For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “All the people are on the same side now: pagans, Christians, Democrats, Trumpsters. Our community is bonded by our love of the area.”
Brandy McDaniels, Pit River Tribe member, opposing new state law mandating renewable power projects
- Governor Freezes State Spending
- State Budget Deficit to Spark Progressives’ Battles Over Spending:“Something Will Have to Give”
- Gas Tax Revenue Drops; State Must Find $6 Billion Annually to Fix Roads
- Increasing Food Insecurity Adds to Upcoming Budget Fight
- Newsom Releases Final Delta Plan to Re-Plumb California Water
- North State Rebels Against Mandatory Renewable Power Siting Law
Capital News & Notes (CN&N) harvests California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING DEC. 15, 2023
Governor Freezes State Spending
Bloomberg
Governor Gavin Newsom ordered a spending freeze as the state’s projected budget deficit ballooned to $68 billion for the next fiscal year — almost five times higher than the initial forecast.
State agencies should cut spending on everything from office supplies to computer equipment and halt all non-essential travel, Newsom’s Department of Finance said in a letter posted to its website late Tuesday. The freeze also restricts purchases of new vehicles and other equipment.
Government entities “must take immediate action to reduce expenditures and identify all operational savings achieved,” budget director Joe Stephenshaw said in the letter.
The deficit for the fiscal year that begins in July is tied to the waning fortunes of California’s wealthiest taxpayers, who pay the bulk of personal income levies, the state’s largest revenue source. The shortfall is forcing the government to consider cuts to key services, including schools, and to weigh tapping budget reserves.
“Issuing this letter now gives us a head start on the budget process by using the governor’s executive authority to get agencies to cut back on nonessential spending,” said H.D. Palmer, a spokesman for the state finance department. “We have roughly seven months left in the fiscal year, so by taking this step now and by getting ahead of the process, we can achieve cost savings that will contribute to closing the budget gap.”
The Newsom administration originally projected a $14 billion deficit in the upcoming fiscal year. In January, Newsom will present a detailed budget proposal.
The last time California ordered state agencies to freeze spending was in spring 2020, when the state was concerned that pandemic-related restrictions would reduce tax revenues.
https://www.bnnbloomberg.ca/california-orders-spending-freeze-on-68-billion-budget-deficit-1.2011353
Dept. of Finance Budget Letter to All State Agencies:
https://dof.ca.gov/wp-content/uploads/sites/352/2023/12/BL-23-27-Current-Year-Expenditure-Freeze.pdf
State Budget Deficit to Spark Progressives’ Battles Over Spending:
CalMatters commentary from Dan Walters
Seemingly, California is a deeply blue state in which Democrats hold virtually all of the levers of political power, including all statewide offices and three-fourths of the Legislature’s seats.
However, California’s most frustrated political bloc these days are the progressives who yearn to remake the state into a model of economic and social egalitarianism with an extensive array of free or low-cost services ranging from universal health care and family income supports to child care and higher education.
Their movement seemed to be making some gains last year when Gov. Gavin Newsom, outwardly the most progressive governor in history, was bragging about a $97 billion state budget surplus and approving expansions of child care, health coverage for undocumented immigrants and other points of the progressive agenda.
It was a fleeting moment at best.
The massive surplus has since become a massive deficit – $68 billion according to the Legislature’s budget analyst – while Newsom has been drifting toward the political middle as he concentrates on building a national profile. He talks a lot more about fighting street crime these days than his 2018 campaign pledge to bring single-payer health care to the state.
Progressive groups are now lamenting that they have been unable to realize their many goals and sounding the alarm about losing ground despite having, on paper, a state government full of vocal allies.
“Why are we coming up short?” Dr. Manual Pastor of USC’s Equity Research Institute said during a roundtable discussion Tuesday aimed at forging a new coalition of progressive organizations to push for change.
“This is the work of our generation,” Henry A.J. Ramos, a senior fellow for the Institute on Race, Power and Political Economy, said.
