For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “One of our major jobs is to provide oversight over the entire state government. Oftentimes, reports aren’t filed or information is not brought forward to the committees, It’s very frustrating.”
Assemblymember Phil Ting, on State departments failing to report to the Legislature
- 100 Climate Groups Lobby Governor & Legislature for a $10-Billion Bond
- State Agencies Ignore Mandated Reports to Legislature; Adds to Budget Costs
- Half of the Rest of the Country Sees Tarnish on the Golden State
- Governor Launches Oil Fracking Ban
- US Refiners Beat Earnings Estimates
- 56% of High School Seniors Don’t Finish College Prep Classes
- Cisco Cuts 4,000 Jobs
Capital News & Notes (CN&N) curates California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING FEB. 16, 2024
100 Climate Groups Lobby Governor & Legislature for a $10-Billion Bond
Sacramento Bee
Gov. Gavin Newsom and legislative leaders should take action to place a “robust and equitable” bond on the November ballot “that prioritizes direct and meaningful investments in the California communities and natural resources most impacted by climate change,” according to a letter signed by a coalition of more than 100 climate advocacy groups.
“We have aligned to recommend $10 billion in investments that we view as the floor for California to continue making timely progress on its ambitious climate and natural resources commitments,” the letter reads in part.
As California, and the world, face the growing threat of climate change-fueled catastrophe, the coalition urges immediate action.
“Action this decade is vital to prevent the worst and deadliest impacts. Placing a climate bond on the November ballot can preserve decades of California leadership towards a healthy environment and social equity by ensuring communities have crucial resources they need now,” the letter reads.
The letter calls for spending including $3 billion for safe drinking water and flood protection, $2 billion for wildfire prevention and resilience, $1.5 billion for “nature-based solutions and biodiversity,” $1.05 billion for extreme heat resilience and $1 billion for coastal protection.
“We know, and polling confirms, that California voters want our state government to ensure clean water, clean air, access to open lands and waters, and healthy sustainably grown food. California voters should have the opportunity to vote for a strong climate bond that equitably invests in protecting communities and nature this November, so they don’t have to endure the consequences later,” the letter reads.
Given California’s shaky fiscal future, it’s unclear how this proposed bond will fare.
State Agencies Ignore Mandated Reports to Legislature; Adds to Budget Costs
CalMatters
Talk to any California legislator about the budget deficit the state is facing, and you might hear a familiar refrain: It’s not just about new programs. It’s also how well existing laws are working.
But that can be difficult to track — for the public and lawmakers, alike.
Many new laws include homework for relevant state and local agencies: A deadline to report back to the Legislature about the performance of the new program or commission. The Legislature, itself, says these reports “provide crucial oversight to ensure effective implementation of programs.”
But more than 70% of the 1,118 reports due in the past year were not submitted to the Office of Legislative Counsel, the public repository for the reports, according to a CalMatters analysis of its records. And about half of those that were filed were late. (About 230 were reports required from multiple agencies.)
The office’s website for these reports isn’t widely known about and isn’t comprehensive, but it’s the only system for tracking them across state government. The office said that it does not have information on the percentage of reports filed, and that it removes reports from its website one year after their initial due date, even if they’re filed late, as long as they aren’t required on an ongoing basis.
In theory, these reports could be used to avoid introducing duplicate or unnecessary bills. A total of about 2,000 are put in the hopper each year, and governors sometimes cite duplication in vetoing measures, in addition to raising cost concerns and policy reasons.
Last year, Newsom vetoed 156 bills. In an Oct. 7 batch on health care, he blocked one to require Medi-Cal to cover medication abortion, which he called “well intentioned, but unnecessary,” and another calling for a state database of mental health providers for postpartum depression, which he said would be “duplicative of existing programs and resources.”
“The Legislature, in requiring these reports, is making the decision that this policy area needs to be further explored in order to properly legislate,” said Brittney Barsotti, general counsel for the California News Publishers Association. “If those reports aren’t being completed or being made available to the public, then it could be hindering the policy process.”
One example: Assemblymember Tom Lackey said that one of his bills in 2022 might have been very different had a California Highway Patrol report been filed on time.
That bill re-authorized an inspection exemption for some agricultural vehicles, created by a 2016 law he also authored, which directed the CHP to report back to the Legislature about the impact of the exemption by Jan. 1, 2022. While the report was completed in October 2021, it wasn’t released to legislators until August 2022, seven months late and one day after they passed Lackey’s reauthorization bill.
