Facing Recall Anger From Shop Owners, Newsom Touts Small Business Roots

Moments after Gavin Newsom was sworn into a seat on the San Francisco Board of Supervisors in February of 1997, he promised that his experience running a small business would be the north star for his new life in politics.

"I have a unique perspective standing before you today," said the 29-year-old supervisor who "pledged to bring the board the benefit of his business background," as reported by the San Francisco Examiner at the time.

Newsom's experience running a wine store and restaurants are central to the political origin story California's governor still tells about himself today: the tale of an aspiring entrepreneur who railed against a stifling bureaucracy, until San Francisco's mayor at the time figured it would be better to have Newsom's persuasiveness and ingenuity inside the tent rather than outside complaining.

"That guy Willie Brown was angry with me and shut me up by making me chair of the Parking and Traffic Commission, and here I am, it's all damn connected," said Newsom, at a press conference on small business relief held last month in Oakland.

Even after decades in politics, Newsom maintained that "my identity is probably more, in terms of my own consciousness, in the context of right out of college opening a small business."

But nearly a quarter-century after Willie Brown appointed his protégé to the Board of Supervisors, launching his ultimate ascent to the governorship, Newsom is facing perhaps the most serious test of his political career. A recall election to remove him from office will take place on Sept. 14, driven in part by small business owners who say the governor treated their survival as an afterthought during his response to the COVID-19 pandemic.

Small Business a 'Driving Force' in Recall

In the campaign to get the recall question on the ballot and passed, "small business owners have been a driving force," said Orrin Heatlie, the former Yolo County sheriff's sergeant who started the recall petition in early 2020. "They’ve been shut out and put out of business."

Heatlie said independent shops around California served as designated locations for petition-signing, helping qualify the recall. And videos of anguished shop owners, like Sherman Oaks restauranteur Angela Marsden, became viral symbols of anti-Newsom anger.

As he campaigns to fight off the recall attempt, Newsom hopes his relief plans can ease the pain of proprietors who are struggling to stay on their feet after a year of closures and restrictions.

“The COVID-19 crisis has absolutely decimated small businesses all across the state," said Assemblywoman Cottie Petrie-Norris, D-Laguna Beach, chair of the Select Committee on Small Business and Entrepreneurship, at a hearing last week. "Thousands of California small businesses have closed their doors forever, thousands more are teetering on the brink.”

Newsom's pandemic restrictions have been credited with saving thousands of lives, and giving California a lower death rate than comparable states which had more open economies.

But many small businesses were left on shaky footing through multiple rounds of tightening rules and a tiered reopening plan that some found difficult to plan around.

“We’ve had a lot of sputtering — starting and stopping and then starting again and stopping," Dr. Robert Fairlie, professor of economics at UC Santa Cruz, told the committee. "That’s been really difficult for small businesses and we had not seen that [in previous economic downturns]."

Calaveras County Shops Open Doors to Recall

In addition to the feeling of whiplash, business owners like Gretel Tiscornia, of Calaveras County, thought the state's rules were giving big business a leg up early in the pandemic.

"You have places like Walmart and Costco that are open all the time, serving hundreds of people in a short amount of time," she said. "Super contradictory."

Tiscornia runs The Pickle Patch, a restaurant in San Andreas, and Mingos on Main, a gift store in Angels Camp, where the historic main street of 19th century buildings with rhyolite walls evokes the region's Gold Rush legacy.

When Newsom announced a second stay-at-home order in December, Tiscornia ignored it — keeping her restaurant open for outdoor dining. As anti-Newsom sentiment rose in the weeks after the governor violated his own guidance by dining at The French Laundry restaurant, Tiscornia made the recall petition available to customers at her stores.

"Sometimes they came in just to sign that, they didn't have lunch, they didn't buy anything," said Tiscornia, who now serves on the Angels Camp City Council.

Eight miles to the northeast, in the bustling village of Murphys, Russell Irish is seeing visitors steadily return to his wine tasting room, Irish Vineyards. But things looked bleak last winter, when the shutdown order came just as Russell was catching up on his back rent payments.

Another closure would have meant potential bankruptcy, and a likely move out of the state, said Russell. Like Tiscornia and other local shop owners, he kept his doors open, and served as a hub for recall petition signing.

