Brown Wants New Anti-Business Agency
January 11, 2012
By LAER PEARCE
California lost about five and a half companies a week to other states in 2011, as the mass migration to avoid California’s hostile business environment grew. You would think a governor who is hungry for tax revenue — and California has one of the highest corporate tax rates in America — would do something to slow the tide, but Jerry Brown’s new budget proposal tells another story.
First, bureaucracies like the California Air Resources Board that are highly efficient in throttling businesses have nothing to fear in the new budget. Brown is all-in on CARB’s anti-global warming campaign, as AB 32 implementation is unscathed in the budget. Brown is not thinking about the war on greenhouse gases’ expected $180-billion-a year hit on the California economy; rather, he’s focused on the $1 billion in new 2012-2013 tax revenues he anticipates collecting under the state’s new cap and trade law.
But that’s just the tip of the supposedly rapidly melting iceberg. Tucked away in the “making government more efficient” section of the budget is a proposed new anti-business government bureaucracy, the Business and Consumer Services Agency, that should speed up the flight of employers from California.
Under Brown’s proposal, the Department of Consumer Affairs, the Department of Fair Employment and Housing and a handful of business licensing and inspection departments will be merged to form the new agency. Fair enough. Maybe they will be able to find some efficiencies. But the red flag for business owners is this: Into this amalgamation of bureaucracies that fundamentally see business as the enemy, Brown is dropping “the newly restructured Department of Business Oversight.”
Scan the list of 380 state agencies and you’ll find no Department of Business Oversight, so it appears this isn’t a case of restructuring an existing agency, but of creating an entirely new one. California’s already excessive amount of business oversight is one primary reason why CEO Magazine listed California as the worst state for business for the last four years in a row. Creating a new department tasked to impose yet more controls on business, and placing that department in an environment that’s already steamy with anti-business hubris, will only make things worse.
How anti-business are the foundational agencies of the new Business and Consumer Services Agency?
The Department of Consumer Affairs has 40 different regulatory entities like the Professional Fiduciaries Bureau, the Telephone Medical Advice Services Bureau and the Hearing Aid Dispensers Bureau, each responsible for regulating a segment of the California economy. Under a two-year initiative to increase the oversight it imposes, the department is seeking to quadruple the number of investigators on its staff and to add a new Deputy Director for Enforcement and Compliance.
The Department of Fair Employment and Housing opens about 4,000 new cases a month where a business, landlord or lender is charged with discrimination — 195,000 cases in total in 2010. If a complaint goes forward, the department’s attorneys represent the complainant at no charge, and the average settlement against businesses, once charges are filed, is $40,000.
Certainly, there are scoundrels out there, along with bigots and guys who don’t know where to keep their eyes, hands or comments, and any state needs agencies to corral them. But Brown appears to be up to much more with his new super-agency. This new agency would assuredly go well beyond that charter, creating new opportunities for the attorneys that feed off of California businesses — attorneys who gave well over $1 million to Brown’s election campaign in 2010.
If California had a pro-business governor, his budget would have proposed a new pro-business department. That we have instead a new Department of Business Oversight in a new Business and Consumer Services Agency tells us a lot about the kind of governor — and the kind of state — we have.
Laer Pearce, a veteran of three decades of California public affairs, is completing a book on California’s impending collapse, “Crazifornia: Tales from the Tarnished State.”