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IN THIS ISSUE – “We Will All Live Within Our Means”
NEW GOVERNOR, NEW LEGISLATURE
- From Day One, Newsom Tells Legislators to Control Spending
- Eager Legislators Queue Up 2019-20 Bills
- Historic Liberal Legislature: “Going to Push the Envelope”
- Feinstein, McCarthy Carry California’s Water in New Bill
- Golden State Leads Nation…in Failing Infrastructure
- LA’s Massive Tejon Ranch First Test of Housing Development in Wildfire Zones
- Another Major Employer HQ Moves East
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. 7, 2018
California lawmakers had been in session for one day this week, and majority Democrats had already proposed tens of billions of dollars in new state spending.
As Gov.-elect Gavin Newsom made the rounds at the Capitol, he had a message for them: No.
“All of this will be whittled down and we all will live within our means,” he told The Sacramento Bee as he left a meeting with Senate President Pro Tem Toni Atkins. “We’re not going to deviate from being fiscally prudent.”
In the first day of the legislative session Monday, lawmakers introduced more than 100 bills that contained more than $40 billion in proposed new spending. The proposals ranged from expanding Medi-Cal eligibility to adults living in the country illegally, which carries a roughly $3 billion annual price tag, to dramatically increasing funding for K-12 schools, which would cost $35 billion over an undetermined period of years.
Democrats claimed 60 of 80 seats in the Assembly and 29 of 40 in the Senate at the November election, and now enjoy the their largest margins in decades.
Some of their proposals align with goals Newsom touted in his campaign, from expanding access to health care to increasing funding for preschool.
Newsom, who will be sworn in next month, said he wants to make those changes gradually over his four-year term.
“Even if you wanted to provide universal preschool, you could not achieve that in the immediate term,” he said, giving an example. “It would take years and years to build out that infrastructure.”
Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the Democrats who run the Legislature frequently propose big spending increases, but Gov. Jerry Brown served as a check on their ambitions. As the record Democratic supermajorities take office without Brown’s moderating presence, Coupal worries they will pass new taxes to pay for their plans that he said will hurt the middle class.
“Their appetite is insatiable,” he said of Democratic lawmakers. “In the last years it’s only because Gov. Brown had some sense of reality that stopped most of those.”
The state’s budget is flush with cash, according to projections by the Legislative Analyst’s Office, which predicts a potential state surplus of $14.8 billion next year.
But Brown and other leaders have been warning for years of an impending recession that could drastically alter the state’s finances.
Legislature’s Visual Guide to State Revenues & Programs
For those of us who believe a chart is worth a thousand words, here is the Legislative Analyst’s Office (LAO) newest Cal Facts, using a variety of different charts to visually and authoritatively depict California’s economy, revenues, and major program trends.
Assembly Budget Blueprint Urges Restraint. Note goals on final page.
California lawmakers kicked off a new two-year session Monday, a day full of pomp and ceremony, and a few eager legislators began putting bills across the desk, giving an early indication of some key policy fights that will shape 2019.
Some of the early legislation reflects policy priorities Gov.-elect Gavin Newsom championed on the campaign trail—calling for more housing, health care and early childhood education. (Newsom will be sworn in on Jan. 7.) Other bills amount to a take-two for lawmakers who saw their policies stall out or get vetoed by Gov. Jerry Brown.
It’s too soon to say how these proposals will fare—a long road of compromises often separates a bill’s introduction from the gubernatorial signature that turns it into a law. But here are a few themes emerging in this first day of legislative action:
California’s recent wildfires are clearly a preoccupation. Both chambers opened with a moment of silence for victims of the Camp and Woolsey fires. In one of the more gripping moments of the morning, Assembly Speaker Anthony Rendon listed, name by name, the many California counties that, just at the moment, are recovering from climate-driven natural disasters, and what Gov. Jerry Brown termed “the new abnormal” figured heavily into his and Senate President Pro Tem Toni Atkins’ opening remarks.
On Monday, Democratic Assemblyman Jim Wood, who represents fire-scarred Santa Rosa—and who, as a forensic dentist, has been helping to identify remains in the Camp Fire— introduced legislation to hasten, broaden, subsidize and better codify local fire preparedness. As last session’s hard-fought wildfire bill demonstrated, though, the costs and liabilities associated with wildfires can politically be a hard sell.
Critics of Pacific Gas & Electric, whose equipment has been linked to many of last year’s fires, have been adamant in their demand that the state not give the massive utility a bailout. Assemblyman Chris Holden, a Pasadena Democrat, had planned to introduce language on Monday that would have expanded last year’s wildfire bill to give PG&E relief for potential liability for the Camp Fire, which killed at least 85 people, but over the weekend, Holden said he would wait.
Lawmakers introduced several bills aimed at alleviating the state’s housing crisis on the first day of the legislative session, including twin efforts to revive a controversial funding source for affordable housing.
Assemblymember David Chiu, Democrat from San Francisco, reintroduced a billthat would revive and reform redevelopment agencies across the state. Eliminated by Gov. Brown in 2011 to close the state’s yawning budget deficit, redevelopment agencies provided about $1 billion annually for the construction and preservation of low-income housing. Loathed by Brown, tax funds raised by these agencies were frequently used for questionable purposes.
