Long Term: Raise Income Lighten Businesses’ Load
VIEWPOINT
by John Campbell
Unless you have had your head in the proverbial sand, you know that the state of California is in serious financial difficulty. You also probably know that a lot of businesses are in financial difficulty. These two circumstances are not unrelated.
The current economic malaise that grips California certainly has a number of contributing factors. But certainly among them is the increasing cost of insurance, personnel regulation, legal defense and settlement, and energy costs. These additional costs result in businesses reducing payrolls or benefits or other expenses or, in some cases, simply moving out of state. Those businesses and their employees are making less money and therefore paying less in income taxes.
So, if businesses can be freed up to want to hire employees and stay in California and to make more money, the state will be the beneficiary of more tax revenue.
In past years, people have suggested adding tax credits to stimulate business and the economy. But this year, the state has no money to do that. Instead, we can help the state save money and still stimulate the economy by taking government’s foot off the back of California business. Here are some suggestions:
n Reform the workers’ compensation insurance system to eliminate fraud, abuse, and middlemen, giving employers more control over the process without reducing benefits to truly injured workers and putting billions of wasted dollars back into the economy.
n Make tort reforms to reduce frivolous and abusive lawsuits, such as requiring that the infamous “17200” plaintiffs prove actual harm.
n Return the overtime rules to a 40-hour workweek like federal law.
n As state energy contracts expire, allow businesses to use the magic of competition to get the best energy rates available from whatever source.
n Eliminate “prevailing wage” requirements in numerous situations which raise costs by insisting that work be done for above-market wages.
And there are dozens more. The bottom line is that incomes can be raised, jobs created and the state’s coffers increased all without spending a single nickel. California can be on the road to competitiveness again.
I’m not saying that these suggestions would eliminate the state’s structural deficit immediately, but no plan being offered in Sacramento will do that. What this would do is provide a sustainable revenue source for the state without raising taxes. And that is precisely what will help California’s budget and economy going forward.
But Democrats in the Legislature are going in the other direction. There are a number of bills this year to increase regulatory burdens and taxes, such as requiring employers to pay to a single-payer health plan or to require certain social engineering in companies that bid on state contracts. Democrats have also proposed fees on diapers, sodas, alcoholic drinks, lumber, bullets and the list goes on.
Will the self-proclaimed pro-business Democrats in the Legislature lead this charge? Yeah right. Democrats must stop digging the hole deeper, and join Republicans in this cost-free economic competitiveness package.
Campbell is the Republican Assemblyman from Irvine, vice chairman of the Assembly Budget Committee and an auto dealer.
