 | |
| |
TechnologyDaily Mobile
Legislative Anxiety In Silicon Valley
by Maureen Sirhal
Democrats in California bucked the national trend on Election Day, sweeping many of that state's races even as Republicans made gains in Congress and several state legislatures, and the political shift could impact the technology industry.
For the first time in years, Democrats will hold all major statewide offices in California while maintaining majority control over the state legislature. And as the Golden State confronts the largest budget deficit in the nation, the technology industry is worried that policymakers will pursue regulatory fixes and tax hikes that could deepen the sector's economic slump.
The composition of California's government also may result in repercussions for industries beyond the state. California often is a regulatory trendsetter. It was among the first states to pass an anti-spam law, for example, and recently began debating fees for recycling electronic products. California policymakers "take great pride in being the leader," one industry lobbyist said.
'Everyone Should Be Worried'
The margins by which Democrats won in California were not as large as suggested by pre-Election Day polls. The winning spread for Gov. Gray Davis, 47 percent to 42 percent over Bill Simon, was not as close as predicted and represented a decline of more than 10 percent from what Davis won in 1998. Attorney General Bill Lockyer won re-election with 50 percent of the vote, and the race for state controller remains too close to call, although Democrat Steve Westly is leading.
Many of the Democrats that campaigned for the state Assembly and Senate also won close races. And despite the Democratic majorities, Republicans did win enough seats to prevent Democrats from gaining a veto-proof majority, which one tech lobbyist called a necessary check on one-sided legislative control. Voters' denial of a two-thirds majority for Democrats also will make it more difficult for the party to raise taxes, according to industry observers.
But while Republicans gained enough seats in five states to shift legislative control to their favor, Democratic gains in California demonstrate the growing shift in that state's political scene. Some players within the business sector see that Democratic domination as troublesome.
"Everyone should be worried," said Fred Main, senior vice president and general counsel at the California Chamber of Commerce.
Sonia Arrison, director of the Center for Technology Studies at the Pacific Research Institute, a free-market think tank based in San Francisco, said tech firms will face "an uphill battle" in California. "It's not just tech issues that are going to affect the tech sector," she said. "General deficit issues and general economy issues are really going to affect the tech sector. This election I really see as a win/lose for Silicon Valley."
Term limits also forced many state lawmakers to leave office, so many new members will take office next month and begin setting policy. That worries some industry players. "They've got to be experts in every subject matter, and our industry is something people don't really understand," said Roxanne Gould, vice president of California public and legislative affairs at the tech industry group AeA. "There is a significant learning curve" that lawmakers need to overcome.
The Budget Battle
The state's looming $21 billion budget deficit, almost a third of the budget, is expected to be a dominant issue. Main said there will be "tremendous pressure" for policymakers to focus on tax increases, adding that Democrats largely support social programs and could look to balance the budget shortfall on the backs of businesses as opposed to raising taxes on personal income.
With a large chunk of revenue already dependent on income taxes, policymakers are likely to look to the business community, one Assembly staffer said, confirming Main's concern. Sales-tax increases also may be examined, the staffer added, which could impact the sale of tech gadgets.
Arrison noted that the need to remedy the deficit and seek new sources of funding for state services may prompt Davis to backpedal on his pledge not to push for e-commerce taxation. "It's his last term," she said, and "he wants to make up shortfall somehow."
Davis in the past has proposed initiatives that have benefited the tech sector, including a research and development tax credit and a rollback of a tax based on a percentage of companies' net losses. But observers said lawmakers may look to delay the rollback of the latter tax as a short-term boost for state funds.
And budget matters are just one piece of the legislative pie for 2003. Many business lobbyists see the potential for lawmakers to revive isolated tech policy issues. "What's going to happen is that everybody will look at the budget and that will be the top level of focus, but it's so overwhelming they'll spend time focusing on issues they can actually do something on," Main said.
Night Of The Legislative Dead
Privacy is one issue anathema to the tech industry that is likely to re-emerge. Lawmakers who sponsored privacy legislation in the last session were re-elected, and a spokesman for state Sen. Jackie Speier, whose broad financial privacy measure was vetoed by Davis, told Technology Daily before the election that Speier would reintroduce the bill.
A broad coalition of businesses, furthermore, is preparing to lobby against bills favoring "protective orders" that they say would cause irrevocable harm by forcing tech firms and other companies to disclose certain proprietary information in the discovery phase of lawsuits. Republicans in the Assembly and Senate, however few, will make it harder for proponents of the measures to ram them through the legislature, but further debate seems likely, Gould said.
Measures to push fees on electronics products for recycling also may be resurrected. Davis vetoed one bill, citing the need to keep state government costs down, but added that he believes "California should have a new law next year."
But tech industry officials still see Davis as their last line of defense and hope he will sign into law only measures that could help the industry or other business sectors. "I think you will continue to see Davis will indeed veto bills that will do harm," one industry lobbyist said. "He has listened to the business community, and he has listened to Silicon Valley."
NEW FEATURE
-Advertisement-
-Advertisement-
-Advertisement-
