Daily Business Report-May 29, 2019
The 56-page report took aim at Sen. Bob Hertzberg’s SB 522, which would set the stage for updating California’s sales and use tax by expanding the levy to business services.
CalChamber-backed study says service tax
would disadvantage California businesses
By Judy Lin | CALmatters
Aiming to short-circuit an idea that has long captured the imagination, if not yet the votes, of legislators, a study backed by California Chamber of Commerce has found that adopting a business service tax—i.e., a tax on lawyers, accountants and consultants—would hurt the economy and put the state at a competitive disadvantage.
The 56-page report took aim at Sen. Bob Hertzberg’s SB 522, which would set the stage for updating California’s sales and use tax by expanding the levy to business services. Although the concept of a business services tax has been repeatedly blocked—business interests oppose it and SB 522 hasn’t even been heard this year—Hertzberg has been among policymakers calling on the state to modernize its tax structure, and the Los Angeles legislator’s measure could form the basis of an overall tax overhaul in 2020.
Such a rethinking, he says, would reduce budget volatility and capture a greater share of tax revenues in the expanding economy. (Read our explainer on taxes here.)
California has evolved from an agricultural and manufacturing-based economy to one dominated by the service industry. According to Hertzberg’s office, sales and use taxes made up 61% of the state general fund in 1950. Today, they account for only 30%. Meanwhile, personal income taxes accounted for 12% of the general fund in 1950 compared to 70% today.
That tax structure has made state coffers more reliant on the income of high net worth Californians, which can decline dramatically in a downturn. It’s a volatile cycle that tends to create boom-and-bust revenue patterns. Would a business service tax improve that?
Not that much, argues the “Analysis of Sales Taxes on Business Services in California,” which was conducted by Encia Advisors and funded by the California Foundation for Commerce and Education, a nonprofit 501(c)(3) think tank affiliated with CalChamber.
The study found volatility was reduced by 18% assuming the tax applied to all business services and doesn’t depress economic activity. Because personal income taxes make up an outsized share of state revenues, the impact on the sales tax side was minimal.
A staff member in Hertzberg’s office said the study was overly broad because it assumes a service tax would apply to all services rather than limited to business-to-business transactions that companies could then deduct from their federal taxes.
Hertzberg’s bill also aims to make California’s tax system more progressive by capturing services such as accounting, real estate and and litigation, which tend to be used by higher-income residents. The current statewide sales and use tax is 7.25% but local jurisdictions have added taxes up to 3% on top of this rate.
While Hertzberg’s bill doesn’t specify the tax rate, the report assumes a 5% sales tax on all services.
In trying to snuff out talk of a business service tax, the report argues that it would increase costs across economic sectors, create an uneven playing field for California companies to compete with out-of-state firms, and create a tax on labor.
“These problems put California companies at a competitive disadvantage, place a burden on small businesses in particular,” the report states, “and result in higher costs for consumers.”
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General Atomics orbital test satellite arrives at Cape Canaveral
General Atomics Electromagnetic Systems’ (GA-EMS) Orbital Test Bed (OTB) satellite has arrived at Kennedy Space Center, Cape Canaveral, to complete launch preparations in anticipation of launching the spacecraft as part of the U.S. Air Force’s Space Technology Program 2 flight on the SpaceX Falcon Heavy rocket.
“The arrival of the OTB spacecraft at Cape Canaveral marks the start of final preparations and integration on board the Falcon Heavy in anticipation of the launch, bringing our hosted payload customers that much closer to executing their missions,” stated Scott Forney, president of GA-EMS. “This will be our first OTB satellite launch, and we are extremely excited to be delivering new technology demonstrations into orbit that will help drive future space exploration.”
OTB satellites host multiple payloads on a single platform for on-orbit technology demonstration. Among the OTB hosted payloads scheduled for launch on Falcon Heavy is NASA’s Space Technology Mission Directorate’s Deep Space Atomic Clock, designed and built at NASA’s Jet Propulsion Laboratory, which supports deep space navigation and exploration. Additional payloads include: a Modular Solar Array developed for the U.S. Air Force Research Laboratory (AFRL); an Integrated Miniaturized Electrostatic Analyzer sensor payload developed by cadets at the U.S. Air Force Academy; the RadMon next generation radiation effects monitor; FlexRX programmable satellite receiver; and Celestis cremains.
