NFIB California Main Street Minute

For the legislative and political week January 17-21

Welcome to the January 17-21 edition of the NFIB California Main Street Minute from your NFIB small-business-advocacy team in Sacramento.

Big U.S. Supreme Court Victory for NFIB

See national section below. Meanwhile, back in the Golden State …

… Of Immediate Importance to Small Business

“The COVID-19 Prevention Emergency Temporary Standards are still in effect. The workplace standards were updated in December 2021 to include minor revisions related to returning to work after close contact. The revisions are effective starting on January 14, 2022.” More from the Cal/OSHA webpage here.
Reports The Sacramento Bee, “One of the biggest changes has to do with employees who have to get a COVID-19 test after exposure in the workplace. Self-administered, self-read tests — in other words, tests taken at home — will no longer be allowed under the new regulations. Instead, a test can go to a laboratory, an employee can take a test in front of a supervisor, or an employee can take a test in front of a health care representative.”

The State Budget and Small Business

By now, everyone is familiar with the big takeaways from Gov. Gavin Newsom’s proposed $286 billion state budget, not so well publicized were the small business nuggets it contained.
First, the good news from Pages 75-76 at this link. “Elective Pass-Through Entity Tax. The 2021 Budget Act included an elective tax and credit program designed to help certain business owners in California fully deduct on their federal tax returns the California taxes they pay on pass-through business income … These changes will allow more California business owners, particularly smaller business owners, to regain at least a portion of the deductibility of their California taxes … These changes should be enacted in time to assist businesses with their 2021 tax liabilities before the March 15, 2022 tax filing and payment deadline for pass-through business entities.
- NFIB was part of a coalition, led by chief legislative advocate Kevin Pedrotti, consisting of more than 50 statewide and local business organizations urging for this reform.
“Tax Conformity Changes. The federal Restaurant Revitalization Fund was established as part of the American Rescue Plan Act to provide grants to help restaurants and other eligible businesses stay open. The federal Shuttered Venue Operators Grant program was also established to provide assistance to venue owners forced to close their doors due to the pandemic. The proposed budget generally conforms California’s tax treatment of these grants to the federal treatment: exempting the grant amount from taxable income and allowing normal deductibility for the expenses related to those grants … these changes should be made in time to assist businesses with their 2021 tax liabilities before the March 15, 2022 tax filing and payment deadline.”
Now, for the fair news from Page 22 of the above link. “Addressing Unemployment Insurance (UI) Debt. In 2020, the federal government allowed states to borrow federal funds to pay regular UI benefits. The state’s UI Trust Fund, which went insolvent in March 2020, borrowed significant sums of money to pay benefits and now owes over $19.4 billion to the federal government. The debt is anticipated to have substantial costs to the state and the state’s employers over the coming years. The Governor’s budget proposes to pay down a portion of the UI debt- $3 billion General Fund over two years ($1 billion in 2022-23, and $2 billion General Fund in 2023-24) – and the forecasted UI interest payment- $470.1 million one-time General Fund.”
Finally, for the middling news from Page 72. “State Small Business Credit Initiative. California is set to receive $1.2 billion from the federal State Small Business Credit Initiative (SSBCI). IBank and the State Treasurer’s Office intend to split the allocation evenly, providing each department with approximately $591 million. The current expenditure plan allocates $1 billion to existing programs:
- the California Capital Access Program for Small Business
- California Capital Access Program Collateral Support at California Pollution Control Finance Authority
- the Small Business Loan Guarantee Program
- and $200 million to establish a Venture Capital program at IBank.
“The Venture Capital program will be directed toward: (1) underrepresented venture capital managers, (2) underserved entrepreneurs and business owners, (3) geographic areas that are socioeconomically disadvantaged or that receive limited venture capital funding, and (4) climate equity and climate justice. IBank and the State Treasurer’s Office initiated the initial SSBCI application on December 10, 2021. The final application that includes detailed information about how the state will spend the funds is due by February 11, 2022.”
NFIB California’s chief legislative advocate Kevin Pedrotti called last Monday’s release of the budget, “the first step in the complicated and lengthy dance that is the state budget process. Call it a dress rehearsal for the real budget, which will be unveiled in May (the May Revision) after state income tax revenues have been tallied. The Legislature will not rubber stamp the budget and will have their own competing ideas (hint: the Governor usually prevails on most) which will all be hashed out by June, the budget deadline.”

