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IN THIS ISSUE – “For someone who has an interest in launching a presidential campaign, these are the first steps you’d take”
Political campaign analyst on Gov. Newsom’s 3 new national fund-raising committees
- Newsom Goes Large: Sets Up 3 National Fund-Raising Committees
- Governor & Legislature Must Balance Billions in 2024 Bond Proposals with Reduced Revenue Realities
- Air Board Admits Roadblocks to Climate Change 2030 Emissions Goals
- Water Board Proposes Landmark Wastewater Recycling Rules
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 AUG. 4, 2023
Newsom Goes Large: Sets Up 3 National Fund-Raising Committees
Sacramento Bee
Gov. Gavin Newsom is taking fundraising steps often used by potential presidential candidates, setting up multiple committees that in their first three months have raised and spent millions of dollars.
The three Newsom-affiliated committees are a political action committee, which limits contributions to $5,000 a year and can donate to individual candidates; a SuperPAC, which can raise unlimited amounts of cash but is restricted from promoting a specific candidate, and a joint fundraising committee, which functions like a bank, mostly collecting and distributing funds to the other groups.
The governor paid more than $100,000 for consulting to Bearstar Strategies, the most powerful political consultancy in California, and $7,500 for polling, though it’s unclear what the subject of the poll was.
Newsom has repeatedly denied any interest in running for the nation’s highest office next year.
Whether President Joe Biden wins or loses, there will be no Democratic incumbent in 2028. As governor of the nation’s largest state, the big winner of two elections and a recall, Newsom would be well-positioned for a White House run.
Forming the trio of fundraising committees allows prospective candidates like Newsom to begin building a base of support and explore a run for federal office without saying it outright, according to Brendan Glavin, senior data analyst at Open Secrets.
“For someone who has an interest in launching a presidential campaign, these are the first steps you’d take,” Glavin said. “I wouldn’t say it’s set in stone, but certainly you wouldn’t do all of these things if you weren’t thinking about it.”
Nathan Click, a campaign advisor for Newsom, flatly refuted that narrative and pointed to dozens of instances where the governor said he had no interest in the White House. “That’s not what this is about,” Click said. “This is all about going deep into the reddest states and helping Democrats where they’re on defense.”
Newsom’s PAC had $6.2 million on hand at the end of June and the SuperPAC had $6.3 million. Most of the money going to the committees came from funds raised by the governor during previous campaigns.
About $2 million was raised through a Marin County fundraising event for Biden and another $1.1 million resulted from email blasts and in-person fundraisers for Democratic parties in red states such as Mississippi, Arkansas, Tennessee, Idaho and Utah, Click said.
The SuperPAC got $666,666 from the California Conference of Carpenters-Builders and another $333,333 from Working for Working Americans, a Washington-based SuperPAC that supports building trades unions. It also received $25,000 from philanthropist Aileen Getty.
“Newsom has made it very clear he would never, ever, ever run for president, but on the off chance that he changes his mind, a lot of this money would be available to him,” said Dan Schnur, a political science professor at USC and former GOP political consultant.
When he launched the PAC, Newsom said it was his way of fighting back against “rising authoritarianism” and helping “elect leaders in 2024 who believe in democracy.” Newsom seeded it with more than $10 million from his gubernatorial campaign account. Since launching the organization in late March, Newsom has campaigned to rebut the GOP agenda and energize pockets of often neglected Democratic voters.
Through fundraising emails and events, he has promoted his own agenda by calling for stricter gun control laws, greater access to abortion and protecting the rights of the LGBTQ community.
The PAC gave $10,000 to the Arkansas Democratic Party and helped the Senate campaign of Democratic Rep. Colin Allred, who’s running a longshot campaign against incumbent Republican Sen. Ted Cruz.
DETAILS ON NEWSOM’S PAC FINANCES
Campaign for Democracy PAC: Contributors are limited to $5,000 per calendar year, and funds cannot come directly from corporations or labor unions. The committee can make contributions to individual candidates, within legal limits. Politicians use these committees to win goodwill and support by giving to candidates around the country. This PAC had $6.2 million on hand at the end of June.