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Renowned physican to speak
at palliative care conference
Dr. Lucy Kalanithi, a Stanford medical school physician and professor and the widow of a New York Times bestselling author, will be the keynote speaker at the fourth annual San Diego Palliative Care Conference at Cal State San Marcos.
The event, titled “Changing Tides: Innovation in Palliative Care,” will take place on June 7 from 8 a.m. to 4:30 p.m. in CSUSM’s University Student Union. The cost for registration is $175 and includes food and parking.
Kalanithi is the widow of the late Dr. Paul Kalanithi, a neurosurgeon who wrote a memoir about his life and his fight against stage IV lung cancer that was published posthumously in 2016, less than a year after his death at age 37. “When Breath Becomes Air” spent 68 weeks on the New York Times nonfiction bestseller list and was a finalist for the 2017 Pulitzer Prize for biography or autobiography. Lucy Kalanithi wrote the epilogue to the book.
Kalanithi is an internal medicine physician and faculty member at the Stanford School of Medicine. She completed her medical degree at Yale, her residency at UC San Francisco and a postdoctoral fellowship training in health-care delivery innovation at Stanford’s Clinical Excellence Research Center.
At the cross-section of her career as a medical professional and her personal experience standing alongside her husband during his life, diagnosis, treatment and death, Kalanithi has special interests in health-care value, meaning in medicine, patient-centered care and end-of-life care. She has appeared on PBS’s “NewsHour,” NPR’s “Morning Edition” and Katie Couric’s Yahoo News show, and has been interviewed by the New York Times, the Washington Post and People magazine, among others. She lives in the Bay Area with her daughter, Elizabeth Acadia.
Kalanithi will be part of a moderated discussion at the conference, and her address will be in honor of Dr. Thomas Chippendale, an Encinitas neurologist who died of lung cancer in 2014.
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Lennar opens newest neighborhood
at Harmony Grove Village in Escondido
Home builder Lennar announced the grand opening of Contessa, the newest collection of homes within the Harmony Grove Village master-planned community in Escondido. California. Regular model home hours at Contessa will be Mondays from 1 to 5:30 p.m. and Tuesday through Sunday from 10 a.m. to 5:30 p.m.
Contessa offers four floorplans ranging from 2,952 to 3,465 square feet, with four to five bedrooms, three to four-and-a-half baths and three-bay tandem garages. The floorplans were thoughtfully designed for growing families, featuring spacious main living areas, large modern kitchens with walk-in pantries, first floor bedrooms and generous master suites.
California rooms with outdoor gas fireplaces and decks off of the master bedroom create additional areas to entertain and relax, all while soaking in Southern California’s enviable climate. Select floorplans at Contessa include bonus rooms that can be used for entertainment, office space or hobbies. All models offer a choice of professionally crafted Cottage, Farmhouse or Hill Country exteriors.
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Biocept awarded patent in China
San Diegp-based Biocept Inc., a commercial provider of liquid biopsy tests designed to provide physicians with clinically actionable information to improve the outcomes of patients diagnosed with cancer, announced that it has been awarded a Chinese patent that covers methods and devices for the capture of rare cells of interest, including CTCs that are shed into the blood stream by solid tumors where an antibody, or mixture of antibodies, and a microchannel are used for cell capture, detection, and analysis. The patent encompasses the use of any biological sample type of interest and is the 33rd patent issued to Biocept that is core to its liquid biopsy technology and commercial testing platforms.
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Cubic installs advanced ticketing
technology for Sydney Metro
Cubic Corporation announced its Cubic Transportation Systems business division has installed advanced ticketing technology for Sydney, Australia’s first Metro train system, which opened for public use on May 26. Driverless trains will arrive every four minutes, carrying up to 18,000 passengers an hour initially, rising to 40,000 an hour further down the line.
The Cubic equipment includes 101 new Opal contactless ticketing gates allowing mobile phones and credit cards to pay for travel, as well as a unique Remote Station Device Management (RSDM) system for controlling the gates. Operators in the Metro’s Operations Control Center will use “eyes on” technology to open and close individual gates to speed up commuter flow during peak periods.
“It is important to ensure customers get on board as quickly and conveniently as possible,” said Tom Walker, senior vice president and managing director of Asia-Pacific, Cubic Transportation Systems. “As train passenger numbers increase in major cities, one of the dilemmas is how to get more commuters through stations more quickly, without just adding more gates.”
