For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – California…The New New York?
STATE FISCAL OUTLOOK
- Voter Majority Supports Newsom’s State Budget; Likes His Style
- Following New York’s Lead? High-Earners May Be Departing
- California Tax Revenues Drop, State Controller Reports
- Storm Clouds for Tech Industry – Earnings Decline
- Export Trade Drops First Time Since 2017
- Governor Has $15 Million Political Warchest
- For Newsom Newbies: Guide to Downtown Sacramento
- “New Awakening in CA…Elections Matter”
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 FEB, 8, 2019
Majorities of Californians support Governor Newsom’s first proposed budget, which increases spending on K–14 education, higher education, and health and human services. This is among the key findings of a statewide survey released yesterday by the Public Policy Institute of California (PPIC).
When read a summary of the governor’s 2019–20 proposed budget, 70 percent of all California adults and 64 percent of likely voters favor the spending plan. Large majorities support two key components of the governor’s proposal: 77 percent of adults and 72 percent of likely voters favor allocating $1.8 billion to expand pre-kindergarten and early childhood programs and facilities, while 78 percent of adults and 70 percent of likely voters support an $832 million funding increase for public colleges and universities.
The survey also asks which of the four major areas of state spending should have the highest priority: K–12 public education, health and human services, higher education, or prisons and corrections. Californians are most likely to choose K–12 education (46%), followed by health and human services (32%), higher education (16%), and prisons and corrections (4%).
Immigration Seen as Top Issue for State Leaders to Address
Asked what the most important issue is for the governor and legislature to address in the coming year, more Californians name immigration and illegal immigration (15% adults, 18% likely voters) than any other issue. Additional issues mentioned by more than 5 percent of Californians are education (11% adults, 11% likely voters), jobs and the economy (10% adults, 8% likely voters), the environment (8% adults, 8% likely voters), and homelessness (6% adults, 7% likely voters).
Just 27 percent of Californians say the situation with illegal immigration across the US-Mexico border is a crisis, while 45 percent say it is a serious problem but not a crisis. A similar share of adults nationwide (24%) called the situation a crisis in a January ABC/Washington Post poll.
A strong majority of Californians (69%) oppose building a wall along the entire border with Mexico, while 28 percent favor doing so. Nationwide, a January CNN poll found that a majority of adults (56%) opposed building a wall and 39 percent were in favor.
Majority Are Optimistic Governor, Legislature Can Work Together
Two-thirds of Californians (67% adults, 65% likely voters) are optimistic that the new governor and the legislature will be able to work together and accomplish a lot in the next year. Majorities of Democrats (79%) and independents (59%) believe Governor Newsom and the legislature will be able to work together, as do 44 percent of Republicans.
With Newsom in office for less than a month, 44 percent of adults and 43 percent of likely voters approve of the way he is handling his job, while 33 percent of adults and 29 percent of likely voters say they don’t know or have not heard enough to have an opinion yet. This is similar to Governor Brown’s approval rating when he took office in January 2011 (41% adults, 47% likely voters).
As the 2019–20 legislative session gets underway, about half of adults (49%) and 46 percent of likely voters approve of the way the California Legislature is handling its job. This is similar to the legislature’s approval rating from last January (51% adults, 50% likely voters).
When asked who should make the tough choices involved in the state budget this year, overwhelming majorities of Californians (77% adults, 78% likely voters) want voters to make some of the decisions. This is consistent with the large share of Californians—always at least three in four—expressing this view on PPIC surveys since 2011.
Mixed Views on “Split Roll” Change to Proposition 13
Proposition 13, which limits property taxes in California, is viewed favorably, with 61 percent of adults and 64 percent of likely voters saying it has been mostly a good thing for the state. A ballot measure eligible for the 2020 ballot would ease the strict limits that Proposition 13 places on commercial property taxes without changing its provisions for residential properties. Californians are divided on having commercial properties taxed according to their current market value. Slightly less than half (47%) favor this change, 43 percent oppose, and 10 percent don’t know. Likely voters hold similar views: 49 percent favor the change, 43 percent oppose, and 8 percent don’t know. A majority of Democrats approve (58%), while 49 percent of independents and 37 percent of Republicans do.
The survey also asks about Californians’ understanding of state finances. Asked to name the largest source of state revenue, a third (33% adults, 34% likely voters) correctly say personal income taxes.
Optimism about Direction of State
A majority of Californians are optimistic about where the state is headed, with 55 percent of adults and 51 percent of likely voters saying things are going in the right direction. However, views vary across racial/ethnic groups and party affiliations. Majorities of Asian Americans (71%), Latinos (62%), and African Americans (57%), but less than half of whites (47%), believe California is going in the right direction. More than three-fourths of Democrats (79%) hold this view, while far fewer independents (41%) and Republicans (18%) do.
