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IN THIS ISSUE – Tax on Texts? “A Dumb Idea”
GOVERNOR, LEGISLATORS, REGULATORS BACK TO WORK
- Legislators Introduce Bills to Spend Billions
- Power Companies Under Scrutiny for Wildfires
- CA Text Tax? OMG!
- Newsom’s Top Issues: Healthcare & No-Tuition Community College, Poll Finds…and Californians See a State of Haves & Have-Nots
- Counting the Census Impacts on California
ECONOMY & JOBS
- State Water Board Increases Central Valley River Water for Fish
- Irrigation Districts Ready Lawsuits to Stop River Water Reduction
- Delta Tunnels, Delayed
ROOFS OVER OUR HEADS
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
READ ALL ABOUT IT!!
FOR THE WEEK ENDING DEC. 14, 2018
Commentary from the LA Times
The new two-year legislative session wasn’t even one day old when Democrats introduced bills to spend countless billions of tax dollars.
Money to provide Medi-Cal healthcare coverage for immigrants of all ages living here illegally. A big boost in K-12 school funding. Free community college tuition in a student’s second year.
Introducing a bill is easy. From there, it’s usually a long, arduous journey to final passage and a governor’s signature. But those proposals apparently reflect a dominant Democratic mood: The money’s there. Spend it before it’s eroded by a recession.
Right now, the state vault is spilling over. The nonpartisan legislative analyst projects a budget surplus of nearly $15 billion. Additionally, there’s a so-called rainy day fund of about $14.5 billion that’s a hedge against the economy tanking.
The total state budget is around $200 billion, $139 billion of it in the main general fund checking account.
Gov.-elect Gavin Newsom spoke the language of fiscal conservatism last week as the Legislature met to organize.
“We are eight years in this bull market and that’s a reality all of us have to accept,” Newsom told reporters. “You’re seeing a global economy that is slowing down. We all have to prepare for that. So, I don’t think you’re going to see something dramatically different … from me than you have seen in the past with Gov. [Jerry] Brown.”
Brown’s hobby as governor seemed to be vetoing spending bills. But he still aggressively pushed two embattled, monstrous infrastructure projects: the $77-billion bullet train and $17-billion twin water tunnels in the Sacramento-San Joaquin River Delta. Newsom has said he wants to scale back both mega-projects.
Speaking to reporters, the Democrat also talked like the candidate who advocated expensive universal healthcare and early childhood education.
“That said,” the governor-elect continued after implying he’d be a Brown clone on spending, “conditions have advantaged our ability to make investments in areas where, frankly, we need to make investments. And that’s where I’ll put my attention.”
Then, as a horde of spending bills was being introduced, Newsom told the Sacramento Bee: “All of this will be whittled down and we all will live within our means. We’re not going to deviate from being fiscally prudent.
“Even if you wanted to provide universal preschool, you could not achieve that in the immediate term. It would take years and years.”
There will be many impatient Democrats, however. They haven’t had this much power in Sacramento for 136 years. It’s one-party rule-plus. Democrats occupy roughly three-fourths of the seats in both legislative houses, and only a two-thirds supermajority is needed to pass tax increases.
But don’t fret about a tax hike, Brown advised right after the election.
“The chances of getting the Legislature to vote by two-thirds on new taxes is very, very limited and unlikely,” the four-term governor told reporters.
“The fact is, it’s a simple formula: The more Democrats win legislative seats, the more conservative are the ones who win…. People don’t have to worry. If there is a two-thirds vote for a tax, it will be very popular or it won’t happen.”
Perhaps. But Democrats may not be sensing much political risk after riding the blue tsunami on election day. In 2020, the political climate could be even sunnier for California Democrats because President Trump probably will be on the ballot drawing his haters to the polls.
Brown says only a “very popular” tax could pass. Would that include a tax on semiautomatic guns? Maybe in urban areas. But in suburban and rural competitive legislative districts, voting to tax gun sales could be dangerous.
Assemblyman Marc Levine (D-San Rafael) introduced a bill to tax the purchase of semiautomatic weapons, the kind often used in mass shootings, including the recent Thousand Oaks bar massacre that killed 12 people. He’s thinking about a $25 tax that would fund gun violence prevention programs.
Even more controversial, I suspect, will be a proposal to extend Medi-Cal coverage to adult immigrants without legal status. Kids are already covered up to age 19. Covering 1.8 million adults would cost an estimated $3 billion a year.
One good argument for it is that placing undocumented adults under Medi-Cal is less expensive than caring for them in emergency rooms, where they are currently treated. Also, we don’t want sick people walking around spreading disease.
The other side contends that if California starts providing health insurance for undocumented people, the state will quickly become a magnet for illegal immigration. Opponents also argue that American tax dollars should be spent on people living here legally.
One bill author is Assemblyman Joaquin Arambula (D-Fresno), a former emergency room doctor. “Working on the front lines of healthcare,” the lawmaker says, he has seen “gross inequality — people whose lives are threatened or ruined because of their inability to access healthcare…. I hope the incoming administration will be bold … a beacon for the rest of the United States.”