To solve this problem, Cubic utilizes remote monitoring to get more use out of existing hardware. “The Sydney Metro will be one of the most modern automated passenger train networks in the world and we are honored to have been involved in this landmark project,” said Walker.
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Easterly Government Properties sells its
U.S. Customs and Border Protection facility
Easterly Government Properties Inc., a real estate investment trust focused primarily on the acquisition, development and management of Class A commercial properties leased to the U.S. government, announced that it has sold its 59,322-square-foot U.S. Customs and Border Protection (CBP) facility in Chula Vista.
Constructed in 1998, CBP – Chula Vista is a build-to-suit property that serves as the San Diego Sector headquarters. The facility covers all of San Diego County and oversees eight CBP stations in various submarkets for total coverage of 7,000 square miles. The facility is 100 percent occupied by CBP and the lease was recently renewed for a 10-year term, expiring in 2028.
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San Diego Regional Chamber announces
2019 Small Business Award winners
From educating San Diegans about the environment to helping service members and their families start a business, six local small businesses have earned awards for their outstanding work in our region. The San Diego Regional Chamber presented the honors at the 2019 Small Business Awards held May 23.
Small businesses – those with fewer than 50 employees – employ half of San Diego’s workforce and account for more than 90 percent of businesses in San Diego County.
This year’s Small Business Awards were presented to an audience of 200 attendees at the Shiley Special Event Center at the San Diego Central Library. The 2019 Small Business Awards winners are:
Walden Family Services & The Water Conservation Garden – Tie as winners of the Making a Difference award for organizations dedicated to helping others and making a positive impact.
- Walden Family Services is a nationally-recognized foster care, adoption, and youth services agency providing programs that lay a new foundation for lives impacted by traumatic experiences and redirect young lives from pain to prosperity and happiness.
- The Water Conservation Garden inspires positive change in the living environment by providing a safe, natural environment to explore and discover plants and animals with hands-on exhibits that foster a direct connection to the environment, creating informed and engaged children and adults.
UPS Store on Park Blvd – Winner of the Customers First award for providing exemplary customer service. The UPS Store is a family-run business dedicated to going the extra mile for their customers and serving as a resource for community members. Their customer-centric culture has earned them many loyal and repeat customers, business partnerships, and extensive positive reviews.
Cravory Cookies – Winner of the Innovation Leader award for an organization that has shaken things up in its industry with creative forward-thinking and innovation. Cravory Cookies started in 2009 as a farmer’s market stand and has grown to three brick-and- mortar locations across the county. The company’s creative cookies are revolutionizing the sweet treat industry with more than 4,000 unique flavors.
Knockaround Sunglasses – Winner of the Marketing Magic award for a creative marketing or promotion campaign that led to measurable success. Knockaround is the original, affordable sunglasses company founded in San Diego. To help create a name for themselves in an industry dominated by big brands, Knockaround partnered with the rock band Weezer to create a limited edition pair of sunglasses in celebration of the band’s new album.
The Rosie Network – Winner of the Thank You For Your Service award for work to benefit San Diego’s veteran, active duty, and service member communities. The Rosie Network strengthens military families through the most fundamental of American activities: starting and growing a businesses. Using a personalized approach, The Rosie Network provides no-cost training, resources, and mentorship to help service members and their families gain financial success and stability.
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Personnel Announcements
Monica Miller joins STM Brands
STM Brands, a leader in the creation and production of innovative bags, cases, and accessories for consumer electronic devices, announces the addition of Monica Miller as senior industrial designer in San Diego. STM Brands is the parent company of two global brands: STM Goods (backpacks, briefs, and cases for digital gear) and Element Case (premium cases for wireless phones). Miller is an industrial designer and manager with experience in both soft goods and hard goods. Prior to joining STM, Miller was an industrial design manager for a sporting goods company where she was responsible for managing product development, coaching designers, developing product processes and more. Miller attended University of Illinois at Urbana-Champaign where she studied Industrial Design.
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The Oz-themed San Diego County Fair
opens Friday at the Del Mar Fairgrounds
The 2019 San Diego County Fair opens Friday at 4 p.m. at the Del Mar Fairgrounds with a theme inspired by L. Frank Baum’s classic tale, “The Wonderful Wizard of Oz.”
The Del Mar Fairgrounds has transformed into an emerald city full of tasty treats, flashy entertainment, adorable farm animals, scream-worthy carnival rides, fantastic festivals, goofy competitions and endless opportunities for fun through July 4. It simply wouldn’t be summer in San Diego without this iconic fair, which draws approximately 1.6 million visitors annually and is one of the top three fairs in the United States.
