From your small-business-advocacy team in Sacramento
Welcome to the July 17-21 edition of the Main Street Minute from your small-business-advocacy team in Sacramento.
Legislature on Summer Recess
- Let’s lead off with some good news. The Legislature went on summer recess after it adjourned Friday (July 14) and will be gone for a month, returning on August 14.
- July 14 was also the deadline for bills coming over from one chamber to have passed the policy committees of the other chamber. Here are the status and brief descriptions of the 52 bills NFIB has targeted for special attention. About half are dead. The list grew by one when a so-called gut-and-replace measure was added.
- Dead is a relative term in the Legislature, which has more healing power than Lourdes in breathing new life into moribund measures, which is why no bill is ever, finally dead until the Legislature adjourns, which will be some time next year.
- In the meantime, for those of you wanting to count the remaining days of 2023:
— September 1 is the last day for fiscal committees to meet
— September 8 is the last day for bills to be amended
— September 14 is the last day for the Legislature to meet, after which it will adjourn for the rest of the year.
Fast Food Bill Dead … Or Maybe Not
- One of the bigger pieces of news last week was the pulling of Assembly Bill 1228 out of the Senate Judiciary Committee by its author, Assembly member Chris Holden.
- The measure seeks to upend the fast-food franchise model by holding franchisors, not just franchisees, responsible for all legal and liability requirements. This is no small matter, as Southern California franchisee Parag Patel explains in a guest editorial in the Los Angeles Daily News.
— “AB 1228 would force national fast food corporations to exert significantly more control over local franchised restaurants like mine. It would make the corporations legally liable for employment and personnel decisions at our local restaurants. In turn, the corporations will be required to assert more control over our operations. That’s not good for me or thousands of other local restaurant owners and our team members.
— “Current law gives franchise owners control over operations including hiring, wages, scheduling, benefits and workplace standards. Our corporate brands have no role in employment decisions because this is my business and I know what is best for my people. That’s how it should be.
— “I became a franchisee to build something lasting for my wife and three kids, my employees and my community. I took all the risk: I’m on the hook for the loans, I signed the building leases, I paid for construction, equipment and more. I did not start this small business because I wanted to run it on someone else’s terms.”
- Reports The Sacramento Bee, “AB 1228 was pulled from the Senate Judiciary Committee on Tuesday morning [July 11], but supporters are holding out hope for a future hearing. In most cases, the legislation would have to wait until next year as it will miss the July 14 deadline to pass out of a policy committee. But the committee chair, Senator Tom Umberg, D-Santa Ana, said he would push for a waiver to hold a special hearing in August or September.”
- Adds Politico California, “David Huerta, president of SEIU California, said in a statement that the bill will get a vote when the Legislature returns from summer recess. ‘We are confident that the Legislature and the administration are fully committed to bringing greater accountability to this industry,’ he said. It’s not clear exactly what prompted the delay, but it’s not uncommon to pull bills when the authors or proponents know they don’t have the votes. In this instance, there were rumblings of misgivings among Democrats on the committee who feared the measure might go too far in requiring corporations like McDonald’s to be legally liable for labor violations in their many franchises.”
UI Trust Fund Insolvent
- “The administration’s expectation that the state’s UI trust fund is now structurally insolvent is in-line with our office’s preliminary projections,” reports the Legislative Analyst’s Office about the Employment Development Department’s (EDD) latest assessment of the fund.
- According to the Fund Forecast put out by EDD, which administers the state’s unemployment insurance trust fund, “The Fund ended 2021 with a deficit of $19.7 billion and is expected to continue running a deficit of $19 billion by the end of 2022, $19.7 billion by the end of 2023 and $20.3 billion by the end of 2024.”
- Reports CalMatters, “The imbalance stems from the state’s forecasted $5.3 billion in annual payroll taxes growing slower than benefit payments expected to hit $6.8 billion next year — a dynamic that economists have argued could be addressed by changing the state’s tax structure.
- “After the worst of the pandemic, employers are already on the hook to pay a temporary unemployment tax hike, which the Analyst’s Office found will still likely prove insufficient because of the nagging financial hole.
- “Chas Alamo, Legislative Analyst’s Office policy analyst: ‘Historically, benefit payments have only exceeded contributions during major economic downturns — most recently, during the pandemic and Great Recession. For the first time, the fund is expected to be out of balance during a period of job growth.’”
Will it Rain Ballot Initiatives?
From Tom Ross, president and CEO of Swing Strategies
- “California’s initiative process was adopted in 1911 and in 1912 voters took to the polls to cast their ballot on four measures. To date, a total of 2,122 initiatives have been filed with the Attorney General’s Office to be titled and summarized for circulation.
- “Over 111 years, an average of roughly 19 measures have been filed for title and summary per year. We have seen this number fluctuate with a high of 109 measures filed in 2005. As of July 3, only eight have been filed in 2023 – the lowest mark in an odd year since 1975.
- “With August 30 as the estimated deadline for proponents to file proposed measures and receive the full 180 days for circulation ahead of the November 2024 Ballot, we may see a flurry of initiatives in the next 60 days.” Click here for Tom’s full article.
$19.08 an Hour
- On July 8, the highest minimum-wage rate in the nation took effect in West Hollywood, a town of 35,000 people.
- “Employers facing financial hardships can apply for a one-year delay via a waiver with the city,” reports the Los Angeles Times. “Still, many small-business owners in West Hollywood are speaking out against the higher wage, saying they are reaching a breaking point and need relief to avoid closing.
- “’These pay increases are about superficiality and about opportunistic politicians who are just trying to make a name for themselves,’ said West Hollywood restaurateur Lucian Tudor, a Romanian immigrant. ‘They don’t make any sense for small businesses who were never consulted. If we go out of business, that means workers will lose their jobs too.’”
National
Highlights from NFIB Legislative Program Manager Caitlin Lanzara’s weekly report
- This week, the Main Street Tax Certainty Act will be introduced by Reps. Lloyd Smucker (R-PA) and Henry Cuellar (D-TX). The bill would make the 20% Small Business Deduction permanent. Sen. Daines (R-MT) introduced the Senate. The Small Business Deduction will expire at the end of 2025. Learn more here and take action here.
- On July 11, the NFIB Research Center released the June SBET survey, which showed inflation and labor quality are tied as the top small business concerns, with 24% of owners reporting each as their single most important problem. Read the press release here.
— NFIB Chief Economist Bill Dunkelberg said, “Halfway through the year, small business owners remain very pessimistic about future business conditions and their sales prospects.”
— Small Business Optimism Index increased in June to 91.0 but remains below the 49-year average of 98.
— Owners raising average selling prices fell to the lowest reading since March 2021.
- The Consumer Financial Protection Bureau is not too widely known in the public realm, but Beth Milito, executive director of NFIB’s Small Business Legal Center, says it has a big impact on small business in this news release announcing the Center’s filing of an amicus brief with the U.S. Supreme Court.
Next Main Street Minute July 24.
Photo snip courtesy of the California State Assembly website