Single-Payer Health Care

A year after it was first introduced, the California Guaranteed Health Care for All Act (Assembly Bill 1400) passed its first committee last Tuesday (January 11) on an 11-to-3 vote. After clearing the Assembly Health Committee hurdle, it now goes to the Appropriations Committee. The full Assembly must pass it on to the Senate by January 31 or it is dead for the year.
The funding mechanism for AB 1400, Assembly Constitutional Amendment 11, has yet to be assigned to a committee. It has no estimated cost estimate, but Section 1 does outline the taxes that would be levied.
“The policy bill and its funding mechanism could have different fates,” reports Politico California. “A.B. 1400 and a constitutional amendment levying taxes to pay for it are not double-jointed, which means the Legislature could send Newsom the policy vessel (which would need a majority vote) without moving the funding mechanism (which would need a two-thirds vote). Paying for single-payer was the major issue last time around. It will still be a sticking point, even with a more concrete payment plan in the Legislature. And as the campaign season intensifies, you can count on Republicans continuing to press Democrats on what single-payer will look like when all is said and done.”
NFIB opposes any notion of government-run health insurance, which will result in a massive tax increase on small-business owners and place something as vitally important as health care in the hands of the same bureaucrats who have managed the broken EDD, DMV, and floundering High-Speed Rail. NFIB has sent this Action Alert to the membership asking them to contact their legislators now.

Small Business Agenda Item Passes

NFIB-supported Assembly Bill 820 passed the Assembly Revenue and Tax Committee last Monday (January 10) on a healthy 8-to-1 vote. According to a coalition letter, which NFIB joined, “AB 820 provides small business more opportunities to seek lending from financial institutions by exempting from taxation the interest revenue California’s banks generate from lending to small businesses of 50 or fewer employees adversely impacted by the COVID-19 pandemic. By exempting the interest revenue, this bill will encourage financial institutions to provide more lending opportunities for qualifying businesses.”

NFIB California in the News

The Sacramento Bee, January 13—NFIB comments on the coming payroll tax increases to pay for the unemployment insurance trust fund loans California borrowed from the federal government for a story that also ran in the McClatchy network of dailies, including The Fresno Bee, The Modesto Bee, and the San Luis Obispo Tribune.
KPCC 89.3 FM Radio, Los Angeles, January 10—State Director John Kabateck is one of the guests on Air Talk with Larry Mantle discussing what the universal health-care proposal means for California businesses.
Northern California Record, January 10—NFIB gives some examples of the regulatory relief it would like to see come out of the Legislature.
LAist, January 10—State Director John Kabateck talks to reporter Sameea Kamal of CalMatters about calls to reinstate the paid sick leave program for COVID cases that expired last September.

Nationally

Huge NFIB Victory in the U.S. Supreme Court. On January 13, the U.S. Supreme Court granted NFIB’s stay application in NFIB v. OSHA, halting the Occupational Health and Safety Administration’s (OSHA) vaccine mandate, which would have required businesses with 100 or more employees to have employees vaccinated or undergo weekly testing. The mandate was scheduled to begin last week. Read NFIB’s news release here. Hear from NFIB Small Business Legal Center’s Karen Harned here.
The Build Back Better Act? Who brought that up? From the National Journal’s Hotline:
- “Frustrations with the Biden administration’s legislative malaise have trickled down to Democratic candidates, who have shied away from campaigning on their party’s signature spending bill, despite party leaders touting Biden’s agenda as the key to defending their narrow majorities.
- “DCCC Chairman Sean Patrick Maloney told us in November that enacting President Biden’s programs, including Build Back Better, was a key tenet of his three-pronged strategy to retain the majority next year. Democrats’ pivot to voting rights legislation and away from Build Back Better has robbed their candidates of one of the few weapons they have in what increasingly looks like a difficult national environment.
- “Democratic strategists who spoke to National Journal said that part of the candidates’ reluctance to highlight Build Back Better boils down to simply not knowing what’s in the bill.”
Released Last Week
- NFIB’s latest Small Business Economic Trends (SBET) report, January 11
- NFIB’s latest webinar, From Congress to the Courts with Kevin Kuhlman, Karen Harned, and Courtney Titus Brooks, January 12
- NFIB’s latest COVID-19 poll of the membership, January 13