Offramps in CA minimum wage bill prompt disagreement

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Source:   —  April 03, 2016, at 9:56 PM

Jerry Brown made it clear earlier this year he'd significant misgivings about proposed ballot measures to lift California’s minimum wage to $15 an hour.

Offramps in CA minimum wage bill prompt disagreement

Gov. Jerry Brown made it clear earlier this year he'd significant misgivings about proposed ballot measures to lift California’s minimum wage to $fifteen an hour. A “noble goal,” he said, but one that needed to be achieved “very carefully.”

“It has to get into account recessions,” Brown told reporters in January.

The nationally watched minimum wage measure Brown will sign in LA on Monday rests on the inclusion of offramps demanded by the Democratic governor. Starting in July two thousand seventeen, Brown or his successor will have the power to break any of the scheduled annual increases to $15 in the event of certain recessionary monetary and economic conditions.

Administration executive declare the pauses could've been triggered for two thousand eight and two thousand nine, as the state slid into recession. Yet the criteria are complex and could be open to interpretation. Business critics, meanwhile, have predicted that public pressure would create governors hesitant to trigger any pauses and declare the provisions, even if used, proposal tiny assistance to employers.

In a letter to Brown latest week, the CA Business Roundtable warned that any break in minimum wage increases would lift just as the state began its recovery.

“The potential unintended effect of these provisions therefore could be to delay recovery and lengthen the following economic recession you've correctly warned as being ‘an event not too distant off,’” the group’s president, Rob Lapsley, wrote.

Added Shawn Lewis of the National Federation of Independent Businesses, “All of these mechanisms, regardless of how they play out, they're all just temporary. They definitely don't remedy the concerns of ours.”

The bill’s supporters counter that neither of the $15 minimum wage ballot measures included any way to suspend annual increases. The measure negotiated by Brown and legislative leaders takes “a pragmatic approach” that business leaders should appreciate, Senate President Pro Tem Kevin de León told reporters.

“They didn’t give us any flexibility,” Dept of Finance spokesman H. D. Palmer added of the ballot measures.

Senate Bill three contains two sets of triggers to break the following January’s minimum wage increase. A review would start within weeks of lawmakers’ June 15 deadline to pass a budget for the coming monetary year, with a final determination on trigger-pulling by Sept. one, giving the Legislature time to keep hearings on possible alternatives.

One trigger centers on the state’s economic performance. If sales tax income for the past twelve months is down from the year before or work growth is negative for either the previous three months or six months, then the trigger could be pulled.

“If they're going in a negative direction, so too is your economy,” Palmer said.

The second break focuses on the state’s own balance sheet, given that a $15 minimum wage would cost the state an estimated $4 billion in higher wages.

That offramp could be triggered up to two times when the state has a projected deficit of more than one % of common fund income in the current monetary year or either of the next two.

Below the minimum wage bill, the measure of the deficit would be the state’s special fund for economic uncertainties. It’s one of two state reserve funds that, among other things, is the source of additional money to fight fires during the summer and fall.

Brown’s office began reporting the special fund’s projected multiyear balances only recently. The lack of comparable data in the past makes it challenging to predict how the minimum wage trigger would've worked then, Jason Sisney of the Legislative Analyst’s Office said.

Based on the most recent projections, the special fund will have positive balances until the 2019-20 monetary year, when it'll have a negative balance of almost $one.9 billion. That'd be more than 1 % of the projected $133 billion in common fund income that year – giving the governor’s office the power to declare a break as early as next summer.

But those projections very likely will change, possibly significantly. Administration executive also well-known there would be ways to boost the fund’s balance out of trigger territory, such as more vetoes of individual spending items in the annual budget.

“I think given the fact the Gov has proposed a significant-sized budget reserve should allow some indication of where this governor’s monetary views are rooted,” Palmer said.

Triggers to break annual wage increases during an economic downturn also are portion of New York’s $15 minimum wage deal, with the details yet to emerge. Recent minimum wage legislation in Oregon, though, lacked such triggers.

CA governors and lawmakers have included triggers in various types of past legislation. One of the most noticed trigger pulls came in mid-2003 when the administration of then-Gov. Gray Davis, dealing with a cash crunch caused by the dot-com crash, triggered a tripling of the vehicle license fee to previous levels.

Public reaction was swift, with criticism of the triggered expand becoming a major theme in that summer’s campaign to recall Davis. Gov. Arnold Schwarzenegger reversed the action within hours of taking office in November 2003.

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