Assemblyman Al Muratsuchi (D-Torrance) introduced legislation to gradually raise K-12 school funding by $35 billion a year. He says that would place California in the top 10 states for per-pupil spending. The state general fund now provides $56 billion annually.
Two questions: Where would the extra money come from? How about throwing in some education reform?
We’ll find out which Newsom emerges — whether he can corral the Legislature and stand up to the spending lobby, especially labor.
California’s two major electric power utilities are on the hot seat as Capitol politicians ponder whether they should be protected from the financial consequences of last month’s killer wildfires.
Downed power lines owned by Pacific Gas and Electric and Southern California Edison are suspected of sparking the fires that killed dozens and wiped out thousands of homes, with multi-billion-dollar damages that could bankrupt the utilities.
Earlier this year, the Legislature and Gov. Jerry Brown agreed that utilities could borrow money, via bonds, to pay damages for 2017 wildfires, such as the one that devastated Santa Rosa, and those occurring in 2019 and thereafter.
The loans would be repaid through utility rate increases, rather than by utilities’ stockholders, thereby protecting their basic financial stability and creditworthiness.
However, the legislation, Senate Bill 901, didn’t address 2018 fires, which is why the issue is once again before the Legislature, which reconvened last week.
The situation also puts the Public Utilities Commission and its president, Michael Picker, on the hot seat. They are supposed to balance the interests of the utilities and their ratepayers and it’s becoming an increasingly difficult role as the wildfire losses mount up.
As fire crews continued to mop up last month’s fires, the PUC held a raucous public hearing and agreed to investigate PG&E’s management, especially its commitment to safety, and look at a possible restructuring of the company.
Afterwards, Picker tweeted, “Next step is reviewing PG&E’s corporate governance, structure and operation to determine best path forward for Northern California to receive safe electrical and natural gas service.”
The wildfire liability issue – which also affects the state’s third big investor-owned utility, San Diego Gas and Electric – is the latest chapter in the tortured relationship of the three with state government.
Beginning with a misbegotten and misnamed “deregulation” of the utilities 22 years ago – which drove PG&E into bankruptcy – the state has been, by legislation and regulatory decrees, increasingly micromanaging how they generate, distribute and price electric power.
They have slowly evolved into quasi-governmental entities while maintaining the façade of private ownership, but without the direct accountability that either fully private or fully public status would impose.
This mish-mash has not been consumer friendly. As they implemented state decrees, many related to shifting from carbon-based generation to renewable sources such as solar and wind, the utilities, with PUC permission, jacked up their ratepayers’ bills dramatically.
Between 2011 and 2018, according to data compiled by the Sacramento Municipal Utility District, monthly bills for a typical 750 killowatt-hour of residential usage have jumped by 69 percent in San Diego Gas and Electric’s service area and 46 percent in PG&E’s, while those in SMUD rose by just 21 percent.
A 750 kwh bill in SMUD was $110.30 last year, while customers in San Diego were paying $224.78 and in PG&E’s area it was $177.41. Protecting them and Southern California Edison from the financial consequences of wildfires will drive them even higher.
Who should consumers hold accountable for these increases? The hopelessly intertwined relationship of the utilities and the state generates much fingerpointing and buck-passing that make accountability impossible.
Perhaps Picker’s PUC, the Legislature and soon-to-be Gov. Gavin Newsom ought to take the governance issue a step further and explore whether California’s electric utilities should become fully governmental entities – bigger versions of SMUD, the Los Angeles Department of Water and Power and dozens of small municipally owned utilities such as those in Roseville, Turlock and Modesto.
All of them have markedly lower rates than the three big private utilities, and have governing structures that are much more transparent and accountable, not only to ratepayers but to voters.
This is no LOL matter, critics say.
State regulators have been ginning up a scheme to charge a fee for text messaging on mobile phones to help support programs that make phone service accessible to the poor. The wireless industry and business groups have been working to defeat the proposal, now scheduled for a vote next month by the California Public Utilities Commission.
“It’s a dumb idea,” said Jim Wunderman, president of the Bay Area Council business-sponsored advocacy group. “This is how conversations take place in this day and age, and it’s almost like saying there should be a tax on the conversations we have.”
It’s unclear how much individual consumers would be asked to pay their wireless carrier for texting services under the proposal. But it likely would be billed as a flat surcharge per customer — one of those irksome fees at the bottom of your wireless bill — not a fee per text.
Business groups, including the Bay Area Council, California Chamber of Commerce and Silicon Valley Leadership Group and others opposing the idea, calculated the new charges for wireless consumers could total about $44.5 million a year.
But they add that under the regulators’ proposal the charge could be applied retroactively for five years — which they call “an alarming precedent” — and could amount to a bill of more than $220 million for California consumers.
Asked about the idea after he checked his text messages in downtown San Jose, Juan Gutierrez, 25, who works for a delivery service, said it sounded “absurd.”
“California just doesn’t stop trying to get money out of you,” Gutierrez lamented. “What’s next?”
