A Proud Finish for Sacramento? : Four cost-cutting moves would put a nice cap on a hectic but productive legislative session

In the last stretch of the 1993 Legislative session, Sacramento lawmakers have 10 days to act on a variety of measures, including four that would go a long way toward improving the business climate in California. Sending a signal that the state is, indeed, acting to keep competitive is even more important these days, considering news reports of the exodus of people from California.

Having finally passed a significant workers’-compensation reform package, it is now less clear that the Legislature will muster the will to enact other pieces of legislation to help California business. Each would help cut costs in different ways and all are necessary.

A bill by Assembly Speaker Willie Brown (D-San Francisco)--AB 1313--to exempt manufacturing equipment from sales tax, having passed the Assembly, is stuck in the Senate Revenue and Taxation Committee. California is one of only eight states that levies a sales tax on machinery and equipment used in research and development, testing and production.

A new study by Southern California Edison on AB 1313 concludes that the exemption would produce significant incentives for new investment in machinery and equipment. It’s true that in the initial years of the exemption, the state treasury would lose more money than it gains, but by the end of the third year the exemption would encourage new investments and create jobs, helping boost the California economy. Exempting equipment from the current 6%state sales tax would generate $230 million in new state tax revenues within three years of the repeal and $15.2 billion in new state revenues by 2004.

Meanwhile, the Assembly and Senate are considering two other bills with the noble goal of streamlining state government red-tape requirements under the landmark California Environmental Quality Act. The law properly gives the public a right to information regarding proposed development. The aim of SB 919 by Sen. Ralph C. Dills (D-Gardena) and AB 1888 by Assembly members Doris Allen (R-Cypress) and Bryon D. Sher (D-Palo Alto) is to simplify the process and cost of complying with CEQA without sacrificing the substance of the legislation. Business groups generally do not argue with the intent of the measures but find the maze and duplicative of compliance procedures burdensome. These bills could do the trick for both business and the environment.

Another bill aimed at reducing government red tape also warrants passage by the Legislature. Senate Bill 1082, by Sen. Charles M. Calderon (D-Whittier), would unite in one program the requirements of no less than seven regulatory programs.

Sacramento has had a productive year so far, having delivered a timely budget and a workers’-compensation reform package. Adding these measures to its legislative accomplishments this year would serve California well. But time for action is short.