Reality – a new reality – is hitting home as Californians work on their 2018 federal income tax returns.
Some are seeing smaller federal tax bites and bigger refunds, thanks to a more generous standard deduction in the tax overhaul that a Republican Congress and President Donald Trump enacted in 2017. But those accustomed to writing off state income tax and local property tax payments are feeling the pinch due to one of the most contentious aspects of the revised system.
It limits deductions for state and local taxes (SALT) to $10,000 on a joint return, which has the intended effect of increasing federal taxes, particularly on residents of in high-taxing states such as California.
This week, New York Gov. Andrew Cuomo declared that his state collected $2.3 billion less in income tax revenue during December and January than the state budget expected and blamed the shortfall on a flight of high-income taxpayers to states that have low or no state income taxes, especially Florida.
“If even a small number of high-income taxpayers leave, it has a great effect on this tax base,” Cuomo said. “You are relying on a very small number of people for the vast amount of your tax dollars.”
Cuomo and governors of other high-tax states – whose politics tend to be, of course, deeply blue – grumbled as the tax overhaul was being written that it would encourage high-income residents, unable to write off their state and local taxes, to flee.
“It was politically diabolical and also highly effective,” Cuomo said this week. “And if your goal is to help Republican states and hurt Democratic states, this is the way to do it.”
“They are investors, they have accountants, they are making informed decisions,” Cuomo said of the New Yorkers who headed south. “This is going to be the tipping point and people will now be making a geographical change.”
After Cuomo complained, the Wall Street Journal reported that Florida is, indeed, seeing a new wave of well-to-do transplants from New York, New Jersey and other high-taxing states, sparking a real estate boom.
So what about California and neighboring Nevada, which, like Florida and Texas, doesn’t have a state income tax? The Wall Street Journal noted that both Nevada and Arizona are seeing their populations grow rapidly.
Former Gov. Jerry Brown sponsored an increase in income taxes on those in higher brackets, generating a windfall of new revenues and helping him balance the state budget. But later, he worried aloud that the federal limit on SALT deductions could entice the rich to flee his state.
There have been anecdotal accounts about such flight, but no one has documented a mass migration. That said, it wouldn’t – as Cuomo pointed out – take much of an exodus from California to have an impact, given that so few high-income residents of his state generate so much of New York’s revenue stream.
The top one percent of New York’s taxpayers supply 46 percent of the state’s income tax revenues. In California, the one-percenters’ share of income taxes is slightly higher, and our top marginal income tax rate, 13.3 percent, is considerably higher than New York’s 8.82 percent.
California Controller Betty Yee tracks state tax receipts and expenditures monthly and reported recently that through December – the first six months of the 2018-19 fiscal year – general revenues were $2.5 billion under budget estimates, including a $1.9 billion income tax shortfall. Preliminary data indicate the monthly shortfall continued in January.
A blip or a trend?
(See page 5)
Don’t look now: Storm clouds are gathering over tech.
Chinese consumers have pulled back their spending, blowing a $9 billion hole in Apple’s recent quarterly revenue. China was again a culprit when Nvidia warned last month that its revenue would come in 20 percent below expectations, though the graphics chip maker also blamed slack demand from Bitcoin miners and cloud data centers.
Intel, the big chip maker, cited intensifying “trade and macro concerns” for financial results in January that did not meet expectations. And Samsung, another semiconductor powerhouse, said sales plunged 10 percent in the fourth quarter because of weakening demand for its memory chips from data centers and smartphones.
China, smartphones, Bitcoin and cloud computing have been among the major drivers of the long tech boom, which in turn has powered the global economy for the last decade. The ingredient common to all of these sectors is computer chips, which form the brains of devices and whose ubiquity means they provide early signals about changes in supply and demand.
Warnings about a sales slowdown this year have come in recent weeks from big chip suppliers that also include Taiwan Semiconductor Manufacturing Company, Micron Technology and Western Digital. It’s an abrupt reversal, coming on the heels of stellar results in 2018 for the business that gave Silicon Valley its name.
Last year, manufacturers shipped a staggering 1 trillion chips and other semiconductor devices, 10 percent more than the year before, IC Insights estimates. But 2019 is shaping up to be a much different story, now that several important sources of chip demand appear to be dampening.
The notion that a chip dip could lead to a general downturn evokes memories of 2000, when one day tech had an unlimited future and the next it was crashing in what became known as the dot-com bust.
Back then, investors showed no mercy. Intel made what seemed a modest adjustment to its revenue forecast for the third quarter of 2000, saying it would be up 3 to 5 percent instead of 7 to 9 percent. The value of the company immediately fell by nearly 30 percent over the next few days.
This year, with a similar downgrade, investors largely shrugged it off. Intel shed about 5 percent of its value over a week.
While acknowledging the parallels to 2000, Gene Munster, research director for Loup Ventures, a venture capital firm, said, “I think it’s different this time.”