A dense California Public Utilities Commission report laying out the case for the texting surcharge says the Public Purpose Program budget has climbed from $670 million in 2011 to $998 million last year. But the telecommunications industry revenues that fund the program have fallen from $16.5 billion in 2011 to $11.3 billion in 2017, it said.
“This is unsustainable over time,” the report says, arguing that adding surcharges on text messaging will increase the revenue base that funds programs that help low-income Californians afford phone service.
“From a consumer’s point of view, surcharges may be a wash, because if more surcharge revenues come from texting services, less would be needed from voice services,” said CPUC spokeswoman Constance Gordon in a statement. “Generally, those consumers who create greater texting revenues may pay a bit more, whereas consumers using more voice services may pay less.”
Wunderman said he’s unaware of any other local, state or federal program that taxes texting. And the wireless industry has argued the state commission even lacks legal grounds for doing so.
The CTIA, which represents the U.S. wireless communications industry including AT&T Mobility, Sprint, T-Mobile, and Verizon, said in legal filings to the commission that texting is an information service like email, not a telecommunications service subject to the commission’s authority.
The Federal Communications Commission is expected to affirm that Wednesday at a meeting, the CTIA said, which would confirm that the state utilities commission “has no authority to impose surcharges on text messaging.”
Beyond that, the wireless industry argues a surcharge on texting would put carriers at a disadvantage with competing messaging services that wouldn’t be hit with the new fees, such as Facebook’s Messenger and WhatsApp, Apple’s iMessage and Microsoft’s Skype. Those kinds of services account for “almost triple the volume” of wireless carriers’ share of the more than 3 trillion text messages sent in 2018 alone, according to the CTIA.
“Subjecting wireless carriers’ text messaging traffic to surcharges that cannot be applied to the lion’s share of messaging traffic and messaging providers is illogical, anticompetitive, and harmful to consumers,” the CTIA said in its filings.
In a letter to commissioners urging them to drop the plan, business groups and other critics added that wireless customers already pay a surcharge for the Public Purpose Programs, which they said “are healthy and well-funded, with nearly $1 billion in the budget.”
But the commission in a proposed decision by an administrative law judge concluded “in principle that the commission should assess Public Purpose Program surcharges and user fees on all text messaging services revenue” and that it has the necessary authority to do so.
As Governor-Elect Gavin Newsom prepares to begin his first term, most Californians say universal health coverage and tuition-free community college should be high priorities for new state funding. This is among the key findings of a new statewide survey released today by the Public Policy Institute of California (PPIC).
In his campaign, Newsom highlighted a number of policy priorities, including universal preschool and tuition-free community college. He also indicated support for statewide universal health coverage. The PPIC survey asks about these policies and one more—building a high-speed rail system—that would require a significant amount of new state funding. The results:
- Majorities of adults (60%) and likely voters (57%) say universal health coverage should be a very high or high priority.
- A slight majority of adults (53%) and nearly half of likely voters (47%) say tuition-free community college should be a very high or high priority.
- Fewer than half of Californians (48% adults, 41% likely voters) say the same about universal preschool.
- Far fewer (25% adults, 19% likely voters) say the same about high-speed rail. Californians voted to allocate money to begin building the rail project in 2008.
The U.S. Constitution requires the federal government to count the total number of people in the United States every ten years—referred to as the decennial Census. The next Census will be conducted in 2020. The results of the Census are used in many ways, including to distribute seats in the House of Representatives and inform the amount of federal funds allocated to states for certain programs.
California has experienced an undercount in past Censuses, meaning there were more people living in the state than were counted by the Census. For example, the 1990 Census undercounted California’s population by 2.74 percent (about 835,000 people), which was disproportionately worse than the national undercount of 1.59 percent. As a result, California gained one fewer seat in Congress than it was entitled to receive and was estimated to have lost over $200 million of federal funds in a single year. While California also experienced an undercount in 2000 and 2010, the counts were much more accurate relative to 1990.
Based on past Census trends and the state’s population make-up, California could experience an undercount in 2020. There are a number of reasons, however, we believe that a statewide undercount equivalent to the 1990 undercount is not likely. That said, a scenario in which certain population groups, including immigrants, are undercounted at a higher rate than other groups is plausible.
This report evaluates how the state may be impacted by an undercount in 2020. First, we think that it is unlikely that California would lose a congressional seat due to an undercount. Other researchers have found that an undercount like the one that occurred in 1990 would not cause California to lose a congressional seat. Because we think that scenario is unlikely, the risk of California losing a seat is relatively low. Second, we find that an undercount like the one that occurred in 1990 could result in the California state government losing tens of millions of dollars in federal funding. In budgetary terms, this amount of money is very small. However, an accurate and complete count in 2020 is still important for the state of California because—among other things—the count affects how legislative boundaries within the state are determined.
In the wake of the November election, residents are more pessimistic today when asked if we will have good times financially in the state in the year ahead—fewer than half of adults (46%) believe this. Optimism was higher in September when a majority of residents (53%) predicted good financial times ahead.