Campaign for Democracy Committee: This is a “joint fundraising committee.” and may collect contributions from individuals, corporations, and labor because one of its participant committees, Campaign for Democracy Group, is a Super PAC. This committee is like a bank that collects and distributes the funds, but usually does little direct spending on political activity.
Campaign for Democracy Group: This is the pro-Newsom SuperPAC. It can raise and spend unlimited amounts of money, and take contributions from labor unions, corporations, individuals and others. It is restricted from promoting a specific candidate, but can run ads or spend to urge voters to turn out or promote a position. It had $6.3 million on hand at the end of June.
https://www.sacbee.com/news/politics-government/capitol-alert/article277831178.html#storylink=cpy
Governor & Legislature Must Balance Billions in 2024 Bond Proposals with Reduced Revenue Realities
CalMatters commentary by Dan Walters
California’s state budget is under stress from stagnating tax revenues, leading Gov. Gavin Newsom and legislators to make some hard choices about priorities and enticing them to adopt alternative strategies to maintain spending.
The recently adopted 2023-24 budget contains examples of both and as the income/outgo squeeze continues, as a recent Department of Finance projection indicates, the search for new strategies will become more intense.
One of those strategies emulates the federal government’s chronic addiction to borrowing money to cover operating deficits. The 2023-24 budget includes several examples, including directly tapping the state’s special funds for loans and indirectly borrowing from employers by forcing them to repay the state’s $18 billion debt to the federal government for unemployment insurance benefits during the COVID-19 pandemic.
When the Legislature returns to the Capitol in mid-August for the last month of its 2023 session, one of its unfinished chores is to decide how many bond issues to place on the ballot for two 2024 elections.
Gov. Gavin Newsom and various lawmakers have collectively proposed something north of $100 billion in bonds, which is far more than either voters or financial markets are likely to swallow. Newsom has indicated that he wants a $26 billion lid on bond issues, telling reporters at a recent press conference, “A number of legislative leaders have come to – ‘Hey, support this, support my bond, this bond.’ We have to work together on what the priorities are going to look like for November.”
Some of the proposals are for things that have traditionally been financed with borrowed money, such as school construction and water projects. But there’s a disturbing trend in other proposals – using borrowed bond money to operate programs and services that are usually backed by budget appropriations.
It’s disturbing because it violates what should be a bedrock principle of bond financing, which is to use it only for projects with long-term benefits, such as construction.
California has generally adhered to that principle but has deviated occasionally, such as issuing long-term bonds in 2004 to pay off billions of dollars in short-term budget debt which threatened to destroy the state’s credit rating. Another example is two voter-approved bond issues totaling $8.5 billion to finance stem cell research.
One of the bond measures floating around the Capitol this year would borrow $5.2 billion to deal with the state’s epidemic of opioid addiction through treatment and education. It’s being pushed by Assemblyman Reggie Jones-Sawyer, a Los Angeles Democrat who chairs the Assembly Public Safety Committee.
The committee has blocked bills that would impose harsher penalties on sellers of fentanyl, a particularly deadly opioid, and Jones-Sawyer contends that non-criminal approaches would work better.
The crisis is real but borrowing money that would have to be repaid by taxpayers over decades, with hefty interest payments, to finance short-term services is a slippery slope. Given the likelihood that California will be seeing budget deficits for the foreseeable future, approval of an opioid treatment bond would encourage advocates for other social service and medical services to seek similarly expedient financing.
California has no shortage of debt now. The state treasurer’s office says that as of July 1, the state was on the hook for $121 billion in principal and interest on bonds it already has issued. That doesn’t count the $18 billion owed to the feds for unemployment insurance, the $82 billion in unfunded liabilities for state employee health care or at least that much in unfunded liabilities for state worker pension obligations.
