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A Letter to the Governor

May 4, 2003
Governor Gray Davis
State Capitol
Sacramento, CA 95814

Dear Governor Davis,

My name is Malcolm Lunn, Chairman, United Small Business of California. We are a small business group with an underlying membership of 5000 members. I am writing about the crucial necessity to suspend or repeal three job-killer bills recently-passed in this state: AB2065, AB 749 and AB 60. These bills, along with thousands of their predecessors, are literally killing California's small businesses. Remember, Governor Davis, what Pastor Martin Niemöller expressed in the 1940's, "In Germany they first came for the Communists, and I didn't speak up because I wasn't a Communist. Then they came for the Jews, and I didn't speak up because I wasn't a Jew. Then they came for the Trade Unionists, and I didn't speak up because I wasn't a Trade Unionist. Then they came for the Catholics, and I didn't speak up because I was a Protestant. Then they came for me. And by that time, no-one was left to speak up."

In our state, about 50% of the population pays about 96% of the taxes. Many feel like they are hostages held for ransom in their own homes and businesses and most must pay for you and your fellow travelers wide ranging social agenda. Unless you back the suspension of these bills and others like them, I am afraid there will not be a small business community left to speak for.

Your administration recently suspended the (NOL) carry-forward regulation which allowed a California business that had lost money in the preceding year(s) to offset taxable gains in a subsequent year. This represented the only refuge that many small businesses in this state had to even out the up and down cycles that have characterized the California economy this past decade. Your suspension of this (NOL) carry-forward section of AB 2065 must be repealed. Our most vulnerable small California businesses will be lost if you do not take immediate action.

As regards AB 749 (Calderon), when our state was running a surplus you, Governor Davis, vetoed a state workers compensation bill that would have increased benefits by $2 1/2B per year, stating that "it was too high a price to pay by businesses and government when California had a large deficit." Now thanks to you and your team, our deficit is HUGE, and you signed a "job-killing machine" workers compensation bill (AB 749) and stated that "Today we are providing justice for working people. It may be overdue, but it has arrived." Where, Governor, is the JUSTICE for the small business owner? AB 749 (Calderon) represents a 23% increase in workers compensation payments by our businesses, and further exacerbates the disparity between California as NUMBER 1 in paid workers compensation claims. Our business owners paid claims totaling more than the paid claims of New York, Pennsylvania and Florida (numbers 2, 3 and 4) PUT TOGETHER! I ask you again, Governor, where is the justice? You have also done nothing to solve a program that is riddled with enormous costs, excessive litigation and fraud and just by itself is driving many small and large businesses from the state.

The Knox bill (AB 60) is the other bill which requires immediate repeal or suspension. Requiring overtime to be paid after eight hours per day has worked so well for this country that only TWO of our 50 states require it (California and Alaska). You have sent significant parts of entire industries to other states, specifically Nevada, Arizona or Utah. This bill (AB 60) needs to be suspended or repealed NOW. Senator Chuck Poochigian put it succinctly when he said, "California's fiscal crisis is a direct result of the runaway government spending of the last four years and exacerbated by the assault on the states job-creating businesses."

I hope that my letter receives a better response than a recent missive sent to you March 15, 2003 by our President, Julie McDannold Miller (copy enclosed). I might add that you and she are alumni from Stanford University. She has yet to receive a reply from you. In parting, Governor Davis, East Germany put up the Berlin Wall due to the mass exodus of citizens fleeing an oppressive, tyrannical state. Unless you give relief soon to your beleaguered constituents they will swiftly vanish from our tax rolls by moving to more-friendly states. I eagerly await your reply.


Malcolm Lunn
Chairman of the Board,
United Small Business of California

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