Two of Chiu’s colleagues in the state senate unveiled their own version of “Redevelopment 2.0” on Monday. Senator Jim. Beall, Democrat from San Jose, and Sen. Mike McGuire, Democrat from Marin, announced they will be introducing a series of bills in the coming weeks to ease the state’s housing crisis, although the specifics of their redevelopment bill or other pieces of legislation were not yet made public. On the campaign trail, Gov.-elect Newsom made restoring redevelopment funding a cornerstone of his housing plan.
Lawmakers introduced a handful of other housing bills, including efforts to increase emergency funding to renters on the brink of homelessness and a major expansion of tax credits to low-income housing developers. But the biggest housing bill of the session will likely be announced tomorrow.
Sen. Scott Wiener, Democrat from San Francisco, plans to reintroduce his controversial bill that would allow taller, denser buildings around public transit, a measure that was widely admired and summarily trounced last year.
If there is a sure bet this legislative session, the expansion of early childhood education is as close as it comes.
Stymied for years by Gov. Brown, who was wary of putting the state on the financial hook for an obligation as long-term and expensive as, say, universal preschool, Democrats have come to the table well-armed. Earlier this year, a Stanford-led team of academicians issued a massive study recommending that California spend much more on pre-K education. And Gov.-elect Gavin Newsom, who has four young children, has been touting early childhood education for years.
On Monday, Democratic Assemblyman Kevin McCarty of Sacramento was first out of the gate, with a package of bills worth nearly $2 billion that would add about 84,000 full-day preschool slots, mostly for students living in poverty; put a $500 million bond on the 2020 ballot for the construction of new preschool facilities; and increase reimbursement rates for private childcare and preschool providers that contract with the state.
The legislation effectively would increase the pool of eligibility for subsidized preschool to include more 3- year-olds and all 4-year-olds living in school attendance areas where at least 70 percent of kids are on free or reduced lunch, a poverty indicator. One of the bills also would raise preschool learning standards to align them better with K-12 curriculum.
Or three. For the last two years legislative Democrats have proposed expanding government-funded health care to undocumented adults, the largest segment of Californians who lack access to insurance. Doing that is expensive, and the proposals failed to make it into the final budget Brown signed in 2017 and again this year.
Now Democratic Assemblyman Joaquin Arambula of Fresno and Sen. Ricardo Lara are trying again, introducing bills on Monday to expand Medi-Cal to cover adults over age 19 who are in the United States illegally.
Also getting another go are some high-profile bills Brown vetoed last year, including one inspired by the #MeToo movement to stop sexual harassment. Assembly Bill 9 by Democratic Assemblywomen Eloise Gomez Reyes and Laura Friedman would give victims more time to file a claim—extending the deadline from one year to three years after an incident.
Brown vetoed the same policy this year, saying the one-year deadline “ensures that unwelcome behavior is promptly reported and halted.” Supporters counter that more time gives workers who are unfamiliar with the legal system enough time to hold predators accountable.
Brown also vetoed legislation to require colleges to provide abortion pills at campus health clinics, saying “the services required by this bill are widely available off campus,” and that students, on average, only have to travel a few miles to get it. Newsom quickly told reporters he would have signed the bill, so it was little surprise Monday when Democratic Sen. Connie Leyva came out with a second go in the form of Senate Bill 24.
A major source of angst or ebullience—depending on your view—at the end of the last session was a state court decision that threw a monkey wrench into a legal pillar of the gig economy.
The so-called “Dynamex ruling” makes it harder for employers to classify workers as independent contractors. Cheered by organized labor, it impacted workers from Uber drivers to businesses to emergency room doctors, and sent Chamber of Commerce lobbyists scrambling for relief, or at least clarification.
On Monday, Assemblywoman Lorena Gonzalez Fletcher, a San Diego Democrat and labor ally, said she will introduce a bill to put a statutory bulwark around the ruling. Business interests, meanwhile, are hoping to soften the blow. Touching on competing goods from across the political spectrum—jobs, tech, small business, fair pay—this is one of those vexing issues that could challenge even a super-duper-mega-majority.
Californians can be forgiven if they’re slightly nervous about the new two-year legislative session that’s starting. Democrats haven’t wielded this much power in 136 years.
Even a devoted Democratic voter should wince at the overwhelming one-party rule. It’s not exactly what the nation’s founders had in mind and bears watching closely. Exhibit A: One-party Republican control in Washington the last two years.
In Sacramento, the Democrats’ power will be checked only by themselves. There won’t be enough Republicans and moderate Democrats in the Legislature to beat back liberals on most issues even if they wanted to team up.
Any serious legislative squabbling will be solely among Democrats. And there’ll undoubtedly be intraparty fighting over turf and goodies.
“I cannot appoint everyone to [chair] policy committees,” Assembly Speaker Anthony Rendon (D-Paramount) notes. But he promises to delegate more power to committee heads and encourage them to spread it among their panels’ members — presumably only if they’re Democrats.
