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State Finance Director: California Must Spend Cautiously, Fill Rainy Day Fund

 

California’s budget is experiencing a surplus, but massive uncertainties loom and fiscal prudence must be maintained, California Finance Director Michael Cohen explained yesterday during a luncheon at the California Chamber of Commerce.

On Tuesday, Governor Edmund G. Brown Jr. proposed the final budget of his gubernatorial career proposing to spend a record $190 billion without raising taxes and setting aside $13 billion in a rainy-day reserve.

Cohen touched on four significant areas of concern to the business community: the rainy day fund, higher education funding, court funding and long-term infrastructure planning.

Filling the Rainy Day Fund

The 2018–19 proposed budget fully fills the rainy day fund to 10% of tax revenues, Cohen explained.

CalChamber-supported Proposition 2, approved by voters in 2014, established a constitutional goal of reserving 10% of tax revenues in a rainy day fund.

By the end of the current (2017–18) fiscal year, the state’s rainy day fund will have a total balance of $8.4 billion, or 65% of the constitutional target. The budget proposes a $3.5 billion supplemental payment in addition to the constitutionally required transfer to the rainy day fund for 2018–19. The two payments would bring the total rainy day fund to $13.5 billion.

Cohen reminded the group that as the state entered the great recession under Governor Arnold Schwarzenegger, the state had only $1.5 billion in a rainy day fund that was pulled out just before the markets collapsed.

“Basically we tried to handle that recession without any money in the bank,” Cohen said. “We are trying to change that so when the next recession does come, we’ll have a chance to either avoid cuts entirely or, more likely, just mitigate the severity of them and maintain as many programs and core services as we can.”

Education Funding

Education funding for K–14 education took a sizable hit during the recession, but school funding has increase by 66% since 2011, Cohen stated.

For grades K–12, the budget proposes to fully fund the Local Control Funding Formula. With $3 billion in new proposed funding for the formula in 2018–19, the budget will achieve full implementation of the formula two years ahead of schedule.

The last few years the budget has been funding career technical education on a limited term basis, but the budget proposes $200 million on a permanent basis and tying it to the community college program created a few years ago, the strong workforce program.

“We think this program has been really successful and this is a much more regional approach to tying industry to the community colleges and we think the K–12 system can successfully link into that,” Cohen said.

 

Community College Funding

The Governor’s budget also proposes the creation of the first wholly online community college in California. The goal is to target a new group of students that, right now, aren’t well served by community colleges or the rest of the public higher education system. Cohen described these 2.5 million individuals as people in the workforce between 25 and 34 years old, who have their high school diploma but yet don’t have a higher education degree.

According to Cohen, these workers are most vulnerable during a recession, and they are the ones who aren’t getting their income back to the same level it was before the last recession.

The online university will target these students who are already in the workforce who don’t have the same amount of time to dedicate to traditional classrooms. The goal is to develop an entire online system to allow students to get certificates and degrees. Cohen pledged to work with industries to ensure a system is created that reflects their needs so that when students finish their certificates and degrees they have skills that are actually needed in the workforce.

“We want workers who have a pathway to improve economically,” Cohen said.

In addition, the 2018–19 budget proposal allocates a 4% increase for community colleges, a total increase of $570 million that includes a new funding formula which encourages colleges to enroll underrepresented students and rewards colleges for incorporating students’ success in completing degrees and certificates. 

Strengthening Transportation Infrastructure

The 2018–19 budget is the first full year of funding under the Road Repair and Accountability Act of 2017 (SB 1), which provides stable, long-term funding for both state and local transportation infrastructure. Cohen said that this act provides $55 billion in new funding over the next decade, split evenly between state and local projects.

There are additional infrastructure proposals; Governor Brown signed two bonds that will appear on the June 2018 ballot. These CalChamber-supported bonds propose $1.3 billion for natural resources and housing projects.

The state has already appropriated the monies, so that—assuming voters approve these bonds—the state is ready to go and get the money on the street as quickly as possible, Cohen said.

Court System Funding

Finally, there is $150 million of ongoing money for the courts. In addition, the budget proposal allocates monies to restart the court construction programs for 10 courthouses statewide. The state’s judicial branch will be provided additional funding to support efforts by the Judicial Council to improve and modernize trial court operations. 

Next Recession

In closing, Cohen reminded attendees that balanced budgets had been quickly followed by huge deficits, but the last five years have been a change in practice from a budgeting standpoint.

