Newsletter: Delay next year’s minimum wage hike, California businesses ask Newsom

One of California’s most hard-fought political battles in recent memory ended four years ago this week, when then-Gov. Jerry Brown signed the law gradually increasing the state’s minimum wage to $15 an hour. It was a huge victory for organized labor and advocates of low-income families, fought by business groups and made possible by two key provisions.

The law imposed a six-year period of gradual wage hikes. Large employers will hit the $15 mark on Jan. 1, 2022; small businesses have until 2023. But it also includes two ways to pause the annual pay increases, an escape clause on which Brown insisted.

Now, as the state’s economy reels from the effects of an unprecedented pandemic, there are calls for Gov. Gavin Newsom to invoke that never-used clause of the 2016 law and delay next year’s minimum wage increase.

Businesses to Newsom: Delay the 2021 wage hike

California’s minimum wage law “anticipated the possibility of a significant economic downturn that would make a wage increase unwise and created ‘offramps’ that would delay increases if certain economic tests were met,” wrote Jot Condie, president of the California Restaurant Assn. in a letter to Newsom last week.

“When the COVID-19 crisis passes, there will be scorched earth on the employment and restaurant landscape — placing the subsequent minimum wage increases on ‘pause’ as authorized by the minimum wage law will help mitigate the damage,” he wrote.

The law gives Newsom two ways to delay California’s minimum hourly wage rising to $14 in January for most businesses and $13 for those with 25 or fewer employees. The governor’s finance director can determine that unemployment has risen and sales and tax receipts have fallen. Or she can estimate that the state budget is projected to run a deficit either in the current fiscal year or in the near future. That determination will be made in July.

Small-business advocates say the public health emergency may have been unexpected, but it’s just the kind of economic crisis the 2016 law envisioned when ensuring that wages wouldn’t exceed available resources.

“We urge our state leaders to show wisdom and compassion by pressing the ‘pause’ button on any minimum wage increases and other onerous costs that will push them one step further toward the cliff of layoffs and closed doors,” John Kabateck, the California director of the National Federation of Independent Business, said.

Labor groups are already poised to fight any such effort, insisting that low-income workers are the ones bearing the brunt of the coronavirus crisis.

“Now more than ever, workers need the boost in pay they’ve been promised,” Steve Smith, a spokesman for the California Labor Federation, said. “Corporate restaurant chains and companies like Walmart are using this crisis to pad their own bottom lines at the expense of the working people who are helping our families weather these difficult times.”

It remains to be seen what Newsom — a Democrat who frequently reminds audiences of his background as a wine, restaurant and hotel company owner — will do.

COVID-19 tax relief will hit local governments

Newsom also finds himself in the middle of a fierce debate over how much tax relief the state and local governments can provide during the coronavirus crisis.

Last week, he announced that small businesses with $5 million or less in annual receipts would be allowed to keep up to $50,000 in sales taxes for a year without incurring any penalties for doing so. “In essence, it is a bridge loan,” Newsom said on Thursday, the same day he announced a moratorium on shutoffs for unpaid water bills.

But those sales taxes mean less money in the near future for city and county governments, now under significant strain to provide enhanced public health and safety services. Key components of California’s pandemic response — county public health and hospital operations, law enforcement’s role in ensuring Newsom’s stay-at-home order is followed — are falling on the shoulders of local officials.

On Saturday, the governor embraced another tax relief effort: a delay in paying property taxes, due on Friday. Those dollars, paid by residential and business property owners twice a year, represent the most important source of revenue for local services.

“Property taxes only go to local governments — schools, counties, cities and special districts — not to the state or federal government, and directly fund education, health care, hospitals, welfare services, fire protection and homelessness efforts, to name a few,” said a weekend statement from the California State Assn. of Counties and the California Assn. of County Treasurers and Tax Collectors.

There’s been considerable haggling behind the scenes over what kind of property tax relief Newsom would either ask, or order, local officials to provide. Locals agreed, on a case-by-case basis, to waive penalties and other fees for property tax payments delayed by COVID-19 problems. Newsom has privately pushed for more, including offering extended payment plans for some property owners. Locals have pointed out that their budgets depend on property taxes being paid this month. Everyone has agreed for now to consider hardship cases as they arise, but expect more discussion about this as the property tax deadline arrives in a few days.

National lightning round

— As the U.S. coronavirus death toll neared 10,000 on Sunday, Surgeon Gen. Jerome Adams said the coming week would be “the hardest and saddest of most Americans’ lives,” likening the projected loss of life to “our Pearl Harbor moment, our 9/11 moment.” Trump, however, largely eschewed talk of dire coming days, instead expressing hopes for a “leveling-off in the hottest spots” of infection.

— Wisconsin Republicans say they will ask the U.S. Supreme Court to block extended absentee voting in Tuesday’s primary, despite public health fears about in-person voting.

— In fighting the coronavirus pandemic, the U.S. is going to live and die by its decentralized public health system.

— President Trump fired a watchdog Friday night who played a pivotal role in his impeachment while also moving to limit supervision of how trillions of dollars are spent for coronavirus relief.

— Michigan Gov. Gretchen Whitmer, a Trump target, has found herself in the spotlight during the current health crisis.

California’s essential politics

— Newsom said California will significantly increase COVID-19 testing capabilities, adding that he “owns” testing lapses in the state that have made it difficult to track the deadly virus.

— Thousands of California nursing students will be able to soon join the state’s battle against the coronavirus pandemic after regulators loosened training requirements that would have kept them from graduating.

— Landlords in Los Angeles are pushing tenants to agree to repayment plans far more onerous than what’s required under new laws designed to prevent evictions.

— Leaders of the California Legislature on Friday extended the cancellation of all legislative hearings and meetings until May 4, a decision they said reflected the need for additional caution in the face of the coronavirus crisis.

— The economic toll of the coronavirus pandemic has spurred a record surge in the number of applications for CalFresh, the state’s food stamp program.

— Newsom to Californians: Do the right thing. Instead of calling on the National Guard to ensure people stay at home, he has embraced peer pressure to “bend the curve.”