The new Legislature was sworn in Monday. Then the lawmakers knocked off until Jan. 7 when they begin meeting full time. That’s when citizens might begin to fret.
Democrats will occupy roughly three-fourths of the seats in both legislative houses. It takes only a two-thirds supermajority to pass tax increases and place constitutional amendments on the ballot. A three-fourths mega-majority is new territory.
Officials are still tabulating votes, but the last count in the Assembly was Democrats 60, Republicans 20. Democrats could still grab a 61st seat. In the Senate, it was Democrats 29, Republicans 11. On election day, Democrats picked up at least five Assembly seats and three in the Senate. And Democrats control every statewide office, including governor.
“The challenge for the party will be to use self-restraint,” says Democratic consultant David Townsend, chief advisor for legislative moderates.
Townsend estimates there are roughly 23 Assembly Democrats and eight senators who are moderates, depending on the issue. In Sacramento, “moderate” essentially means business-friendly.
But Democratic consultant Steve Maviglio contends that new liberal lawmakers “don’t have to be careful” and show restraint. The electorate will be even more leftist in the 2020 presidential election, he says. There’ll be a higher voter turnout, and that usually favors Democrats.
It’s my bet, however, that far-left libs will be kept in check. Gov.-elect Gavin Newsom isn’t about to reverse course 180 degrees from Gov. Jerry Brown and become a lavish spender. And there won’t be much chatter about a sanctuary state, as there was when Los Angeles Democrat Kevin de León was Senate leader.
“Democrats made their point [about illegal immigration] and did well in the elections,” Sen. Bill Dodd (D-Napa) says. “I’d like to see us doing more of the work people want in California.”
Exactly how Democrats use their buffed-up muscle is anyone’s guess. It’s doubtful they know themselves yet.
But here are some guesses:
Newsom will target early childhood education, focusing on what he calls the “readiness gap” — kids not being adequately prepared to start school. The governor-elect says he has a “sense of urgency” for “universal access to preschool.”
That’s also the Assembly speaker’s top priority.
Rendon says he and Newsom are “definitely on the same page. Get the kids early and break the cycle of poverty.” He wants to expand access and also modernize programs.
But how poor will a family need to be to qualify for a state-funded program? That may upset many people.
“The consensus in the Legislature is that it’s not our goal to serve kids whose parents have the means to afford their own” early childhood education, Rendon says.
Newsom also will take a stab at universal healthcare, although not necessarily the single-payer, all-government system many of his supporters adamantly advocate.
“I’m going to push the envelope, lean in on this and see how far we can take it,” Newsom told me in October. “I’ve got over 30 people working on it as we speak.”
This also is a top priority for Senate leader Toni Atkins (D-San Diego). Last year she coauthored a colossally expensive single-payer plan that passed the Senate and was quickly killed in the Assembly by Rendon because it lacked details and funding.
Rendon points out that only roughly 7% of Californians aren’t covered by medical insurance, thanks largely to the federal Affordable Care Act.
“Closing that final gap,” he says, “makes more sense” than trying to create a costly single-payer system.
That gap-closing, however, would mean covering all immigrants who are here illegally with government-financed Medi-Cal. Kids are already covered, but adults aren’t. Covering them could require a bruising legislative fight.
Another pressing problem Democrats have promised to keep working on is homelessness. Newsom says it’s a priority. So does Atkins. California has by far the largest homeless population of any state, with an estimated 23,000 living on L.A. streets.
Voters last month approved $5 billion in bonds for various homeless and low-income housing programs, but that’s just a start.
There’s also a huge deficit of affordable middle-class housing. A big part of the solution is regulatory streamlining. But Democrats haven’t had the stomach for that because unions use the regs to strong-arm labor concessions from developers.
There’s a long list: wildfire prevention, more accessible higher education, a 21st-century tax system….
Newsom will set the agenda and, based on his history, try to make a big splash.
It should be fun to watch. Hopefully it won’t be painful.
California’s most senior Democrat and most powerful Republican in Washington are teaming up to extend a federal law designed to deliver more Northern California water south, despite the objections of some of the state’s environmentalists.
While controversial, the language in their proposal could help settle the contentious negotiations currently underway in Sacramento on Delta water flows — the lifeblood of California agriculture as well as endangered salmon and smelt.
Democratic Sen. Dianne Feinstein and Rep. Kevin McCarthy of Bakersfield, the House majority leader, are leading the push to fold an extension of expiring provisions in the 2016 Water Infrastructure for Improvements for the Nation (WIIN) Act into the year-end spending bill that Congress must pass this month. And on Friday, they won the endorsement of Democratic Gov. Jerry Brown.
The legislation would make hundreds of millions of federal dollars available for California water storage projects as well as desalination and water recycling programs.
The WIIN Act also gives the federal government’s Central Valley Project and the State Water Project more operational flexibility to increase water deliveries at certain times of year to the south state through the massive pumps in the Sacramento-San Joaquin Delta, leaving less water in the system for Chinook salmon and other endangered species.
