Volume I, No. 6

December 11, 2008

Republican Lawmakers Provide Wish List As Part of Budget Negotiations

As the budget impasse progresses toward the new year, Republican lawmakers gave the Governor and leaders in the Legislature a wish list for consideration before they even begin talks about tax increases.  In his recent Fiscal Outlook report, the Legislative Analyst indicated that it will take significant changes on both sides of the state ledger (increase revenues and cut expenditures) to mitigate the current fiscal situation.  Democrats and the Governor have been calling for new revenues through tax increases and new taxes – such as a tax on services – to compliment spending cuts, but Republicans in the Legislature have heretofore resisted, citing that a recession is not the time to burden Californians with greater pressure on their personal finances.

The GOP wish list is a cornucopia of preferences for change to employment, business and environmental laws and regulations that they believe will help stimulate the state’s economy by providing greater flexibility and opportunity for businesses.  Changes include flexibility for employee schedules, health care options, and ways to expand apprenticeships.  The Republicans also are seeking ways to streamline business by encouraging public-private partnerships and using tools like design-build and contracting out.  The wish list also targets concerns over the implementation of the landmark climate change bill, AB 32, which calls for the reduction of green house gas emissions statewide.  The Republicans are looking for relief by extending AB 32 deadlines and providing flexibility to the agriculture industry.  Finally, GOP leaders want tax credits to promote job creation and business development in California, including tax credits for companies that hire unemployed Californians, modifying the tax code to encourage jobs in the state, and tax credits for equipment investments.

The Republican wish list was delivered by Assembly Republican Leader Mike Villines for consideration in exchange for agreement to begin talks about tax increases.  Below is the GOP wish list provided to the Sacramento Bee Capitol Bureau:

REGULATORY CHANGES - EMPLOYMENT LAW FLEXIBILITY
Employee schedule flexibility
Expanding health care options for employees (health savings accounts)
Reducing unwarranted litigation
Overtime for high way earners
Meal and rest clarification
Eliminate "needs test" to allow more apprenticeships

REGULATORY CHANGES - BUSINESS DEVELOPMENT
Design-build
Public Private Partnership
ADA compliance
Streamline small business certification process for micro businesses and sole proprietorships
Reclassify "destination management companies" (DMS) as consumers rather than retailers (SB 1628)
Streamlining the permitting process (THPS, development)
Contracting out

ENVIRONMENTAL FLEXIBILITY
Expanding deadlines for engine retrofits (on and off road)
Extending deadlines for greenhouse gas regulations (AB 32)
Carl Moyer program changes
Regulatory flexibility for agricultural industry
3rd party analysis of economic impact of ARB regulations

TAX CREDITS
A new employee tax credit for businesses that hire out-of-work Californians
A manufacturing investment credit to help businesses purchase the equipment they need
Capital gains reduction for businesses that invest in California
Modification of the tax code to encourage companies to locate jobs in California
Suspension of regulatory burdens that "discourage job creation"

~Patti Herrera

pherrera@m-w-h.com