“While solidly Democratic, California still hasn’t lived up to its progressive reputation in terms of real policy change,” Ramos and another seminar participant, attorney and organizer Robb Smith, wrote in Capitol Weekly a few months ago. “Why not, when we have such a large pool of left-leaning voters? Because securing long-overdue social and economic justice reforms across our state will require a much greater focus on coalescing voters to first approve structural changes in state governance.”
The term “structural changes” means contesting state laws, some of them in the constitution, that make it difficult to raise taxes that would be needed to finance the movement’s agenda, even if the state didn’t have a big budget gap.
The same lament is also found in another appeal this week from the California Earned Income Tax Credit Coalition, which supported the state’s initial efforts to raise incomes of poor families by giving them refundable state tax credits.
The coalition, citing rising levels of poverty, called on legislators to protect the tax credit and other programs to support poor families as they deal with the state’s huge budget deficit – by raising taxes if necessary. The coalition specifically supports Senate Bill 220, which would increase corporate income taxes.
Legislative leaders have issued pro forma assurances that they will protect vital programs as they deal not only with the $68 billion current deficit but projections of multibillion-dollar shortfalls for years to come. However, something will have to give – unless they muster the will to raise taxes on corporations and the wealthy that progressives seek.
Newsom has adopted a no-new-taxes mantra as he moderates his national image, but he also opposes a business-backed ballot measure, scheduled for the November 2024 ballot, that would make it even more difficult to increase local and state taxes. Its passage would be the ultimate setback for progressives who already feel stymied.
https://calmatters.org/commentary/2023/12/progressives-frustrated-agenda-blue-california/
Gas Tax Revenue Declines; State Must Find $6 Billion Annually to Fix Roads
CalMatters
California’s funding from gas taxes will drop by nearly $6 billion in the next decade due to the state’s electric car rules and other climate programs, “likely resulting in a decline in highway conditions for drivers,” according to a new state analysis released today.
As California phases in major policies aimed at reducing greenhouse gas emissions — such as the mandates for zero-emission cars and trucks — consumers buy less gasoline and diesel, and consequently pay less taxes.
Those declines in tax dollars will be partially offset by the state’s road improvement fee, which drivers pay when they register their electric cars. But the Legislative Analyst’s Office stressed that overall the state will still see a $4.4 billion drop in funding, a 31% decline, over a decade, so the Legislature and governor must come up with substantial new funding sources.
Unless the drop is accounted for with new fees or other funding, there would be substantially less money for highway programs as well as local road maintenance, the analysts wrote. Work supporting buses, trains and other public transit options across the state also would face drops in funding.
“As the state tries to meet its ambitious climate goals through the adoption of zero emission vehicles, and greater fuel efficiency within conventional vehicles, the report finds that we’ll see a decline in fuel tax revenues,” said Frank Jimenez, a senior fiscal and policy analyst with the office.
Fuel taxes and vehicle fees fund about a third of state spending on transportation. This year’s budget, passed in June, includes about $14.2 billion in state funding for transportation.
The report projects declines of $5 billion, or 64%, in the state’s gasoline excise tax, $290 million, or 20%, in the diesel excise tax and $420 million, or 20%, in the diesel sales tax, over the next decade.
Highway maintenance is funded primarily by the fuel taxes “and therefore will face significant funding declines,” the report says. “…We project funding for these programs will drop by roughly $1.5 billion (26 percent) over the next decade, from $5.7 billion to $4.2 billion.”
The state’s transportation agency, Caltrans, declined to comment. “Caltrans is reviewing the report but does not comment on potential legislative proposals,” a spokesperson said.
Lawmakers could make up for the shortfalls in many of these programs by spending less on transportation, but that would likely mean worsening roads and highways, and also some public mass transit cuts. They might also consider further increasing gas taxes or vehicle fees. But that might have an outsized impact on the state’s lower-income communities, who are expected to adopt zero-emission vehicles more slowly as middle- or higher-income Californians.
