Gino DiCaro

Welcome to the New Year

By Gino DiCaro, VP, Communications

Capitol Update, Jan. 3, 2007 Share this on FacebookTweet thisEmail this to a friend

Welcome to the New Year and what promises to be a busy legislative session!  CMTA lobbyists and staff are already putting shoulder to wheel to improve the business climate for manufacturers.  We are meeting new legislators, reviewing introduced bills and convening the CMTA policy committees to discuss looming issues. 

If you are new to CMTA, I encourage you to join one or more of our committees.  A good introduction to our lobbyists and the issues we cover is available on our Government Relations Committee conference call on January 18 at 10:30am.  I encourage you to contact Loretta Macktal at  for information and to join the call.  

Join us for CMTA’s 2007 Winter Policy Conference and Legislative Reception on January 30, 2007. Registration & details

During the holiday break, the following opinion editorial ran in the San Jose Business Journal and the East Bay Business Times.  It summarizes our major challenges and opportunities this year.  If you missed it, here it is again for your reading pleasure.

All of us at CMTA wish you and your companies the very best in the New Year.

‘Tis the Season to be Jolly Over Jobs

Employers and Working Families Have Ambitious Wish List for Governor

by Michael Jackson, Boeing

Joe Krkoska, Dow

Jack M. Stewart, CMTA

The holiday season is perhaps the most important time for California policy development.  We find ourselves in the narrow center of the hourglass separating the tumultuous elections behind us and the furious legislative session ahead.  Governor Arnold Schwarzenegger is using the calm to write his much anticipated January State of the State speech in which he will formulate and announce his future agenda on everything from health care to economic development.  This is, therefore, the most crucial time for the state’s shrinking middle class to write and send their wish list, put out stockings, and hope for some holiday cheer.  Indeed, employers and working class families will benefit from an ambitious agenda that calls upon Sacramento to help them revitalize our state’s economy and bring back good paying jobs.  Our future prosperity depends on it.

From 2001 to 2006 more than 375,000 manufacturing jobs were lost in California.  Instead of recouping manufacturing jobs – jobs that provide middle class, family wages – our state is instead growing service sector jobs with much lower average wages and decreased opportunity for advancement.  The difference in average wages between declining sectors ($66,000) and growing sectors ($40,000) is dramatic and affects both workers’ pocketbooks and the state’s economy as our population grows.  Moreover, a 2005 "Cost-of-Doing-Business" index prepared by the Milken Institute showed that California was the most expensive western state to operate a business; indeed, we were 24 percent more expensive than the rest of the country.

So, to put our state back on track, working families and high wage employers will be fighting this year to see that public education re-focuses on preparing our kids for the new 21st Century jobs. Furthermore, California must compete with other states by promoting new investment among job creators and lowering the behemoth cost of doing business here.

Education Must Be Connected to Job Growth of our 21st Century Economy

There is a strong grassroots movement afoot to put educational leaders and politicians back in touch with the purpose of taxpayer-funded education.  In our state there is a growing workforce crisis fueled by a breakdown in public education.  Institutional biases against career technical education (CTE) at all levels of education, from junior high to college – coupled with growing pressure to teach to standardized tests – are forcing schools to track students into a one-size-fits-all pathway.  Schools no longer offer courses that equip students with the real-world skills necessary to fill good-paying, high-demand, technology-based 21st century jobs. More disastrously, this trend away from career technical education is contributing to the problems that have left our high schools with a nearly 30 percent drop-out rate. At the same time, only one in four high school students goes on to obtain a four-year college degree. As the shortage of technically capable workers grows, businesses will find it difficult to remain competitive in California.  A strong push for career technical training at the high school level can help keep kids in school and prepare them for the good paying jobs that our economy will create.

We Must Lower Cost of Doing Business and Promote Investment in California Jobs

Middle class working families will also take a lead in the Governor’s effort to provide access to affordable health insurance for all Californians.  We all agree that more California families should be covered by affordable health insurance plans. The unpaid medical bills for un-insured individuals are passed onto taxpayers, businesses and other Californians through higher health insurance premiums. By example, 74.1 percent of our state’s manufacturers insure their employees – a percentage higher than any other industry.  In fact, only 66.4 percent of the services sector covers their employees.  However, the cost burden is becoming too great for some employers, forcing cuts in staffing and benefits, even among manufacturers. Our future health and prosperity depends on finding sensible solutions to the problem of the un-insured in our state while not driving businesses away.

Further, we must work to reduce the state tax burden so as to place California companies on a level playing field with their competitors in other states.  For example, California is one of only four states that impose a sales tax on the purchase of manufacturing equipment. California’s manufacturing investment tax credit in place since 1994 expired in 2004.  Many other states provide both a sales tax exemption and investment tax credits to encourage manufacturing investment. Exempting from sales tax the purchase of machinery used in manufacturing would make California a more favorable location to expand operations and add or retain employees.

With the passage earlier this year of Assembly Bill 32, California’s global greenhouse gas emissions reduction bill, state job creators will be working closely with the Governor and Legislature to implement sound measures and keep businesses afloat.  Driven by the high cost of energy and strong environmental regulations in California, our state’s manufacturers and other job creators have already set the national industry standards for efficiency.  However, it is imperative that parallel to AB 32 implementation, the state pursue policies that encourage investment and economic development in the industries.  Without a comprehensive plan that balances emissions reductions and economic incentives, our state’s middle class jobs will continue to move to other, more competitive and less restrictive states.

Californians will be hoping this holiday that Governor Schwarzenegger’s vision for the State of our State mirrors their own – a place that prepares kids for their future while investing in the creation of good paying jobs that will sustain tomorrow’s families.  A vision any less ambitious or inspired will be a lump of coal in holiday stockings of working class families.

PDF of article in SJ Business Journal


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