“We are really doing more multi-year planning, looking ahead and knowing what our future costs will be,” Cohen said. “Above all, to maintain our fiscal prudence, California must be cautious in spending and put money into our rainy day fund.”

The full summary of the Governor’s budget proposal can be found at www.ebudget.ca.gov

 

 

 

 

Advocacy – California Chamber of Commerce

Californians Can Legally Buy Weed But Employers Can Still Keep a Drug-Free Workplace

 

Last week, California businesses began to legally sell recreational marijuana in California. More than 400 state licenses have been issued so far, but the rollout may be slow. Cities or counties must first approve commercial marijuana sales, and localities can choose to ban or restrict recreational marijuana shops.

On November 8, 2016, Californians voted to pass Proposition 64, also known as the Adult Use of Marijuana Act, which legalized the recreational use of marijuana for adults 21 years old and older. Although marijuana became legal to smoke on November 9, 2016 (the day after the election), licensed recreational marijuana sales were not allowed until January 1, 2018.

But what about smoking weed at work? When it comes to the workplace, California employers can take a deep breath of fresh air, because the recreational use of marijuana stops at the workplace. Employer policies related to drug possession, use and impairment, as well as testing, are not compromised with the legalization of marijuana use under Proposition 64.

Proposition 64 explicitly states that it is intended to “allow public and private employers to enact and enforce workplace policies pertaining to marijuana.” The initiative also provides that it will not be construed or interpreted to amend, repeal, affect, restrict or pre-empt:

The rights and obligations of public and private employers to maintain a drug and alcohol free workplace or require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growth of marijuana in the workplace, or affect the ability of employers to have policies prohibiting the use of marijuana by employees and prospective employees, or prevent employers from complying with state or federal law (Section 11362.45 (f)).

These provisions distinguish Proposition 64 from the failed 2010 initiative, which did not protect employer policies concerning the use of marijuana in the workplace. Therefore, even with the passage of Proposition 64, employers may continue to prohibit use, possession and impairment at work and may continue to test for use when appropriate. Proposition 64 is not intended to interfere with these workplace policies or practices.

Pre-employment drug testing in California usually should be done only after a conditional job offer has been made.

Otherwise workplace drug testing is usually subject to a “reasonable suspicion” test —allowing an employee to be drug tested only when specific objective facts indicate abuse. Random drug testing in California is rarely allowed; although certain industries or professions, such as transportation, have stricter drug testing requirements.

Employers with concerns about recreational marijuana use will want to review existing policies and remind employees not only about the company’s drug-free workplace policy and practices but also to specify that marijuana is prohibited.

Still unsure about legalized marijuana and drug-free workplace policies? CalChamber offers a free white paper on Marijuana and Workplace Policies (CalChamber members can download the white paper). CalChamber members can also view How To: Oversee Pre-Employment Drug Testing. Not a member? See how HRCalifornia can help you.

Staff Contact: Gail Cecchettini Whaley

 

 

Advocacy – California Chamber of Commerce

GO-Biz Accepting Applications for California Competes Tax Credit

The Governor’s Office of Business and Economic Development (GO-Biz) has announced the first quarter application period is open for businesses interested in applying for the California Competes Tax Credit (CCTC).  Applications must be submitted by January 22.

The California Competes Tax Credit is an income tax credit available to businesses who want to come, stay, or grow in California. Tax credit agreements are negotiated by GO-Biz and approved by a statutorily created “California Competes Tax Credit Committee,” consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, and one appointee each by the Speaker of the Assembly and Senate Committee on Rules.

In December, 12 CalChamber members were selected as recipients of the tax credit.

Governor Brown created the California Competes Tax Credit in 2013 to focus on helping businesses grow and stay in California. Since 2014, GO-Biz has allocated $622.8 million to 865 companies projected to create 83,414 new jobs and make $15.7 billion in new investments.

California Competes Tax Credit Webinar Information

Before each application period, GO-Biz hosts online webinars about the CCTC program. Each webinar consists of a 45-minute presentation, followed by a question and answer session. Each presentation includes the following:

  • Overview of the program.
  • Program goals and evaluation criteria.
  • Step-by-step instructions through the application process.

All businesses are encouraged to participate in our webinars to receive instructions on how to apply. Below is a list of the upcoming webinars:

January 12, 2018
Details and Registration

January 16, 2018
Details and Registration

 

 

Advocacy – California Chamber of Commerce

Remember: W-2s Due January 31 to IRS

The Internal Revenue Service (IRS) reminds employers and other businesses of the January 31 filing deadline that now applies to filing Form W-2 wage statements and independent contractor forms.