Lawmakers also could consider using other state funds for transportation or implementing a road charge, which would tax people based on the number of miles they drive.
https://calmatters.org/environment/2023/12/gas-tax-revenue-drop-climate/
Increasing Food Insecurity Adds to Upcoming Budget Battle
CalMatters
Food insecurity in California ticked upward over the past year, bringing the share of hardship back up to levels early in the COVID-19 pandemic, according to data released by the California Association of Food Banks on Tuesday.
“Families are buying less food,” said May Lynn Tan, the association’s director of research and strategic initiatives, who conducted a survey of food aid recipients this summer. “They’re running out of food, not being able to afford nutritious meals, and worrying more about food.”
Advocates credited a pandemic-era federal aid program that gave food assistance recipients more money for groceries for pulling food insecurity below 20% of California households between 2021 and 2022. The additional aid, Tan said, helped recipients buy healthier food and become more financially stable.
As prices soared last year, food insecurity spiked. Then, the boost in federal aid ended in April. By October, more than 1 in 5 California families — more than 3.1 million households, including 1.1 million with children — were steadily reporting uncertain access to food, according to Census data analyzed by the association.
Anti-poverty advocates had feared a rise in hunger after the end of the aid boost this year, which affected the nearly 3 million California households that receive CalFresh, the federally-funded food stamps program.
For three years the program had given all families receiving CalFresh the highest possible amount of food assistance for their family size each month, with $95 on top for those already receiving the maximum.
When the program reverted to ordinary aid levels, the decrease was anywhere from 32% to 40%, depending on the recipient, according to the food banks association. In a survey the association conducted over the summer, more than two-thirds of the state’s food banks reported increases in the number of clients seeking meals and groceries.
The uptick in food insecurity also follows an increase in poverty last year, triggered by the end of a different pandemic-era policy.
A one-time, yearlong expansion of a tax credit program in 2021 sent thousands of dollars to most families with children and pulled child poverty levels down to historic lows; after it ended, poverty spiked again.
Both trends are likely to be the basis of advocates’ calls next year for California to expand safety net spending, even as the state faces a projected $68 billion deficit in the 2024-25 fiscal year. That’s double the budget hole California plugged this year.
The food insecurity data was outlined by the food banks association Tuesday as it gears up to lobby for the expansion of assistance programs next year, including increasing funding for food banks to buy California produce to distribute to clients and supplementing the federally-funded CalFresh (food stamps) program with state dollars.
“It does look like a tough budget year next year but I don’t think that changes our strategy,” said Becky Silva, the association’s director of government relations.
It’ll be a tough sell.
MORE:
Newsom Releases Final Delta Plan to Re-Plumb California Water
Sacramento Bee
California’s water agency released a final report on the controversial plan to build a tunnel beneath the Sacramento-San Joaquin River Delta. The highly anticipated document is expected to lead to approval of the water project.
The environmental impact report said the tunnel’s construction and operations would significantly impact the Delta’s endangered and threatened fish species, tracts of important regional farmland and tribal cultural resources that include human remains.
State officials say some of those impacts will be mitigated, and that the Delta Conveyance project is needed to slow a long term decline in water supplies by capturing more during intense storms for southern California cities and farms.
“This is a project that generates a lot of controversy and intense feelings,” said Karla Nemeth, director of California’s Department of Water Resources. “But it’s just one part, a very critical part, of how we put together California’s water system to ensure that communities have a secure water supply into the future.”
“The angst of it will always be there, and I want to be very respectful of that,” said Nemeth. “But I also believe that this project has done enormous work and has put a lot more details on the drawing board.”
This final, two-volume report outlines the proposed path of a 45-mile tunnel that would pipe water from the Sacramento River, bypassing the Delta, and funnel it into Bethany Reservoir, the “first stop” on a state aqueduct that carries water south. It’s an updated version of a draft environmental impact report released last year, including responses to hundreds of public comments.
The final report’s release concludes a lengthy process under the California Environmental Quality Act and a major step toward finalizing a plan to overhaul the state’s system of water management.
