Biz to Brown: Jobs, Jobs, Jobs

Business leaders are angling for less regulation and more job growth to come out of Sacramento as the era of Arnold Schwarzenegger comes to a close and Jerry Brown prepares to return to the governor’s seat in January. Brown defeated the former CEO of eBay, Republican Meg Whitman with 53.6 percent of the vote Nov. 2, in the most expensive governor’s race in California history. “We’re hopeful that Jerry Brown will understand that the most important thing he can do right now is create jobs in this economy,” said Stuart Waldman, president of the Valley Industry and Commerce Association. “We’re not going to get out of this recession by raising taxes; we’re only going to get out of this by creating an environment that makes it easier for businesses to create jobs.” However, fostering a good business environment is not as simple as decreasing regulation and cutting taxes, according to political analysts who say Brown will have to walk a very fine line while spending money wisely. “If you want to know what decreased regulations and decreased taxes can do to a state just go to Mississippi,” said Martin Saiz, chair of the Political Science Department and Eugene Price Professor of Political Science at California State University Northridge. As an example, Saiz said regulation is needed to protect the economy from suffering a blow like the one dealt by BP and the recent oil spill, and taxes are needed to invest in infrastructure that can withstand natural disasters. Striking that balance and creating a business environment that doesn’t stunt growth with overregulation is a challenge that some are confident Brown will be able to tackle. “Jerry Brown appears to understand that the economy depends on the strength of its businesses and I think this time he will have the same enthusiasm but a more seasoned perspective with regard to what is important to all people in the state,” said Greg Lippe, former chair of VICA. “I’m hoping he delves into the overregulation and works to streamline it, and he works on ways of reducing the cost on business and making California more business friendly.” Brown, who will face an ongoing budget crisis and high unemployment, gained a reputation as a fiscal conservative during his first term as governor from 1974 to 1982, back when he was 36 years old. Under his leadership the state saw one of the biggest budget surpluses in its history, roughly $5 billion. Fiscal conservative? Political analysts expect Brown will again be fiscally conservative, but this time, more by necessity than by choice. “Even if he wasn’t a fiscal conservative, conditions dictate he will have to be, he doesn’t have much of a choice as the state is limited in the amount of funds it’s going to be getting via taxes and fees, and because of the general state of the economy,” said Saiz. Proposition 26, which passed with 52.9 percent of the vote, would further limit the state’s ability to raise taxes. The measure makes it more difficult for legislators to use a loophole in the law to pass taxes by calling them “fees”. And while Proposition 25, which was also approved by voters in Tuesday’s election, makes it easier for legislators to pass a budget through a simple majority instead of a two-thirds vote, Saiz anticipates there will be a lot more cutting going on in the budget process than there will be the raising of taxes. As an experienced politician, some believe Brown may be able to succeed where Arnold Schwarzenegger failed. “Schwarzenegger failed at building consensus and negotiating with legislators; the budget was never on time and in fact the lateness of this last budget broke records,” Saiz said. When Schwarzenegger tried getting around the legislature by bringing his initiatives directly to the voters, that effort failed as well proving that political acumen is vital in bringing people together and building consensus. “Brown goes in with experience and understands the task at hand and although there’s certainly no guarantee that he’ll do any better than anyone else, experience matters a lot.” Leverage with unions David Fleming, founder of The Los Angeles County Business Federation, said he felt optimistic that things would get done in Sacramento under Jerry Brown, especially to address the $19 billion deficit. “If anyone has leverage with the public employees unions it’s Jerry Brown because he was the one who gave them the right to organize in the first place,” he said. “We need to get some give back from the unions on pensions if we are going to begin to crawl out of this $19 billion hole.” Saiz pointed to Oakland as a good precedent for Browns’ leadership style in boosting economic growth. “Oakland was a declining city, and he was able to bring it around,” said Saiz. “But the real challenge is that government doesn’t create jobs, government has to create the right conditions that allow jobs to foster.” Brown, who in 1977 sponsored the “first-ever tax incentive for rooftop solar” among other environmental initiatives, has said he plans to boost economic development in the areas of renewable energy and efficiency by investing in and promoting the development of cutting edge clean technology. The failure of Prop 23, which would have suspended state laws regulating greenhouse gas emissions and other environmental mandates of state law AB 32, is a step in the right direction, according to business owners. The measure was rejected by 61 percent of the vote. Green jobs “New jobs that are being created are coming from the green industry and the green sector, and numerous companies in the Valley and elsewhere have already spent money to prepare themselves for mandates of AB32 and are already on their way,” said Lippe. “Now that the momentum started, if we were to lose that momentum by having impeded the implementation of AB32, we would find ourselves down the road buying all of our green products from China instead of from our companies here.” Among other propositions that had the potential to directly impact the business environment, the failure of Prop 24 allows businesses to keep already approved tax breaks, he said. Prop 24 would have repealed three pieces of recent legislation that reduce the tax burden for businesses, scheduled to take effect for the 2011 tax year, in order to use that revenue to plug budget gaps. Prop 22, which was approved in Tuesday’s election, prohibits the state from taking, borrowing or redirecting local taxpayer funds dedicated to public safety, emergency response or other vital government services. “Prop 22 is good for business because if the state can’t grab money from cities the cities will not be in a position of needing to raise costs on business to make up for the amount of money that was grabbed from the state,” Lippe added. The failure of Prop 19, which would have legalized the recreational use of marijuana, also saved businesses from having to face a series of challenges and legal hurdles including the possibility that employees would gain the right to smoke pot at work. The measure could have also prohibited employers from discriminating against marijuana users, which had the potential to impact hiring practices.