In keeping with this note of caution about the economy, Californians are most likely to name jobs and the economy (17%) as the most important issue facing people in the state today. The next most frequently named issues are the environment (10%), housing affordability (9%), and immigration (9%). Notably—in the wake of the recent wildfires—9 percent say wildfires are the most important state issue. Across regions, San Francisco Bay Area residents are the most likely to name housing affordability as the top issue, and Central Valley residents are the most likely to say wildfires.
When asked what the state government’s most important priority should be in planning for the future, 39 percent say improving jobs and the economy, 20 percent say protecting the environment, and 15 percent say updating water and transportation infrastructure. Across all parties and demographic groups, improving jobs and the economy is the highest priority.
“Californians say that improving jobs and the economy is the most important priority for the future,” Baldassare said. “And many believe that children will be worse off than their parents.”
Half of adults (50%) say that children growing up today will be worse off financially than their parents, while fewer (40%) say children will be better off. Slight majorities of Latinos (54%) and Asian Americans (51%) think children will be better off, while most African Americans and whites (62% each) say they will be worse off. US-born Californians (34%) are much less likely than immigrants (53%) to say children will be better off than their parents.
Asked if the state will be a better or worse place to live in 2025 than it is now, 40 percent say it will be better, 32 percent say worse, and 23 percent say it will be the same.
Two-thirds of Californians (67%) say the state is divided into two economic groups: the “haves” and the “have nots.” Solid majorities across income groups express this view, as do majorities across parties (Democrats 73%, independents 69%, Republicans 60%). Across racial/ethnic groups, African Americans (82%) are the most likely to say the state is divided into haves and have nots, followed by Latinos (68%), whites (67%), and Asian Americans (55%).
Apple said Thursday that it would build a new $1 billion campus in Austin, Tex., where it could eventually employ 15,000 people, amid a broader expansion that will create thousands of jobs in several American cities.
The company, which has 90,000 workers in the United States, also plans to open 1,000-worker operations in San Diego, Seattle and Culver City, Calif., and add hundreds of employees in offices in New York, Pittsburgh and Boulder, Colo., in the next three years.
“Apple is proud to bring new investment, jobs and opportunity to cities across the United States and to significantly deepen our quarter-century partnership with the city and people of Austin,” Tim Cook, Apple’s chief executive, said in a statement.
The move coincides with those by other technology giants to expand beyond their West Coast roots. Amazon said last month that it would divide a planned second headquarters between sites in New York and Virginia after a yearlong beauty contest, and Google is said to be considering more than doubling its 7,000-employee work force in New York.
Apple said it had applied for a $25 million grant from Texas, payable over 15 years, as well as property-tax rebates from Williamson County. Those rebates would be in the tens of millions of dollars over 15 years, said a person familiar with the application, who declined to be named because the negotiations are private.
Unlike Amazon, whose competition for a new headquarters was highly publicized, Apple has been relatively quiet about its expansion plans. The company opened its own new $5 billion headquarters in Cupertino, Calif., last year.
The tech industry’s expansion beyond its West Coast base shows the companies’ increasing importance to the American economy. As Apple, Google and Amazon add jobs and new offices around the country, companies like General Motors are shrinking and cutting thousand of positions.
The new 133-acre campus in Austin will initially employ 5,000 workers in engineering, research and development, operations, finance, sales and customer support. It will ultimately have the capacity for up to 15,000 workers. Apple said it expected that its expanded presence in Austin, where it already employs 6,000 people, would make it the area’s largest private employer.
Despite an epic last-minute compromise brokered by Gov. Jerry Brown, state water regulators voted Wednesday to reallocate billions of gallons of San Joaquin River water from farms and cities to revive struggling fish populations.
After hours of testimony, the State Water Resources Control board voted to deliver hundreds of thousands of acre-feet of water from the San Joaquin watershed to salmon, steelhead and other species that ply the fragile Delta. The vote will eventually take water from Valley farmers, who have blasted the plan as a “water grab,” as well as cities such as Modesto and San Francisco.
The vote probably won’t be last word on river flows, however. Earlier in the day, Brown’s administration offered a broad, $1.7 billion compromise agreement under which many cities and farms across the Central Valley would surrender water to the fish and would kick in cash to help the ailing species survive. The money would be spent on building spawning grounds and making other habitat improvements.
The compromise represents “collaboration over conflict,” said Chuck Bonham, director of Brown’s Department of Fish and Wildlife. Karla Nemeth, director of the Department of Water Resources, said some of the habitat restoration projects could begin as early as next year.
Water board members – all of whom are Brown appointees – said they weren’t dismissing the governor’s compromise outright. But by sticking to their original plan to reallocate water, they said they hoped to put pressure on a group of holdout water agencies that hadn’t agreed to a deal yet with Brown. Those agencies draw water from two of the most important rivers in the San Joaquin Valley – the Merced and Stanislaus.
A tentative deal has been made for the third main tributary of the San Joaquin, the Tuolumne River, which serves Valley farms as well as San Francisco and Modesto.