The report summary said the project and proposed alternatives would result in significant impacts to winter-run and spring-run Chinook salmon, Central Valley steelhead, and Delta and Longfin smelt.
To offset impacts to threatened or endangered fish, the agency has said it would restore up to 3,500 acres of wetland habitat by breaching or setting back levees. The project will also convert significant amounts of farmland of statewide importance, the report concluded. Impacts to tribal cultural resources, including burial grounds, caused by construction were described as “significant and unavoidable.”
For decades, water has been pumped directly out of the Delta and shipped south to 30 million Californians and 6 million acres of farmland. But state agencies predict that climate impacts and environmental regulations will lead to a decreasing supply.
State officials say the proposed tunnel is intended to slow that decline by capturing water further upstream on the Sacramento River, bypassing the Delta estuary and funneling supplies directly into the State Water Project.
They estimate the project would yield about 500,000 acre-feet per year — a significant amount but a fraction of California’s annual water needs.
Delta farmers, residents, regional Native American tribes and environmental groups vigorously oppose the plan. Opponents say drawing freshwater from the historic region coupled with years of construction will endanger native fish, imperil farms and destroy vulnerable communities.
Those communities, they added, were excluded from the development of Newsom’s water agenda. This summer, the Environmental Protection Agency said it would investigate a civil rights complaint filed by a coalition of tribes and environmental justice organizations over alleged discriminatory mismanagement of water quality in the Delta.
Gov. Gavin Newsom has continued prioritized the Delta Conveyance project as a cornerstone of his water policy agenda despite that opposition, which also includes the Sites Reservoir and voluntary cutback agreements with major water users. He called the project an “essential update” needed to protect against a catastrophic earthquake and impacts of climate change.
“Doing nothing is not an option,” Newsom said in a written statement. “After the three driest years on record, we didn’t have the infrastructure to fully take advantage of an exceptionally wet year, which will become more and more critical as our weather whiplashes between extremes.”
The Delta, the central hub of California’s water system, is a giant network of waterways, sloughs, and islands at the confluence of the Sacramento and San Joaquin rivers. It’s home to hundreds of thousands of people and 415,000 acres of farmland, but its fragile ecosystem has been deteriorating for years as more water is exported or used upstream.
Plans to replumb the Delta have been decades in the making, changing shape over time from a canal to twin tunnels to, eventually, a single tunnel that Newsom promoted when he took office. The last time California finalized an environmental impact report for it was in 2016. That project, which constituted a pair of tunnels, stumbled amid high costs and Newsom eventually withdrew support.
The price tag will be in the billions. In 2020, the estimated cost of one of the alternate paths was just under $16 billion. Bonds will be issued to fund design and the construction process, and beneficiary water agencies across the state will pay a significant portion.
Investment from agencies such as Metropolitan Water District of Southern California would be critical. In a statement Friday, general manager of MWD Adel Hagekhalil said the tunnel project could be part of a “balanced, holistic solution” for capturing water during times of high flow. “
Construction is estimated to take another 12 to 13 years to complete. In 10 days, DWR will determine whether to certify the final report and approve the proposed project. That will launch a months long permitting process on endangered species and water rights. An updated cost estimate is expected next year.
https://www.sacbee.com/news/politics-government/capitol-alert/article282819658.html#storylink=cpy
DWR REPORT ACCESS:
North State Rebels Against Mandatory Renewable Power Siting Law
SF Chronicle
In the sprawling green hills of California’s far north, where the politics run red and rowdy, a new state law designed to clear a path for climate-friendly energy projects is facing a tough debut.
State officials are using their authority under the law, for the first time, to gain approval powers over a plan to build 48 giant wind turbines in Shasta County — powers typically held by local officials.
In doing so, they’ve encountered not only opposition to the project but broader anger in a region known for its distaste of heavy-handed government and, in particular, Sacramento Democrats.
Previously, the county Board of Supervisors here rejected Gov. Gavin Newsom’s COVID mandates, scoffed at the state’s support of tighter gun restrictions and vowed to take on the Legislature over whether the county could hand-count ballots amid concerns, though unsubstantiated, about fraud in President Donald Trump’s failed reelection bid.
