Capital News & Notes
For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “Down to the Last Couple of Dollars”
LEGISLATURE
- Atkins Selected First Woman State Senate Leader
- Labor Activist Wins LA Assembly Seat in Liberal v. Liberal Contest
- Sexual Harassment Charges May Slow Legislature’s Pace
CALIFORNIA TRENDING
- Cap-and-Trade Irony: Too Much Cash for Clean Air?
- Renters Increasingly “Down to the Last Couple of Dollars”
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.
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FOR THE WEEK ENDING DEC.8, 2017, READ ALL ABOUT IT!!!
Atkins Selected First Woman State Senate Leader
San Diego State Senator Toni Atkins – a former Assembly speaker – will become the first woman to ever lead the California Senate when the Legislature returns next year.
Senate President Pro Tem Kevin de León announced Thursday that Atkins is the consensus pick of the Senate Democratic Caucus to succeed him as leader. She will be formally elected in January and a transition will take place at an undecided date later in the year.
“Toni is a leader of great experience, achievement and integrity, and I have every confidence that she will lead America’s most accomplished legislative chamber to even greater heights,” de León said in a statement.
Atkins was elected to the Senate last November after serving for six years in the Assembly, where she was speaker from May 2014 until March 2016.
“Today, I am humbled by the trust my colleagues have placed in me, and I intend to earn that trust every day by working tirelessly and inclusively to keep California a place of opportunity for everyone,” she said in a statement. “Given our national divisions, California’s example is more important than ever – and I look forward to working with our president pro tem and all of our colleagues to ensure that the Senate continues to rise together to meet the challenges faced by the great people we represent.”
In a series of firsts, Atkins will also be the first openly gay pro tem in state history and the first person to have served as both Assembly speaker and Senate president pro tem in nearly 150 years, according to Alex Vassar, a legislative historian at the California State Library.
Atkins and de León declined interview requests Thursday.
Atkins was elected to the Senate last November after serving for six years in the Assembly, where she was speaker from May 2014 until March 2016.
The daughter of a miner and a seamstress, she grew up in a house without running water in rural Virginia. The family didn’t have health insurance, which she discussed on the Senate floor earlier this year as she pushed her colleagues to adopt a universal health care bill she introduced with Sen. Ricardo Lara, D-Bell Gardens.
She worked for the San Diego City Council before becoming a councilwoman in 2000. She served on the council until 2008, including a short stint as interim mayor.
In a text message to other Democratic senators, Atkins said she intended to build on successes under de León’s leadership. She pledged to focus on the needs of the senators and address challenges such as elections, legislation, sexual harassment and workplace safety.
“I do believe California can chart a new vision and give direction to other states and industries on how to address this issue,” she wrote.
De León, who terms out of the Legislature at the end of next year, entered the U.S. Senate race against incumbent Dianne Feinstein in October. The announcement prompted lawmakers to make plans to replace him as pro tem.
De León had previously made it known that he wanted to continue to serve as pro tem as long as possible. Some in the caucus questioned whether de León could focus on both his federal race and fundraising for state senate campaigns, a key aspect of the leadership position.
Atkins and at least two other Democratic legislators – Sens. Connie Leyva of Chino and Bob Hertzberg of Los Angeles – jockeyed for the top spot in the Senate. Leyva announced her desire to be the next pro tem in September, with some quick to criticize her for speaking out. She stepped out of the race roughly two weeks ago after it became clear that Atkins secured the necessary votes from other lawmakers.
“I was happy to come together with Sen. Atkins and support her,” Leyva said Thursday. “I think it’s incredibly important for a woman to be pro tem. We need unity right now in the Senate.”
Hertzberg commended de León and voiced support for the incoming pro tem.
“We have critical work to do, and there’s no better person to lead the charge than my fellow former Speaker Toni Atkins,” Hertzberg said in a statement. “Senator Atkins’ experience as speaker makes her well positioned to hit the ground running, and I am excited to work together to address the great challenges we face in the Senate and across California.”
