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Wednesday, Oct 4, 2023

Filing Away the Index Cards

Startup businesses have enough to worry about and bureaucratic delays should not top their list of concerns. But that was precisely the case last month when a Northridge contractor came to me in crisis. After years of working for someone else, he wanted to break out on his own. He passed the Contractors State License Board exam but the future of his new company was jeopardized by a formidable roadblock – a 65-day business filing backlog at the Secretary of State’s Office. I intervened and expedited the processing of his business as a limited liability company, helping the man save half a million dollars in business already lined up – and 40 construction jobs. The experience has made me wonder how many other businesses in our community are in a similar predicament. It also got me thinking about the prospects of more than 100,000 entrepreneurs across the state who are stuck in limbo because of California’s business filing backlog. A visit to the Secretary’s website tells a discouraging tale. As I write, limited liability company filings sent by mail in mid-January are finally being processed. The same applies for limited partnerships, limited liability partnerships and general partnership filings. Altogether 122,000 business documents are caught up in the backlog. Every day that a business owner must wait on paperwork is a day that contracts cannot be signed, jobs cannot be created and new contributions cannot be made to our economic recovery. This is cause for great concern and it prompted me to take quick action through the Assembly Budget Committee, which I chair, to improve this most basic of services to California businesses. We summoned Secretary of State Debra Bowen to a budget hearing on the backlog. The Secretary outlined in depressing detail the pitfalls of California’s Byzantine paper and index card-based system that is still used today to process business licenses. We also learned that a more efficient computer-based system will not come online until 2016. I am a strong supporter of technological modernization to improve government services. But California cannot wait for the new system. We have to do the best with what we have now, which means bridging the time gap by improving the performance of our current system for the next three years. Last week, I presented emergency legislation which passed the State Assembly with overwhelming bi-partisan support. Assembly Bill 113 provides the secretary with an immediate $2 million infusion to hire more temporary workers and provide overtime pay for her staff to reduce the business backlog. This is part of a larger effort that I am overseeing in the state budget to establish an unprecedented five-day performance standard for new business license processing by November of this year. Notwithstanding the current backlog, this rapid response goal is dramatically better than California’s historic response rate of 20 business days. A five-day response will put California back in the game with other states where service levels are significantly better than ours. In New York, for example, it takes seven business days to get a business license. In Texas, it takes three to five business days and they offer applications online. As is always the case with plans, everything is in the execution. That is why AB 113 requires the secretary to report back each month to the Legislature on progress to reduce the backlog. As we close out the budget, we will identify a range of ways to hold the secretary accountable. And we will make sure that her office will start the next fiscal year, in July, with the resources necessary to perform effectively until the new computer-based system is up and running. The State Senate has yet to act on AB 113. While I expect prompt action, I encourage you to make your voice heard in order to get the Senate in gear. Another delay is a luxury that we cannot afford. California is turning a corner on the recession. Our state budget is stabilizing. Our housing market is recovering. But we have more work to do before every Californian who wants a job can find one. One of the best ways to make that happen is helping small business start and succeed. Bob Blumenfield, D-Woodland Hills, represents the 45th District in the California State Assembly and serves as Chairman of the Assembly Budget Committee. He was elected March 5 to represent the Third District on the L.A. City Council.

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