Back then, among the best customers for the established chip firms were start-ups, which had more dreams than revenue. As the start-ups faltered, the chip firms were imperiled. The storm lasted for years.
“These are all real companies now, with real customers,” Mr. Munster said. “People are willing to look past a few bumpy months.”
Even if the problems do not linger, they are a reminder that demand is not eternal. That seems to be what happened with smartphones, which use multiple varieties of chips to run software, process data and connect to cellular networks.
Consider Apple, which gave a muted forecast in October for the holiday season and followed up early last month with its first full-fledged revenue warning in 16 years. The iPhone maker faces stiff competition and slumping demand in China. Total smartphone shipments fell 15 percent in that country in the fourth quarter, according to research firm Canalys.
Michael Wolf, who surveys consumers annually about their technology and media usage for his management consulting firm Activate, said people seem to be shifting to lower-priced phone models and cheaper service plans. But he said demand seems strong for digital subscription services like Netflix, video games, online advertising and business-to-business sales for companies like Microsoft.
“From all of our research, I don’t see some general consumer malaise,” Mr. Wolf said.
Yet several other businesses appear to be softening as well, including the market for server systems used by cloud service operators, including Amazon, Microsoft and Google. Sales of high-priced chips for such hardware have driven profits for companies like Intel and Nvidia, but they now say that equipment buyers for data centers have turned cautious.
“Cloud service providers shifted from building capacity to absorbing capacity,” Robert Swan, who was then Intel’s chief financial officer and now chief executive, said on a conference call after Intel released its fourth-quarter results.
Longtime tech industry watchers began picking up trouble signs late last spring in the market for memory chips, an essential component in computers that in decades past prompted trade tensions between the United States and rivals in Japan and South Korea. Makers of a key category called dynamic random-access memory, or DRAM, have suffered product shortages and gluts that whipsawed pricing and heralded changing fortunes for the broader industry.
During the dot-com bust of 2001, DRAM revenue plummeted 63 percent while total semiconductor revenue fell 31 percent, according to Gartner data.
But conditions changed dramatically over the years as manufacturers fled from the lack of profits, leaving three major DRAM makers — Samsung, Hynix and Micron. They have been slow to boost production, enabling them to keep their prices high. And they also benefited as memory became more important in smartphones, data center hardware and other products beyond the personal computers that once drove most sales.
“The markets today are structurally different,” Sanjay Mehrotra, Micron’s chief executive, said in a recent interview.
Yet market cycles haven’t disappeared entirely. DRAM prices peaked last June and began sliding, prompting Micron and Samsung to issue their recent profit warnings. DRAMeXchange, a Taiwan-based firm that tracks the market, predicts DRAM prices will fall an additional 20 percent in the first quarter.
Memory chips “behave like onions or steel or any other commodity,” said Jim Handy, a market researcher at Objective Analysis. “If there is an oversupply, prices fall.”
Nvidia presents an extreme example of both boom and bust. The 25-year-old company, which pioneered the specialized processors that generate images in video games, became one of Silicon Valley’s most valuable companies in 2017 as those chips were adapted for artificial intelligence uses by internet giants.
But Nvidia’s processors also became extremely popular for the mathematical process of mining digital currency, driving a surge in demand that inflated prices and created a shortage of chips. Buyers wound up placing multiple or overly ambitious orders, making it hard for the company to get a handle on conventional demand for its technology.
The cryptocurrency bubble faded suddenly last year, causing Nvidia’s revenue and stock price to tumble as the company wound up with extra inventories of unsold chips. The crypto issue “ended up being way, way bigger” for the company than expected, said Hans Mosesmann, an analyst at Rosenblatt Securities. “It’s been a crazy story.”
For all the turmoil, industry executives and analysts said that business conditions remain a lot healthier than past semiconductor slumps. For one thing, a series of mergers has reduced price competition. Companies like Micron, which routinely lost money in past cycles, are expected to remain solidly profitable even if sales dip.
Beyond that, there is the glorious future.
“Eventually the storm will pass and these companies — Nvidia, Apple, Samsung — will have a pole position in the next tech growth curve, including A.I., health care, self-driving cars, 5G,” said Mr. Munster, the Loup analyst. “The curve is so exciting, so juicy, so full of opportunity.”
For the first time in more than a year, California’s merchandise export trade fell in November, according to Beacon Economics’ analysis of U.S. trade statistics released this morning by the U.S. Census Bureau following a lengthy delay caused by the Federal government shutdown.
Foreign shipments by California businesses totaled $15.00 billion for the month, a nominal 2.2% decline from the $15.33 billion recorded in November 2017. While exports of manufactured goods were off by 3.2% to $9.06 billion from $9.36 billion in November 2017, exports of non-manufactured goods (chiefly agricultural products and raw materials) fell by 4.3% to $2.22 billion from $2.32 billion. The value of re-exported goods meanwhile did rise by 1.9% to $3.72 billion from $3.65 billion.