Members of the Senate Democratic Caucus joined a conference call early Thursday morning to receive an update on the house’s actions to address sexual harassment in the Capitol. At the end of the call, de León discussed transitioning the leadership role to Atkins, according to lawmakers.
http://www.sacbee.com/news/politics-government/capitol-alert/article188586714.html#storylink=cpy
Labor Activist Wins LA Assembly Seat in Liberal v. Liberal Contest
Democratic labor activist Wendy Carrillo won a special election in Los Angeles on Tuesday night and will serve out the term of former assemblyman Jimmy Gomez, who was elected to Congress in a special election earlier this year.
Carrillo’s opponent, fellow Democrat Luis López, called her to concede late Tuesday evening as Carrillo led López 52.83% to 47.17% with a 943-vote margin.
Tuesday’s vote is the last in a series of four special elections that have reshuffled the political landscape in a section of Los Angeles stretching from Silver Lake to Eagle Rock and East Los Angeles.
The string of elections was triggered when Barbara Boxer announced her retirement from the U.S. Senate more than two years ago. Kamala Harris won Boxer’s seat, and Los Angeles Rep. Xavier Becerra was appointed to fill out Harris’ term as state attorney general. Gomez beat out a large field of candidates to succeed Becerra, a 24-year House veteran, and in July he began work in Washington.
Carrillo will take over for Gomez in the Assembly when lawmakers return to the Capitol in January to begin the second year of a two-year legislative session.
Carrillo, a former local radio host and communications manager for a Service Employees International Union affiliate, counted on her personal history — she was brought to the U.S. from El Salvador when she was a child, became a citizen in her early 20s and went on to graduate from Cal State L.A. and earn a master’s degree at USC — to resonate in the district, home to a large Latino population.
At an election night party at an East Los Angeles restaurant, Carrillo told a crowd of students, activists and political leaders including California Senate President Pro Tem Kevin de León that her win would send a message to other candidates from nontraditional backgrounds that transitioning into politics and winning elections is possible.
“You don’t need to wait to get tapped on the shoulder for someone to tell you it’s your turn,” she said. “You have to fight.”
Carrillo was the party establishment pick for the seat, and earned several coveted endorsements from the state Democratic Party, Emily’s List, the Los Angeles County Federation of Labor and the Democratic Legislative Women’s Caucus. Gomez also endorsed Carrillo.
Carrillo’s election is a win for the Legislative Women’s Caucus, which lost four seats held by women to men in the 2016 election, part of a decline in the number of women serving in Sacramento. In 2017, 26 women held seats in Sacramento, down from a high of 37 in 2006.
The caucus, led by Assemblywoman Cristina Garcia (D-Bell Gardens), made it a priority to ensure Gomez was replaced by a woman.
Garcia urged several women interested in running to rally behind a single female candidate to avoid the same fate as the more than a dozen women who ran in the crowded primary to replace Becerra: None of them won more than 10% of the vote and two men made it to the runoff.
On Tuesday night, Garcia was on hand to celebrate Carrillo’s victory.
“I don’t just want another woman in the Assembly,” she said. “[Carrillo’s] background in journalism and her real-life experience as a refugee really allows her to be a bridge between communities. That is what we need.”
The effort to elect a woman to the Assembly comes as women’s groups and candidates — galvanized by the election of President Trump — have found new political strength around the nation.
Outside her Silver Lake polling place Tuesday, Laura Thornburg, a 46-year-old film librarian, said it was tough parsing out the differences between two progressive candidates such as Carrillo and López.
For Thornburg, electing a woman was the deciding factor.
Carrillo also had financial muscle behind her.
After she won the October special election, her campaign benefited from over $650,000 in outside spending from independent expenditure committees to support her or attack Lopez. The money came from a variety of sources including labor unions and a committee funded by charter school proponents.
That money was likely crucial in the low-turnout election. Just 10% of the approximately 220,000 registered voters in the district cast ballots in the October special election, and preliminary numbers late Tuesday indicated that 7.6% of voters had cast ballots. That number is expected to climb on Friday when the county releases an update that counts late and provisional ballots.
López, who has a master’s degree in public policy from Harvard University and is the director of government affairs for City of Hope Medical Center, stressed his resume working in government and with neighborhood groups in the district.
