Businesses Report New Worries, Thanks to Recession

0

Before the recession, Los Angeles businesspeople were most concerned about quality-of-life issues such as traffic and crime.

But the recession has shifted their priorities. Now their biggest concerns are taxes and regulations, according to a new survey by the Los Angeles County Business Federation.

The annual survey of about 300 businesses in L.A. County, which was conducted during the first quarter, found that the top three areas of concern for local businesses were taxes and fees, government regulations and health care costs. That’s a switch from four years ago, when the top concerns, in order, were transportation, crime and education.

“Businesses are in survival mode right now, so anything that impacts the bottom line directly is what gets their attention,” said Mark Wilbur, BizFed board chair and chief executive of the Employers Group, a human resources consulting company.

The Business Federation, or BizFed, is a coalition of more than 85 local chambers of commerce, trade associations and other business groups representing more than 150,000 individual businesses in Los Angeles County. It was founded in 2008 as an intended counterweight to the growing influence of organized labor in local and state politics. BizFed uses the annual survey to help form its public policy agenda.

Among the most disheartening findings of the survey: Even though 62 percent of those surveyed said that their sales were growing, only one-third expected to hire more employees. That doesn’t bode well for the county’s unemployment rate, which in April stood at 12.1 percent.

The main reasons cited for the anemic hiring: lack of access to credit and increased uncertainty about the prospect of more taxes, fees and regulations.

“One of the most insidious factors facing our businesses today is the uncertainty factor,” said John Kelsall, chief executive of the Greater Lakewood Chamber of Commerce and a BizFed board member. “There’s uncertainty about the cost of ‘Obamacare,’ about the next intrusive regulation that will cost more real dollars to implement, or the next tax or fee that will strangle shrinking profit margins. It’s causing companies to stash away cash for the next crash.”

Causing some of the uncertainty: Gov. Jerry Brown may not veto most bills calling for more taxes and regulations on business, as was the habit of his predecessor, Arnold Schwarzenegger.

“At our chamber meetings, this is a huge, huge issue for our members,” said Heidi Gallegos, chief executive of the Regional Chamber of Commerce in the San Gabriel Valley and also a BizFed board member. “These are small, usually family-owned businesses that have just barely managed to hang on during the recession. If any of these taxes and regulations pass, they are telling me they will either shut down or move to another state. They simply don’t have the financial ability to withstand what may be coming down from Sacramento.”

Gallegos said these issues have shoved aside the longstanding concerns about commute times, education and water supply.

Transportation, the top concern of businesses responding in 2007, has moved way down the list, to No. 13. A big factor was the passage of Measure R in 2008, which helped pay for major transportation projects including the Expo light rail line from downtown Los Angeles to Culver City.

“Businesses are seeing the investment coming into transportation, so there’s a sense that the problem is being addressed,” said BizFed Chief Executive Tracy Rafter.

Of course, there’s another less rosy explanation for the drop in concern over traffic: With nearly one in eight Angelenos unemployed, there are fewer cars on the road to create congestion.

One surprising finding was that more businesspeople believe that banks are stingy with credit. About 70 percent of survey respondents said they believed access to credit was so tight that they couldn’t get loans even though most reported growing sales. That’s up from 63 percent two years ago right after the financial collapse.

Since then, banks have clamped down on loan requirements, rejecting many businesses seeking loans and deterring others from even trying.

“Banks are perfectly willing to lend to businesses that have perfect credit and are in great financial position,” Wilbur said. “It’s the businesses that have been struggling, that can really use the money, that can’t get loans.”

Previous article Attorney Sentenced in Saban Tax Case
Next article Edmunds.com to Offer ‘Daily Deals’
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

No posts to display