“The delayed report could’ve changed the bill,” the Palmdale Republican said in an interview. “If we had it before, we could have modified the bill to be more meaningful because now we’re probably going to have to redress it a third time because there’s a sunset, and we could’ve prevented that if the information had come quicker.”
“When you have to duplicate over and over again, that’s a waste of resources, a waste of time, and it’s frustrating,” Lackey added.
Assemblymember Phil Ting, who served as budget committee chairperson from 2015 through last year, said delayed or missing information also plagues plans state agencies or boards are supposed to make for the future.
“One of our major jobs is to provide oversight over the entire state government,” said the San Francisco Democrat. “Oftentimes, when reports aren’t filed or information is not brought forward to the committee, it’s very frustrating.”
According to state statutes, any report required or requested by law must be submitted to the Secretary of the Senate as a printed copy, as an electronic copy to the Chief Clerk of the Assembly, and as an electronic or printed copy to the Office of Legislative Counsel. Upon receiving the reports, the Assembly clerk and Senate secretary print them in the journal and might refer them to the relevant policy committee.
Since 2013, the Office of Legislative Counsel has been required to make the list of local and state agency reports accessible to the public to increase transparency and create “a repository for information” that “more effectively allows for tracking the completion of a report.”
But it’s not always clear whether a missing report hasn’t been completed, or if it was completed, but wasn’t submitted to the Office of Legislative Counsel.
The lack of reliability may be why some lawmakers and consultants say they don’t often use the website. Instead, they gather intel from multiple sources. Some legislators receive reports through their policy committees.
There’s also the Legislative Information Systems public website that provides bill language, votes and analysis. Lawmakers can also reach out to the Legislative Analyst’s Office or the state auditor. They can also ask state agencies directly, though that’s not always a quick process.
The state auditor’s office could evaluate the work of a specific agency. Until December, the Legislature had a Committee on Accountability and Administrative Review, whose job was to study how well state programs were implemented and run. But it only held one oversight hearing in 2022 and only three in 2023.
As part of his committee reorganization announced last November, Assembly Speaker Robert Rivas disbanded the accountability panel and shifted its duties to a budget subcommittee tasked with examining how effectively the state is spending money. The committee will be led by Assemblymember Avelino Valencia, a Democrat from Anaheim.
“Delivering effective programs for taxpayer dollars is our perennial responsibility,” the Salinas Democrat said in December. “This subcommittee will closely examine what is, and isn’t, getting the job done.”
Senate President Pro Tem Mike McGuire, who was sworn in to the post last week, said he will be “digging into the issue” of the lack of oversight of past laws.
MORE:
Half of the Rest of the Country Sees Tarnish on the Golden State
LA Times
As Californians, we are often aware of how the rest of the nation perceives our state, and —shocker— it can be negative. Half of U.S. adults believe California is in decline, a recent survey for The Times suggests. The Golden State has lost its luster, according to the naysayers.
Democrats and Republicans harbor various concerns and animosity toward California. Liberals find the state too expensive and unsuitable for raising a family; conservatives disapprove of, well, almost everything.
Such partisan divide fuels the negativity, with 48% of Republicans considering California “not really American,” the survey found.
“Not really American.” What does that even mean?
Yes, California’s politicians must address significant issues like soaring housing prices, a persistent homelessness crisis, drought and wildfires. However, what state doesn’t have its share of problems?
How much are these opinions grounded in fact versus the blue-versus-red divide that lacks nuanced arguments beyond “California is a liberal state, that’s why it’s failing.”
Is California too expensive?
California’s high cost of living is a bipartisan concern, with 87% of survey respondents agreeing it’s too high. This sentiment is shared by around 8 in 10 Californians and nearly 9 in 10 residents elsewhere in the country, according to the poll.
Residents have complained about the rising expenses, with some contemplating relocation due to the high costs. California has a larger share (13.2%) of people in poverty than many other states, based on census data.
Los Angeles (No. 6) and San Francisco (10) rank among the world’s most expensive cities to live in, according to the Worldwide Cost of Living Index. Even the most affordable areas in the state, like Modesto, Bakersfield and Stockton, are experiencing a decrease in affordability.