He is a board member at Planned Parenthood, previously served as president of the East Los Angeles Area Planning Commission and co-founded the Silver Lake Neighborhood Council.
López previously ran for the Assembly seat in 2012, but lost to Gomez by about 19 percentage points. Like Carrillo, Gomez ran with the support of the Democratic Party and labor unions.
http://www.latimes.com/politics/la-pol-ca-assembly-district-51-special-election-20171206-story.html
Sexual Harassment Charges May Slow Legislature’s Pace
Commentary from CalMatters
California Republicans have harbored thoughts—or fantasies—about eroding the Democrats’ two-thirds legislative “supermajorities” in next year’s elections.
However, it appears that Democrats could do it to themselves by ousting legislators accused of sexual harassment.
Raul Bocanegra, a Pacoima Democrat, was forced to resign from the Assembly due to revelations about harassment that occurred eight years ago, when he was a legislative staffer.
Sen. Tony Mendoza, an Artesia Democrat, faces multiple allegations of sexual misconduct and has been stripped of his key leadership positions by the Senate Rules Committee, headed by Kevin de León, the president pro tem of the Senate who was, until recently, Mendoza’s weekday roommate.
The latest eruption in the Capitol’s harassment scandal occurred Monday, when lobbyist Pamela Lopez identified Assemblyman Matt Debabneh, a Democrat from Woodland Hills, as the man who cornered her in a bar’s restroom and masturbated.
The political question is this:
If Bocanegra was compelled to resign over something that occurred eight years ago when he wasn’t even a legislator, how could the institution not demand the same penalty from two other men whose alleged misbehavior occurred while they were in office?
The heat is especially high on de León, not only because he was Mendoza’s roommate but because he’s running for the U.S. Senate next year and is trying to unseat the state’s most prominent woman politician, Dianne Feinstein.
And the political equation is this:
Bocanegra’s resignation, when added to the vacancy created by Assemblyman Jimmy Gomez’s elevation to Congress, dropped Democrats to 53 seats in the Assembly, one short of a supermajority.
A Democrat filled Gomez’s Los Angeles seat in a special election on Tuesday, restoring the supermajority, but if Dababneh were to be forced out, it would disappear again. His seat would eventually be occupied by another Democrat via special election, but the 2018 legislative session would begin with Democrats still short a seat.
The party’s margin in the Senate is even thinner. Were Mendoza to leave, it would drop Democrats to 26 seats, one short of a supermajority until the vacancy was filled via special election sometime in 2018.
Supermajorities allow Democrats, at least in theory, to approve tax increases, urgency bills and constitutional amendments without Republican votes. However, such actions also require Democrats to remain unified, which has proven to be difficult.
This year’s measures that required two-thirds votes, such as a controversial gas-tax increase and extension of the state’s cap-and-trade program for curbing greenhouse gases, succeeded only because a few Republicans filled in for Democratic holdouts.
There’s no shortage of potential issues requiring two-thirds votes in 2018, such as the hefty taxes required for a single-payer health program or changes in Proposition 13, both much-cherished goals of the Democratic Party’s left wing.
Bocanegra, Mendoza and Dababneh are not the only politicians ensnared in the harassment scandal. Devon Mathis, a Republican assemblyman from Visalia, also stands accused, but his departure would not, as a practical matter, affect the Legislature’s delicate balance of power.
Rumors abound, however, that other names may surface.
Meanwhile, too, another Democratic senator, Josh Newman of Fullerton, faces a Republican-backed recall election because of his vote for the gas-tax bill. With all of the other turmoil, his fate could have a serious impact on what happens, or doesn’t, in the Capitol next year.
Cap-and-Trade Auction Recovery May Imperil Long-Term Emissions Cuts
California is swimming in $1.5 billion in new money for clean energy programs and the high-speed rail project, after lawmakers extended the climate-change program, cap-and-trade. But analysts suggest the current boom could ultimately undermine the program’s purpose of cutting long-term emissions.
Sales of cap-and-trade credits—which businesses must obtain in order to legally emit greenhouse gases—have soared in the second half of 2017, after a year of uneven returns.
