NFIB California Main Street Minute

For the legislative and political week May 3-7

Welcome to the May 3 edition of the NFIB California Main Street Minute from your NFIB small-business advocacy team in Sacramento.

Victory!

• One of NFIB California’s highest priorities is now law, after Gov. Gavin Newsom signed Assembly Bill 80 Thursday afternoon, April 29.

• According to a staff analysis of the bill, it “Conforms, with certain modifications, state law to federal law with respect to the tax treatment of Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loan (EIDL) advance grants under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Consolidated Appropriations Act of 2021.” You can read the staff’s full analysis here. Click the top link.

• “The law is especially timely as small employers are now huddling with their CPA’s assessing their taxes,” said State Director John Kabateck in a news release, which received wide pickup, including from KFI-AM NewsTalk radio in Los Angeles, where the governor signed AB 80. “This tax relief could not have come a moment too soon. It, combined with the looming June 15 general reopening, will help to ensure California’s mom-and-pop enterprises are getting back on their feet, men and women are returning to work, and our communities and public services are thriving once again.”

• For another story about the legislative passage of AB 80, Kabateck told the Los Angeles Times, “Small-business owners shouldn’t be penalized for taking federal support when businesses were adversely impacted by government shutdowns to deal with this terrible pandemic.”

• AB 80 passed the State Assembly 75-0 and the State Senate 37-0.

On Other Legislative Matters

• Assembly Bill 570 would make California the first state in the nation to allow adult children to add their parents to their health insurance plans. The yearly cost to employers, according to one analysis, would be between $207 million and $830 million. NFIB testified against the bill last week in the Assembly Health Committee.

• Don’t bank on it. Presumably calling on the same intellectual capital and famous efficiency running the Employment Development Department (EDD) and the Department of Motor Vehicles (DMV), Assembly Bill 1177 would create a state-owned bank. NFIB has joined other groups in opposition to the idea. North Dakota is the only state with such a bank, and it has always had bipartisan support, but why is there a sneaking suspicion California politicians and bureaucrats would manage to screw it up?

The Swing of Things

• Kevin Pedrotti, NFIB California’s chief legislative advocate, reports in. “We have been glued to TVs and screens all week conducting the business of remote lobbying: texting, calling, monitoring hearings, and calling into hearings for substantive testimony and to voice support/opposition on bills. This has been a busy couple weeks with policy committee deadline ending this week for those bills required to be heard in fiscal committee.

• “Appropriations (Fiscal) committees report bills out until the fiscal deadline of May 21, which normally thins the herd of those bills we have fretted about since introduction. Any bill costing the state more than mid-five figures will be referred to the Appropriations Suspense File, after which it is either released, amended and released, or held. Suspense is arguably the most hygienic and fingerprint-less way for a bill to die.

• “We get many questions about Suspense and how it works, and our answer is usually, ‘How much time do you have?”’

Save the Capitol!

• Small business owners, schools, and millions of Californians have been forced to cut budgets or close their doors – and Sacramento politicians are hell-bent on spending $1.2 billion of our tax dollars to renovate the State Capitol building. NFIB CA is part of a coalition urging the Governor to stop this boondoggle project in favor of a more cost-effective approach. It’s time to spend our money to rebuild Main Street, not a “Taj Mahal” in Sacramento! Click here to add your name to a letter to Gov. Newsom, co-signed by other small business owners.

No Rest for Independent Contractors

• Like a case of eczema that must always be treated but never cured, Assembly Bill 5 has flared up again. According to The Sacramento Bee, “A new California law directing employers to provide benefits to more workers applies to truck drivers, a federal court ruled Wednesday as it overturned a previous decision that had allowed them to operate as independent contractors.

• “The ruling by the Ninth Circuit Court of Appeals could apply to as many as 70,000 truck drivers in California who continued to work classified as independent contractors after Gov. Gavin Newsom signed the gig economy law known as Assembly Bill 5 in 2019.