There is good debt and there is bad debt. In winnowing through the competing bond proposals for placement on the 2024 ballot, Newsom and legislators should remember the difference.
https://calmatters.org/commentary/2023/07/bond-money-cover-budget-deficits/
Air Board Admits Roadblocks to Climate Change 2030 Emissions Goals
Sacramento Bee
For the first time, California’s leading air regulator acknowledged major roadblocks to meeting its ambitious carbon emissions target for 2030, a goal the agency set just months ago in a sweeping plan to tackle climate change.
The hurdles revolve around the feasibility of carbon capture technologies and the state’s flagship climate program, known as cap-and-trade. It’s a tension poised to intensify as the California Air Resources Board navigates a transformation of the energy economy.
Central to the debate is the question of whether California should tighten the reins on industrial emitters by strengthening its cap-and-trade program, which established an emissions trading system aimed at cutting emissions while providing flexibility for industry.
In its 2022 climate change roadmap, the agency placed heavy bets on emerging technologies to remove carbon pollution from the atmosphere, setting a target to reduce emissions across the economy to 48% below 1990 levels by 2030 – an increase from the previous 40%.
But Air Board staff now say those technologies may not be widely available in time. As a result, they say relying solely on cap-and-trade could drive carbon prices to unmanageable heights and push industrial polluters out of California. Dave Clegern, an Air Board spokesman, emphasized the need to overcome carbon removal infrastructure challenges to attain the ambitious 48% reduction goal.
“If those tools are not widely available by 2030 with a 48% target, then prices get very high in the program and that leads to leakage — production moving out of state to reduce emissions in state and comply with the program,” Clegern said in a statement. He asserted that California is still on track to achieve its lower, legally mandated target to reduce emissions 40% below 1990 levels by 2030.
Clegern also hinted at the possibility of exploring alternative approaches to achieve the higher target.
These obstacles come as no surprise to climate experts who have long warned that California is at risk of missing its 2030 climate goals. In the past, the Air Board agency faced criticism for lacking a clear implementation strategy of its climate plan and relying on optimistic assumptions.
The cap-and-trade program itself has faced sustained criticism for not effectively curbing industrial emissions and burdening communities already plagued by high pollution levels.
Under this program, the state sets a limit on emissions allowed from power plants, refineries and factories, which are then issued permits that can be bought, sold or traded.
Danny Cullenward, a climate economist who serves as an advisor to the state, said the Air Board appears to be “laying the groundwork for a blame shift” by conditioning the program’s strengthening on carbon removal technologies.
“This is how you begin to say, ‘It’s not our fault that we can’t get there,’” Cullenward said. “’We are unable to do the things we want to do because somebody else didn’t follow through.’”
Critics including environmental justice advocates have voiced opposition to the Air Board’s heavy reliance on nascent technologies such as carbon capture and storage and green hydrogen, expressing skepticism about their feasibility.
But Air Board staff expressed confidence it could meet the ambitious 2030 target in its scoping plan until last week.
At a Thursday workshop, deputy executive officer Rajinder Sahota questioned the viability of those exact technologies. According to attendees of the meeting, Sahota indicated that achieving the 2030 scoping plan target would necessitate several extraordinary, unlikely feats.
They include a significant expansion of green hydrogen (462 times current levels) and removing 20 million tons of carbon dioxide from the atmosphere, amounting to an annual emissions reduction of 5%.
For context, emissions only fell 9% during pandemic lockdowns. The carbon capture and storage industry must also overcome significant pipeline permit challenges.
https://www.sacbee.com/news/politics-government/capitol-alert/article277730683.html#storylink=cpy
Water Board Proposes Landmark Wastewater Recycling Rules
CalMatters
Californians could drink highly purified sewage water that is piped directly into drinking water supplies for the first time under proposed rules unveiled by state water officials.
The drought-prone state has turned to recycled water for more than 60 years to bolster its scarce supplies, but the current regulations require it to first make a pit stop in a reservoir or an aquifer before it can flow to taps.
The new rules, mandated by state law, would require extensive treatment and monitoring before wastewater can be piped to taps or mingled with raw water upstream of a drinking water treatment plant.
“Toilet-to-tap” this is not.
