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Saturday, Jun 3, 2023

The Fading California Dream?

California has historically been thought of as the place where dreams come true, where anyone can make a better life for themselves and their families. One way that millions have done that has been by starting their own business – the true definition of the American Dream. But for today’s entrepreneurs, it seems the American Dream isn’t as easy. And if you have a company that is growing it can be even more challenging. At times it may seem that the bigger your business grows, the more government gets in the middle of your dream. What we hear from the San Fernando Valley and elsewhere on Main Street is that there are a number of things in this state that keep businesses from doing what they do best. Our legislature needs to stop treating small businesses like a perpetual ATM machine. One entrepreneur in Southern California I know owns an auto detailing shop where he employs less than 10 people. He often says he would hire more employees and expand, but he holds off because of the rising expenses that come with hiring additional help. This year Gov. Jerry Brown, along with the state Legislature, increased the minimum wage by $2 per hour over the next two years. What doesn’t get mentioned is the increase in employer taxes – a 15-plus percent increase – on top of the direct payroll cost increase. Add that to the massive sales and income tax increases that were passed with Proposition 30 last November – the highest in the nation – plus implementation of the Affordable Care Act, and small business owners feel taxed, levied and fee’d right out of existence. The reality is that until we have a Legislature that understands that getting out of the way of business is the best way for them to thrive (i.e., produce more tax revenue for the state), we will continue to see business costs soar. Small business owners need to share their stories with the elected officials – at every level – so that they understand the real-world impact their decisions have. California also boasts the most regulations in the nation – another “first” that no one here should be proud of. Small businesses are harmed more than their larger counterparts, paying 37 percent more to comply with regulations than big business. Last year, there were over 283,000 full-time government employees dedicated to preparing and enforcing regulations, and in our state more than 102 agencies and departments promulgating upwards of 467 regulations – all at different times throughout the year. In 2012, NFIB-sponsored SB 1099 was signed into law, requiring the state to implement regulations on designated quarterly dates. Many small business owners believe complying with federal regulations is the most significant problem confronting the success of their business. That is probably why 90 percent of small business owners support reforming the regulatory process. These reforms should include increased business input, greater openness and transparency, more thorough cost-benefit analysis, a lack of agency duplication, and regulations that are grounded in hard science and objective data. And agencies should not benefit financially from the fines they impose. For most business owners in California, taxes and regulations seem to be the nail in the coffin – but consider the threat of a frivolous lawsuit hanging over your head as well. From predatory lawsuits related to disability access to being sued for not having the proper Prop 65 signage in your store – the costs can be staggering. This year, the governor signed legislation that will provide some protections for certain small businesses under Prop 65, the law requiring businesses to post warning labels for products they sell or use that might cause reproductive harm or cancer. This will give small businesses two weeks to post the sign and avoid a costly lawsuit. What would further fix the lawsuit problem in our state? Reigning in overzealous agency enforcement officials. And reasonable time for businesses to fix violations of both ADA and Prop 65 requirements. The bottom line – government has to stop this “Gotcha” mentality with businesses in the state – and ask instead “How can we help?” The challenges facing California small businesses aren’t insurmountable. Frankly, if those in the Legislature would genuinely listen to the voices of small business owners in their districts – the very businesses that play a primary role in funding our local and state economies and creating most jobs – they might just change their opinion of what is helpful versus harmful. And if they don’t listen – well, the 2014 election is right around the corner and maybe it will be time for voters to make the needed change. John Kabateck is executive director of the National Federation of Independent Business, California, a national small business advocacy group with representation in all 50 states.

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