Welcome to the December 16-20 edition of the Main Street Minute from your small-business-advocacy team in Sacramento.

The 2025-2026 session of the California State Legislature convened for just one day this month (December 2) before adjourning to re-start business on January 6, but already a few bills have percolated up. One NFIB takes a shining to, another most definitely not.

Senate Bill 17, a bipartisan measure co-sponsored by Republican Sen. Rosilicie Ochoa Bogh and Democratic Sen. Melissa Hurtado, would “for taxable years beginning on or after January 1, 2026, … exclude tips, as defined, from gross income for the purposes of the Personal Income Tax Law.”

The idea to do the same on federal taxes, reports The Sacramento Bee, was “endorsed on the campaign trail earlier this year by both major presidential candidates [but] economists are skeptical of the proposal, both at the state and federal level.

— “I think this is a solution in search of a problem,’ said Alex Muresianu, a senior policy analyst with the Tax Foundation … “There isn’t a clear reason why tipped income should not be taxed like other forms of labor (or) salaried income.

— “… top Legislative Democrats, Senate President pro Tem Mike McGuire and Speaker Robert Rivas, have pledged to work on making California a more affordable place to live during the next two-year legislative session. McGuire did not respond to a request for comment about the tips proposal. California also faces a roughly $2 billion deficit ahead of the next fiscal year. It’s unclear how much the proposal would cut into state tax revenues if it’s approved.”

Now for a Bad Idea

Pensions for legislators. We’ll let the editorial writers of The Orange County Register briefly take the wheel.

“Assembly Constitutional Amendment 2, introduced on Dec. 2, would ‘require the Legislature to establish a retirement system for Members elected to or serving in the Legislature on or after November 1, 2010.’

— “The pension would apply to legislators who served 10 or more years. Those who serve fewer than that would be granted pensionable credits that could be applied to other public employee pension systems.

— “Yes, because, you know, isn’t it a shame that all of these politicians aren’t able to collect a pension for all of their years running the state into the ground?”

New Laws Taking Effect in 2025

NFIB members and other small business owners should be aware of some new laws taking effect in a few weeks. This is the time of year some media publish their sweeping stories on them.

The Main Street Minute finds business reporter Kathleen Pender’s the best, so far, of the bunch for its narrowing down to what small businesses need to know the most. Click her article in the San Francisco Chronicle to read short summations on the following topics:

• Minimum wage increases
• Disability and Family Leave enhancements
• Help for freelancers
• ‘Captive audience’ meetings
• More help for crime victims
• Who needs a driver’s license?
• Workplace discrimination
• Workplace safety
• Digital replicas

NFIB and its coalition partners opposed most of the legislation mentioned in Pender’s article and will work to amend the most troubling aspects of them when the Legislature returns for real work on January 6.

Related to the above is NFIB’s list of Top 14 Small Business Victories from the 2023-2024 Session of the California State Legislature, a few of which will become law in 2025 but most of which were stopped from passage.

NFIB California News Releases

NFIB California sent two news releases last week:

• December 11—Not a Top 10 List to Make California Proud

• December 10—California Comment on Record Poll Findings

NFIB California in the News

• CalMatters, December 11—In the CA concerns on cost of living section of the news site’s article, California confronts opiod crisis at work, reporter Levi Sumagaysay quotes State Director John Kabateck on NFIB’s latest Small Business Optimism Index. The CalMatters story ran in five other publications that subscribe to its content.

• The Center Square, December 11—State Director John Kabateck discusses how the good news from NFIB’s latest Small Business Optimism Index will affect California.

• Check out the latest NFIB California in the News story that has a representative sample of all media hits for 2024.

The Forever Issue for Small Business

If you thought voter rejection last month of Proposition 32, the ballot initiative calling for increasing the state’s minimum wage rate, might have bought some time before the issue surfaced again. No dice. California is a state that allows local governments to set their own rates, which the Los Angeles City Council voted to do last Wednesday (December 11)

“The Los Angeles City Council voted Wednesday to raise the minimum wage for more than 23,000 tourism workers,” reported the Los Angeles Times. “On a 12-3 vote, council members instructed City Atty. Hydee Feldstein Soto to draft the legal language needed to push those wages to a minimum of $30 per hour by July 2028, just as the city hosts the Summer Olympic and Paralympic Games.

— “… Councilmember John Lee, who represents the northwest San Fernando Valley, voted against the proposal, warning his colleagues they were about to “take an ax to the local economy.” Councilmembers Traci Park and Monica Rodriguez also voted no, saying they fear hotels and other businesses will scale back operations by cutting employees or turning to automation.

— “’My hope is that we’re not creating the best-paid unemployed workforce in the country,’ Rodriguez said.”

Speaking of the Minimum Wage

As a reminder, the base minimum-wage rate rises to $16.50 an hour on January 1, 2025, except for fast-food workers and certain health-care employees, whose minimum wage rates increased $20 and $25 respectively this year. Forty cities also have higher minimum-wage rates that the state.

Calendar

• January 6, the 2025-2026 session of the California State Legislature opens for regular business.
• January 10, Gov. Gavin Newsom submits state budget to the Legislature
• January 24, last day to submit bill requests to the Office of Legislative Counsel

National

Highlights from NFIB Federal Government Relations Principal Josselin Castillo’s weekly report

NFIB applauded the passage of Bipartisan Legislation to Reduce Burdensome Health Care Reporting Requirements. The bill now heads to the President’s desk and will streamline health care reporting requirements, providing some relief to small employers.

NFIB released a new video explaining how the expiring 20% Small Business Tax Deduction works and the positive effects if Congress makes it permanent by passing the Main Street Tax Certainty Act.

NFIB released Episode 50 of the “Small Business Rundown” podcast, featuring Vice President of State Government Relations Tim Goodrich and Senior National Political Director Sharon Sussin discussing what the recent election results mean for small businesses.

Next Main Street Minute December 23.