Capitol Punishment: Where Have the Landmarks Gone? GUEST COLUMN by Gregory N. Lippe A recent trip down memory lane made me realize that many of the familiar landmarks that made California a beautiful and exciting place to be born and raised are gone. Those landmarks were the manufacturing businesses that occupied many of our historic buildings. They were some of the most vibrant businesses in California’s history. Many of us who were raised in the Los Angeles area have memories of the Helms Bakery in Culver City, the Carnation Company and the General Motors assembly plant in Van Nuys, the Chrysler plant in South Gate and many more. Where have those landmarks gone? Could it be that the high costs of doing business in California have driven them either out of the state, or out of business? Could it also be that a significant factor in our current budget crisis is a lack of revenue resulting from a decline in manufacturing? How many products have you purchased lately that were manufactured in California? For me, the unfortunate answer is, not many. From December 2000 through September 2002, Californians lost 167,000 manufacturing jobs. Additionally, California’s manufacturing revenues in the year 2001 were $23 billion less than in 2000. Another example of the flight to achieve lower costs is found in film production, frequently referred to as “runaway film production.” In 2001 Los Angeles County lost 17,000 motion picture jobs. Now, the one significant incentive provided by California to retain film production, is falling victim to the budget deficit. That incentive is the “Film California First” program that was originally established as a three-year program to provide $15 million annually, with a maximum of $300,000 per production, to reimburse certain costs incurred by qualified production companies when filming on public property in California. For fiscal 2003, several attempts were made to retain the program by reducing the budget to $6 million, but these attempts have now failed and the program will be eliminated. Despite all of the above, anti-job and anti-business bills continue to be proposed “and the beat goes on.” The following are the bills I have selected to profile this month: – AB 749: Provides that a “represented” employee may agree to settle with his/her employer, the right to prospective vocational rehabilitation services with a one-time payment to the employee not to exceed $10,000, for the employee’s use in self-directed vocational rehabilitation. The settlement agreement is to be submitted, for approval, to the Department of Labor’s Department of Workers’ Compensation vocational rehabilitation unit. The rehabilitation unit can only disapprove the settlement agreement upon a finding that receipt of rehabilitation services is necessary to return the employee to suitable gainful employment. Potential significant increase in costs to employer by encouraging employees who do not want or do not truly need vocational rehabilitation services to seek the $10,000 settlements. Since, according to the law, the only ground for the rehabilitation unit’s disapproval of the settlement agreement is a finding that services are needed, one would infer that the settlements are approved when services are not truly needed. The increased costs are a disincentive to the creation of jobs and an incentive to utilize fewer employees. Status: Signed into law February 19, 2002 Valley legislators voting for bill: Assembly, Frommer, Hertzberg, Koretz, Pavley; Senate, Alarcon, Kuehl, Scott Valley legislators voting against bill: Assembly, Richman, Strickland; Senate, Knight, McClintock – AB 226: Prohibits an insurer from issuing or delivering a life insurance policy on the life of an employee when the policy is purchased by a California employer (“corporate-owned”) and the employer is the designated beneficiary. Currently many employers utilize corporate-owned policies to assist in funding employee retirement and other benefit plans. By prohibiting these policies, the employer will either face increased costs or need to consider reducing benefits. The result will punish the employer, the employee or both. Status: Passed Assembly and Senate, awaiting action by the Governor Valley legislators voting for bill: Assembly, Frommer, Koretz (co-author), Levine, Montanez, Pavley; Senate, Alarcon, Kuehl, Scott Valley legislators voting against bill: Assembly, Richman, Strickland; Senate, Knight, McClintock – SB 796: Provides an incentive (25 percent of the assessed penalty) to employees who file civil lawsuits against employers for alleged wage and hour Labor Code violations. Existing law directs the Labor and Workforce Development Agency (“LWDA”) and its departments to assess and collect penalties for Labor Code violations. This bill, in effect, commissions employees to file civil lawsuits, on behalf of the LWDA, against their employers. The stated justification for this is that declining staff levels in the enforcement agencies will limit their ability to keep up with the future growth of the labor market. Encourages litigation, possibly frivolous, resulting in increased legal and insurance costs to employers. Status: Passed Senate May 29, 2003, currently in Assembly Valley Senators voting for bill: Alarcon, Kuehl Valley Senators voting against bill: Knight, Margett, McClintock – AB 16: Requires that all oil produced offshore in new or expanded oil extractions, be transported by pipeline only. Potentially results in significant petroleum price increases and possible uncertainty in supply. Status: Passed Assembly May 8, 2003, currently in Senate Valley Assemblymembers voting for bill: Frommer, Koretz, Levine, Montanez, Pavley Valley Assemblymembers voting against bill: Richman, Strickland More than one million California voters signed a petition to recall our governor. Those who signed believe that he is not doing his job effectively and needs to be replaced by someone who will. Whether or not you agree with them, this is a prime example of the power of the vote. This power is available to assure that all of our legislators and other elected officials do their jobs effectively. Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lever, Lippe, Hellie & Russell LLP (LLHR) and a director of the Valley Industry and Commerce Association (VICA).