California is projecting the largest budget deficit in state history. This is due partially to increased expenses incurred during the COVID-19 pandemic, but also from substantially reduced economic activity.
As reported by Bloomberg, personal income-tax collections will drop by 26%, sales and use taxes by 27% and corporation taxes by 23%. Meanwhile, unemployment is expected to reach 18 percent this year. In April, it was estimated that the state lost about a third of its economic output, according to a U.S. News & World Report.
In other words, everyone is struggling: Government, employees and employers. And we’re all connected. But everything starts with businesses selling products and services to get more employees back on payroll so that everyone can pay taxes to ensure our teachers, firefighters, police officers and vital services can thrive.
As we are all painfully aware, many businesses are either struggling to stay open or begging to reopen. And one of Gov. Gavin Newsom’s executive orders will make it harder for businesses of all sizes to keep their doors open.
Newsom’s executive order expanded the conditions for which employees can get workers’ compensation for COVID-19 claims. Of course that sounds good so far – if an employee contracts COVID-19 while at work, they absolutely should be covered by workers’ compensation.
But the executive order goes a step further and imposes what’s called a “rebuttable presumption” on employers, meaning false claims must be proven by the employer.
COVID-19 is a highly contagious virus with an incubation period between two and 14 days. That means it is nearly impossible for an employer to disprove an employee’s claim, especially without tracking each employee’s every move – which is not something any of us want. There are a few silver linings: the executive order is time limited and does not apply to employees who work from home. But this order could still lead to a disastrous number of claims that employers can’t afford.
Meanwhile, state Sen. Jerry Hill, a Democrat from San Mateo, has introduced Senate Bill 1159 that is similar to Newsom’s executive order, but would not have an end date.
We strongly support all workers who are risking their health on the front lines of society during this crisis. We also support employers who are struggling to keep their businesses open and those workers employed.
Our member organizations have gone to great lengths to support our workers with the safety protocols outlined by the Centers for Disease Control and Prevention, the state of California and local governments. They are diligent about providing the Personal Protective Equipment and sanitary materials necessary to ensure a safe work environment and practicing the 6-foot distancing requirements. Our members are committed to safety.
Newsom’s executive order was well-intentioned and so is Hill’s bill – but both get California further from our shared goal of rehabilitating our economy and our state.
This piece was originally published in CAL Matters. To view the original piece, click here.
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Clint Olivier is the executive director of Central Valley Business Federation and a former Fresno City Councilman, clint.olivier@bizfed.org. He wrote this commentary for CalMatters.
