End-of-session victories for manufacturers

By CMTA Staff

Capitol Update, Sept. 6, 2012 Share this on FacebookTweet thisEmail this to a friend

On Friday night at approximately 1:00 a.m. (Saturday morning) the 2012 Legislative Session gaveled to a close.  CMTA's advocacy team delivered California manufacturers some much needed victories.  Following are some of CMTA's key successes:

Mandatory single sales factor – AB 1500 and AB 1501

Both bills together, by Assembly Speaker John Perez (D-Los Angles), would have mandated a single sales formula to calculate tax liability for many California corporations and shifted the resulting new state revenues to college scholarships for "middle class" families.

CMTA worked tirelessly to expose this policy as a harmful tax increase on California employers and manufacturers. In the closing hours of the session after a “mega tax deal” did not come together to gain a 2/3 vote, the bills were defeated. The same tax policy will be voted on as the key element of November's Proposition 39, also opposed by CMTA, but would instead shift the money towards energy efficiency programs. If Prop 39 fails, this idea will be back on the table during next year's legislative session.

Mandated employer retirement plan -- SB 1234

SB 1234 (Kevin de Leon, D-Los Angeles) creates a state-mandated retirement savings program for private employees that forces all employers of five or more employees to either enroll them into the program or offer a comparable one.

A months-long battle, with CMTA working hard to oppose and amend the bill, ended with companion legislation (SB 923, de Leon) that essentially turned SB 1234 into a study bill, requiring the plan to come back to the Legislature for approval. This was a big victory for small and medium sized businesses. As a result of SB 923's passage, CMTA went neutral on SB 1234 and the bill passed with all opposition removed.

Workers' compensation reform -- SB 863

Workers' compensation premiums are currently the fifth highest in the nation. According to workers' comp experts the reforms in SB 863 (de Leon) create approximately $1.50 in cost savings for every $1 in benefit increases.

Employer and labor representatives worked extremely hard to negotiate an agreement that ensured both savings for employers and benefit increases for permanently injured workers. A bulk of the savings could come from streamlined processes and reduced litigation. Benefit increases are phased in over two years and regulatory work to implement the reforms will commence immediately. CMTA will work with our business partners to ensure lower costs and insurance premiums for manufacturers.

Cap-and-trade revenue bills -- AB 1532, SB 535, SB 1572, AB 1186

CMTA strongly opposed, but was unsuccessful in stopping all the bills that appropriate cap-and-trade auction revenue. AB 1532 (Perez) was joined with SB 535 (de Leon) and sent to the Governor. The former sets up a Greenhouse Reduction Fund and investment plan process for cap-and-trade auction revenue and the latter allocates 25 percent of investment plan funds to the benefit of "disadvantaged communities". Both bills must be signed by the Governor to become law.

SB 1572 (Fran Pavley, D-Agoura Hills) would have directed the use of monies collected in the early year of the program to specified purposes. It failed passage.

AB 1186 (Nancy Skinner, D-Berkeley) creates a fund for energy efficiency in schools but without a funding source. It successfully passed.

CMTA argued that the state's manufacturers can't afford increased costs and that withholding allowances to create revenue is a violation of AB 32 and other state law. Minimizing leakage and maximizing cost-effectiveness are primary goals in AB 32, not raising billions of dollars from regulated industries.

Broadening the Academic Performance Index (API) -- SB 1458

SB 1458 (pro Tem Darrell Steinberg, D-Sacramento) allows the Superintendent of Public Instruction to develop a way to complement the Academic Performance Index, to determine the accuracy of the graduation and drop-out rates, and measure pupil preparedness for postsecondary education and career.

SB 1458 passed and is on its way to the Governor after a similar bill passed and got vetoed last year. Measuring career readiness in our high schools will help ensure a skilled workforce for manufacturers.

Mattress recycling mandate -- SB 1118

SB 1118 (Loni Hancock, D-Berkeley) imposed an "extended producer responsibility" (EPR) system requiring mattress manufacturers to develop a costly and inefficient program for collecting and transporting used mattresses that have been negligently discarded or dropped off at landfills (all over the state) to recycling centers in the Bay Area and Los Angeles. It is estimated that this would add $25-$50 to the cost of every mattress sold.  In addition it would create a bureaucracy at CalRecycle to review the manufacturers’ plans and compliance.

SB 1118 failed in the Assembly. It was a costly bill for the state's mattress manufacturers. Further, on principle, it created a very "slippery slope" for the rest of California's manufacturing community and future mandated EPR policies.

Traction on 100% free allocation of carbon credits

In the closing weeks of session democrat Assemblymember Henry Perea (D-Fresno) developed language to freely allocate to all industry 95 percent of carbon credits associated with the portion of statewide emissions related to industry. CMTA argued that California can achieve the 1990 emission target in AB 32 without withholding allowances for purposes of a cap-and-trade auction. In fact, 16 democrat legislators signed a letter supporting the concept of free allocation.

While the bill language was not introduced, we raised awareness about the costs and unnecessary burdens posed by the CARB cap-and-trade program.

Polystyrene food container ban – SB 568

SB 568 (Alan Lowenthal, D-Los Angeles) would have banned the use of polystyrene foam take-out packaging as of January 1, 2016. This packaging is cheaper than the alternatives and recycling programs have been started in numerous cities throughout the state in the past three years. This would have cost the state at least 1,000 manufacturing jobs at a time when they can least afford it. The proponents refused to discuss expanding recycling and other anti-litter policy options.

SB 568 failed on the Assembly floor.

Water Board Ex Parte communications – SB 965

SB 965 (Rod Wright, D-Los Angeles) would allow communications between stakeholders and the regional or state water boards when decisions are pending as long as there is public acknowledgment that there was communications between the parties. The water boards have previously interpreted a 2002 legal decision to mean that they were not allowed to speak to the public once a formal comment period had commenced, on matters like a general stormwater permit.

SB 965 is on the Governor's desk.

Voice over Internet Protocol (VOIP) -- SB 1161

SB 1161 (Alex Padilla, D-Pacoima) provides regulatory certainty in the marketplace by affirming that the State Legislature, not the California Public Utilities Commission, will establish California's policy regarding the Internet and Internet-based services, in accordance with federal law as established by the Federal Communications Commission.

SB 1161 is on its way to the Governor and, if signed, will ensure one less major regulation in California's future.

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