And these urban regions significantly surpass the national average for cost of living: San José (174.9%), San Francisco (169.6%) and Los Angeles-Long Beach (148.8%), the Council for Community and Economic Research index found. The findings consider “housing, utilities, grocery items, transportation, healthcare, and miscellaneous goods and services.”
How unsafe is California?
National news stations and conservative social media consistently highlight California’s safety issues, shaping negative views. While three-quarters of Republican participants fuel this belief, over half of all respondents share concerns about the state’s safety.
Despite recent improvements in crime statistics in Los Angeles and other major cities, there is still a lingering perception of danger. In October 2023, L.A. reported a nearly 7% decline in violent crime compared with 2022, with decreases in homicides, robberies, rapes and property crimes other than petty thefts.
In 2022, California’s reported rate of violent crime exceeded the national average, but mirrored rates in states including Colorado, South Carolina and Missouri, according to the most recent state-by-state data released by the FBI.
Where does California’s higher education rank?
Although California’s colleges and universities consistently rank among the best in academic surveys, 3 in 10 people nationwide perceive the state’s higher education options as superior to those of other states.
California’s public universities are a dominant force in educating Californians. An abundance of the state’s institutions appear on Forbes’ 2023 America’s Top Colleges list based on schools that enroll diverse students and help them graduate, achieve high salaries and become successful leaders without excessive student debt.
Four University of California campuses appear in the top 25: UC Berkeley (5), UCLA (7), UC San Diego (21) and UC Santa Barbara (24). Twelve other public universities cracked the top 100.
Private universities like Stanford (3) and USC (14) also cracked the top 25.
Have the haters even visited California?
Some responses are puzzling, such as 3 in 10 Republicans saying California’s natural environment is worse than other states.
How can a state boasting numerous picturesque views of the vast Pacific Ocean, the extraordinary peaks of Yosemite and the towering redwoods of Sequoia be perceived so poorly by the right? Have you ever experienced the beauty of Big Sur?
Surprisingly, 43% of non-California residents in the survey admitted they had never visited the state, with 23% visiting only once.
Additionally, 77% stated they wouldn’t consider moving to California, citing reasons such as the state’s lack of alignment with their lifestyle and dislike of the politics.
Despite the negative perceptions, 58% believe California positively affects the nation.
Governor Launches Oil Fracking Ban
Sacramento Bee
Nearly three years after Gov. Gavin Newsom directed it, California’s oil and gas industry regulator kickstarted a process to outright ban hydraulic fracturing, the fossil fuel extraction method known as ‘fracking.’
Fracking permits have not been issued in the state since 2021, but environmentalists celebrated the move as a win in the fight against climate change. Oil industry groups called it yet another example of regulatory overreach and argued it could lead to higher oil prices.
Late last week, the Geologic Energy Management Division (CalGEM) said in a draft rule that it will officially cease to approve hydraulic fracturing permits on California oil and gas wells.
“This regulatory change will improve the Department’s Geologic Energy Management Division’s ability to prevent damage to life, health, property, and natural resources… including the mitigation and reduction of greenhouse gas emissions,” said Jacob Roper, a spokesperson for the Department of Conservation.
CalGEM said it will hold a virtual public hearing on the fracking rule on Tuesday, March 26 ahead of the public comment deadline.
Hydraulic fracturing involves injecting a high-pressure mixture of water, sand and chemicals underground to fracture subterranean layers of rock and release oil and gas. The practice is more common in larger oil gas producing states such as Texas and Pennsylvania.
As the practice exploded in the mid-2000s, research gave fracking a reputation for pollution and public health dangers. Fracking not only is water intensive, it releases potent greenhouse gases such as methane and benzyne and can contaminate groundwater basins with chemical additives.
Even in earlier days of oil and gas extraction in California, fracking was not widespread. Roughly 13% of California oil and gas wells have been fracked at least once. Overall, permitted fracking operations accounted for just 2% of statewide oil production in 2021.
CalGem estimated that the new ban, which it expects to be approved by the end of 2024, would have moderate impact on oil production. The agency said the rule would lead to $190 million in costs incurred by oil and gas operators and cut production by 4%.
California’s oil production industry has been on the decline since the 1980s, but that doesn’t mean it’s going down without a fight. Last year Chevron and the Western States Petroleum Association collectively spent more than $18 million on lobbying in Sacramento.
