News from the California Legislature

By Western Carwash Association Government Affairs Team

As is said, “As goes California, so goes the nation,” but 2017 is shaping up to be quite a different year for the California State Legislature. Following the election of President Donald Trump, the leaders of the California Senate and Assembly released a joint statement indicating their commitment to continuing to pursue a progressive agenda. In their statement, the leaders said:

“California has long set an example for other states to follow. And California will defend its people and our progress. We are not going to allow one election to reverse generations of progress at the height of our historic diversity, scientific advancement, economic output and sense of global responsibility. We will be reaching out to federal, state and local officials to evaluate how a Trump Presidency will potentially impact federal funding of ongoing state programs, job-creating investments reliant on foreign trade and federal enforcement of laws affecting the rights of people living in our state. We will maximize the time during the presidential transition to defend our accomplishments using every tool at our disposal. … California was not a part of this nation when its history began, but we are clearly now the keeper of its future.”

Since the election, it has become clear to advocates that the legislature is preparing to push back against the federal government and proactively pursue legislation that will make changes to federal law more difficult to implement in California. This point is made sharper by Democrats winning a two-thirds supermajority in both legislative houses in November.

This supermajority gives the Democratic Caucus the ability to raise or implement new taxes or modify property tax assessments without Republican support. Although we have yet to hear of any substantial efforts in that arena, we don’t expect the year to go by without concerted attempts.

Governor Jerry Brown too has been clear about his desire to continue pushing California to achieve his environmental goals, including water conservation and greenhouse gas emission reductions. In keeping with the governor’s direction to develop policy that ensures California leads the nation in all things environmental, he has directed the State Water Resources Control Board (Board) to develop regulations to permanently reduce the amount of water used both commercially and residentially. In compliance with his order, the Board reached out to WCA to discuss the possibility of increasing existing mandates on carwashes’ use of recycled water.

Fortunately, thanks to a proactive effort on the part of WCA, we had previously established a relationship with Board staff and educated them about carwashes’ water use and methods. As a result of our existing relationship, it was made clear to Board staff that implementing further water restrictions on the carwash industry would be both fruitless as well as burdensome.

In addition to focusing on an environmental agenda, some members of the legislature have also made clear that they intend to renew their fight for employee rights and have introduced legislation reflective of that priority.

AB 5, by Assemblymember Lorena Gonzalez (D-San Diego) mandates that employers with as few as 10 employees offer additional hours to existing employees before hiring a new employee, temporary employee or contractor. Although the bill states that this offer is required to be made only to those who have the “skills and experience,” the bill provides no guidance as to how an employer should legally make such a determination.

After contacting each employee whom the employer reasonably presumes can perform the work, AB 5 requires an employer to use a “transparent and nondiscriminatory process” to pick amongst numerous available employees who will ultimately receive the additional hours of work. This requirement exposes an employer to threats of litigation, fines and administrative complaints when one employee is given the additional time over the other. In fact, the proposed definition of “retaliation” in the bill explicitly identifies the “denial of additional hours” as retaliation, thereby setting an employer up for costly litigation. WCA has taken a position of opposition to this proposal and will be working with the larger business community to defeat the measure.

In addition to AB 5, Senator Hannah Beth Jackson (D-Santa Barbara) has introduced two pieces of legislation, SB 63 and 64, aimed at extending the amount of time offered under protected family and medical leave and expanding the people who are able to claim that leave (i.e., grandparents, siblings, etc.). These bills are not new to the legislature but reflect a continued commitment to expand such employee protections without the inclusion of legal liability protections for the employer.

In addition to the existing challenges faced by California’s business owners, employers continue to struggle with increased workers’ compensation costs. Despite rate reform under former governor Arnold Schwarzenegger, fraud and changes to law have driven the costs up to unprecedented levels. Employers statewide are calling for relief from the program, and we are optimistic that business-friendly legislators will pursue action this year.

Despite what looks like a potentially bleak year for California’s businesses, we have seen great results in instances where we have proactively established relationships with legislators and regulators. When California law changed to increase the amount of the required surety bond, those legislators who heard from their constituents were quick to engage, and we are still reaping the benefits of those relationships as we continue to work on the issue.

In order to have a strong offensive and defensive legislative strategy, these relationships are key. We encourage carwash owners in California and across the nation to establish and leverage relationships with elected officials and policy makers.

Sales tax exemption work in Washington state

By Elly Snow, executive director, Puget Sound Car Wash Association

Keeping professional carwashes affordable to reduce stormwater pollution is the idea behind a legislative effort being mounted by the Puget Sound Car Wash Association. The PSCWA is seeking an exemption from state retail sales tax for all professional carwashes in Washington state. As of this writing, bill language has been drafted and a sponsor is being sought for this legislation.

Washington state has the fifth highest sales tax rate in the country. This sales tax exemption will help keep carwashes affordable, and more cars washed at carwashes means healthier water systems at very little cost compared to other resources directed toward clean water in Washington state, where carwashes contribute only 0.0008 percent of sales tax revenue collected each year.

Approval of a sales tax exemption will bring Washington state in line with 29 states that have some sort of exemption for carwashes out of the 45 states that have retail sales taxes.

The Washington state legislature has a long history of granting sales tax exemptions to a variety of services and products, so long as those exemptions achieve a meaningful purpose. Many exemptions have been aimed at encouraging specific taxpayer behavior. Both the EPA and DOE recommend that citizens utilize professional carwash facilities to reduce substantial pollutants into the state’s waterways.

Costs for carwash operators continue to escalate due to the need to comply with increasing environmental standards, rising utility costs, reduced access to water treatment facilities and government-mandated labor concessions. The PSCWA believes that, in the long run, a sales tax exemption will help keep the cost to customers down while encouraging them to wash their cars in an environmentally appropriate way.

The PSCWA is calling for carwash operators in Washington state to join us in supporting the effort to approve a sales tax exemption. To learn more, to become involved in the grass roots effort and/or to contribute to lobbying costs, visit the PSCWA website at www.pscarwash.org.