BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 1098 (Quirk-Silva) - Office of Small Business Advocate:
Regulations: Report
Amended: May 1, 2013 Policy Vote: BP&ED 9-0; EQ 9-0
Urgency: No Mandate: No
Hearing Date: August 30, 2013
Consultant: Robert Ingenito
SUSPENSE FILE.
Bill Summary: AB 1098 would require the Office of the Small
Business Advocate (OSBA) to commission a study regarding the
costs of state regulations on small businesses, as specified.
The study would need to be completed by January 1, 2015 and
updated every five years thereafter.
Fiscal Impact: The Governor's Office of Business and Economic
Development (GO-Biz) estimates that it would incur costs of
about $200,000 to implement the provisions of the bill. As
currently drafted, the fund source for the study is not clear;
however, the bill stipulates that the study be funded from
non-General Fund sources.
Background: Current law sets forth extensive processes for the
development and adoption of state regulations, including
requiring the identification of potential adverse impacts on
businesses and individuals. Current 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,
contend 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 (OAL) 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
sufficient attention being paid to their cumulative impact faced
by size of business.
Go-Biz exists within the Governor's Office to serve as the lead
for economic strategy and marketing of California with respect
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to issues pertaining to business development, private sector
investment and economic growth. GO-Biz also serves as the
administrative oversight for the California Business Investment
Service and the OSBA.
Proposed Law: This bill would, among other things, do the
following:
Require OSBA to commission a study, to be conducted every
five years, of the costs of state regulations on small
businesses, which shall parallel, to the extent feasible and
practical, the scope and study on the impact of regulatory
costs on small firms conducted by the federal Small Business
Administration and examine successful models from other
states on identifying regulatory costs and developing
potential alternative approaches that meet the same
regulatory objectives, but are less burdensome on small
businesses.
Convene one or more stakeholder meetings to provide advice
on the study. Stakeholders shall include, but not be
limited to, representatives from small business associations
representing a cross section of the small business
community.
Require OSBA, no later than January 1, 2015, and every five
years thereafter, to post the completed study, including
recommendations, on the OSBA Web site and remain available
on the Web site at least until the next study is posted.
Requires OSBA to provide notice to DOF, the Speaker of the
Assembly, the Senate President pro Tempore, the chair of the
Assembly, Committee on Jobs, Economic Development, and the
Economy, and the chair of the Senate Committee on Government
Modernization, Efficiency and Accountability, that
information is publicly available.
Provides that, for the purposes of the study, information
shall be provided based on nonemployer businesses,
businesses with five or fewer employees, businesses with 99
or fewer employees, businesses with 499 or fewer employees,
and businesses with more than 500 employees.
Requires OSBA, prior to commissioning the study, to
determine that sufficient funds to conduct the study are
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available from a non-General Fund source. Requires OSBA, at
least 30 days prior to commissioning the study, to notify
DOF that OSBA has determined that sufficient funding is
available and that the study will be commissioned.
Staff Comments: For the past ten years, the federal Small
Business Administration has conducted a peer-reviewed study that
analyzes the costs of federal regulations on businesses of
various sizes, concluding that small businesses bear a
disproportionate share of the federal regulatory burden.
The comparable costs of California regulations are studied less
often, and this bill serves as a follow-up to previous
legislation in this regard. Specifically, in 2009, OSBA released
a study on the impact of California regulations on small
businesses as required by AB 2330 (Arambula), Chapter 232,
Statutes of 2006. The study found that total cost of regulations
to the state was $493 billion. Since small businesses
reportedly constitute 99.2 percent of all employer businesses in
California, the report concludes that, as is the case with
federal regulation, small businesses disproportionately bear the
regulatory costs.