Catherine Reheis-Boyd, president and CEO of WSPA, said CalGEM had already instituted a de-facto ban on fracking but that this rule would exceed the limit of the agency’s regulatory authority and overlooks “decades of safe operations.”
“This decision is another misplaced political assault on production and energy supplies by the Newsom administration,” she said. “These types of policies are devastating to our state’s energy supplies, which are rapidly shrinking under the Newsom administration, and will likely lead to even higher energy costs for California consumers.”
Three years ago, after Newsom directed CalGEM to cease issuing fracking permits and set a 2024 deadline to legally end the practice, the state denied a string of at least 100 fracking permit applications. Several oil companies filed suit, claiming the agency could not reject permits without a formal ban.
Now, after three years of quiet on the issue from the agency, this new effort could put those lawsuits to bed, said Hollin Kretzmann, an attorney at the Center for Biological Diversity’s Climate Law Institute.
“Symbolically, it means California is moving in the right direction. A ban on fracking is a simple no brainer,” he said. “Californians have wanted to end fracking for years, and hopefully this rule is an indication that they’re getting serious on the rest of the fossil fuel industry.”
If CalGEM was serious about addressing the climate crisis, Kretzmann said, it could use its authority to put a new oil well setback restriction into regulation. California passed a restriction 2022 but that law has been suspended pending a referendum vote in 2024.
https://www.sacbee.com/news/california/article285393757.html#storylink=cpy
US Refiners Beat Earnings Estimates
Reuters
Major U.S. fuelmakers beat Wall Street’s earnings expectations in the fourth quarter on strong refining margins and operating performance, and they predicted profits would rise again this year thanks to global demand growth.
For 2023, three of the biggest U.S. independent refiners – Marathon Petroleum, Phillips 66, and Valero Energy – posted combined adjusted earnings of $25.7 billion. While that beat forecasts, it was down from combined profits of $33.9 billion in 2022, when market disruptions from sanctions on Russia’s energy industry drove record earnings.
“Investors have turned positive on refiners and metrics, especially for gasoline demand, look good,” said Matthew Blair, a refining analyst at Tudor, Pickering, Holt & Co, in an interview.
Marathon posted a profit of $2.24 per share last quarter, while Phillips 66 earned of $3.09 per share and Valero earned $3.55 per share.
Globally, gasoline demand rose by 3% and distillate demand grew by 2% throughout the year, according to Brian Mandell, executive vice president of marketing of Phillips 66. Global gasoline demand is expected grow by 1% in 2024 while distillate demand will grow by 0.5%, he added.
The bump in global demand growth will keep encouraging U.S. refiners to focus on exporting fuels. U.S. petroleum product exports totaled nearly 6.0 million barrels per day in the first half of 2023, the highest ever for the first six months of a year, according to the U.S. Energy Information Administration.
The U.S. has also increased distillate exports to Europe, which previously imported sanctioned Russian diesel and heating oil. U.S. distillate fuel oil exports to Europe averaged 138,000 bpd in the first half of 2023 more than double the 56,000 bpd in the first half of 2022, according to the EIA.
Still, U.S. fuelmakers must compete with an additional 1.5 million barrels a day of global refining capacity to come online this year, more than the projected 1 million bpd of oil demand growth projected globally.
Startups of some of the biggest new refineries in the world, such as the 650,000 barrel per day Dangote refinery in Nigeria, should begin running at higher rates in the second half of 2024.
56% of High School Seniors Don’t Finish College Prep Classes
EdSource
While the vast majority of students in California — 86% of seniors in 2023 — graduate from high school, most — 56% in 2023 — do not complete their college prep “A-G” requirements, according to an EdSource analysis of data from the California Department of Education. EdSource’s analysis found that Black and Latino students are the hardest hit.
In 2023, 68% of Black students and 64% of Latino students did not meet A-G requirements, compared with 26% of Asian students and 48% of white students, according to EdSource’s analysis.
A-G requirements are the mandatory college prep classes, including math, science, English, visual arts and at least one designated elective.
The highest non-completion group is foster students at 88%, followed by disabled students at 85% and English learners at 82%.
“These kinds of numbers should be treated as a five-alarm fire,” said Melissa Valenzuela-Stookey, director of P-16 research for Ed Trust-West, a nonprofit that advocates for justice in education.
Valenzuela-Stookey said high school graduates are being shut out of affordable four-year public college options, because they are not getting the support they need to complete the A-G coursework.