Between flush and faucet, a slew of steps are designed to remove chemicals and pathogens that remain in sewage after it has already undergone traditional primary, secondary and sometimes tertiary treatment.
It is bubbled with ozone, chewed by bacteria, filtered through activated carbon, pushed at high pressures through reverse osmosis membranes multiple times, cleansed with an oxidizer like hydrogen peroxide and beamed with high-intensity UV light.
Valuable minerals, such as calcium, that were filtered out are restored. And then, finally, the wastewater is subjected to the regular treatment that all drinking water currently undergoes.
“Quite honestly, it’ll be the cleanest drinking water around,” said Darrin Polhemus, deputy director of the state’s Division of Drinking Water.
The 62 pages of proposed rules, more than a decade in the making, are not triggering much, if any, debate among health or water experts. A panel of engineering and water quality scientists deemed an earlier version of the regulations protective of public health, although they raised concerns that the treatment process would be energy-intensive.
“I would have no hesitation drinking this water my whole life,” said Daniel McCurry, an assistant professor of civil and environmental engineering at the University of Southern California.
This water is expected to be more expensive than imported water, but also provide a more renewable and reliable supply for California as climate change continues. Most treated sewage — about 400 million gallons a day in Los Angeles County alone — is released into rivers, streams and the deep ocean.
The draft rules, released on July 21st, still face a gauntlet of public comment, a hearing and peer review by another panel of experts before being finalized. The State Water Resources Control Board is required by law to vote on them by the end of December, though they can extend the deadline if necessary. They would likely go into effect next April and it will take many years to reach people’s taps.
Heather Collins, water treatment manager for the Metropolitan Water District of Southern California, said the regulations will give the district more certainty about how to design a massive, multi-billion dollar water recycling project with the Los Angeles County Sanitation Districts. The district imports water that is provided to 19 million Southern Californians.
The new rules come as endless cycles of drought leave California’s water suppliers scrabbling for new sources of water, like purified sewage. In 2021, Californians used about 732,000 acre feet of recycled water, equivalent to the amount used by roughly 2.6 million households, though much of it goes to non-drinking purposes, like irrigating landscapes, golf courses and crops.
Last year, Gov. Gavin Newsom called for increasing recycled water use in California roughly 9% by 2030 and more than doubling it by 2040.
Some recycled water is already used to refill underground stores that provide drinking water, a process called indirect potable reuse, employed beginning in the 1960s in Los Angeles and Orange counties.
But a water agency must have a clean and convenient place to store the expensive, highly-purified water. “You don’t want to inject this recycled wastewater that you’ve spent all this effort cleaning into a dirty, polluted aquifer just to ruin it again,” McCurry said.
To expand these uses, state lawmakers in 2010 tasked the water board with investigating the possibility of adding recycled water either directly into a public water system or just upstream of a water treatment plant. In 2017, they set a deadline to develop the regulations by the end of 2023.
California won’t be the first; Colorado already has regulations and the nation’s first direct potable reuse plant was built in Texas in 2013. Florida and Arizona have rules in the works.
California’s statewide rules, however, are expected to be the most stringent, said Andrew Salveson, water reuse chief technologist at Carollo Engineers, an environmental engineering consulting firm that specializes in water treatment.
The water that flushes down toilets, whirls down sinks, runs from industrial facilities and flows off agricultural fields is teeming with viruses, parasites and other pathogens that can make people sick.
Chemicals also contaminate this sewage, everything from industrial perfluorinated “forever chemicals” to drugs excreted in urine. Bypassing groundwater stores or reservoirs to funnel purified sewage directly into pipes means that there’s less room for error.
The new regulations would ramp up restrictions on pathogens, calling for scrubbing away more than 99.9999% of diarrhea-causing viruses and certain parasites. Also a series of treatments are designed to break down chemical contaminants like anti-seizure drugs, pain relievers, antidepressants and other pharmaceuticals. Medications can bypass traditional sewage treatment so they are found in low concentrations in recycled sewage and groundwater.
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