BILL ANALYSIS
AB 2330
Page 1
Date of Hearing: April 18, 2006
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Juan Arambula, Chair
AB 2330 (Arambula) - As Amended: April 6, 2006
SUBJECT : Small businesses: impact of state regulations.
SUMMARY : Requires the Office of the Small Business Advocate
(OSBA) to commission a study on the costs of state regulations
on small businesses. Specifically, this bill :
1)Requires the study to parallel, to the extent feasible and
practical, the study conducted by the federal Small Business
Administration.
2)Requires the study to examine successful models from other
states, identifying regulatory costs and developing potential
alternative approaches to meeting the same regulatory
objectives with less burden to small business.
3)Requires the study to make recommendations on how California's
regulatory process can more effectively assess a regulation's
impact on small businesses, including cumulative impact, and
methods for developing policy-appropriate alternatives.
4)Requires the OSBA to convene a small business advisory
committee to provide advice on the development of the report.
EXISTING LAW
1)Establishes the OSBA, within the Governor's Office of Planning
and Research, for the purpose of advocating for small business
causes.
2)Finds and declares that it is in the public interest to aid,
counsel, assist, and protect the interests of small business
concerns in order to maintain a healthy state economy.
3)Requires the OSBA to report to the Legislature, every two
years, on the efforts of the state in assisting minority and
other small business enterprises, and make recommendations on
how to strengthen minority and other small business
enterprises.
AB 2330
Page 2
4)Requires the OSBA to annually report to the Governor and the
Legislature on the activities and recommendations of the OSBA.
5)Establishes the Office of Administrative Law as the entity
with purview of the state's regulatory process, including
assessing the impact of proposed regulations on small
businesses and consideration of reasonable alternatives that
would lessen identified adverse impacts.
6)Defines small business to mean a business with activities in
agriculture, general construction, special trade construction,
retail trade, wholesale trade, services, transportation and
warehousing, manufacturing, generation and transmission of
electric power, or a health care facility that has revenues
under certain specified thresholds, is independently owned and
operated, and not dominant in its field of operation for the
purposes of state regulatory actions. Existing law excludes
from the definition of small businesses a(n):
a) Financial institution, including securities broker-deals
and investment advisers;
b) Insurance company, either stock or mutual;
c) Mineral, oil, or gas broker;
d) Subdivider or developer;
e) Landscape architect, an architect, or a building
designer;
f) Nonprofit institution;
g) Entertainment activity or production, including a motion
picture, a stage a television or radio station, or a
production company;
h) Utility, a water company, or a power transmission
company generating and transmitting more than 4.5 million
kilowatt hours annually;
i) Petroleum producer, a natural gas producer, a refiner,
or a pipeline;
AB 2330
Page 3
FISCAL EFFECT : Unknown
COMMENTS :
1)Small business and state regulations : According to the
author, regulatory burdens and costs continue to be a major
concern for small businesses. For the last ten years, the
federal Small Business Administration has conducted a study
that analyzes the costs of federal government regulations on
businesses. This research shows that small businesses continue
to bear a disproportionate share of the federal regulatory
burden. On a per employee basis, it costs about $2,400, or 45
percent, more for small firms to comply with federal
regulations than their larger counterparts.
The impact of California regulations on small businesses is
unknown. Although state agencies are required to consider the
costs of adopted regulations on the California economy, in
general, and on small business, specifically, state agencies
are not required to consider the cumulative impact of
regulations. The author argues that the cumulative impact of
state regulations must be analyzed in order to fully identify
the role of regulations on small businesses.
2)Past studies not completed : In 2002, the OSBA was
substantially enhanced through the enactment of AB 505
(Wright), Chapter 1059, which relocated the OSBA to the
Governor's Office, created a small business task force, and
required the task force to conduct a study on issues of
concern to small businesses. The study was required to be
released on or before May 1, 2002. This study, however, was
never released and the task force no longer exists.
Similarly, the required annual report to the Governor and
Legislature regarding OSBA activities and recommendations is
not known to have been submitted in the past several years.
This bill takes a different approach to adding supplemental
reporting requirements by recognizing the limited capacity of
the OSBA and requiring the report be prepared by another
entity, under the direction of the OSBA. Further, the bill
requires that a more focused, action-oriented, report be
provided to the Legislature that addresses implementation
strategies as well as costs of state regulations on small
businesses.
AB 2330
Page 4
3)Duplicative of existing requirements : Opponents of the bill
raise concerns that the bill is unnecessary and duplicative of
the AB 505 (Write) report from 1999. The issues addressed in
this bill, opponents state, should be part of that study and
not an entirely separate report. The author, in amending the
bill on April 6, 2006, has tried to more clearly differentiate
the purposes and outcomes of the two documents. Opponents
remain in opposition.
4)Background on California small business : Small businesses
comprise more than 90% of all businesses in the state and
employ more than half of the workers in California. There are
an estimated 3.3 million small businesses in California, which
contributed $137.5 billion to the state's economy in 2003,
based on the federal definition of a small business meaning a
firm with fewer than 500 employees. In 2004, 117,000 new
small businesses opened while 143,000 closed their doors.
5)Technical amendments : The author may want to extend the
deadline for completion of the study. To the extent the OSBA
will be commissioning the study and not preparing it
internally, an additional three months may be appropriate.
Further, the author may want to address the cost of
commissioning the study.
REGISTERED SUPPORT / OPPOSITION :
Support
California State Controller Steve Westly (sponsor)
Automotive Aftermarket Services, Inc.
California Association for Local Economic Development (Caled)
California Chamber of Commerce
California Manufacturers and Technology Association
California Metals Coalition
California Small Business Association
California Chamber of Commerce
Greater Fresno Area Chamber of Commerce
Lumber Association of California and Nevada
National Federation of Independent Business
Palm Desert Chamber of Commerce
Simi Valley Chamber of Commerce and Visitor Center
Small Business Action Committee (SBAC)
Small Business California (SB-Cal)
AB 2330
Page 5
State Farm Insurance Companies
Tulare County Chamber of Commerce
Opposition
American Federation of State, County and Municipal Employees,
AFL-CIO
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation, AFL-CIO
California Teamsters Public Affairs Council
Engineers and Scientists of California
Professional & Technical Engineers, Local 21
Strategic Committee of Public Employees, Laborers' International
Union of North America
Unite Here!
United Food and Commercial Workers Union, Western States Council
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090