Since July, when lawmakers voted to renew the cap-and-trade program through 2030, the state has sold every available credit at its quarterly auctions, even as emissions are lower than regulators expected. In other words, companies are buying more credits than they need.
State regulators, academics and analysts generally agree on the reason; businesses are stocking up on credits and holding them for future years.
“It’s a pretty simple comparison of the supply and demand in the market, and it’s not requiring a lot of forecasting,” says Chris Busch of the climate change think tank Energy Innovation.
Companies buying up excess credits now can use them later, when the state’s greenhouse gas targets tighten and the “cap”—the limit on credits offered by the state—lowers. Lawmakers included a provision in the cap-and-trade legislation that allows the banking of credits, one of several safety valves to give businesses more leeway to meet the state’s goals and prevent sudden price spikes.
The danger, Busch says, is the scale of oversupply. He’s preparing a report that suggests businesses are banking enough credits now, when they don’t need them, that they’ll be able to stave off as much as 30 or 40 percent of the cuts cap-and-trade will require next decade.
“Left unaddressed, oversupply and the resulting banked allowances (credits) threaten California’s 2030 emissions reduction success,” Energy Innovation said in a preview of that report last month.
“It could mean a very significant overshoot of the target,” says Michael Wara, an energy attorney at Stanford who has consulted on the cap-and-trade program. “It could well be that we have emissions that are much higher than that, because of over allocation, because of banking, because it makes sense to save up allowances early when it’s cheap to do that.”
Forecasting emissions levels next decade—and therefore the price of credits—is an inexact science at best, and it’s possible the worry is overblown. A University of California, Berkeley study finds it only slightly more likely that cap-and-trade credits will sell for the minimum allowed (suggesting there are more available than businesses need) than that they will sell for the maximum (likely requiring state intervention to prevent price spikes).
Administrators of the cap-and-trade program at the California Air Resources Board are familiar with the over allocation concern, and generally dismiss it. They say they have controls in the program to prevent businesses from hoarding too many credits or oversaturating the market with them.
“There are holding limits,” says Raginder Sahota. “There are limits to how much entities can actually buy and keep in their accounts, and those holding limits have always been in the program.”
She’s also skeptical many companies will want to spend money now to hold the maximum number of allowances to use in the future. Lastly, the Air Resources Board has authority to alter the total number of credits available each year.
“We have opportunities to adjust along the way,” Sahota says. “This isn’t a one-time deal, and that’s never been the practice of the ARB to put something out there and not monitor it and adjust as necessary.”
Critics worry that regulators, under future governors next decade, may not have the will to take away credits that businesses are relying on—and possibly raise prices in the process.
Lawmakers, environmental groups and industry debated whether to allow banking of credits—and how many—in the lead-up to the program’s extension earlier this year. And, the board will likely discuss it again later this month, when it convenes to approve new rules governing the post-2020 cap-and-trade program.
California Renters Increasingly “Down to the Last Couple of Dollars”
Even before their latest rent increase, Barbie Thompson and her husband, Juan, could barely afford the Rancho Santa Margarita apartment where they raised two children.
The company that paid her around $13 an hour to distribute samples at Costco often kept her on a part-time schedule, Thompson said. Her husband earned even less as a busboy. So to make ends meet, at times the couple used a food pantry, let auto bills lapse and turned their $1,845 rent in late — a budgeting tool that cost $50 in late fees.
“Sometimes we were down to the last couple of dollars,” said Thompson, who estimated she and her husband spent at least 57% of their gross income on rent and utilities. “There was never enough.”
And that was before the landlord raised the rent on their two-bedroom unit to more than $1,930.
California’s high housing costs have pushed many tenants to the edge of affordability. Even if they have steady work, the cost of putting a roof over their heads demands a staggering share of income.
The problem has been building for decades, a result of rising rents and stagnant income for many lower- and middle-class workers as the economy shifted away from manufacturing to create a legion of low-wage service jobs.
One reason rents have risen steadily in California is a lack of apartment construction relative to job and population growth. And even though low-wage work has exploded in many corners of the state, California has added many well-paying jobs as well. Those workers bid up prices, particularly in the San Francisco Bay Area and Southern California
For many, finances simply can’t stretch any further. A study this year from real estate website Zillow found 2,000 more L.A. County residents would be pushed into homelessness by a 5% rent hike.
