Welcome to the October 20-24 edition of the Main Street Minute from your small-business-advocacy team in Sacramento.

Legislation Update

Last week’s Main Street Minute reported on a few good and bad bills for small business signed into law, but Gov. Gavin Newsom’s deadline to act on legislation had not passed. Now, it has.

We begin with a moment of praise for the state’s chief executive for vetoing Senate Bill 512 (Perez), which attempted an end-run around Proposition 13 protections, and Assembly Bill 1136 (Ortega), giving five, unpaid working days of leave time for a variety of reasons unrelated to sickness.

We thanked our members for helping spur the governor to protect Proposition 13 in this web story.

Three other measures also drew his veto stamp. A fuller report of the 2025 session is forthcoming.

Now, on to the governor we’re more familiar with.

Winning the governor’s signature into law were:

— Assembly Bill 692 (Kalra) expanding the rights of people to bring civil actions on behalf of a person

— Senate Bill 261 (Wahab) adding public shaming to labor law violations

— Senate Bill 294 (Reyes) establishing a Workplace Know Your Rights Act

— Senate Bill 464 (Smallwood-Cuevas) that adds sexual orientation to reporting information on employees

— Senate Bill 590 (Durazo) expanding leave benefits to someone with the equivalent of a family relationship.

More information to come in the future Main Street Minutes.

Another State Budget Looms

Yes. We’re only a few months into the 2025-2026 state budget, but as CalMatters’ Dan Walters reports in this story, California’s chronic deficit looms again as Newsom prepares his last state budget, we’re on to the next one.

“It seems like just yesterday that Gov. Gavin Newsom and state legislators enacted a state budget that papered over a $20 billion gap between income and outgo while blaming President Donald Trump for their fiscal dilemma.

“Trump, however, had nothing to do with what state officials have described as a ‘structural deficit,’ meaning that spending encased in current law outstrips revenue expectations. Rather, it stems from what officialdom later acknowledged as a $165 billion error in revenue projections in 2022 that fueled Newsom’s boast of having a $97.5 billion surplus. That, in turn, resulted in a sharp increase in spending.”

Why this matters to small business.

So, what is the likelihood of the next state budget dedicating any money to paying down the $20 billion in loans it still has outstanding with the federal government for the money it borrowed to keep its unemployment insurance trust fund solvent?

According to the U.S. Dept. of Labor, “22 states took Title XII advances during the year while 18 of those states had an outstanding balance on January 1, 2021 totaling $45.5 billion. Many states were able to supplement their unemployment funds during the year by using relief funds available through the CARES Act.”

California is now the last man standing, the only state to still owe Uncle Sam money. Furthermore, that will not change anytime soon. “The state will need to borrow from the federal government in most years to make up the gap between UI benefits and contributions,” reports the Legislative Analyst’s Office. “This means that businesses could face a perpetually outstanding federal loan, on which the state must make interest payments. These interest costs will be significant, likely around $1 billion per year, and paid by the state’s taxpayers.”

The state passed on its pandemic-era opportunity to use CARES and ARPA money from the federal government to put a substantial dent in the payment of its UI loans, and as a result, from the same legislative analyst’s report, “We recommend the Legislature increase the taxable wage base from $7,000 to $46,800, tying the taxable wage base to the amount of UI benefits a worker can actually receive ($450 per week) … While necessary, this step alone would not be sufficient to address the state’s solvency problems.”

NFIB will have it work cut out for it on this issue, which other states, because of their superior prudence, will not have to deal with.

Calendar

— November 4: Statewide Special Election Day on Proposition 50. Click here for more information from the secretary of state.

— January 5, 2026: Legislature reconvenes

National

Highlights from Federal Government Relations Principal Louis Bertolotti’s weekly report

— The federal government remains shut down for an undetermined period of time, as Congress negotiates a funding agreement. NFIB has no position on this issue.

— NFIB President Brad Close published an op-ed in the National Review regarding BOI reporting requirements: “Main Street’s only hope is for Congress to repeal this mandate and remove it from the books forever.”

— NFIB’s Research Center released the September SBET survey, which found that the Optimism Index declined 2.0 points in September to 98.8 and the Uncertainty Index rose seven points from August to 100, the fourth-highest reading in 51 years.

Next Main Street Minute: October 27. All Main Streets Minutes can be found on the NFIB website here. Pull down the California tab in the upper-right-hand corner.