The settlement deals were pulled together in a month-long sprint and unveiled for the first time Wednesday morning. The board members said they need more time to study the agreements.
The agreements are “potentially quite good,” said state water board Chairwoman Felicia Marcus. “But…the devil’s in the details.”
Another big sticking point with the governor’s settlement: Environmentalists by and large don’t like it, saying the agreements don’t go nearly far enough to prop up sagging fish populations, and urging the water board to pursue its original plan.
Trout Unlimited — an organization where Bonham worked for a decade — rejected the early settlement plan, saying it “falls short of meeting the needs of fishing families and salmon and steelhead in too many California rivers and the Delta estuary.” Regina Chichizola of Save California Salmon urged the board to vote right away: “The salmon are at the point where they can’t wait any longer.”
Yet others warned the water board that the vote could lead to years of litigation – and could undermine the fragile agreements that were unveiled Wednesday.
And many of the participating water agencies insisted that the habitat restoration projects, including new spawning grounds, they’re agreeing to finance will lead to substantial improvements for the fish – at least as important as merely delivering more water. “We’ve known for a long time that water by itself isn’t enough,” Tom Birmingham of Westlands Water District, which serves farmers on the west side of the San Joaquin Valley, said in an interview.
The state water board has spent years studying water flows through the Sacramento and San Joaquin watersheds into the Delta. Earlier this year its staff rolled out a final plan for leaving 40 percent of the San Joaquin’s flow in the river and its tributaries. A similar plan for the Sacramento River watershed was set for a vote next year.
State water board officials described the situation as dire. In the San Joaquin rivershed, currently as little as 20 percent of the water stays in the rivers. Marcus, chairwoman of the board, has said the status quo has put endangered fish species “on the verge of collapse,” even as she has acknowledged the hardships that farms and cities would face because of the board’s proposal.
The board was scheduled to vote on its plan in November but relented after Brown and Gov.-elect Gavin Newsom asked for additional time to broker a compromise.
The settlements unveiled by Nemeth and Bonham are unprecedented in many respects. Farms and cities throughout the Central Valley would surrender up to 700,000 acre-feet of water to the fish populations – enough water to fill three-quarters of Folsom Lake. Thousands of acres of farmland would be fallowed. Most water agencies would contribute millions to a “water acquisition fund,” to help pay for habitat restoration projects and to compensate some of the other agencies for the water they’re losing.
All told, the local water districts would kick in a total of $800 million and the state is planning to contribute $900 million, using water-bond proceeds and other sources, Nemeth said.
Wednesday’s development capped weeks of negotiation among water agencies, the Brown administration and President Donald Trump’s administration.
Trump’s administration, which has vowed to deliver more water to Valley farmers, sent a representative to the board meeting to repeat its vow to sue the state to block the water board’s original plan. In recent weeks, it stepped up pressure on state officials to find solutions to a series of problems facing the Delta, the hub of California’s water network. The Delta is jointly governed by the state and the federal government.
Brown’s administration, which has feuded with Trump on a host of environmental issues, signaled a thaw in relations last week by endorsing a plan in Congress to extend the Water Infrastructure Improvement for the Nation Act, a 2016 law that allows for greater water deliveries through the Delta to the south state. Earlier Wednesday, both sides announced they’d reached agreement on a broad set of issues concerning the Delta. Details weren’t revealed.
Lawsuits replaced settlements as the most likely path forward the day after a crucial State Water Board vote in Sacramento approving the “water grab.”
The Oakdale and South San Joaquin irrigation districts had no agreement for flows on the Stanislaus River before Wednesday’s meeting of the State Water Resources Control Board. By virtue of a 4-1 vote approving the latest update to the Bay-Delta water quality plan, the agency will require districts to leave 40 percent of runoff in the Tuolumne, Stanislaus and Merced rivers for salmon.
“Given that the board adopted the plan, it is reasonable to say we are all headed toward litigation,” SSJID General Manager Peter Rietkerk said Thursday.
The OID and SSJID released a statement saying a voluntary agreement with the state had been within reach. In the past several months, the two districts along with Modesto, Turlock and Merced irrigation districts negotiated for acceptable terms with the state Department of Fish and Wildlife and Department of Water Resources.
In early November, Gov. Jerry Brown and governor-elect Gavin Newsom convinced the state water board to grant another 35 days for those talks, allowing the MID and TID to achieve a framework of a settlement agreement. By the deadline this week, the Merced district had no deal but OID and SSJID were close.
The districts offered habitat improvements and a large pulse flow to support salmon migration in the Stanislaus.
“There are many points of consensus,” the districts said in a statement issued jointly with the Save the Stan campaign. “Settlement discussions since last night provide encouragement that a lasting solution on the Stanislaus River is near. We encourage the state board to provide a bit more time to foster continued dialogue toward reaching settlements.”
Local political leaders had hoped the water board members, all appointees of Gov. Brown, would postpone the decision again. Board members said it was time to vote and move to a second phase focused on the Sacramento River. They were encouraged by conservation groups to approve a plan that was nine years in the making.
