A capitol battle: industry swarms to Sacramento in lobbying blitz

A capitol battle: industry swarms to Sacramento in lobbying blitz – California state Capitol, restaurant industry lobbies against health-care insurance legislation

Alan Liddle

Industry swarms to Sacramento in lobbying blitz SACRAMENTO, Calif. — Alarmed that pending legislation could cripple their businesses and lead to widespread layoffs, more than 160 California restaurateurs and suppliers descended on the state Capitol to plead their case and otherwise buttonhole and cajole lawmakers.

Topping the list of concerns mentioned by most of the amateur lobbyists were bills that would require employers to provide workers with health-care insurance.

But skyrocketing workers compensation insurance costs and threatened reductions in the business meal deduction also troubled many operators.

“We’re at the point where the employer community is going to get really mad,” Pasadena operator Michael R. Hawkins warned Sen. Newton Russell during a meeting in the Republican legislator’s Capitol office. “I’ve talked with other restaurateurs about a work stoppage. If we close for lunch, it will hurt us but the loss of sales tax will hurt the state even more.”

Russell, cheering the local industry’s growing resistance to unreasonable workplace legislation, replied supportively, “I hope it doesn’t come too late.”

The swarm of hospitality professionals that moved through the Capitol were invited there by the California Restaurant Association in conjunction with its fourth annual Lobby Day.

Participants represented large corporations, including Harman Management of Los Altos, KFC’s largest privately held franchisee, with more than 200 restaurants; contemporary independent establishments, such as the Cypress Club of San Francisco and Chez Melange of Redondo Beach; and everything in between, from Beadle’s Cafeteria in Pasadena to Picasso Take ‘N Bake pizza of Eureka.

Especially threatening to the group were Assembly Bill 2001 by Democratic Assembly Speaker Willie Brown Jr. and Senate Bill 248 by Republican Kenneth Maddy. Both of the measures are legislative versions of a proposed California Medical Association ballot measure that would require employers to provide part-time and full-time workers and their dependents with health insurance and pay a minimum of 75 percent of the premiums.

“We’re here to let our legislators know how we feel about actions that are life-threatening to our businesses, to let them know about the real grind at ground level,” explained Lawrence Lazio, president of Lazio’s Seafood Restaurant in Eureka, a coastal community in Northern California.

Lazio drove more than 300 miles to attend Lobby Day in the company of three other Eureka area operators: Steve Dolfini, vice president of nine-unit Redwood Restaurants; Brian A. Baku, general manager of Picasso Take ‘n Bake Pizza; and Bill Carson, assistant manager of the Eureka Inn.

Referring to mandated health insurance proposals, Dolfini remarked, “You can almost live with the other [bills], but you can’t live with that.”

“I firmly believe everyone deserves health coverage, but I don’t believe small business should pay for it,” Baku added.

Carson estimated that he would have to lay off about 60 of his 100 foodservice employees if the toughest of the mandated health insurance proposals pass.

“It’s fair to say that if mandated health insurance comes to be, none of these companies would show a profit,” Lazio concluded, drawing nods of agreement from the group.

Hawkins of the Green Street Restaurant in Pasadena and five other Southern California foodservice colleagues ventured 400 miles north to meet with their elected representative, Sen. Russell. The operators said they were well-acquainted with Russell and believed him to be a “friend” of the industry. Nevertheless, they wanted “to set him straight” on the costs they could incur if they are mandated to provide workers with health insurance and pay for it.

Showing Russell a breakdown of his restaurant’s current health insurance costs and “conservative” projections of what mandated programs could cost employers, Hawkins demonstrated that a mandate could more than triple his annual health insurance costs from about $74,000 to $223,000.

The restaurateur pointed out that a mandate could lead to a vicious cycle of price hikes. He reasoned that his suppliers probably would raise prices to cover their increased costs, which would force him to raise menu prices to protect already thin margins, which could lead to higher rent based on a percentage of sales, which could drive menu prices even higher.

The cumulative impact of the price increases, Hawkins said, could be a decline in customer traffic and gross sales as consumers decide they can’t afford to eat out.

“Ultimately, it [costs associated with mandated health insurance] is going to hurt sales-tax collection, and the projected state budget deficit will get worse and worse,” he declared.

Dennis M. Landis, a Marie Callender’s franchisee from Fairfield, who sat in on the visit with Russell, outlined what he would do if A.B. 2001 or S.B. 248 wins approval.

“My basic reaction to those bills, if they passed, would be to eliminate all of my part-time employees; they represent roughly 30 positions,” the family restaurant operator said.

Landis and others in the group told Russell that the best way to put health-care insurance within reach of people now without coverage is to contain ever-rising medical costs. Containment, they argued, could lower premium costs to the point where most small businesses could afford to cover their employees.

Jo-Linda Thompson, the CRA’s senior director of government affairs, discussed the association’s stand on mandated health insurance proposals earlier in the day during a briefing with operators at A Shot of Class, a restaurant near the Capitol.

“Our position is |no’ on mandates; do cost containment first,” Thompson declared.

She suggested a response for restaurateurs who find themselves confronted by lawmakers arguing that a mandated insurance program needs to be enacted and achieve a critical mass before efforts can be made to contain health-care costs.

Observed the CRA official: “We’ve had that experience [and heard that argument] with workers compensation insurance. Everyone is in that system, and costs are out of control.”

Kevin T. McCarney of Poquito Mas, a “Fresh Mexican Cuisine” concept out of Universal City, is a keen observer of the workers compensation insurance system in California. He is a member of the Independent Business Coalition Against Workers Compensation Fraud, a group trying to bring reform to the state system, which has been plagued in recent years by rising rates resulting, in part, from widespread incidents of fraud, particularly fraudulent “stress” claims.

“If we don’t get workers-compensation reform this year, California is over for a lot of us,” McCarney stated during a break in his Lobby Day tour of legislative offices. “Without change, many people might close down their businesses and move elsewhere.”

Every time Burger King franchisee Ella A. Smothers’ Los Angeles business is named in a workers-compensation claim, she mails copies to her elected representatives.

“When I get them [claims], they [lawmakers] get them,” Smothers said. Explaining why she goes to the trouble, she added, “I can’t believe that anyone who reads these claims will sit back and do nothing about reforming the system.”

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