In 2006, the California Legislature passed AB 2330. This law mandated the Office of the Small Business Advocate to commission a study on the cost of regulation on Small Business. This month the study was published with concerning results:

• The direct cost of the regulatory environment in California is $176.996 billion in lost gross state output each year. The direct cost does not account for second order costs.
• The total loss of gross state output for California each year due to direct, indirect, and induced impact of the regulatory cost is $492.994 billion.
• In terms of employment the total output loss is equivalent to the loss of 3.8 million jobs for the state each year. 10% of the total population of California!
• The total regulatory cost of $492.994 billion is four to four and a half times the total budget for the state of California, and almost five to six times the general fund alone.
• The indirect business taxes lost could have helped fund many of the state’s departmental budgets. As an example, the indirect business taxes lost are 60 times the budget of the Office of Emergency Services, and would have paid for almost half the budget of the Department of Education.
• The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $57,260.15 per small business, indirect business taxes not generated or lost were $4,359.55 per small business, and finally roughly one job lost per small business.
• The total regulatory cost of $492.994 billion translates into a total cost per household of $38,446.76 or $13,052.05 per resident. The total cost per household comes close to the median household income for California.

For the complete report, description of the methodology used, go to the Small Business Advocates webpage, www.sba.ca.gov. Many thanks to Assemblyman Juan Arambula and the former CA State Controller, Steve Westly for authoring and sponsoring AB 2330. I have requested information from the Advocates office on the “now what?”. Will let you know what I learn!

My Best, Mary

(I found the list of the Bill’s Supporters and Opposition “interesting”)
Support (partial list)

California State Controller, Steve Westly (sponser)

California Chamber of Commerce

California Manufacturers and Technology Association

California Metals Coalition

California Small Business Association

National Federation of Independent Business

Small Business Action Committee (SBAC)

Opposition (partial list):

AFL-CIO

Ca Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Teamsters Public Affairs Council

Strategic Committee of Public Employees, Laborers’

International Union of North America

Unite Here!

United Food and Commercial Workers Union

Mary Fleet Manager Wall policy, regulation, small business