“Why not allow more time if the settlement talks are getting close?” Stanislaus County Supervisor Terry Withrow said Thursday. “Now, this will be left in the hands of the attorneys, and millions of dollars will be wasted fighting this in court. This should be worked out through negotiations, and there should be a place in the middle where we meet.”
The MID and TID, joint owners of Don Pedro Reservoir, essentially agreed to strategic flows and extensive nonflow measures, as early as next year, to boost salmon numbers in the Tuolumne. The two districts would join more than a dozen other agencies on the San Joaquin and Sacramento river systems in a compromise agreement favored by Gov. Brown, committing $1.7 billion for water, spawning grounds, habitat and hatchery improvements to rejuvenate the delta.
State Water Project and Central Valley Project contractors would contribute to the effort.
Assemblyman Adam Gray, D-Merced, said the state water board mostly disregarded the settlement proposals that were put forward. He called for a lawsuit to stop the state regulatory agency from implementing the flow requirements approved Wednesday.
“This plan is dangerous,” Gray said. “It fails to protect people; it fails to protect the environment.” In consecutive dry years, the higher river flows February through June are expected to draw down reservoirs and cut deliveries to agriculture, destroying thousand of jobs, Gray said.
The Northern San Joaquin Valley water districts have 30 days to decide whether to contest the state plan in court.
The state board OK’d an amendment to its resolution encouraging parties to continue working together on agreements that are consistent with goals of the water quality plan. Gov. Brown’s ambitious compromise proposal was seen for the first time at Wednesday’s meeting and needs to be vetted, board members said.
Chairwoman Felicia Marcus and others suggested that additional talks should be transparent with participation from other groups, which would include those wanting to see more reservoir storage committed to the environment.
“They did say they want it done in a transparent process and for the public and others to get under the hood and understand what the proposals mean for their interest,” Rietkerk said.
With the Stanislaus carrying 30 to 35 percent of unimpaired flow, compared with the Tuolumne’s average of 20 percent, the OID and SSJID perhaps would give up the least amount of water to the state plan. But the districts watched as New Melones Reservoir crashed during the last drought, sinking to 10 percent of its 2.4 million acre-foot capacity, without the burden of additional flow requirements, Rietkerk said.
Fine print in the updated Bay-Delta plan will result in losing more than the 40 percent flow requirement and is not acceptable, the general manager said.
The districts have a partner in the U.S. Bureau of Reclamation, which has threatened legal action to challenge pieces of the water board plan that contradict congressional directives for New Melones. The dam is operated for flood control, agricultural deliveries, recreation and other purposes.
The Bay-Delta plan also needs a signoff from the federal Environmental Protection Agency by April. EPA officials who report to President Donald Trump, and staff members of the previous administration, have cited concerns with versions of the Bay-Delta proposal.
Withrow said the county won’t be involved directly in litigation filed by irrigation districts but will be supportive.
“I don’t know how that will work financially,” he said. “We have to dispute this draconian decision that is going to affect our county.”
State officials pulled back on their effort to secure a crucial green light for the Delta tunnels project, all but ensuring that the controversial plan to re-engineer the West Coast’s largest estuary will remain in limbo after Gov. Jerry Brown leaves office.
Facing a likely defeat, the Department of Water Resources withdrew its petition to the Delta Stewardship Council to have the project deemed in compliance with what’s known as the the Delta Plan, a set of policy goals, mandated by state law, that put protection and restoration of the fragile Sacramento-San Joaquin Delta estuary’s eco-system on an equal footing with more reliable water supplies.
Without the council’s green light, the $16.7 billion project, known officially as California WaterFix, can’t go forward.
As a consequence, regulatory approval for WaterFix almost certainly won’t be completed before Brown’s term as governor runs out this year. Brown has championed the project for years, but his successor, Gov.-elect Gavin Newsom, has taken a more lukewarm attitude toward WaterFix and has said it might have to be scaled back to one tunnel instead of two.
The decision by DWR Director Karla Nemeth was hailed as a victory, at least in the short term, for opponents of the project, which is designed to overhaul how Northern California river water gets delivered through the Delta to farms and cities in the southern half of the state.
“Now they have to go back to the drawing board and prepare a new certificate,” said Kelley Taber, a Sacramento lawyer who represents several local governments that are fighting the project.
Taber said it isn’t clear how long that will take, but “it’s hard to see how these issues could be fixed quickly.”
But DWR expressed confidence the project was not imperiled.
“WaterFix will continue to move forward,” DWR spokeswoman Erin Mellon said in an email. “We will work with the Delta Stewardship Council to resolve issues related to Delta Plan interpretation and plan to submit a revised certification.”
An obscure state agency formed in 2009, the Delta Stewardship Council was set to vote Dec. 20 on whether the tunnels project complies with the Delta Plan.