The ability to pump more water has become a key demand of local water agencies that are in the midst of trying to negotiate a water flow agreement for the lower San Joaquin River watershed.
They are in talks with California officials to try to stave off a controversial proposal by the State Water Resources Control Board to divert considerably more of the San Joaquin’s flow to fish, leaving less for farms and cities.
The board is scheduled to vote on the plan Dec. 12 but Brown’s administration has been urging the farms and cities to make voluntary deals under which they would pay for habitat restoration and other projects to help the fish. In return, they wouldn’t surrender as much water as the state water board is proposing.
Jeff Kightlinger, general manager of the Metropolitan Water District of Southern California, said an extension of the WIIN Act would give those farms and cities more comfort with the river-flow settlements. They’re more likely to accept a deal if they “have the added certainty that things like the WIIN Act will allow you to get more water supply more reliably,” Kightlinger said.
Feinstein and McCarthy also want the deal to help fund the potential settlement agreements — part of a bid to win Brown’s support for their proposal. The WIIN Act extension would authorize the Secretary of the Interior to collect fees from the participating water contractors to pay for things like habitat restoration.
It appeared to have worked. On Friday afternoon, Brown released a statement saying he supported the extension of the law, “including important provisions that House Majority Leader McCarthy and Senator Feinstein have proposed that enable California water users to participate in voluntary agreements and help improve river flows to restore fish populations.”
Environmentalists were quick to blast the legislative proposal, and Brown’s decision to support it.
Doug Obegi, a lawyer with the Natural Resources Defense Council, said the outgoing Democratic governor is cooperating with the Republicans in an effort to keep the Trump administration from backing away from his controversial Delta tunnels proposal. “This appears to be a quid pro quo where the governor trades away our salmon and thousands of fishing jobs for his stupid Delta tunnels,” Obegi said.
Osha Meserve, a Sacramento lawyer representing environmental groups that oppose the Delta tunnels project, said the law “creates a pot of money that could potentially be put towards what we think of as environmentally destructive projects.”
The original law “was supposed to be kind of special to accommodate the pain of the drought that was going on,” added Meserve. Now that those drought conditions have mostly abated, she questioned the necessity of extending the same, more flexible standards for pumping in the Delta.
Lisa Lien-Mager, deputy secretary at Brown’s California Natural Resources Agency, disputed the depiction of the governor’s support.
“It’s not a quid pro quo,” she said in an emailed statement. “The WIIN Act and its provisions ensure that any changes to water operations must be consistent with the California Endangered Species Act. The Brown Administration has been clear that any policies we advance on water supply have to also protect ecosystems and comply with (the California Environmental Quality Act). Where there are opportunities to add flexibility to the system to meet both of those objectives, we will work with our federal partners to pursue that. “
As it stands now, most of the provisions in the WIIN Act are scheduled to expire in 2021. Feinstein and McCarthy’s proposal, which is supported by a handful of other California members of Congress from both parties, would extend the California sections of the law until 2028.
And it would make more than $670 million in federal funding available for water storage projects in the state. In the past, those funds have been used for studies on a controversial proposal to raise Shasta Dam and one to expand the San Luis Reservoir.
Brown’s administration has been opposed to the Shasta Dam project. It would also provide $160 million over for wastewater, groundwater, water desalination projects. An example of one such project: the North Valley Regional Recycled Water Program, which transports recycled wastewater from the cities of Turlock and Modesto to agricultural users in the Del Puerto Water District. The program has received several million dollars from the federal government through the WIIN Act.
The 2016 law hasn’t translated into lots of additional water for south state water agencies thus far, mainly because state officials have been reluctant to cooperate with federal efforts to increase pumping through the Delta, according to Obegi. The state and federal governments operate the pumps in tandem.
Frustrated Trump administration officials have been trying to ramp up the pressure on California to increase water deliveries in recent months. In August, the Interior Department and Bureau of Reclamation declared they want to renegotiate a landmark 1986 agreement that governs how the state and federal governments operate the Delta pumps. Outside policy experts say the Trump administration is trying to take greater control over Delta operations and ship more water to the federal Central Valley Project customers, almost all of whom are San Joaquin Valley farmers that are allied politically with the president.
Environmentalists say greater federal control would translate into fewer protections for fish. “I am hopeful that the state of California will stand its ground,” said John McManus of the Golden Gate Salmon Association, which represents commercial fishermen.
Congress has just a week to work out a spending deal to keep the federal government funded for the rest of the fiscal year. The water proposal Feinstein and McCarthy are pushing is only one of dozens of potentially controversial measures lawmakers are trying to add to the bill. And like the others, the WIIN Act extension is likely to be a subject of last-minute horse trading. But the bipartisan nature of the measure — and the endorsement of California’s governor — give it a significant edge.
The grades for major U.S. infrastructure would give any parent indigestion if they were on a child’s report card.
Roads: D; bridges: C+; dams: D; ports: C+: railways: B; airports: D; schools: D+; public transit: D-.