Now, the new climate law, Assembly Bill 205, has rural Shasta County in yet another dust-up with the state. The confrontation was cemented late last month with a lawsuit filed by county officials, challenging the California Energy Commission’s jurisdiction over the Fountain Wind Project.
“It’s the right thing for us to address this and fight back,” Board of Supervisors Chair Patrick Jones said during a public discussion of the matter.
Resistance in the region has typically come from the right, and recently the far right, after a political shift sparked by pandemic-era frustrations and fueled by a group of activists that included anti-vaxxers, self-styled militia members and evangelicals.
By contrast, the wind project, proposed in timberlands 35 miles east of Redding, has drawn opposition across the spectrum, including the local Pit River Tribe, which is joining the county as a plaintiff in the lawsuit.
“All the people are on the same side now: the pagans, the Christians, the Democrats, the Trumpsters,” said Brandy McDaniels, a member of the Pit River Tribe, standing in front of her home one afternoon at the Montgomery Creek Rancheria, below the project site, on a wooded slope with views of distant Mount Shasta. “Our community is bonded by our love of the area.”
The objections to the turbines, some of which would rise 600 feet, range considerably. They include doubts about the benefits of clean energy, anxieties over firefighting planes navigating the tall towers, and worries about disturbance to forests and wildlife.
The tribe helped forge the unlikely alliance against the nearly half-billion-dollar proposal because it doesn’t want to see its ancestral lands developed. Tribal members say the project could “erase” their people from history.
The concerns about the wind farm reflect the unpopularity of renewable energy ventures in many California communities that might host them — an aversion that threatens to slow the state’s push to replace planet-warming fossil fuels with clean sources of power. California officials have been frustrated by what’s often perceived as NIMBYism, and for developers, it’s a minefield.
“We need all the wind that we can get in the state to reach” California’s energy objectives, Mark Lawlor, vice president of development at ConnectGen, the Houston company that wants to build the Fountain Wind Project, told the Chronicle. “There’s just not that many places that have suitable wind with all the right resources, like transmission.”
Newsom signed AB205 into law last year, in part to help the state reach its goal of generating all its power from carbon-free sources by 2045. The ambitious target is one of California’s marquee initiatives to combat climate change.
The new law, among other things, allows developers of wind and solar projects to apply to the California Energy Commission for streamlined review and authorization. That process has historically been handled by cities and counties.
The change in jurisdiction, which was done with little fanfare as part of California’s convoluted budget process, was urged by state officials who worried about too few renewable energy projects coming online. The move is one of several efforts by the Newsom administration to cut red tape for vital infrastructure such as power production.
While the state has met its interim objectives for zero-carbon electricity, getting about 37% of its energy from clean sources at last count (not including nuclear and large hydropower), the path to 100% remains uncertain. Increasing demand for electricity complicates matters.
“As we think about building really fast, doubling or tripling the (clean) electric grid, the challenge identified by the administration is the challenge of long permitting timelines,” Siva Gunda, vice chair of the California Energy Commission, said in an interview.
Commission officials did not want to discuss specific power proposals or Shasta County’s lawsuit against the state. But Gunda acknowledged that, under AB205, local concerns will have to be weighed against the bigger and broader threat of climate change.
“No matter what kind of project we’re trying to build, no matter where we’re trying to build it, there’s always going to be potential benefits to the community but there will also be impacts,” he said. “This is a brand-new program. As we go through the process, the agency will learn.”
The proposal in Shasta County is among renewable energy plans that have been shot down locally, from wind turbines on the breezy ridges of Humboldt County to solar arrays in sunny Southern California. Los Angeles and San Bernardino counties have gone as far as banning renewable projects in certain places.
With the passage of AB205, however, ConnectGen petitioned the California Energy Commission to put the plan back in play, and this fall, the agency agreed, making it the first project to be taken up under the law.
The county’s suit against the state commission, filed in Shasta County Superior Court, argues that undoing local decisions and providing a developer a “second bite at the apple” is inappropriate and illegal.