“Our education systems urgently need to invest more in our students of color,” Valenzuela-Stookey said.
Of 1,766 high schools in California, about half graduated more than 56% of students lacking the required college preparatory courses.
Fewer than 2 out of 10 students met A-G rates in 2023 in many northern counties, such as Lake, Del Norte, Plumas, Lassen, Nevada, Tehama, Trinity. Just 3 out of 10 students in Kern, Merced, Tulare and Kings counties met the requirements. That compares to the Bay Area in San Mateo, Santa Clara, Alameda and Marin counties where more than 5 out of 10 students met A-G requirements.
Improving low A-G completion rates has been a longtime goal of both educators and state policymakers, but it’s a problem that resists easy answers or quick fixes, said Sherrie Reed, executive director of the California Education Lab at UC Davis and a researcher with Policy Analysis for California Education (PACE), an independent research nonprofit affiliated with several California universities.
The idea of simply aligning the state’s minimum high school requirements with A-G requirements hasn’t gained steam because of the concern that it would result in fewer students graduating, said Mayra Lara, the director of Southern California partnerships and engagement with Ed Trust-West.
The state, instead, has offered carrots for districts working on improving poor A-G rates, especially those that have a large marginalized student population, such as those who are low-income, English learners, homeless or have a disability. In 2021-22, the state set aside over $547 million for the A-G Completion Improvement Grant Program. The state has also pushed dual enrollment and career technical education to the high school curriculum, both of which can help students meet their A-G requirements.
Progress has been slow. The number of students who have met A-G requirements statewide has ticked up just shy of four points over the last six years.
Understanding why any given student may or may not meet A-G requirements requires examining what is happening in a particular region or district, as well as disparities within schools.
“The answer is that it is all of that,” said Reed. “No one factor accounts for it.”
Most high schools in the state — 91.4% of traditional district schools, according to PACE — do offer a full slate of A-G coursework that put them on track for college. But the degree of access students get to those courses or support, once they have enrolled, varies greatly, resulting in wide disparities between groups of students.
PACE released a series of briefs and reports on the A-G completion rates in summer 2023, noting that access to rigorous coursework — whether dual enrollment, Advanced Placement or other college preparatory courses — can profoundly change the trajectory of a student’s life. These courses not only set students up for admission to college, but make it more likely that a student will pursue college in the first place.
Researchers found that some high schools do not offer the full range of A-G courses. In 2018-19, 2.5% of schools offered no A-G courses, and another 6% only offered some A-G courses. The list also includes small and rural schools that struggle to hire teachers who are qualified to teach A-G required classes in fields such as math, science or foreign language.
But 84% of schools that do not offer a full range of A-G courses are charter schools focused primarily on credit recovery for students at risk of not graduating from high school. Charter schools tend to be outliers in both directions; schools with the highest and lowest A-G rates — where fewer than 40% or greater than 80% of students meet A-G requirement — tend to be charters.
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Reuters
Cisco Systems said it would cut 5% of its global workforce, or more than 4,000 jobs, and lowered its annual revenue target as the company navigates a tough economy that has led to thousands of layoffs by tech firms this year.
Shares of the networking equipment maker fell more than 5% in extended trading on Wednesday, after Cisco cut the forecast to $51.5 billion to $52.5 billion from $53.8 billion to $55 billion, it projected earlier.
“We also continue to see weak demand with our telco and cable service provider customers,” CEO Charles Robbins said in a conference call.
Analysts expect demand for Cisco’s products to remain under pressure, as clients in the telecom industry restrict spending, prioritizing clearing their excess inventory of networking gear.
The networking hardware inventory pile-up should resolve in the second half of 2024 or early 2025, Joe Brunetto, analyst at Third Bridge said.
Meanwhile, Cisco is focusing on artificial intelligence and partnership with Nvidia to boost growth. CEO Robbins said Nvidia agreed to use Cisco’s ethernet with its own technology that is widely used in data centers and AI applications.
Cisco expects third-quarter revenue between $12.1 billion and $12.3 billion, below estimates of $13.1 billion, according to LSEG data.
The company, which has 85,000 employees, was planning layoffs and restructuring to focus on high-growth areas, three sources familiar with the matter told Reuters earlier this month.
https://www.reuters.com/technology/cisco-lay-off-5-workforce-2024-02-14/