Barriers to Economic Development Pass; Next Stop: Vote on Assembly Floor

Two California Chamber of Commerce opposed “job killer” bills passed Assembly policy committees this week and will be considered next by the full Assembly.

  • AB 52 (Gatto; D-Los Angeles) creates significant obstacles for new development and opens up new avenues for California Environmental Quality Act (CEQA) litigation.
  • SB 365 (Wolk; D-Davis) creates uncertainty for California employers making long-term investment decisions by requiring tax incentives end 10 years after their effective date.

AB 52: CEQA Consultation

AB 52 requires lead agencies to engage in substantial consultation with Native American tribes early in the CEQA process prior to approval of land use projects that may have an adverse impact on a tribal cultural resource.

The CalChamber and a coalition of employer groups emphasize that they are not opposed to the goal of protecting tribal cultural sacred places.

To that end, the CalChamber and many of the groups in the coalition worked closely with the Legislature and California tribes during the 2003–2004 legislative session to pass SB 18 (Burton; D-San Francisco), which established meaningful ongoing government-to-government consultation regarding the protection of cultural sacred places by requiring local city and county governments to consult with Native American tribes about proposed local land use planning decisions including the adoption or substantial amendment of general plans, specific plans, and the dedication of open space for the purpose of protecting cultural places.

Dramatic Shift in Decision Making

The coalition is open to a dialogue about the ways in which the SB 18 process has been implemented, but remains very concerned with AB 52’s dramatic shift in land-use decision-making from local government to tribal governments, the new complications the bill would create for environmental impact reviews under CEQA, the reliance on project-by-project reviews rather than earlier broadly based identification and planning, and the costs this measure would impose on future projects throughout the state.

Although May 30 amendments resulted in AB 52 no longer granting Native American tribes veto authority over land use projects, as currently drafted, the bill will curtail the growth of jobs and the economy of California.

Disincentive to Invest

It will create a disincentive to invest in land, whether it is to build affordable housing, build schools and universities, or construct needed infrastructure projects such as roads and highways, or renewable energy projects.

AB 52 has the potential to stop development of state and local public safety projects, such as firehouses, police stations, and jails. Every project in California could be adversely affected by AB 52’s new CEQA process, regardless of whether there are legitimate impacts to cultural sacred sites.

SB 365: Tax Credit Sunset

The CalChamber supports efforts of the state to consider the effectiveness of tax policies and programmatic expenditures.

SB 365, however, attempts to address this periodic review and good government structure related to tax policy by mandating a maximum 10-year sunset on all future tax credits. This would have the adverse effect of creating uncertainty about the future of the state’s tax structure.

Stability Is Key

When businesses choose to locate in a state, factors such as the availability of a skilled workforce, infrastructure, regulatory environment, and tax structure all play a significant role. Businesses evaluate whether they can rely on these factors to remain relatively stable and consistent in the long term.

Furthermore, for capital-intensive industries like manufacturing and research and development, investment decisions are made many years into the future. The ability for corporate decision makers in these industries to plan anticipated costs over a span of many years is an important factor when determining locations for these investments.

Establishing an arbitrary maximum 10-year sunset puts the long-term viability of any credit in jeopardy and, in many cases, could ultimately render the credit’s value useless in a company’s final decision on a location.

Amendments Needed

The CalChamber believes that the arbitrary maximum 10-year sunset requirement should be amended to allow tax credits introduced in the future to be evaluated on their own merit. A reasonable sunset should be applied only if appropriate.

Key Votes

• AB 52 passed the Assembly Natural Resources Committee on June 24, 6-0:

Ayes: Chesbro (D-North Coast), Garcia (D-Bell Gardens), Muratsuchi (D-Torrance), Skinner (D-Berkeley), Stone (D-Scotts Valley), Williams (D-Santa Barbara).

Absent/abstaining/not voting: Grove

(R-Bakersfield), Bigelow (R-O’Neals),Patterson (R-Fresno).

• SB 365 passed the Assembly Revenue and Taxation Committee on June 24, 5-2:

Ayes: Bocanegra (D-Pacoima), Gordon (D-Menlo Park), Mullin (D-South San Francisco), Pan (D-Sacramento), Ting (D-San Francisco).

Noes: Dahle (R-Bieber), Nestande (R-Palm Desert).

Absent/abstaining/not voting: Harkey (R-Dana Point), V. M. Pérez (D-Coachella).

Staff Contacts: Mira Guertin, Jeremy Merz

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