By Howard Fine
Last week’s election left businesses in Orange County and across the state beaming.
Republican Gov. Arnold Schwarzenegger’s landslide re-election win over Democrat Phil Angelides spurred jubilation among businesses and their supporters in Sacramento.
And the approval of more than $40 billion in bonds to boost the state’s infrastructure is expected to improve the movement of goods while providing thousands of construction jobs.
At the same time, business prevailed in thwarting measures that would have imposed new taxes on industries.
“The message that voters sent this week is that California is open for businesses to start and to grow,” said Michael Shaw, assistant state director for the National Federation of Independent Business.
Business also got what it wanted locally.
In OC, voters extended half-cent sales tax Measure M for transportation projects, an initiative backed by business groups.
In Newport Beach, voters resoundingly rejected tightening the city’s slow-growth law. Real estate and other business interests opposed Measure X, known as Greenlight II.
The original Greenlight passed in 2000, putting major projects in the city to a vote. Three have come before voters since then. All were rejected.
Not only did Newport Beach voters turn down a stricter Greenlight, they approved a revised general plan for the city, Measure V.
The initiative allows development of more than 2,000 homes near John Wayne Airport, retail, office and homes projects along the coast and other projects, none of which will have to go for a vote under Greenlight.
Hoag Memorial Hospital Presbyterian, which is looking to expand into a recently acquired office building near the hospital, backed Measure V. The measure allows the hospital to build more medical office facilities near its campus.
Statewide, the re-election of Schwarz-enegger was sweet for OC business, which has invested heavily in its relationship with the actor-turned-governor.
Even with Schwarzenegger’s move to the center, he presented a stark contrast to Angelides, who had pledged to “close corporate tax loopholes” and raise taxes on wealthy Californians.
“Schwarzenegger has held the line on taxes and improved the state’s business climate by stopping job-killer bills from becoming law,” said Allan Zaremberg, president of the California Chamber of Commerce. “He has pledged to continue these policies in a second term.”
Just as important in the eyes of business was the passage of five bond measures totaling $40 billion to fund highway and goods movement projects, build schools, repair damaged levees and build affordable housing.
The largest of these bonds would provide $19.9 billion for transportation and commerce projects, including more than $1 billion to reduce congestion at the ports of Long Beach and Los Angeles.
The bonds have a double benefit: reducing congestion and providing needed maintenance of highways and bridges and transit systems, and also creating tens of thousands of construction jobs.
The timing of these bonds is crucial. By the time they clear the bureaucratic hurdles and actually hit the street, they likely will take up the slack that’s building on the private construction front.
“Firms like ours are quite busy right now working with public sector clients in trying to get their projects positioned for funding,” said Tim Psomas, chairman of Los Angeles-based Psomas, an engineering firm whose Costa Mesa office has worked on OC colleges, roads and other projects. “This is a positive development, since most firms are in the process of figuring out how to move some of their activity over to the public sector now that the housing market has cooled.”
Meanwhile, a series of ballot measures largely or entirely opposed by business went down to defeat last week.
Topping the hit lists of major business groups was Proposition 87, which would have levied a tax on oil extracted from California. Oil companies and their business allies spent $95 million to defeat the measure, almost double the $57 million raised by supporters, including $50 million from multimillionaire Stephen Bing.
Major business groups had argued that some of the tax eventually would make its way back to consumers in the form of higher prices at the gas pump.
The measure did win some business support, especially from Silicon Valley investors with investments in alternative energy projects.
The other major target of business was Proposition 89, which would have used a $200 million increase in the bank and corporation tax to fund a system of public campaign financing.
The measure, which was authored by the California Nurses Association, also would have limited the ability of corporations to donate to initiative campaigns.
Most business groups also opposed Proposition 86, which would have raised the tobacco tax by more than $2 per pack of cigarettes. The money would have been used to fund hospitals and other health programs.
Likewise, most business groups opposed Proposition 90, which would have restricted the ability of local governments to use eminent domain to acquire land from unwilling sellers for redevelopment projects.
The state chapter of the National Federation of Independent Business, which is comprised of small businesses, supported the measure.
“We were disappointed, since so many of our members have themselves been the target of eminent domain proceedings,” NFIB’s Shaw said.
Fine is a staff writer with the Los Angeles Business Journal.
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Democratic Congress
The Democratic takeover of Congress tempered last week’s election wins for businesses.
The shift brings concerns about impacts of a federal minimum wage increase and more scrutiny of corporate practices and global trade pacts.
What’s more, Democrat leaders’ pledges to cut the prices of Medicare prescription drugs, reorient the nation’s defense spending and impose higher taxes on oil companies have businesses in those industries fretting about what may lie ahead.
Some businesses could benefit from the change in power in Congress.
With San Francisco Democrat Nancy Pelosi poised to become speaker of the House, and California’s two senators now in the majority party, the longstanding Washington attitude of “anything but California” may fade, allowing more money to flow in for infrastructure and homeland security.
Also, some in the business are hopeful that a pact can be reached on immigration reform. President Bush and Democrats in Congress were closely aligned on the need for a guest worker program. Conservative Republican opposition in the House killed that proposal in the last session.
Tops on the Democrats’ agenda: a minimum wage hike, which Pelosi said the House would pass within 100 hours after the start of the next session. Last week, President George Bush said he was amenable to the idea.
An increase in the federal minimum wage is unlikely to have much of a direct impact on California, which is due to increase its minimum wage to $8 an hour by Jan. 1, 2008.
Meanwhile, Democrats have promised more scrutiny of proposed trade agreements, to see if they have adequate worker and environmental protections. This could mean the end of fast-tracked trade deals.
Democrats have also pledged to cap the prices that drug makers can charge the federal Medicare program, which could cut into the profits. Also, pressure may build to rein in profits of managed care companies and other healthcare insurance providers.
With Democrats in charge, oil and energy companies can also expect rough treatment, with possible hearings on price gouging when gas prices spike again and a push to levy a windfall profits tax.
But on these fronts, Democrats in Congress will be limited by the threat of a Bush veto and,in the Senate at least,Republican filibusters. That’s why overall, business interests were not in panic mode last week.
,Howard Fine