The nation’s overall grade: D+, which translates to being “in fair to poor condition and mostly below standards” with “significant deterioration” and a “strong risk of failure,” according to an evaluation last year by the American Society of Civil Engineers.
And it won’t be cheap to fix all that crumbling infrastructure and build badly needed new projects. The estimated cost is as much as $4.6 trillion through 2025 — and depends on Republicans and Democrats in Washington acing a subject they have been failing: bipartisanship.
But the results of the November elections — particularly California voters refusing to repeal an increase in the state’s gas tax to pay for road and bridge repairs — are spurring optimism that a major infrastructure initiative is possible if party leaders can overcome key differences in how it would be structured.
The need to rebuild the nation’s highways, dams and other infrastructure is one of the only areas of agreement among President Trump, congressional Republicans and Democrats, who will take control of the House next year. Projects range from filling dangerous potholes on Interstate 5 in California to the proposed $30-billion Gateway project to upgrade bridge and tunnel connections between New York City and New Jersey.
Leading business groups have made a significant boost in infrastructure spending a top priority, and the projects could provide a lift to the U.S. economy as the stimulus effect of the recent Republican tax cuts starts to fade. That all has experts pointing to infrastructure as the most likely major legislative accomplishment for both parties before the next elections in 2020.
“The conventional wisdom is there’s a lot of reason to work together. Both sides want an infrastructure program,” said Henry Cisneros of Siebert Cisneros Shank & Co., a firm that manages financing for large-scale infrastructure projects.
“But whether it will happen will depend almost exclusively on whether the political climate is contentious preparing for 2020 or both sides see the benefit in getting it done,” said Cisneros, who served as Housing and Urban Development secretary from 1993-97.
The day after the November election, Trump said he and Democrats “have a lot of things in common on infrastructure” and cited it as one of the issues the two parties could work on next year.
Rep. Peter A. DeFazio (D-Ore.), the likely new chairman of the House Transportation and Infrastructure Committee, said a White House official visited him in September to discuss infrastructure investment, apparently with an eye toward a Democratic takeover of the House.
“I’m cautiously optimistic that we can actually get something done,” DeFazio said.
But there are major hurdles to a deal.
Democrats have called for $1 trillion in new federal spending over 10 years. Trump has proposed trying to leverage $200 billion in federal money in partnership with the private sector to produce $1.5 trillion in new infrastructure over the same period.
On top of the huge discrepancy in the amount of federal funding is a debate over how to raise the money. That question has become more pressing since the federal budget deficit soared this year after the big corporate and individual tax cuts took effect.
Trump’s plan, unveiled in January, called for the federal spending to be offset by unspecified budget cuts. Democrats want to raise the federal gas tax, which has not been increased since 1993. Business groups also support a modest hike in the gas tax. Most Republicans and conservative groups have opposed any increase in the 18.4-cent-a-gallon tax.
(Los Angeles Times)
But Trump told DeFazio and other Democrats in a meeting in February he was open to a 25-cent increase, phased in over five years. The U.S. Chamber of Commerce has proposed such an increase, noting the tax, designed to fund highway and mass transit spending, hasn’t kept up with inflation over the last 25 years.
“A lot of the Congress wants infrastructure, but now we have to figure out a way to pay for it,” said Ed Mortimer, the business group’s vice president of transportation and infrastructure. “From a business community standpoint, we’re willing to stand by these elected officials to get this done.”
There’s little debate that much of the nation’s infrastructure — a broad category that includes public parks, high-speed internet access, pipes for delivering drinking water and facilities holding hazardous waste — is badly in need of significant upgrades.
The aging drawbridges carrying Interstate 5 over the Columbia River between Oregon and Washington are stretched beyond capacity and don’t meet seismic standards, but a multibillion-dollar plan to replace them has stalled for years. The nation’s out-of-date air traffic control system is in the midst of a $36 billion overhaul to replace ground-based radar with satellite tracking, but funding to complete it is in question.
And Amtrak’s Portal Bridge in New Jersey often malfunctions and needs workers to bang the rails back into place with sledgehammers. It is part of the Gateway project that is seeking federal funding. One New Jersey commuter even set up a GoFundMe campaign recently to draw attention to the problem.
Last year, California officials drew up a wish list of $100 billion in state projects for possible additional federal funding. They included the replacement Gerald Desmond Bridge under construction in Long Beach, an expansion of the Los Angeles-to-San Francisco bullet train project to include service to San Jose and an earthquake early warning system.
“I think there is a need to both renew — by that I mean repair deterioration and bring things up to good operating condition — and there’s a need to modernize,” said Martin Wachs, a retired professor of urban planning at the UCLA Luskin School of Public Affairs.
The American Society of Civil Engineers’ evaluation found about 9% of the nation’s bridges — 56,007 of them — were structurally deficient in 2016.
Highways are in even worse shape, with drivers spending about a fifth of their time on rough pavement. And about 31% of public transit tracks, tunnels and other fixed guideways were in poor condition in 2012, according to the latest data from the U.S. Transportation Department.
Nearly a third of schools — 31% — use trailers or other temporary buildings. The average dam is 56 years old and many are not expected to survive major floods or earthquakes, with about 17%, or 15,500, having the potential to cause loss of life if they failed, the engineers group said.