You’ll find plenty of new attractions, including: mobile ticketing for rides and games, esports competitions, balloon rides and some new treats (deep-fried crème brulèe or Flying Monkey Caramel Corn, anyone?)
WHAT’S NEW AT THIS YEAR’S FAIR:
Get your FunPass and FastPass
The new FunPass will streamline the carnival ride pass process and make it easy to ride rides and play games with the scan of your phone or a card. The FunPass can be pre-loaded with digital ride and game tickets that are scanned and deducted from the card or app without needing individual paper tickets. Parents can even buy FunPass tickets and send them to their kids through the app. If all the tickets aren’t used in one day, they can be saved for the next visit.
The FastPass, which costs $20 per person, allows fairgoers to use a special lane to skip to the front of the line at rides. A limited number of these passes will be sold daily and can only be purchased at the Fair’s box office.
And speaking of rides …
There’s a new ride in town: The Endeavour. It’s an open-air suspended passenger vehicle that sends fairgoers flying 60 feet through the air at 25 miles per hour! It joins the Fair’s 80+ rides which include the always popular Big Wheel, Crazy Mouse Roller Coaster and Sky Ride. There are plenty of ride package specials to get more thrills for your bills – go to sdfair.com for information on admission/ride packages and “Pay One Price” ride days.
Up, up and away!
For the best bird’s eye view of the Fair, hop in a hot air balloon, offered by Magical Adventure Balloon Rides & Aerial Tours. Rides will launch from the Fair in the evenings, beginning at 5 p.m. For $211 per adult, you’ll get views of the Fair, the ocean, Del Mar and you’ll enjoy plenty of treats on board.
The FOOD
Creative bites are always a star of the Fair, and whether you’re on the hunt for deep-fried favorites, healthy snacks or unique Oz-inspired foods, there’s more palate-pleasing options than you can imagine. Can’t choose just one? Try out “Taste of the Fair” on Thursdays where you can buy taster portions of delish Fair foods for just $3.
Here’s a sampling of the new foods you’ll find at the Fair this year:
Deep-Fried Crème Brulèe and Buffalo Chicken Chimichanga – Chicken Charlie’s
Wicked Witch’s Sriracha Ceviche – S.D.’s Original Fish and Chips
Flying Monkey Caramel Corn – Kettle Corn
Wizard of Oz Waffle Pizza – Pignotti’s
Auntie Em’s Brownie – Mom’s Chocolate Chip Cookies
Hot Cheetos Potato – Spud Shack
Ruby Red Lemonade – Hot Dog on a Stick
Candy Funnel Cake – Funnel Cake Express
Yellow Brick Smoothie and Ruby Red Smoothie – Rainbow Treat
Fried Bacon Plantains – Bacon a Fair
Blizzard of Oz Frozen Hot Chocolate – Crutchees
Emerald City Pizza Balls – Linda’s Pizza
Scarecrow Dog – Pink’s Hot Dogs
Get your game on
Our new interactive video game exhibit will share information about the growing and wildly popular esports industry. Located in 17 Hands Restaurant & Bar, this interactive esports exhibit will feature eight Nintendo Switch consoles hooked up to TV monitors, a gaming PC and arcade machines. Informative sessions hosted by esports specialists will explain the structure of this growing industry.
Oz-some theme
At this year’s new theme exhibit, you’ll get to take a peek behind the scenes of the 1939 MGM film and see original props on display from the private collections of USC and the Wamego Oz Museum including a Munchkin jacket that was worn during the film. There are 11 Instagram-worthy selfie spots, to boot.
If you think you’re a trivia wizard, join in our daily “Ask the Wizard” show and on weekend nights, you’ll have a wicked good time with the Flying Monkey Electronic DJ area.
It’s all about the music
Music always takes center stage at the San Diego County Fair. There are 27 nights of entertainment on the Corona Grandstand Stage featuring Pitbull, Toby Keith, Smokey Robinson, Lindsey Stirling and KC and the Sunshine Band, just to name a few. Your ears are also in for a treat at the Paddock Concert Series and Solid Gold Concert Series. To explore the full line-ups, go to sdfair.com/concerts.
You can park for FREE at off-site lots at Torrey Pines High School and MiraCosta College San Elijo. For more parking information, go to sdfair.com/parking.