Under the Protecting Americans from Tax Hikes Act, employers are now required to file their copies of Form W-2 and Form W-3 with the Social Security Administration by January 31. The January 31 filing deadline also applies to certain Forms 1099-MISCreporting non-employee compensation such as payments to independent contractors.

In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. The accelerated filing date started last year and is aimed at making it easier for the IRS to spot errors on taxpayer returns, verify legitimate returns, and prevent fraud.

Note that an extension of time to file Forms W-2 is no longer automatic. The IRS only grants extensions for very specific reasons, and only one 30-day extension to file Form W-2 is available. If an extension is necessary, a Form 8809 must be completed as soon as you know an extension is necessary but no later than January 31.

Failure to file these forms correctly and timely may result in penalties.

As always, employers are also required to distribute copies of the Form W-2 to their employees on January 31.

Act now to get ready for the filing season by making sure that:

  • Your company’s account information is current and active with the Social Security Administration.
  • You have correct employee information.
  • You have enough copies of the forms you will need, if you use paper forms. Consider the advantages of filing your forms electronically (accuracy, speed, convenience).

 

 

 

Staff contact: Gail Cecchettini Whaley

Advocacy – California Chamber of Commerce

Join the Chamber for an adventure to China

china-press-release

Tri-City Mental Health Tip – What does Mental Illness mean?

What does Mental Illness mean?

Mental illness is a condition that affects a person’s mood, thinking and behavior. It is a term that is often misunderstood. For some, it invokes images of severe cases such as schizophrenia. In reality, schizophrenia accounts for less than 1% of the mental illnesses in the United States.* Depression and anxiety are the two most common mental illnesses likely to be found in the workforce.

Similar to a physical illness, such as diabetes or asthma, mental illness can be episodic. This means people will have periods when they are motivated and highly productive, as well as times when they are not feeling well and functioning at a lower capacity. Mental illnesses are more likely to occur during times of high stress or uncertainty, so reducing stress in the workplace can be a big part of managing these conditions.

Suggested Action – Tips to reduce stress in the workplace:

1. Ensure employees have clearly defined roles and responsibilities.

2. Provide positive feedback often so staff know they are delivering what is expected of them.

3. Keep employees informed about upcoming changes to their department or to the organization.

4. Eat lunch with your co-workers. Interesting article on the benefits of eating lunch together. http://money.usnews.com/money/careers/articles/2016-02-03/3-reasons-to-eat-lunch-with-your-co-workers

“Alone we can do so little; together we can do so much.”

Hellen Keller

* www.mentalhealthfirstaid.org

TO LEARN MORE CLICK HERE

Employers Required to E-File Paperwork with Employment Development Department

Beginning January 1, 2017, employers with 10 or more employees will be required to electronically submit employment tax returns, wage reports, and payroll tax deposits to the Employment Development Department (EDD).

***This requirement will expand to all employers beginning January 1, 2018.

CLICK HERE TO READ FULL ARTICLE

Big Yellow Bus Program – LA County Fair

2016 BYB Brochure-page-001

Help Students in your community enjoy a day full of learning and fun at the LA County Fair and other year-round opportunities, courtesy of The Learning Centers at Fairplex! We invite you to join us and help make a difference in the lives of students in our community by joining the Big Yellow Bus Partnership Program. On average it costs $5.oo to bring one student on an educational field trip to the LA County Fair to experience an unforgettable hands-on opportunity found nowhere else.

Here are the top 5 reasons you should become a partner today!

1. 100% of all funds raised go toward providing transportation.
2. All students, teachers and chaperones attending FairKids enjoy FREE admission and parking.
3. Students enjoy 15 hands-on instructional exhibitions not found anywhere else in Southern California.
4. The educational exhibitions are aligned with California State Standards and count as a day of learning.
5. You can designate your donation to the community of your choice, providing a direct benefit to local students.

Click Here to Make a Difference!

Cal Chamber Releases 2016 Midyear Employment Law Update

The California Chamber of Commerce has released a new white paper that explains important changes to employment law. It’s already been a busy 2016 for employers, with lots of action from the California Legislature, federal and state agencies, local governments and the courts.

Click Here for full article…

Say Hello to Summer

Focus News_Summer 2016_lowres-page-001

It’s that time again!!! Check out Chaffey Federal Credit Union’s “Great RV & Vacation Loan Event”

Click Here to Start Summer Fun!