In some ways, car-dependent Californians have it the worst.
Aside from hours-long commutes, they drive on some of the roughest pavement in the country, with San Francisco, San Jose and Los Angeles topping the list of major urban areas with the highest percentage of bad roads, according to TRIP, a nonprofit research group sponsored by insurers, equipment manufacturers, labor unions and others that would benefit from increased spending.
Well over half the major roads in those cities were in poor condition, and the ragged condition of the state’s transportation infrastructure was the motivation behind legislation last year to increase the gas tax and vehicle fees to provide $5.2 billion a year to do repairs and other construction.
It raised the state gas tax by 12 cents a gallon and created a new annual vehicle fee ranging from $25 to $175 depending on a car’s value. Starting in 2020, electric car owners also will pay a $100 annual fee in lieu of gas taxes.
Top Republicans opposed the law and put a repeal initiative on the November ballot. While they raised $5 million, supporters of the gas tax, including the construction industry and labor unions, raised $47 million to defeat it. The repeal failed, receiving only 43.3% of the vote.
“People will vote for higher taxes if they believe it will be used for a good purpose that they believe is necessary,” said Rep. John Garamendi (D-Walnut Grove), who serves on the House transportation committee.
The strong support among California voters for a gas tax wasn’t the only positive sign about infrastructure support in the November election. In Minnesota, Democrat Tim Walz won the governor’s race after calling for a gas tax increase to pay for infrastructure improvements. And Democrat Gretchen Whitmer, who was elected Michigan’s governor, campaigned on a “fix the damn roads” slogan.
Polls show Americans aren’t happy with state and federal infrastructure efforts and support increased spending.
About 62% said the federal government is not spending enough on transportation infrastructure projects in their area, according to a May survey by Monmouth University.
But there’s no consensus on how to pay for it, with the public roughly equally split on raising the federal gas tax, according to a Quinnipiac University poll in February.
The federal gas tax is the primary source of revenue for the highway trust fund. The fund pays for federal transportation programs and grants for state and local projects. But inflation has eroded the value of the revenue generated over the last 25 years even as infrastructure costs have risen.
(Los Angeles Times)
The highway fund hasn’t been able to pay for all authorized projects, forcing Congress to fill the gap with $144 billion in additional money through 2020. After that, unless Congress ponies up more money, the fund will start running an annual shortfall again that will grow to $161 billion by 2028, according to the Congressional Budget Office.
It’s part of an overall funding gap for infrastructure. From 2016-2025, estimated funding is projected to fall nearly $2.1 trillion short of the $4.6 trillion needed, according to the American Society of Civil Engineers, a group whose members also would benefit from increased infrastructure spending.
So a gas tax increase to boost funding makes sense to many politicians and business groups such as the U.S. Chamber of Commerce, the Business Roundtable and the National Assn. of Manufacturers.
The survival of California’s gas tax is fueling optimism that a modest federal gas tax increase could happen.
“We were heartened by the California vote,” Mortimer of the U.S. Chamber said. “It would have been a big challenge to get revenue adjustments in Washington if the California vote went the other way.”
Trump’s proposal this year did not include a gas tax increase, instead relying on public-private partnerships that have a checkered history. Trump’s plan is similar to the United Kingdom’s Private Finance Initiative, recently ended by British lawmakers as there was broad agreement the partnerships drove up costs because the government can borrow money more cheaply than private firms.
A computer monitor displays airline traffic at the Air Traffic Control System Command Center in Warrenton, Va. The aging air traffic control system is getting a $36-billion overhaul that is not yet fully funded. (Pete Marovich / For the Washington Post)
DeFazio said public-private partnerships can play a limited role. But significantly improving U.S. infrastructure will require “real money” and increasing the gas tax makes the most sense, he said.
Trump’s backing would be key, DeFazio said. “If the president supports it … I think a lot of Republicans would come along,” he said.
A White House spokeswoman declined a request for comment.
There is strong conservative opposition to a gas tax increase. A coalition of conservative and free-market groups — which claim existing funds are being frittered away on pet projects and red tape — sent a letter to members of Congress this year declaring, “Raising the gas tax is a bad idea.”
Senate Majority Leader Mitch McConnell (R-Ky.) said after the November election that he hoped Congress could pass infrastructure legislation, but he was not interested in increasing the federal budget deficit to do it.
The deficit is projected to jump $1.5 trillion by 2028 because of the tax cuts Republicans pushed through Congress last year. In the 2018 fiscal year, which ended Sept. 30, the budget deficit increased 17% to $779 billion from a year earlier.
Some Democrats have suggested scaling back the corporate tax cuts to help pay for infrastructure. But congressional aides have said it’s a non-starter and business groups would oppose it.
McConnell acknowledged that “almost everybody seems to be interested” in pursuing major infrastructure legislation next year.
“You know what the sticking point is?” he told reporters. “How do you pay for it?”
A long-debated development in a remote, uninhabited part of Los Angeles County could be vulnerable to dangerous wildfires of the type California has seen in recent months, prompting concerns about the safety of building there.