Absent court intervention, the commission’s governing board is expected to make a decision on the Fountain Wind Project next summer. The timeline is within the expedited schedule set by AB205, which requires environmental reviews to be wrapped up in nine months.
The project would consist of four dozen remote turbines, down from 72 initially proposed, across 2,855 acres of private forest owned by Shasta Cascade Timberlands. It would generate up to 205 megawatts of electricity, enough to supply more than 80,000 homes, according to ConnectGen.
The site is within easy reach of existing transmission lines operated by Pacific Gas and Electric Co. A smaller wind project already runs across the adjacent Hatchet Ridge.
Lawlor, with ConnectGen, said the project would yield significant benefits for the county: hundreds of construction jobs and 10 to 20 permanent positions, $50 million in property tax revenue over 30 years and, despite what critics say, a reduction in fire danger with the company’s plans to build fuel breaks and increase vegetation management.
At the Montgomery Creek Rancheria, McDaniels said she selected the site of her modest home, amid the scruffy brush and pine, because of the views of the surrounding mountains. She fears they’ll be tarnished if the turbines go up.
Many residents on the reservation reside in old trailers along dirt roads, with no running water or electricity. McDaniels, a cultural representative for the Pit River Tribe’s Madesi Band, says the primitive conditions are a trade-off for being able to live amid the sacred hills and valleys of their ancestors. The hardship also reflects the struggles the tribe has endured.
“The original narrative of our people is written in this landscape,” she said, looking up at the tree-covered slopes where the wind farm is proposed. “They’ll just come and destroy the land.”
The tribe counts about 3,800 members in Northern California, organized into 11 independent bands, many of which expect to be affected by the project. The tribe’s headquarters is in nearby Burney, where members run a small casino that only recently got a sign that lights up and still operates with limited hours.
On this particular afternoon, a work crew was laying the foundation for a new house at the Montgomery Creek Rancheria, part of an effort to improve the quality of life for residents.
“We’re trying to build a community here. Now we’re in limbo,” McDaniels said. “We really don’t deserve this. We’re still healing from what’s happened to us in the past. When is enough enough?”
Not far from the reservation, Joseph Osa, a retired Department of Defense engineer, was taking a stroll with his two dogs on his 95-acre plot, where he can see a few of the existing turbines on Hatchet Ridge.
The self-described conservative Christian, who joked that “with all the labels we put on people these days, I’m probably one of the bad ones,” acknowledged that he hadn’t thought much about the Pit River Tribe — until the Fountain Wind Project emerged.
His initial concerns were that bald eagles and other birds would get caught in the spinning blades and that firefighting, especially from the air, would be hampered, a claim the developer rejects. For many in the area, the memory of wildlife remains fresh, foremost from such recent monsters as the Dixie Fire, the Zogg Fire and the Carr Fire, all of which took homes and lives.
Now, Osa says, the concerns of the tribe are top of mind.
“Prior to this, I kind of stayed on the property and didn’t meet a lot of people,” he said, noting his increased interaction with neighbors after the project surfaced. “Here (the tribal members) are telling their stories, the kind of stuff they’ve gone through over the years. It’s hard to imagine. We don’t want to be adding to that.”
One of the organizers against the proposal, Beth Messick-Lattin, said she is encouraged by how easy it was to get different types of people together to discuss their opposition to the turbines, especially amid the divisiveness that has come with the rising voice of the county’s hard right. Messick-Lattin says she leans Democrat on social issues in general but Republican on the right to carry.
She remembers only a few tense moments during the community discussions she helped lead.
“One person honestly believed he was having email conversations with Trump every morning,” Messick-Lattin said. “But mostly, everyone was respectful.”
County Supervisor Mary Rickert, who represents the Montgomery Creek area and is also critical of the wind proposal, wants to make sure Shasta County is taken seriously in its new fight with the state.
MORE:
https://www.sfchronicle.com/california/article/shasta-wind-climate-politics-18499963.php