By Howard Fine
If it’s not enough that gasoline and basic materials costs are going through the roof, government regulators are ready to act on a series of fee and rate hikes that will hit local businesses hard.
The state Public Utilities Commission is set to vote Thursday on Southern California Edison’s request for rate hikes totaling 1.5% for the second half of 2006, on top of 13% in rate hikes already approved for this year.
Edison provides energy to most of Orange County.
This move caps a complex two-year rate case in which Edison and the commission went back and forth over the utility’s revenue requirements. It also comes on top of emergency rate increases granted earlier this year to offset higher natural gas costs.
Meanwhile, the South Coast Air Quality Management District is proposing to increase fees for all businesses required to obtain permits from the agency to offset a budget deficit of up to $7 million for the next fiscal year beginning July 1.
The air quality district covers Orange, Los Angeles, Riverside and San Bernardino counties.
Two proposals are on the table for the Air Quality Management District’s June meeting.
One would increase most fees by 3.7% for 2006-07, the same amount as the Consumer Price Index. The other would hike most fees 10% for each of the next three years.
Even under the 10% option, district spokesman Sam Atwood said the agency would still face a $1.8 million shortfall next year.
Drug Tax
State tax regulators are poised to give Irvine-based Allergan Inc. a break.
The state Board of Equalization next month will likely approve a proposal to exempt from sales taxes Allergan’s wrinkle-fighting drug Botox as well as all other prescription drugs that are used to treat illnesses. It wouldn’t matter whether those drugs also are used for cosmetic purposes.
Besides benefiting Allergan, physicians prescribing these drugs and patients that buy them also will reap tax savings.
Under existing law, the state does not impose sales taxes on prescription drugs like penicillin or medical devices like dialysis machines that are used to treat illnesses.
But prescription drugs or medical devices used for cosmetic purposes are taxable. The confusion is when the same drugs or medical devices are used both to treat illnesses and for cosmetic purposes, such as Botox.
Construction Permits
State regulators are considering changing the way safety permits are issued to general contractors and subcontractors at construction sites where major buildings are put up or demolished.
The move could impact many sites in OC, where developers are readying to start work on high-rise office buildings for the first time in years.
Current regulations allow for the state Division of Occupational Safety and Health to issue a single permit for each project.
In recent years permits had been issued to general contractors or to subcontractors and it became increasingly unclear who was in charge of safety precautions at the site, according to a staff report.
Regulators have decided to issue separate permits: general contractors or project administrators would have to obtain “project-specific permits,” while subcontractors would have to obtain annual safety permits that could be taken from job site to job site.
The proposed change is to be aired at a hearing this week.
Toxic Cleaning
The California Air Resources Board next month will take up new rules to reduce emissions of perchloroethylene from dry cleaners in OC and across the state.
Perchloroethylene, or “perc” as it’s commonly known, is the chemical solvent most dry cleaners use, but it’s also been designated as a cancer-causing, toxic air contaminant.
The Air Resources Board regulations would require dry cleaners that open new facilities to install advanced ventilation systems and other pollution control devices on machines using perc.
Existing dry cleaning facilities would have to install these ventilation systems and devices on their machines starting in 2008, with deadlines of 2009 for facilities within 100 feet of homes or schools and 2010 for facilities more than 100 feet from homes or schools.
The proposals are set to be considered at the Air Board’s May 25 meeting.
Arbitration Assault
Business groups are decrying the latest effort by lawmakers to expand the right of employees to sue employers.
Last week, Assemblyman Lloyd Levine, D-Van Nuys, unveiled AB 2371, which would bar employers from enforcing arbitration agreements after a worker files a discrimination or harassment suit.
Those arbitration agreements generally say that if an employee files a lawsuit instead of going to arbitration, the employer can fire the worker. Levine said that arbitration proceedings are biased in favor of employers.
“An employer, with far more resources than their employee, will often bear the entire cost for hiring and paying an arbitrator,” he said. “Then, the arbitrator is supposed to render an unbiased decision between the defendant, who provides his income and the plaintiff, who is seeking redress from the person who provides his income.”
But employer groups oppose the bill, saying this is the first step toward banning the use of arbitration outright.
“This bill effectively bans the use of arbitration,” said Michael Shaw, assistant state director for the National Federation of Independent Business, which represents small businesses. “Small employers don’t have the ability to fight protracted legal battles, which is why they use arbitration in the first place.”
Howard Fine is a staff reporter with the Los Angeles Business Journal.
