(May 20, 2003) - As the state budget crisis heats up, a few bills incurring a fiscal cost to the state were temporarily placed on hold, while California businesses were dealt another setback in the Senate Appropriations Committee yesterday.

Two controversial bills were moved to the suspense file because the committee deemed them as costly to the state:

• SB 2 (Burton; D-San Francisco/Speier; D-Hillsborough), mandating employer-paid “universal” health care. This bill would translate into at least $12 billion in new taxes on employers, predominately falling on the shoulders of small businesses.
• SB 335 (Romero; D-Los Angeles), which enacts a “Corporate Three Strikes Act.” This bill would prohibit corporations, many of which employ hundreds of workers, from doing business in the state if members of their leadership committed a broad range of violations.

Both bills are opposed by the California Chamber.

“In light of the unprecedented state budget crisis facing California, it’s outrageous that the state Legislature is proposing billions of dollars in new state spending,” said Richard Costigan, Chamber vice president of government relations. “The Legislature needs to adopt a “do no more harm” mentality on new spending and programs, and focus on policies that promote job creation and stimulate the state’s economy. Legislators should ask, ‘Does this bill create jobs, or cost us jobs?’”

A Chamber-opposed bill with the potential to greatly damage the state’s fragile jobs climate passed the Democrat-controlled Senate Appropriations Committee on a party-line vote. The committee analysis designated the bill as having no fiscal cost to the state. SB 796 (Dunn; D-Santa Ana) inappropriately gives workers the ability to bring lawsuits to enforce wage-and-hour laws and penalties, and establishes new civil fines.

“To classify this bill as having no fiscal cost to the state is misleading. SB 796 will result in substantial costs to California businesses to defeat frivolous lawsuits, and in the end will cost jobs,” said Costigan. “When classifying a bill as having no cost to the state, lawmakers should consider the negative impact bad fiscal policy has on state income when it reduces the job base and business income from which the state draws tax revenues.”

SB 796 is headed for the Senate Floor. Bills placed in the suspense file could be taken up as early as next week.

Staff Contact: Richard Costigan