It seems like the stars might be aligning
in California when it comes to regulatory reform for our state.
Last week, President
Barack Obama announced in a Wall Street Journal column that he is signing an
executive order directing government agencies to review rules and regulations
to ensure they do not unnecessarily hinder economic growth. Governor
Brown indicated earlier this month that he also favors taking a look at the
regulatory climate in California to make it more business-friendly. And more recently, Senate President pro Tem
Darrell Steinberg announced that he would support legislation forcing state
agencies to review all regulations and recommend reviewing the states
regulatory processes. In his words, "Government
needs to be more nimble."
As a small business owner who owns an electrical engineering
company in Bakersfield recently told me, "Regulations are strangling small
businesses out of existence in California." Whether it is onerous diesel
regulations, a pending AB 32 cap-and-trade system, or other restrictive labor
regulations such as the daily overtime requirement, small businesses and their
employees are being bombarded by costly regulatory mandates.
According to a 2005 study by the U.S. Small Business
Administration, businesses with fewer than 20 employees on average pay 45
percent more to comply with federal regulations than businesses with more than
500 employees. To put that into hard costs, that’s approximately $7,500 your
average small business must pay each year, as opposed to about $5,000 for a
larger business. Through this gripping data and the call to action from elected
leaders at every level, one resounding message rings true: regulatory reform is
needed if we want to save and create jobs in California.
There have been several attempts in the past to fix this
disparity – Senate Bill 356 by Senator Rod Wright was one example. This bill would have required state agencies
to analyze the economic impact of potential regulations on small businesses and
specified the criteria that must be included.
It also required that state government actively seek out the input of
small business owners during the regulatory drafting process. Neighboring states including Arizona and
Nevada already have more extensive processes in place that have significantly
benefited the economy of those states – sometimes to the detriment of
California. Unfortunately, the bill died
before even getting a vote on the floor of the Senate.
In 2010, NFIB/CA sponsored another bill, AB 2328 by
Assemblyman Roger Niello, which would have required that one of the public
members of the California Air Resources Board have a background in small
business. This policy change would have
acknowledged the impact that CARB regulations have on the business community, most
notably the small business community.
The current makeup of the board reflects comprehensive representation
from health and science fields, but fails to include a representative from California’s
leading job creators, who might be able to lend logistical insight to drafting
regulations in a way that ensures greater ease of compliance. Again, this bill did not even get a chance to
be heard in the Senate before it was killed in committee.
NFIB/CA members
stand ready to work with the Governor on policies and legislation that can ease
the regulatory burden on small employers. Smart regulations protect jobs and
economic growth. That is the best path
to recovery we can put the state on.