• “ ‘The California Trucking Association will take any and all legal steps necessary to continue this fight on behalf of independent owner-operators and motor operators operating in California, [CTA Spokesperson Shawn] Yadon said.’ ”

Hot Off the Griddle

• Today, May 3, is the day the application period for Restaurant Revitalization Funds begins. Registration for them opened on Friday, April 30. There’s still time to register for them here.

• But before you do, check out NFIB’s latest webinar on the ins and outs of them, hosted by Holly Wade, executive director of NFIB’s Research Center, and Elizabeth Milito, senior executive counsel for the NFIB Legal Foundation.

• According to the U.S. Small Business Administration, “Established under the American Rescue Plan, and signed into law by President Joe Biden on March 11, 2021, the Restaurant Revitalization Fund provides a total of $28.6 billion in direct relief funds to restaurants and other hard-hit food establishments that have experienced economic distress and significant operational losses due to the COVID-19 pandemic. This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Funds must be used for allowable expenses by March 11, 2023.” Read SBA’s news release here.

Speaking of Financial Help

• Hurry! Round 6 of the California Small Business COVID-19 Relief Grant Program, offering grants between $5,000 and $25,000, closes tomorrow, May 4, at 5 p.m. Click here for information applying.

In Case You Missed It

• The state Department of Industrial Relations has launched a 2021 COVID-19 California Supplemental Paid Sick Leave Eligibility Navigator. NFIB fought against Senate Bill 95, which created the supplemental paid sick leave, but, in concert with other business groups, succeeded in having it end on September 30. The governor signed SB 95 into law March 19.

Your Reputation

• You are beloved and trusted, small-business owner. Morning Consult, a polling and market research firm NFIB has used in the past, just interviewed 330,000 consumers in 15 markets around the world, and do you know what it found? “50% of global consumers trust leaders of companies based in their country to do the right thing. This rises to 62% trusting small business owners, and drops to 41% trusting leaders of major international corporations.”

• Morning Consult is not the only company to find small-business owners high up there in the esteem they are held. Here, on one sheet, are what some of the other temperature-takers have discovered how you’re viewed by voters.

Nationally

• On April 28, President Biden addressed Congress and released his $1.8 trillion American Families Plan “human infrastructure” proposal. It includes:
  • Creation of a government-sponsored national paid family program (details lacking) and a call for employer-mandated paid sick leave program
  • Increasing Taxes at Death (eliminating stepped-up basis and increasing capital gains tax rates at death), negatively impacting family-owned businesses as they try to pass down the business

• • • NFIB leads the Family Business Estate Tax Coalition, which released a study, showing repealing the stepped-up basis would result in a total of 800,000 jobs lost and a $100 billion decrease in GDP over ten years. Read more here
    • NFIB’s Senior Manager Courtney Titus Brooks stated, “We are highly concerned that this will prohibit small-business owners from being in a position to invest more in their employees, invest more in their business operations…Instead, it’ll go to estate planning.” Read here
    • Courtney Silver, president of Ketchie Inc., a family-owned, 25-employee machine shop in Concord, N.C. that started in 1947, said she was concerned about the potential impact. Additional information here
    • The Wall Street Journal had a Q&A on a stepped-up basis here.

• • Increasing the top individual income tax rate, lowering the thresholds at which the rate applies, and applying new net investment income taxes more broadly, negatively impacting pass-through business owners who pay taxes at the individual rates
  • Increasing tax enforcement on passthrough business owners
  • NFIB will continue to analyze the plan and provide additional information soon.

• Biden previously released the American Jobs Plan proposal on March 31st, which includes increasing the corporate tax rate on small c-corporations.
  • Previously, in 2017, small c-corporations (under $50,000) had a graduated scale and taxed at the corporate rate of 15%. Biden is proposing a 28% flat corporate tax rate.
  • More than 1 million of the 1.6 million c-corporations have business receipts of under $400,000-$500,000, according to IRS data. Increasing taxes on these small c-corporations would violate President Biden’s promise to not increase taxes on Americans earning below $400,000.

• Next NFIB webinar on May 19 will be on taxes. More details in future Main Street Minutes.

Next Main Street Minute, May 10.