MIKE VILLINES: Red tape puts squeeze on small businesses

Published online on Thursday, Oct. 15, 2009

After a long week's work in Sacramento, it saddens me every time I return home to see the glut of foreclosures and shuttered storefronts that are plaguing the Central Valley.

While numbers tell one part of the story -- California's unemployment rate is now 12.2% and 14.6% in Fresno County -- listening to the struggles of residents who have lost their jobs makes this economic recession really hit home.

With no end in sight, I believe there is no more important priority for the Legislature than to revitalize our economy so more people can get back to work.

A key part to turning things around is encouraging the success of California's 770,000 small businesses, which are the backbone of the state's economy. As a former small businessman myself, I know how important they are in providing much needed jobs and investment in the community, which is crucial to keeping California competitive in the global economy.

Unfortunately, one reason why we are in terrible shape is because of all the red tape that the state imposes on these businesses, which hinders job creation.

Recently, the governor's office released a report requested by my friend Assemblyman Juan Arambula showing how much state regulation has cost small businesses and our economy.

The two Sacramento State professors who compiled the report found that the average cost for a small business to comply with the law is an astronomical $134,122 a year. Just think of the additional jobs that could have been created if companies had the freedom to use that money to invest, rather than complying with endless mandates.

Take for example our laws on meal and rest periods. Current law is confusing and often leads to costly lawsuits against businesses for minor alleged violations.

Right now, the law is so rigid that employers have to police their workers to ensure they are taking their meal periods at the right time. There is no flexibility at all for an employee to take it at a more convenient time, which is especially crucial in time-sensitive places like restaurants.

It seems like many laws that Sacramento has imposed reflect the ideal world of bureaucrats who have never run a business, rather than the real world of entrepreneurs who put their heart and soul into their trade. Perhaps that is why Forbes magazine has ranked California as the most expensive place to do business in, and why our unemployment rate is significantly above the national rate of 9.8%.

The Legislature cannot ignore California's economic problems any longer. The Sacramento State report is a good starting point to find out which regulations are needed to maintain public safety and which ones need to go.

We need to consider measures that will reduce red tape and stop junk lawsuits that are squeezing many small businesses with high costs.

We must also reform our laws and tax structure so we can encourage more investment in growing industries such as biotech and green energy. While California is already a leader in these two areas, we cannot afford to lose our competitive edge to other states that are promising more flexibility for companies.

That is why I am working hard to convince my colleagues in the Legislature that we must join together to reduce the red tape that has hurt far too many businesses and families. The findings in the Sacramento State report demand immediate action and I am determined to work with both houses to implement its framework this year.

Now is the time to give job creators a hand up in hiring new workers, rather than burdening them with more rules. I know that with a bi-partisan effort we can make California the ideal place for small businesses to innovate and create jobs once again.