From your small business advocacy team in Sacramento
Welcome to the January 22-26 edition of the NFIB California Main Street Minute from your small-business-advocacy team in Sacramento.
State Budget
Keeping up with the dates and numbers.
- December 7, 2023, the Legislative Analyst’s Office (LAO) releases its California’s Fiscal Outlook report showing a $68 billion hole in the state budget.
- January 10, 2024, Gov. Gavin Newsom releases his proposed state budget for the 2024-2025 Fiscal Year showing the deficit only at $38 billion.
- January 13, the LAO comes back with an analysis of the governor’s budget, claiming, “Our estimate of the Governor’s budget deficit is larger than the administration’s estimate ($38 billion) largely due to differences in what we consider to be baseline changes.” And warning:
— “Overall, the Governor’s budget runs the risk of understating the degree of fiscal pressure facing the state in the future. The Legislature likely will face more difficult choices next year. To mitigate these challenges, we recommend the Legislature develop this year’s budget with a focus on future years. Specifically, we suggest the Legislature: (1) plan for lower revenues, (2) maintain a similar reserve withdrawal, (3) develop a plan for school and community college funding, (4) maximize reductions in one‑time spending, and (5) apply a higher bar for any discretionary proposals and contain ongoing service level.”
- Next Up: Governor will issue May revise of his budget.
The Legislature
- Whether the budget deficit is $38 billion or $68 billion, it has had a chilling effect on the spendthrifts in the Legislature. Last week was a quiet one.
UI Fund Forecast
- “In order to repay the principal on the federal loan, federal law imposes a tax increase on employers, which is referred to as the Federal Unemployment Tax Act (FUTA) credit reduction. This occurs when a state UI Fund is in deficit for two consecutive years. Once this occurs, the state loses 0.3 percent of the FUTA tax credit each year, which is the equivalent of an increase in federal taxes of $21 per worker per year. Despite a loan balance at the end of 2020, the FUTA tax credit reduction was not assessed in that year as California had not been in deficit for two consecutive years as of January 1, 2020. The FUTA credit reductions started occurring for tax year 2022, with the higher federal taxes due in January 2023. In 2023, the federal tax increase will generate a projected $397 million in contributions, which is estimated to increase to $858 million in 2024.” — From the January 2024 Unemployment Insurance Fund Forecast.
Calendar
- February 5, counties begin mailing ballots to voters.
- February 16, deadline to introduce bills in the Legislature
- February 20, last day to register for the March Primary Election
- March 5, Primary Election Day
- May 24 deadline for bills to pass their house of origin (Assembly, Senate)
- June 27 deadline for ballot measure to qualify for November
- August 31 deadline for bills to have passed Legislature and sent to governor
- September 30 deadline for governor to sign bills into law
- November 5, General Election Day
National
Highlights from NFIB Legislative Program Manager Caitlin Lanzara’s weekly report
- On January 17, NFIB hosted a webinar titled, “Beneficial Ownership Reporting Is Here: What Small Business Owners Need to Know About the New Reporting Requirements.” Watch here.
- On January 19, NFIB sent a letter in support of the bipartisan H.R. 7035, the Death Tax Repeal Act, introduced by Rep. Randy Feenstra (R-IA) and Rep. Sanford Bishop (D-GA). The bill would permanently eliminate the federal estate and generation-skipping transfer taxes.
— 92% of NFIB members oppose increasing the estate tax.
— Read the NFIB press release here.
- Last week, NFIB State Government Relations released the SGR Connection, a periodic overview of some of NFIB’s issues in the state legislatures.
This Main Street Minute can also be read on the NFIB California webpage here. Next Main Street Minute January 29.