The Centennial development at Tejon Ranch would sit squarely within “high” and “very high” fire hazard severity zones as defined by the California Department of Forestry and Fire Protection.
From 1964 to 2015, Cal Fire recorded 31 wildfires larger than 100 acres within five miles of Centennial, including four within the project’s boundaries, according to county planning documents.
Given those facts and the recent devastation of the Camp and Woolsey fires, some say the model that has long characterized development in Southern California — communities sprawling farther and farther out into wildland — is no longer sustainable.
“Going back to the 1960s, everywhere that we move … fire erupts,” said Char Miller, professor of environmental analysis at Pomona College.
“There’s a pattern here and we need to pay attention to the relationship between urban development on the one hand and wildland fire on the other,” Miller said.
Representatives for Tejon Ranch Co. said they have taken fire hazard into account and that modern building and safety practices can significantly reduce the risks.
“From the beginning of our planning process we’ve been cognizant of ‘fireproofing’ Centennial insomuch as any community can be fireproofed,” said Barry Zoeller, vice president of corporate communications and investor relations.
Over the last two years, California has experienced an unprecedented series of catastrophic wildfires, which burned tens of thousands of homes and killed more than 100 people. From Santa Rosa to Redding to Paradise, fires have swept into neighborhoods with incredible speed and destruction, generating new debate about the wisdom of building homes in areas that are susceptible to fire.
The disastrous toll of wildfires has also prompted discussion about how climate change has made homes in the path of fire more vulnerable than ever.
The proposed Centennial project, set to come before the Board of Supervisors on Dec. 11, would bring more than 19,000 homes to a private wilderness area. Supporters say it will help reduce California’s drastic housing shortage and provide more Californians the dream of a single-family home in a beautiful natural setting.
Aides to Supervisor Kathryn Barger, whose district includes the Centennial site, said she trusts the safety expertise of the L.A. County Fire Department, which submitted comments throughout the planning process and accepted the final environmental impact report.
Chris Perry, Barger’s planning deputy, said Centennial would bring four new fire stations to the community and provide multiple points of entry and exit.
“Every community has some vulnerability,” Perry said. “It’s one of the reasons we said you must have an overwhelming fire presence in any new community that you build.”
Like much of Southern California, Tejon Ranch experiences hot summer temperatures and a months-long dry season.
Though the area is susceptible to Santa Ana winds, more frequently it experiences cooler, moister winds from the north and northwest, lowering the potential for red flag conditions, said David Gomberg, manager of the fire weather program at the National Weather Service in Oxnard.
Local vegetation and terrain pose separate hazards.
The area selected for housing at Centennial is mostly flat grassland, though some of the site includes high brush, woodlands and steep slopes, increasing the chance of fire, according to county planning documents.
And grass, though short, is highly flammable.
“Add to that an ignition and you get a fire that’s burning very quickly,” said Alexandra Syphard, an ecologist at the Conservation Biology Institute.
The vast majority of wildfire ignitions result from human activity.
County planning staff and the Tejon Ranch Co. say fire risk at the project site can be contained.
Because Centennial falls within state-designated fire hazard zones, homes will be built according to the most stringent codes, requiring flame-resistant roofing, attic vents with mesh screens, and double-pane, tempered glass windows. Homeowners must also clear brush within a certain radius on their properties.
Because the community will be master planned, the developer can ensure all of its homes are built to the same specifications and surrounded by fire-resistant landscaping and open space — a luxury non-planned communities don’t have.
Power lines to the site — a frequent cause of fires — will be underground.
“You could get a series of fires in downtown L.A.,” said Zoeller, of Tejon Ranch Co. “What you have to do is … everything that you can within reason to try to fireproof any community anywhere.”
But fire experts say reducing the risk to zero isn’t realistic.
“The aesthetic that would be required to do that” — lots of concrete, small windows, little to no landscaping — “is something people don’t want,” said Michele Steinberg of the National Fire Protection Assn.
In fact, one attraction of Tejon Ranch is its natural environment, which the company has promised to preserve.
Even if all the houses are designed exactly to code, Steinberg said, they have to be maintained perfectly, with no dry leaves accumulating in gutters, cracks seeping between tiles or wooden decks tacked onto houses.
“We’re talking about fires spreading house to house, vegetation to house, embers to house …. The embers will get into gutters, ducts [and] vents that are open,” she said.
Once houses ignite, they radiate heat and drive the fire forward.
Coffey Park in Santa Rosa was destroyed this way, as the Tubbs fire raced from home to home. Aerial photos of Paradise show trees still standing between burned-out houses.
In a worst-case scenario, 60,000 people — double the population of Paradise — would have to evacuate Centennial at once.
”If the fire goes through fast enough, even with appropriate evacuation access, it becomes a human life concern,” Syphard said.
State Route 138, which leads to Interstate 5 to the west and State Route 14 to the east, would offer the main path in and out.
The two-lane highway will be expanded to four to six lanes, and the Tejon Ranch Co. says it will add connecting roads to facilitate traffic to and from Centennial.
