BILL ANALYSIS Ó
AB 1098
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Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1098 (Quirk-Silva) - As Amended: May 1, 2013
Policy Committee: JEDE Vote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the Office of the Small Business Advocate
(OSBA) to commission a study regarding the costs of state
regulations on small businesses, as specified. Requires the
study to be completed by January 1, 2015 and updated every five
years.
FISCAL EFFECT
Estimated costs for completing a comprehensive study on
regulations is approximately $200,000.
COMMENTS
1)Purpose. According to the author, California's small
businesses face certain challenges in meeting regulatory
requirements. The author notes, small businesses are the
backbone of the state's economy, but the regulatory burdens
continue to be one of the major complaints of small
businesses. Although state agencies are required to consider
the effects of adopted regulations on small businesses, state
agencies are not required to consider the cumulative cost
impact of regulation. The author argues understanding the
financial effect of state regulations would help policymakers
reduce, or design more cost-effective regulatory approaches
that achieve desired policy objectives while placing fewer
burdens on the regulated industries.
2)Background . The OSBA released a study on the impact of
California regulations on small businesses in response to AB
2330 (Arambula), Chapter 232, Statutes of 2006. This first
state study found that total cost of regulations to the State
AB 1098
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of California was $493 billion. Since small businesses
constitute 99.2 % of all employer businesses in California and
all of non-employer business, the regulatory cost, according
to the report, is shouldered substantially by small business.
3)Regulation adoption : Existing state law sets forth extensive
processes for the development and adoption of regulations,
including requiring the identification of potential adverse
impacts on businesses and individuals. California law
specifically states that the purpose of the rulemaking process
is to avoid the imposition of unreasonable and unnecessary
regulations, reporting, recordkeeping, or compliance
requirements. Businesses, however, have repeatedly complained
that California's regulatory process is expensive and overly
burdensome. One of the criticisms of the process has been
that the Office of Administrative Law has no real authority to
ensure that the intent of the law is enforced because its
oversight is limited to a procedural review. Other criticisms
have included that regulations are developed without adequate
regard to their cumulative impact or challenges faced by small
versus large companies.
4)Study funding . The bill states OSBA shall only begin the
study after determining sufficient funds are available from a
source other than the General Fund. This option for funding
the study raises an issue because the source of funds could
include a donation from a source with a particular view or
position on small business regulatory issues.
5)Previous legislation .
a) AB 1409 (V. Manuel Pérez) of 2012, would have modified
the state rulemaking process to require state agencies to
consider alternative small business compliance mechanisms.
This bill was held in the Senate Rules Committee on Rules.
b) AB 1037 (V. Manuel Pérez) of 2011, would have increased
review of regulations for the impacts on small business.
This bill was held on this Committee's Suspense File.
c) AB 2692 (Tran and V. Manuel Pérez) of 2010, would have
directed the California Small Business Board to examined,
the impact of licensing and permitting regulations on small
business startups. This bill was held on this Committee's
Suspense File.
AB 1098
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Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081