But it was clear that the Stewardship Council wasn’t likely to go along with the state’s application. The council’s staff on Nov. 15 said the Brown administration hadn’t proven that the south-state water agencies have done enough to reduce their reliance on Delta water shipments, as the Delta Plan mandates. The staff also criticized DWR for not using updated analysis of how climate change would affect tunnels operations, and it said the project poses major “conflicts with land uses in existing Delta communities.”
At a council meeting in November, board Chairman Randy Fiorini ripped the Brown administration for “political expediency” and rushing the application before it was ready.
In her letter to Fiorini, Nemeth defended the petition but said her agency “appreciates that there are unresolved issues” regarding the project.
Tunnels backers acknowledged it was a setback, but they hoped not a major one.
“I hope it’s just a time issue, like a fix-it ticket,” said Jeff Kightlinger, general manager for the Metropolitan Water District of Southern California, the massive Los Angeles urban water agency that’s WaterFix’s biggest booster. “Rather than fight it and appeal it, I figured, let’s just pull it back we’ll get that more information to them and move forward. … We’ve been working on this over a decade. A few months isn’t going to kill anything.”
Metropolitan agreed in April to bankroll $10.8 billion of WaterFix’s total cost, breathing new life into a project that was sputtering because of funding shortfalls. South-of-Delta water agencies are supposed to pay for the entire project.
The withdrawal comes as the tunnels project falls under attack from other quarters.
Environmentalists, who are generally opposed to the tunnels, say the Trump administration is threatening to withhold support for WaterFix unless California officials agree to significant changes in how water is shipped through the Delta. The Trump administration is trying to streamline environmental rules that sometimes interfere with Delta pumping operations — which means billions of gallons of water sometimes bypass the delivery pumps and flows out to the ocean, leaving less water for the farmers and cities.
The state and federal government pumps, located at the south end of the Delta, are so powerful that they can cause the river channels in the south Delta to run backward, causing endangered smelt and winter-run Chinook salmon to migrate toward the pumps and predatory fish that gather to eat them at the intakes.
The tunnels, a pair of 35-mile-long underground pipes, are designed to bring some of the water from the Sacramento River near Courtland south of Sacramento directly to the pumping stations.The pumps then wouldn’t have to churn so hard, tamping down the “reverse flow” problem and allowing water deliveries to proceed with fewer problems for the fish.
Environmentalists, however, say the tunnels would actually worsen the Delta’s ecosystem and deprive the region’s farmers of much of the fresh water they need to grow grapes, corn and other crops.
The Central Valley is slowly becoming a society of renters.
New numbers from the U.S. Census Bureau show that many counties have seen double-digit growth in renter-occupied households and only modest gains in homeownership — if not single-digit declines since 2011.
In the period between 2011 and 2017, the number of owner-occupied homes in the valley fell by three-tenths of a percentage point, whereas renter-occupied households grew to 103,000, an 11 percent increase, data shows.
It’s perhaps one of the remaining scars left by the Great Recession 10 years ago when the housing boom dropped with a thud. Experts say the trend is not surprising but the consequences could be dire for families in poverty since homeownership is a ticket to creating wealth.
“Parts of the San Joaquin Valley have never really recovered from that. We saw families — especially families of color — who lost all of their family wealth,” said Rob Wiener, director of the California Coalition for Rural Housing.
“So many families in the Valley have not recovered from that economically and moreover, banks are much pickier about the loans they make. There may (be) a whole generation of households in the San Joaquin Valley for whom homeownership is not going to be a possibility, at least not for some time to come.”
- Fresno, Madera, Merced, Placer, Tehama and Yuba counties saw between a 1 and 6 percent increase in the number of owner-occupied households. Homeownership is highest Placer County where 71 percent of households are homeowners.
- Amador, Butte, Calaveras, Kings, Mariposa, Sacramento, San Joaquin, Shasta, Stanislaus, Sutter and Tuolumne counties each saw declines in owner-occupied households between one and six percent.
- Only three counties saw declines in renters: Calaveras, Mariposa and Tehama counties.
The middle of the state has long been considered a bastion of affordable life. Central Valley residents were the least likely to say housing costs are an issue when compared with other major regions in the state, according to a 2017 survey by the Public Policy Institute of California.
Still, the region took the economic downturn on the chin. The rampant building stopped. Homeowners fell underwater. Banks foreclosed on thousands of properties. And in some places, investors swooped in to buy up the leftovers.
“Investors came in a scooped up a lot of property at very low prices just like you’ve seen in Sacramento. That had positives and negatives,” said Jeff Michael, an economist who directs the Center for Business and Policy Research in Stockton.
“The positive is it did stabilize the housing market. The downside is you have a lot of houses owned now by these out-of-town landlords which are not necessarily positive and results in a lower homeownership rate.”
It’s unclear whether the trends point to less interest in homeownership or reflects the tight housing market and the high cost of living. Affordable housing is a dominant subject of conversation in the state with most attention, at least in recent years, focusing on renters.
Michael said renters generally have lower incomes than homeowners so that’s really where the crisis has been hitting.
“Part of the reason the affordable housing crisis is so focused on rentals is that that’s where the biggest affordability problems have been,” he said. “More people are in the rental market as the homeownership rate has declined and we’ve seen rents really escalate at high rates.”
