Right now I’m making a list of the positives and negatives concerning Valley business in 2004. It’s really a mixed bag. But, of course, I can’t write a column that doesn’t have any highs and lows so I’ll dig deep and find the true ups and downs of the year. Before I do that I want to say that because things are middle of the road or “medium” isn’t so bad. That’s the beauty of the Valley economy. It’s diversified, so it tends to be insulated from the wild swings many other areas experience. The mixed results are also due to the fact that some of the Valley business “highs” also had some “low” byproducts this past year. As we have titled our special report in this issue of the Business Journal, 2004 was a “Rebuilding Year” locally. There was a “steady as you go” attitude in the economy and among many businesspeople. There were problems but they were hiring more, making more capital expenses and being more optimistic. But still not quite enough as some may have hoped. The Highs Business Tax Reform: It’s by far the biggest high of the year. I never thought the politicians would do it, but they did. They cut L.A.’s ridiculously burdensome business tax. I still say it was a model for how the private and public sectors should work together to deal with a problem. Business owners got together at a grassroots level, with great help by organizations such as the Valley Industry and Commerce Association (VICA) and didn’t let go. They never gave up although the whole process of tax reform took years. They calmly outlined how the business tax problem was killing our local economy and our competitiveness and hammered away at the decision-makers. You can’t ignore the fact that the flight of businesses out of the city of L.A. has gotten to a crisis point and probably was too big a problem for the politicians to ignore. But they have ignored major problems in the past. It was the business community’s pressure that sealed the deal. But we must not rest on this issue now that there has been some success. Let’s hit the ground running in the new year and figure out how the city can get along with a complete elimination of the tax. That’s the final answer. Electoral Involvement: Whether you voted for Bush or whether you voted for Kerry, it was great to see how interest in the electoral process and politics in general was so heightened in 2004. Yes, the process was very polarizing but in the presidential election, a clear choice was made and a lot of people were involved in the process. Statewide, California had a lot of issues to think about and a lot of ballot measures to consider. Voters seemed to make reasoned decisions on these issues with no wacky results, it seems to me. But like with business tax reform, I hope voters just don’t go back to the same old routine and forget about the political process and the fact that they have a stake in it. But everybody needs to stay informed and not just read the headlines or listen only to the talking heads on television. I firmly believe that you need to keep yourself educated on the issues and the politicians in order to be an intelligent voter even though some politicians don’t want us to stay abreast of things. They want to play on our emotions. The Health Care Mess: Yes, I’ve listed this on the list of the high points in Valley business this past year. I’ll also list it among the low points. There was something good that came out of all the problems at area hospitals and within the health care industry it’s a big issue now. The media are focused on it finally and as the issue of businesses fleeing the area has become a crisis, this too is a crisis and it can’t be ignored. At our recent health care awards events earlier this month, I talked to several people involved in all aspects of the industry and they were tremendously candid about the problems they are dealing with. Many say drastic measures need to be taken in dealing with such issues as the uninsured, lack of nurses and how to cope locally with fewer and fewer hospitals treating more and more patients. The problems will only get worse and I think all involved in making decisions concerning the industry know that. State Government: Gov. Schwarzenegger has shaken things up in Sacramento in his first full year in office, putting a renewed emphasis on helping business. (See the lows list). The Lows State Government: The governor has brought a new attitude to state government but I get the sinking feeling that if he decides not to continue up in Sacramento (Hollywood may be more fun) that things will go right back to the way they were. We still have an anti-business legislature and a new governor with less celebrity status than Schwarzenegger may not be successful. We’re relying too much on him to shake things up, clean up the mess. He’s only one guy in office at a certain period of time. Tremendous structural changes of how the state does business and how we elect officials must be made for any long-term success. Health Care Mess: This is a real tough one. Local hospitals are closing in part due to state-mandated standards, low staffing and too many uninsured patients coming in for care. What people forget are that hospitals are businesses and if it is too costly to stay open, they won’t. No one seems to have any credible answers to the health care problems we face. People in the industry are just Band-Aiding things right now and I admire them for hanging in there. One thing has become more apparent and more public in the last year. The small-business owner who believes they can’t offer health insurance to their employees at reasonable rates does have several options out there. There are several creative health plans that allow even the smallest of firms to offer benefits. The companies offering the plans just need to market them more aggressively. Infrastructure: Getting around the San Fernando Valley and its surrounding Valleys has become next to impossible. As we reported in the Business Journal recently, traffic gridlock is negatively affecting business in a big way at some companies. They can’t move goods and employees through in a reasonable time frame. Government leaders really need to get tough and take some drastic measures. The Orange Line Busway is a good start but we need to do more on making freeways such as the 101 run more smoothly. More lanes or a convenient mass transit system down the middle of the freeway may work, but homes will be displaced. This, however, may be the only answer unfortunately. The patchwork suggestions that have been offered such as making onramps more efficient seem way too little. There are many other highs and lows of 2004, but these are some of the bigger ones in my opinion. It was a mixed year. But that’s not so bad. Business Journal Editor Jason Schaff can be reached at (818) 316-3125