“I don’t think it’s any stretch that our homeless numbers are going to rise,” said Elise Buik, chief executive of United Way of Greater Los Angeles. “We have so many families on the edge.”
In 2016, 29% of California tenants put more than half their income — before any deductions — toward rent and utilities, according to an analysis by the California Budget & Policy Center. Housing costs are considered to be a burden on finances when they surpass 30% of income; more than half, or 54%, of California renters were paying that much.
The share of renters living on the edge has risen in fits and starts through years of economic expansion and contraction.
Back in the days of “Ozzie and Harriet,” in 1960, just 11.9% of U.S. renters put more than half their income toward rent and utilities, according to Harvard University’s Joint Center for Housing Studies. By 1980, the number in California was up to 20.2%.
Those who are less well-off have to make tough decisions: move to a cheaper area or cut back on cellphone services, restaurant outings and other, more necessary items.
Michael Flood, president of the Los Angeles Regional Food Bank, said he usually sees a sharp decline in households looking for help as the economy improves. But this time around it’s been only a slight decrease — something he attributes chiefly to rising housing costs.
“We are hearing more and more people say, ‘I am working … but the rents are just killing me,’” Flood said.
Concepcion, a 40-year-old mother of three who requested only her first name be used because she fears deportation, entered the U.S. illegally as a teenager. She said it’s hard getting by with a rent and utility payment that comes to about 40% of what her husband earns each month at three jobs.
She said it’s been hard to find better-paying work because she and her husband are here illegally. She lost a hospital job a few years back because of her immigration status.
So when it comes time to pay the $820 monthly rent for their Santa Ana apartment, the stay-at-home mom and part-time nursing student said she sometimes has only $10 to cover two days of food for herself and three kids.
Her husband isn’t home for dinner. She said he leaves at 4:30 a.m. and is sometimes back as late as 2 a.m. the next day, working as a landscaper and at two restaurants.
After rising steadily since 1960, the share of U.S. renters spending more than half their incomes on housing flatlined from 1990 to 2000, a time when rents rose just slightly faster than incomes. The share was also flat in California.
Then during the first decade of this century, the share in both the state and the nation surged amid the housing bubble and weak wage growth. It jumped further in the wake of the financial crisis when millions lost their jobs.
By the end of the decade, median renter incomes adjusted for inflation had actually fallen nearly 12% from 2000, while rents were 10% higher, according to an analysis from NYU.
Then in 2011, the share of renters spending over half their income on housing hit an all-time high of 27.9% nationwide, in part because of a surge in rental demand from young adults as well as people who lost their homes in foreclosure. The share has since fallen as the economy recovered, but at 25.2% it remains historically high.
“It sounds kind of simple-minded to say it, but renter income hasn’t been going up very fast and rents have been going up fast,” said Rolf Pendall, co-director of the Urban Institute’s Metropolitan Housing and Communities Policy Center.
In the Los Angeles region, the median rent when adjusted for inflation increased 55% from 1980 to 2014, to $1,294, according to a study from website Apartment List. Incomes rose only 13%.
Economists and urban planning experts said income growth has been sluggish for a variety of reasons, including the loss of well-paying manufacturing jobs, declining union power and increased competition from low-wage workers in China and other developing countries.
With more limited options today, many workers without a college degree have turned to minimum-wage restaurant work, contract jobs or employment in the so-called gig economy.
In theory, rent growth shouldn’t consistently soar past gains in income.
But Richard Green, director of the USC Lusk Center for Real Estate, said his research shows that while rising incomes push rents up, when incomes fall, rents don’t always fall as much because landlords don’t want to earn less money.
In economically vibrant places such as California, too little apartment construction has also put sharp upward pressure on rents. In the high-income job centers of San Francisco and San Jose, many residents have been able to absorb the rent hikes, while poorer renters are pushed to outlying areas.
The places with the highest burdens tend to be places such as Los Angeles, with both high housing costs and a large population of low-wage workers.
http://www.latimes.com/business/la-fi-rising-rents-affordable-housing-20171203-story.html