COMMENTARY | COLUMNISTS | JOHN KABATECK

Regulatory relief for small business on the horizon

It’s rare these days that any good news comes out of Sacramento. With elected officials who have never run their own business or aren’t listening nearly enough to their district's Main Street concerns, many of the proposals put forth are harmful to millions of our leading job creators.

That is why it is heartening to see a group of bills introduced by legislators from both sides of the aisle that will take steps in the right direction for regulatory reform. These proposals won’t entirely fix the regulatory problem in California, but they will increase certainty for small business owners.

Agency accountability

Assembly Bill 2723 by Democratic Assemblymember Jose Medina would modify the state rulemaking process to require state agencies to consider the effect of major regulations on sole proprietorships and other small businesses, when assessing the economic impact of a proposed major regulation on new business formation or elimination of existing businesses.

We like to remind our legislators that small businesses are not just mini-versions of big businesses. Regulations and complying with them are much different in a small business. It is time that state agencies consider that when proposing and implementing new regulations.

California law requires agencies to list the reasons for any proposed regulation. Assembly Bill 1711 by Democratic Assemblymember Ken Cooley would require an initial statement of reasons for a new regulation to include a standardized regulatory-impact analysis.

Job creators are not opposed to the right regulations that ensure industry and business practices as efficient as possible. However, they deserve to have a regulatory process that makes sure the overall impact of regulations are evaluated and debated so that small businesses and taxpayers are not burdened with soaring costs.

A more transparent process

Assembly Bill 1612 by Republican Assemblymember Tim Donnelly would require the California Office of Administrative Law to create a searchable database of regulations for public access. California small businesses have fewer resources and yet are required to pay 37 percent more to comply with regulations than larger businesses or corporations.

Too many regulations are put in place without our leading job creators having any knowledge of what regulations already exist. If agencies and departments want Californians to comply with regulations, they need to make every effort to provide the infrastructure to inform citizens about the regulations.

Regular review of regulations

The National Federation of Independent Businesses enthusiastically supports Senate Bill 981 by Senate Republican Leader Bob Huff, which would require state agencies to review regulations that were adopted before Jan. 1, and to report the findings to the Legislature. It also would require a review at least every five years thereafter.

Every year, state agencies and departments implement regulations that may be well intended and may have served a good purpose, but the dynamic nature of California’s economy may, over time, render some rules unnecessary or overly burdensome.

It is simply good governance to periodically review older regulations to determine if they are still necessary or if there is a more effective means for accomplishing their objectives. It is also imperative to find out what impacts they have had on the economy.

And NFIB also supports Assembly Bill 1706 by Democratic Assemblymember Reggie Jones Sawyer, which would require regulatory impact analyses to include the cumulative economic impact of regulations on California businesses.

It is a sad fact that many state agencies and departments propose and approve regulations without any semblance of a fair, reasonable, and objective analysis of the economic impact of those regulations.

Any environmental, labor, employment or other regulation ought to be subject to a full and fair review and analysis of the effect of the regulation on stakeholders; the cost to the business, industry and state; and a determination if the regulation would be effective.

NFIB is encouraged to see legislators of all stripes responding to the pleas of their small business constituents to stop the regulatory madness in our state. Outdated, duplicative and onerous requirements are strangling mom and pop businesses and putting people out of work.

We are hopeful that this bipartisan array of legislation will make it to Gov. Jerry Brown’s desk and that he will quickly sign these important policies into law. They won’t fix California’s burdensome regulatory system entirely, but it will be a step in the right direction and provide clarification and certainty for the millions of small businesses in the state.


Kabatek is executive director of the National Federation of Independent Businesses, California. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small- and independent-business owners a voice in shaping the public policy issues that affect their business.

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