Now that the Legislature is out for interim and all the veto/signature request letters have been sent to the Governor’s office, many think that it is time for rest and relaxation for lobbyists and government affairs. Of course there is a little of that, but it is primarily a time to prepare for the upcoming session by determining legislative priorities and lobbying strategy. With a new administration coming in (we’ll miss you Governor Brown!) and several open seats in the Legislature, there will be new political and policy challenges in 2019. Here are a few to keep in mind:
1. Governor’s Office and State Agencies: Whoever the new Governor elect is, there will be a significant change in decisionmakers for not only the Governor’s Office of Legislative Affairs (the “horseshoe”), but also potential changes in leadership at important state agencies. The Legislature obviously passes laws, but agencies are given authority to promulgate regulations that can have a significant impact on California employers.
2. Legislature: There are several open seats in the Assembly for 2019 and a few open seats in the Senate as well. While the outcome of these seats are certainly not going to change who the majority party is in California, it could have an impact on whether Democrats get a supermajority in both houses and whether the incoming members are more moderate or liberal with regard to policy.
3. Policy Issues for 2019: The Legislature left several things unresolved when they left that will absolutely be a priority in 2019 including the following:
a. Dynamex – independent contractors vs. employees will be a huge policy debate in 2019 as it challenges the traditional views of employment and will force a discussion on California’s modern and changing workforce. For more details on this issue: (See CalChamber Top Stories – September 14, 2018)
b. Data Collection/Privacy – facing the threat of an even worse ballot initiative, the Legislature passed a consumer data privacy bill in a week that included some unintended consequences. Some of those unintended consequences include clarifying the definition of consumer does not include an “employee,” so that if an employee is alleged or found to have engaged in sexual harassment, they cannot request an employer to delete that information from his or her personnel file. Another unintended consequence is the elimination of rewards programs that many companies offer consumers that provide consumers with significant discounts and benefits.
c. Housing – while the Legislature did pass some reforms on housing in 2017 and 2018, and there are two ballot initiatives for November that also address housing, California still has a huge shortage of affordable housing that the Legislature will need to continue to address in 2019.
d. Pension and Retiree Benefit Liability/Tax Increases – the growing cost of unfunded liability for public employees’ pensions and health benefits is a debt that the new administration and Legislature will have to address in the near future. As CalMatters reported in February 2018 and updated in April 2018, there is approximately $254 billion in pension liability and $147 billion in retiree health care. State and local governments are struggling to meet these financial demands and are facing tough choices, including bankruptcy, increased taxes, reduction of services: https://calmatters.org/articles/california-retirement-pension-debt-explainer/. These unfunded and growing liabilities will create more pressure for revenue, which will create more pressure for new taxes. Increasing property taxes and expanding the sales tax to services are likely proposals that will come up in 2019.
**These are certainly not the only important policy issues for 2019, but just a sample of what is to come next session.
So yes, the pace is slower, the atmosphere is more relaxed, but the CalChamber policy staff is still hard at work getting ready for the new legislative session.