Bills help and hurt small businesses in California

Florist Jim Relles has been running his family’s two Sacramento shops for nearly 40 years. This year, more than ever, he’s worried about what state lawmakers have in store for his business.

His concerns span from additional taxes to new workers’ compensation rules that could add red tape and liability.

“In light of how the economy is, you would think the Legislature would say, ‘What can we do to help you?’ rather than keep introducing legislation that does the opposite,” he said.

Advocacy groups say there’s a full plate of legislation for small-business owners and managers like Relles to be concerned about. But there are proposals aimed to benefit them as well, said Scott Hauge, president of Small Business California, an advocacy organization.

First, the good news for small business, according to Hauge and others, is that they could get some help in the battle against big Internet retailers.

Small Business California is a big supporter of proposals to tax companies like Amazon.com for California purchases. The proposals, it says, would make homegrown stores more competitive.

“The Amazons of the world have a 9- to 10-percent advantage to the brick and mortar stores,” Hauge said. “It’s really a fairness issue. If you’re talking about a hardware store, they don’t even have a 5 percent profit margin.”

Three bills dealing with the issue had passed their house of origin by a June 3 deadline, and a tax on Internet retailers was part of a budget proposal that Democrats were considering as a deadline approached on Wednesday. Small businesses hope at least one of the bills is signed by Gov. Jerry Brown.

Of the bills, the most prominent is Senate Bill 234, introduced by Loni Hancock, a Democrat from Oakland. It empowers the Board of Equalization to compel online sellers to collect sales tax. Hauge said all three bills would reduce paperwork for business owners that purchase items over the Internet because the online retailer, not the buyer, would be responsible for maintaining sales tax records.

But critics, which include tax watchdog organizations, note that Amazon has cut ties with affiliate marketers — many of which do pay state sales taxes — in other states where such laws were enacted. That could result in the opposite effect of the bills’ intent — the loss of potential revenue.

Republican Board of Equalization member George Runner described the effort as a tax measure “that will cost California jobs and hurt state revenues.”

It’s unclear how lawmakers will respond to Amazon’s threat.

Small-business successes

Business lobbyists are divided over a bill concerning grocery superstores. Small Business California supports SB 469, which would require an economic impact analysis to be prepared for new stores that are larger than 90,000 square feet.

California Chamber of Commerce and several other business groups oppose the bill, aimed at big retailers like Wal-Mart Stores Inc., which have taken sales away from smaller stores. But an existing store of any size might benefit from potential hurdles to new competition.

The bill is now up for consideration by the Assembly. Former Gov. Arnold Schwarzenegger vetoed past efforts.

Another measure being backed by small business is Assembly Bill 135, said John Kabateck, executive director of the California chapter of the National Federation of Independent Businesses. The bill would require one of the 11 members of the California Air Resources Board to be a small-business owner.

Small businesses can count several successes from the session so far. One is that lawmakers did not take action on an effort to create “split-roll” taxes, which would have rolled back Proposition 13 for property owned by corporations or partnerships.

Proposition 13 restricts property tax increases to no more than 2 percent per year unless there is a change in ownership. The proposition is a frequent source of dispute, with watchdogs viewing it as sacrosanct while others say it has hamstrung the state’s revenue sources.

Lawmakers declined to bring other bills forward that would have had major effects on small-business owners, including those mandating paid sick leave and minimum wage increases for workers. Crucial decisions have been put off because lawmakers are still focusing on the budget.

“Anything that lands in appropriations gets kicked,” Hauge said. “That’s not bad from our perspective.”

Concerns abound

Taxes top the list. But with the budget impasse, no one knows the fate of the governor’s plan to extend tax hikes temporarily and then put them to a vote. In the meantime, there’s an effort to allow local governments to raise taxes by public vote, should Brown’s plan fail.

The National Federation of Independent Businesses opposes plenty of efforts this year targeted to specific businesses, Kabateck said.

Restaurant owners are concerned about efforts to ban polystyrene containers. A ban certainly would push up restaurant costs. Just last week, however, the federal government said styrene foam cups and plates may cause cancer. Although risks to consumers are minimal, manufacturers could face a higher risk because of lengthy exposures.

The NFIB also is opposing a bill by state Sen. Darrell Steinberg, who represents Sacramento, that would allow labor organizers to collect confidential ballot information individually from farm workers as an alternate to the secret ballot system already in place. It also would increase penalties for those who engage in unfair business labor practices and broaden the definition of what constitutes illegal activity when it comes to union organizing for farm workers.

Business interests, usually opposed to any expansion of organized labor, claim individual balloting would lead to intimidation or coercion of workers to unionize or choose particular candidates.

For many business owners, worker’s compensation also tops the list of concerns.

That’s the case for local florist Relles, who runs two shops in Sacramento and, for a number of reasons, has been forced to reduce staff by about 30 percent since 2008.

On top of the economy, he said he’s dealing with an ever-increasing amount of state regulation while handling pending workers’ compensation cases.

He’s upset about a slew of workers’ compensation measures that threaten to undermine changes made to the law seven years ago.

“Since the reform in 2004, it’s been slowly eroded,” Relles said. “Litigation means an increase administrative cost, and a lot of it ends up going toward legal fees.”