CA Sales Tax decrease/Local Gov Budgets/ AB103 Enterprise Zone

Fortunately for California residents and businesses, the emergency 1% sales tax increase passed by the State Legislature will expire on June 30, meaning that in July we will pay less for everything that we buy at the register. In addition, Utility Telephone will be able to be a little more competitive because Use Tax, which is assessed on millions of dollars of equipment that we buy for our network and our customers, will cost a little less. Anything California can do to increase its competitiveness is good for the residents of this state. We operate in both CA and NV and I’d like to see both states be as globally competitive as possible and keeping operating costs like sales tax under control is very important. Higher taxes on equipment purchases means plants and factories cost more. We need to keep manufacturing jobs here wherever possible. I think we have shown that purely service-sector jobs in any single industry is bad for local economies. We need a diverse economy to stay healthy and avoid a downturn in any particular industry from decimating our employment numbers.

However, this sales tax decrease will mean less money for local budgets, and folks from every county and city will be scrambling to make up the shortages in the near term. My hope is that Utility Telephone could be part of these local governments plans to save money on their telecom costs. About six weeks ago, because our headquarters is in Stockton, I mailed letters to every City Manager of every incorporated city in the county and the County of San Joaquin urging them to allow Utility to analyze their telecom expenses or at least get to know them better for a future relationship. Two of the cities are or were current customers, but for very small pieces of their total telecom budgets. I even reminded them that the County Board of Supervisors amended their procedures to urge the “buy local” mentality in the buying habits of the county. I have not received a single response. At the State of the City address in Stockton in May, “buy local” was the almost singular message, very nearly the mantra of the Mayor in her address. The head of the Stockton Chamber of Commerce even spoke of how he “always” buys local whenever possible. We are the only locally owned telecom carrier and have had no success with any government accounts. I can’t help but feel frustrated a bit. Working with government is never easy, as any of their vendors will tell you. Even after the long sales cycles and politics and paperwork, you call them after being their vendor for 3 years and ask why they are 90 days behind, and they ask “what exactly do you sell us? We don’t know how to pay this invoice.” Still, I think that we have a valuable message: “We sell savings. We help thousand of businesses stay in business. We could help cities and counties too.” We’ll keep pushing; maybe someone will listen eventually.

Some disappointing news, comes in the form of AB103, a bill in the state Assembly potentially destroying the Enterprise Zone tax credits that are a big part of where Utility has located its headquarters and how many of what type employees we have been able to hire. I realize the state budget is in crisis, and what is described by detractors as “corporate welfare” seems like an easy target with great political “feel good” value. However, this is a great program which helps keep California competitive. Other states have similar programs in one way or another, and California is already the most expensive state to operate in on the west coast. The employee training programs, which encourage employers to keep people on and to locate their offices and equipment in areas of the state which are “run-down” (to put it nicely) are important. While the effectiveness of “trickle-down” economic theories of tax cuts for the rich are much debated, giving incentives directly to employers for hiring new employees and buying equipment including computers is less doubtful, in my opinion at least. Do you own research and if you agree with me, send an email to your State Assemby member and State Senator in case in gets to a full vote. Your opinion matters.