But the company is not required to design an evacuation plan before the project’s approval. That will come later, with tract maps.
The county’s Regional Planning Commission has recommended approval of Centennial. Planning staff found that measures to lessen the project’s environmental impacts, including fire hazard, were adequate.
Mitch Glaser, an assistant administrator at the planning department, said public safety, health and welfare form the basis for all land-use planning at the county, but that there is no specific regulation prohibiting development in a fire hazard zone.
The Board of Supervisors could still deny the Centennial project on that or another basis, he said, but would need to explain its decision.
Glaser said he was not aware of any development in L.A. County that had been rejected wholesale because of fire hazard, though at least one had been downsized because of it.
Los Angeles is not unusual. Research shows that across California and the U.S., the number of homes built in wildland areas, including those that have previously burned, is growing.
The legal ground for denying developers the right to build after they’ve met local planning requirements is shaky, said Don Elliott, director of the land-use consultancy Clarion Associates.
The 5th Amendment enshrines private property rights, and governments can be sued for taking private land and leaving the owner with no “reasonable economic use” of it.
“The government will lose that lawsuit,” Elliott said.
“If you want to say you can’t build in a fire hazard area, you have to adopt a resolution or ordinance ahead of time,” he said. That law must be based on objective standards, including risk maps, and go through a public approval process.
The federal government already gives states and municipalities incentives to regulate developments in flood plains this way, but no parallel system exists for developments in the wildland-urban interface.
Donald Falk, a fire researcher at the University of Arizona, said communities should proceed carefully.
“We need new places to live, of course, but we have to recognize that every time we build a house in an area that is fire-prone we are just making the land-use problem more difficult,” he said. “We can’t be surprised down the road when we’re spending billions of dollars and losing many lives as a consequence of those decisions.”
McKesson Corp., the nation’s largest pharmaceutical distributor, announced today that it will relocate its headquarters from San Francisco to Irving in April.
The company, which delivers prescription drugs and medical supplies, has more than 75,000 employees globally and had revenue of $208 billion last year. It ranks sixth on the Fortune 500 list, behind only Walmart, Exxon Mobil, Berkshire Hathaway, Apple and UnitedHealth Group.
With its move, McKesson will become the second-largest company by revenue to be based in North Texas, surpassing AT&T Inc. The largest, Exxon Mobil, is also headquartered in Irving.
Dallas-Fort Worth had 22 Fortune 500 company headquarters this year. That’ll grow next year with the addition of McKesson and another California transplant, San Francisco-based Core-Mark Holding Co., which is relocating to Westlake.
Medical industry giant McKesson was founded by John McKesson and Charles Olcott in 1833 as a drug import and chemicals wholesale business in New York City. Since then, it’s become a powerhouse in pharmaceutical distribution, moving mass quantities of prescription drugs, latex gloves and other items used in clinics and surgical centers. Although many consumers never see its name on a product, one-third of pharmaceuticals used each day in North America are delivered by McKesson.
McKesson began setting the stage for its relocation last spring. It opened a North Texas campus in Las Colinas and relocated U.S. Pharmaceuticals Group, its largest business unit and biggest revenue driver. When its campus opened, it brought about 1,000 jobs to Dallas-Fort Worth. Since then, it has grown to about 1,600 jobs at the campus.
With the headquarters relocation, McKesson’s top executives will be based in North Texas. Company officials say the relocation will bring additional jobs in divisions such as human resources, finance and accounting and corporate strategy, but it did not specify a number. The company has about 500 jobs in San Francisco, and most of those will move to Irving or another company hub by 2021. Some divisions of the company, such as McKesson Ventures and a tech development team for its U.S. oncology network, will remain in San Francisco.
The relocation comes as McKesson faces intense scrutiny over the role it may have played in the nation’s opioid crisis. It is the target of lawsuits and congressional hearings that allege it knew that some of its pipeline of highly addictive drugs were being diverted to illicit markets, such as millions of doses of prescription painkillers that were delivered to a tiny West Virginia town.
Texas is part of a multistate investigation that’s exploring whether McKesson and other major pharmaceutical companies broke laws and contributed to a sharp increase in the number of overdose deaths and babies born addicted to painkillers.
But the state also gave $9.75 million to McKesson through the Texas Enterprise Fund, a pool of money used to attract companies to Texas, when it announced its Irving campus last year. The company was awarded an additional $2 million from Irving. The company said in a statement that it will not receive additional incentives for moving the headquarters.
Jonathan Palmer, a health care analyst for Bloomberg Intelligence, said McKesson’s profits have been squeezed as drug manufacturers and pharmacy chains, such as Walgreens and CVS, get bigger.
“There’s consolidation across every sector of health care,” he said. “Everyone is using that scale to drive a harder bargain.”
McKesson’s Irving headquarters will have the largest head count of its campuses. Other large U.S. offices will be in Scottsdale, Ariz., Richmond, Va., and Atlanta. It also has employees in Canada and Europe. It has more than 50 distribution centers and about 20,000 retail employees who work in the United Kingdom.