Business interests adjust as Dem supermajorities rule

The California Legislature is currently more progressive than ever before, and the business community is adjusting its strategy in Sacramento accordingly.  California has long been home to an extraordinarily active Legislature that routinely passes laws with significant and far-reaching impacts on businesses throughout the state, as well as national and international businesses, most of which have an economic interest in the world’s fifth-largest economy. 

And, many of these laws are trendsetters because they impact other states and the national policy agenda, and often serve as the basis for “copy-cat” legislation in those other states or in Congress. Influencing the way in which California legislation is crafted is therefore often an effective way of influencing the policy agenda nationwide. 

California’s Democratic supermajority — combined with a more progressive Governor Newsom (in comparison to his predecessor) — is a recipe for an ambitious state policy agenda.

For this reason, the business community simply cannot afford to avoid this massive state.       

The 2018 elections solidified California’s role as the nation’s progressive policy leader. The California Assembly, comprised of 80 members, is now home to 61 Democrats. Speaker Anthony Rendon referred to this three-fourths majority, which had not been reached by Democrats in more than 100 years, as a “giga majority.”

Similarly, the California Senate comes close to having a so-called giga majority, with 29 Democratic senators in the 40-member upper chamber. Many have predicted that the 2020 elections could actually result in an increase in these dominant figures because the state’s Democratic electorate will be motivated to vote on an anti-Trump platform. 

California’s Democratic supermajority — combined with a more progressive Gov. Newsom (in comparison to his predecessor) — is a recipe for an ambitious state policy agenda that will undoubtedly impact the business community for years to come.

If the 2019 Legislative Session is any indication for what is to come, the business community will continue to see strong legislative pushes in the areas of labor and employment, environmental regulation, consumer privacy and data security, litigation, health care, and consumer products regulation, among others. 

In years past, the business community, with the help of a large bloc of moderate Democratic legislators in the Assembly, had greater strength and could often squash bills either on the Assembly Floor or before a bill was even put up for a vote. As long-time Capitol columnist Dan Walters stated in the Sacramento Bee in 2016, “[m]od squad influence is rarely demonstrated in showdown votes on specific bills. Rather, legislation that fails because of their presence is usually placed on the shelf without votes after legislative leaders count noses and come up short.” 

But things are different today.

Now, the business community needs to convince a whopping 21 Democrats in the Assembly and 9 Democrats in the Senate to abstain or no vote for a measure in order to stop bills on their respective floors. In reality, even more Democratic votes are needed in order to demonstrate that the particular measure does not have a sufficient number of votes to pass.

The more common question for businesses moving forward will be “how do we make this bill workable?” rather than “how can we defeat this bill?”

While the moderate bloc of Democrats continues to wield some influence, the stark reality for the business community is that the numbers speak for themselves. For that reason, much of the business community appears to have adjusted its legislative strategy by expressing an increasing willingness to strike a compromise on high-profile legislation.

In other words, bills that the business community would have overwhelmingly opposed and successfully “killed” in previous years are now the subject of intense negotiations instead. The idea is that, if the business community determines early in the legislative process that a bill “has legs,” many have opted to sit at the negotiation table to make the bill as workable as possible, rather than risk the bill passing in an unworkable form without any input.

The result is that the business community has and indeed will need to continue to adjust its expectations in California, particularly from a national perspective. The more common question for businesses moving forward will be “how do we make this bill workable?” rather than “how can we defeat this bill?”

Making a bill more “workable” requires serious negotiation.  And in order to negotiate effectively, one must have a deep understanding of the relevant issues and the ability to engage meaningfully and substantively in the legislative process.   It would serve the business community well, therefore, to adjust to this new environment in Sacramento by ensuring that it has the requisite in-house expertise and outside counsel to create new opportunities in California and continue to do business in the state despite a challenging legal and regulatory environment.

This is not to say that the business community was not successful in defeating a number of bills in 2019, as we have seen only 2 of the 31 California Chamber of Commerce “Job Killer” bills make it to Governor Newsom’s Desk, or that the business community will not be successful in doing so moving forward. However, with some exception, those wins may only be temporary.

And, if predictions come true for the 2020 November elections, we could see even larger Democratic super-majorities in one or both of the houses of the California Legislature.  This would make amending or defeating problematic California legislation even more difficult than it is today.
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Editor’s Note: Anthony Samson is a Sacramento-based senior attorney and policy adviser at the Arnold & Porter law firm. Chris Micheli is an attorney and legislative advocate for at Aprea & Micheli.