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Five Must-Watch Issues For Business in 2014

Posted: December 21, 2013 3:00 a.m.
Updated: December 21, 2013 2:00 a.m.

The Valley Industry and Commerce Association (VICA) saw a record legislative session in 2013: a 90 percent success rate in the Senate and Assembly and an 84 percent success rate once Gov. Jerry Brown’s signatures and vetoes were factored in.

Despite a Democratic supermajority, legislators remained fairly moderate in their policymaking. However, all it takes is a different mix of legislators to pass legislation in 2014 that failed to gain traction in 2013.

Here are some of the perennial issues that we will certainly see again – for better or worse.

CEQA reform

One of VICA’s legislative priorities in 2013 was to pass meaningful improvements to the 40-year-old California Environmental Quality Act in 2013. Business advocates were hopeful during the last legislative session about Senate Pro Tem Darrell Steinberg’s CEQA reform bill. Unfortunately, it did not address crucial problems with the legislation, including unnecessary environmental reviews and meritless lawsuits, a lack of transparency in CEQA litigation, weak plaintiff responsibility and the slow litigation process.

Developers like Newhall Land – 18 years into their fight to build Newhall Ranch – are in need of legislators to enact common-sense changes to this environmental mandate. As the construction industry continues to improve, it is important that future projects can actually break dirt and give people jobs, instead of creating more backlog in our overcrowded court system.

If other issues don’t distract the attention span of our legislators, then 2014 could be the year that moderate Democrats help make crucial CEQA reform a priority for the year.

Living wage mandates

Various employee unions have pushed for increasing living wage levels. If a business is under contract with a city or receives some type of assistance from a city then the business must pay employees a pre-determined wage, well above the state’s minimum wage. MIT calculated that the living wage in Santa Clarita for one adult would be $11.37 for one adult and $23.53 if that adult has one child. A couple would need to make a total of $17.20 an hour.

Legislators regularly introduce legislation to increase the state living wage levels, but historically have not been successful in passing such policy. However, the Democratic supermajority voted in 2013 to increase the minimum wage from $8 to $9 in 2014 and $10 in 2015, driving the minimum wage up very close to the living wage in our area. We expect the momentum from this gives a living wage bill more traction. It’s very important that businesses show their opposition to this job-killing policy.

About 36 percent of Santa Clarita’s commercial real estate vacancies are in retail space. If the minimum wage continues to go up, then the region can lose out on restaurants and stores that would want to fill those vacancies but can’t afford the employee costs.

Split-roll initiatives

One issue that VICA annually fights in Sacramento is a split-roll proposal – an ill-advised measure that eliminates the caps on property tax increases for commercial properties mandated by Proposition 13 and expands the definition for a “change of ownership” in commercial property.

Legislators typically introduce a split-roll bill in hopes of adding a quick $4 billion to $10 billion in extra property tax revenue from the business community. However, the measures are usually shot down because research shows it would also result in a total of $71.8 billion in lost output and 396,345 lost jobs over the first five years statewide.

Hopefully, Sacramento will continue to kill split-roll bills, but it is important that businesses and commercial realtors continue to educate their legislators on the awful effects that this alteration on Prop 13 would have on the state.

Film and TV tax credit expansion

While VICA opposes many perennial measures, one issue that VICA supports every year is expanding the current film and TV tax credits. California currently allocates $100 million to film and TV productions ranging from independent and feature films to existing TV series that relocate to California.

These incentivized productions create $3.8 billion in economic output and $200 million in tax revenue for the state – double the tax credit appropriation. Worth noting, 20 percent of the program’s projects have been filmed or based in Santa Clarita since its inception in 2009.

Research shows there is no downside to increasing the limit, as the economic output and tax revenue will continue to grow if the pot does. There is plenty of demand for an increased tax credit: The California Film Commission must turn away hundreds of applications every year due to lack of funding. Additionally, our program pales in comparison to our main competitor, New York, whose allocation is five times as much.

Several legislators seem to hold fast to the short-signed belief that California will always remain the filming capital of the world. But as we see more projects go elsewhere, hopefully legislators will favor the production crews that want to stay in California – particularly Santa Clarita.

State Water Project

Policymakers are continually discussing California’s water infrastructure problems, as Southern California’s main water source – the Sacramento-San Joaquin Delta – is at risk structurally and environmentally.

The Delta is 300 miles from Santa Clarita but majorly affects our region’s infrastructure. If an earthquake shut down water deliveries from the Delta for a year, then Los Angeles County’s economy would lose $55 billion and a half-million jobs, according to research from the Los Angeles Economic Development Center.

2014 is the year for us to pay attention to the action surrounding this important piece of infrastructure.

The Bay Delta Conservation Plan (BDCP) was introduced seven years ago to restore the delta’s ecosystem and secure California water supplies. It proposes building two 30-mile underground tunnels to ensure stable water delivery across the state. After years of discussion, the BDCP just released its environmental impact review, which will be open for public comment until April 14, 2014. After that, the legislators have the responsibility of determining funding mechanisms for the plan, which will cost $24.7 billion.

It is important that Californians advocate for policy that moves these crucial improvements forward - our elected officials need to be proactive instead of reacting to a disaster that could cost the region billions of dollars.

The Valley Industry and Commerce Association (VICA) is a business advocacy organization based in Sherman Oaks that represents employers throughout the Los Angeles County region at the local, state and federal levels of government.


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