last day for fiscal committees to hear and report to the floor, bills introduced in their house. Check out last week’s Main Street Minute for two bills NFIB is lobbying extensively to prevent from meeting that deadline: unsafe workplaces, family responsibility discrimination. A week later, May 27, is the last day for each house to pass bills introduced in that house.
NFIB California in the News
- Last Tuesday (May 10), NFIB California sent a news release commenting on the California Air Resources Board’s draft climate action plan. State Director John Kabateck’s remarks were published in the Santa Barbara News-Press to name one of the media running The Center Square story syndicated throughout the state.
- On May 9, the Northern California Record ran a story spurred by the special inflation survey NFIB produced. Kabateck provided a California angle.
- In addition to the Los Angeles Times above, it was a busy week spreading the small-business message. As a reminder, no one speaks with more authority on small-business issues than a small-business owner. The media love hearing from you. If you’d like to add your name to an informal roster of those willing to speak, drop an email with Senior Media Manager Tony Malandra and Grassroots Manager Taylor Criddle.
Highlights from NFIB Legislative Program Manager Caitlin Lanzara’s weekly report.
- On May 11, in response to the latest Bureau of Labor and Statistics consumer price index (CPI) report indicating inflation increased 8.3% over the past year, NFIB released a statement on inflation and its impact on small businesses. Read it here.
- On May 13, NFIB sent a letter of support for H.R. 6852, the Porch Pirates Act of 2022, introduced by Congressman Dean Phillips (D-MN), which would make theft of packages at a private home, distribution centers, in transport, or at drop-off boxes a federal felony.
- Also on May 13, the NFIB Small Business Legal Center filed an amicus brief in a Fair Labor Standards Act (FLSA) collective action case. “It is important to small businesses that the Courts have a clear procedure when hearing collective action cases and determine whether plaintiffs are ‘similarly situated’ at the outset of the collective action.” said NFIB Small Business Legal Center Executive Director Karen Harnd. “We urge the Sixth Circuit to reverse the district court’s decision.”
Next Main Street Minute May 23.