"I just wanted to be part of the recall," he said. "You can’t get a recall done or anything else done politically unless you have help. And for us to be a base for that help — where anybody from this area could come sign a petition — that’s where I felt like, sure, open my doors, come on in, sign it."

Recall organizers say roughly 900 business owners across California hosted petition-signing in their shops, helping fuel the grassroots movement against a governor who they feel abandoned his small business roots.

"I don't know if Newsom ever can be considered one of us," Tiscornia said.

A 'Point of Pride' for the Governor

In recent weeks, as Newsom has traveled across the state to pitch his small businesses relief plan, he's argued that his personal history makes him uniquely qualified to help store owners recover from the recession.

After all, to find California's last governor who jumped from running a business into politics, you'd have to go back to James Rolph, the shipping and banking entrepreneur who was elected mayor of San Francisco, and then governor, in 1930.

"It’s a big point of pride, it’s personal for me," said Newsom, after a visit to a San Francisco restaurant in June. "I can’t express to you how many extraordinary things have happened in my life because I had the privilege to be behind a counter, serving other people."

Political consultant Ellie Schafer, who ran Newsom's first ever campaign in 1998, for supervisor, remembers a candidate intent on bringing relief to small business owners butting heads with city bureaucracy.

"His focus was on small business, and that was really something that he ran strong on," said Schafer, founder and president of South Lawn Strategies.

Unlike your average shop owner, Newsom had well-publicized connections to some of San Francisco's elite families. Oil heir Gordon Getty was among the early investors in Newsom's first shop, PlumpJack Wine & Spirits. But Schafer said Newsom still dealt with bureaucratic hurdles in getting his early businesses off the ground.

"His philosophy at the time was like, 'If I'm running up against these roadblocks and I have the leg up that I have, what are other people who don't have these advantages running up against?' " Schafer recalled. "And he really, truly wanted to make their lives better."

In that first campaign, Newsom even saw fixes to the city's Muni metro system – the top issue for voters – through an entrepreneurial lens. He wrote a ballot measure requiring city departments to create annual "customer service plans," an idea which was approved by voters as Newsom won a full-term on the board.

Now, as a governor presiding over California's flush budget coffers, Newsom is directing relief checks to businesses and waiving regulations in hopes of spurring a small business recovery.

Can Grants to Businesses Spur Recovery?

This spring, the governor signed executive orders extending the allowance of parklets for outdoor dining and the sale of alcoholic beverages to-go — and approved a tax cut for shops that received federal loans.

And the state budget he approved earlier this month added $1.5 billion to a small business grant program that his administration launched in December — making a total of $4 billion in grants available to companies making less than $2.5 million in annual revenue. So far, 155,471 small businesses and nonprofits have received over $1.8 billion in grants.

"California is leading the nation in this type of relief grant program for small businesses," Tara Lynn Gray, director of California’s Office of the Small Business Advocate, told assemblymembers last week.

Tyranny Allen, co-owner of BeastMode Barbershop in Oakland, is among the entrepreneurs applauding Newsom's investment in small businesses. His barbershop, created in partnership with NFL running back Marshawn Lynch, opened just before the pandemic hit and was closed for 11 months. Because the shop's barbers are independent contractors, not employees, the business was ineligible for federal loans.

Despite the closure, Allen said he doesn't harbor any resentment toward Newsom, who visited his shop last month on a tour of local small businesses.

"We shouldn’t blame the government, we shouldn’t blame Gavin Newsom, can’t blame the president," Allen said. "We have to come together and I think that’s the most important thing for us to do is come together as far as businesses are concerned."

Even with the state relief, the road to recovery will not be smooth for all business owners across the state. Advocates for independent store owners say Newsom will need to commit to boosting small businesses, even if he puts the recall in the rear view mirror.

One looming concern: commercial rent bills. During the pandemic shutdowns, most small businesses were only given a rent deferment by their landlords, not a reduction, said Mike Daniel, regional director of the Orange County Inland Empire Small Business Development Center, at the Assembly committee hearing.

"That’s where most businesses are at right now, is that deferment is now coming due," he said. "As [grants] start to subside and go away, what is next?"