Carolina Reid, a researcher at the Terner Center for Housing Innovation at UC Berkeley, said policymakers have been “gun-shy” to promote homeownership given how the financial crisis played out.
“I think that’s a mistake. A lot of that foreclosure crisis was driven by very predatory lending practices,” Reid said. “If we had given people responsible loan products there would have been not nearly as many foreclosures.”
California’s homeownership rate was the same in 2016 as it was in 1987. Reid authored a report last year on “lease-purchase agreements” as a way to move more low-income people into homeownership. She said the arrangement would have been ideal when real estate prices were still low.
However, low-income and communities of color were largely left on the sidelines at that time, she said.
“At that same moment when we see homeownership being incredibly affordable, banks are saying ‘we’re not going to lend’ and so the only people who can buy homes at the bottom of the market are people who already have wealth or have extremely pristine credit scores,” Reid said. “So who benefits from the house price recovery? It’s white people who already have wealth.”
After nearly 20 years of planning, the Los Angeles County Board of Supervisors on Tuesday approved a massive development near the Tejon Pass that has become a centerpiece of the debate over how California should develop in an era of worsening wildfires and growing urban sprawl.
The Centennial project would add 19,000 homes in the northwestern corner of Los Angeles County, a sparsely populated area 70 miles from downtown L.A. that is also far from other job centers.
The development has pitted environmental groups, which argue it will destroy an important natural habitat and worsen greenhouse gas emissions as residents commute by car to faraway cities, against a private landowner and residents who say it will bring badly needed housing and services to the region.
The vote on the project also comes on the heels of catastrophic wildfires that tore through the communities of Paradise, Calif., and Malibu, raising questions about whether homes in the state should continue to be built in fire-prone areas near wildland.
All of the Centennial project site would sit within “high” and “very high” fire hazard severity zones as identified by state officials.
Backers said Centennial is designed to address many of critics’ concerns.
“This is not just another ‘sprawl’ project,” said Supervisor Kathryn Barger, who represents the district where Centennial will be located.
She said the development will help meet the state’s housing needs, create long-term jobs and go “above and beyond” existing environmental requirements.
The vote was 4 to 1, with Supervisor Sheila Kuehl casting the dissenting vote.
“I can’t support it. I think it is not a good idea to build a brand-new city so far away from everything else — because of the fire concern, because I don’t quite understand and believe the affordable housing promises” and because of the environmental impacts, she said.
More than 100 people spoke about the development at the public hearing.
Supporters included real estate developers, business associations, building trades representatives and residents of nearby Gorman and the Antelope Valley. Some of them had been invited and were provided lunch by the Tejon Ranch Co., the publicly traded owner and developer of the project land.
“Centennial … is a prime example of development that boosts our economy,” said Bill Allen, chief executive of the L.A. County Economic Development Corp.
Opponents included several members of the California Native Plant Society, which has been blacklisted from Tejon Ranch, other environmental advocates and private citizens.
“If I were a supervisor, I would not want the deaths of Centennial residents on my conscience,” said Clifford McLean of the plant society, referring to the area’s fire hazard.
Some urban planners, land-use experts and ecologists have said the project’s location in a fire-prone area alone should compel officials to reevaluate the project and their priorities, but the Tejon Ranch Co. and county planning staff have said fire risk at the site can be reduced through safer building standards and good overall planning.
“I remain deeply concerned about all communities located in high fire [hazard] severity zones and stand ready to act as swiftly as we can to ensure protection of life and structures,” Barger said.
But, she said, houses at Centennial will be built with flame-resistant materials and surrounded by appropriate “fuel modification” zones.
“These will not be 50- to 60-year-old buildings with wood construction, shake roofs, within close proximity to large stands of pine trees found on hillsides and canyons,” she said.
The Centennial site is mostly flat grassland, though it also encompasses oak woodlands and some steep terrain. The 270,000-acre Tejon Ranch traverses a variety of ecosystems, including desert and mountain landscapes with Joshua trees, pine forests and wildflower fields that are home to California condors, mountain lions, black bears and elk.
The Regional Planning Commission voted 4 to 1 in August to recommend that the Board of Supervisors certify the project’s environmental impact report and sign off on the associated land-use plans and permits, with additional conditions that the developer set aside 15% of the units for affordable housing and commit to 30% local hiring for construction.
Another point of contention Tuesday was the affordability of homes at Centennial. The developer has said the price of a single-family house would range from $425,000 to $550,000.
“That … is out of reach for people that are working at minimum wage or are homeless,” Supervisor Hilda Solis said.
Tejon Ranch spokesman Barry Zoeller said in an interview after the meeting that the company was “obviously pleased” with its outcome.
“We believe that the plan put forth will help make a dent in L.A.’s housing crisis,” he said.
The project will come back to the board for one final procedural vote after the county’s attorneys prepare the necessary documents.
Zoeller said the Tejon Ranch Co. is prepared to fight expected litigation.