“A nearly 15% drop in exports to China was a major culprit, but a stronger dollar, tariffs aimed at California farm products, and global price declines in commodities like oil and chemicals were not helpful.” said Jock O’Connell, Beacon Economics’ longtime International Trade Adviser.
The Golden State accounted for 10.7% of the nation’s overall merchandise export trade in November, down from 11.3% one year earlier. California exports in the first eleven months of 2018 amounted to $164.43 billion, 5.0% higher than the $156.61 billion at the same point in 2017.
“Given the punitive tariffs slapped on U.S. products by Mexico, Canada, and China, along side an appreciating dollar, a slowing global economy, and the front running of exports, I’m surprised the data is as good as it is,” said Christopher Thornberg, Founding Partner of Beacon Economics.
Gavin Newsom raised more than $50 million for his 2018 gubernatorial campaign and has $15 million left over for his next statewide run, according to campaign money disclosures filed Thursday night.
Thousands of donors contributed to the campaign, which also benefited from nearly $3 million Newsom raised during his 2014 run for lieutenant governor.
The Service Employees International Union, the California Teachers Association, the California Nurses Association and other interest groups independently spent millions to elect Newsom. Their independent efforts weren’t subject to contribution limits, but they were legally barred from coordinating with Newsom or his campaign.
Newsom, a Democrat, benefited from far more in campaign contributions and outside spending than his Republican opponent John Cox, who raised $16.5 million. Newsom beat Cox by more than 20 percentage points.
Leading up to the November election, Newsom’s campaign spent the bulk of its money on advertising. It dropped more than $21 million on television ads and $2.7 million on online ads through websites including Hulu, YouTube and Facebook.
The campaign reported more than $35,000 in expenditures at wineries and restaurants Newsom owns, mostly for fundraising events. Shortly before he was sworn in, Newsom announced he would put his wineries and other businesses in a blind trust managed by a family friend.
In its Thursday filing, the campaign also reported returning a $2,500 donation from Miramax, film producer Harvey Weinstein’s production company. Newsom’s wife, Jennifer Siebel Newsom, said she was subject to “aggressive advances” by Weinstein after other women came forward accusing Weinstein of sexual harassment and assault.
Dear newly relocated political staffers of the Newsom administration and others:
Welcome to our flat, hot city, which we never, ever call “Sactown.” Doing so will establish you as a noob. We do, however, enthusiastically and lovingly call it “Sacto” or “Sac,” and we especially cherish opportunities to say “Old Sac.” Practice it at home, “Ooooolddd Saaaac.” Feels good, right? The city can try to rebrand it as “The Waterfront,” but it will always be Old Sac to us.
Also, we only say “DoCo”—a marketing term for Downtown Commons—sarcastically.
On to food and drink. There are some things we have a lot of, such as third-wave coffee, craft beer and gluten. We are somewhat lacking in categories that you may be used to encountering, such as natural wine, gluten-free items and lines. We don’t wait in lines much around here. If you are a former Bay Area or Los Angeles denizen, you may find yourself craving that time spent waiting in endless lines for everything, like ice cream and ramen; we recommend a trip to the DMV on Broadway if you are really jonesing.
You are in luck—some of Sac’s finest old bars are within blocks of the Capitol. Sit at the bar in Henry’s Lounge in the dark interior, whence you can hit a buzzer and order food from excellent adjacent greasy spoon Capitol Park Café.
The Chambers Room is even more divey, and the drink of choice is Pabst Blue Ribbon tall boys. Please remember to respect the dive bar atmosphere by not being too boisterous about posting on social media or loudly remarking on the fashion choices of the regulars.
Pre Flite Lounge will do in a pinch, but it hasn’t been the same since it was moved and the old spot demoed to build the arena. If you repeat that exact phrase, you can fake having lived here for a decade.
- Henry’s Lounge: 117 9th St.
- Chambers Room: 701 J St.
- Pre Flite Lounge: 1011 10th
Sac has a rich carved-meat history, thanks to our reverence for Sam’s Hof Brau, a ’60s-era local chain that is now down to one outpost out in the burbs. But, luckily, chef Mike Thiemann of Empress Tavern was inspired to create an haute version under K Street. Go for the unctuous prime rib or rich, saucy beef cheeks stroganoff. Empress is sexy and indulgent, and some menu items can maybe fit into a paleo diet plan in a pinch.
The fast-moving queue at Bud’s Buffet will barely give you time to contemplate which chunk of flesh swimming in a steam tray you would like to have sliced to order. Bud’s is the kind of place where you’ll see politicos slinging their ties over their backs to avoid dipping them in the au jus that comes with the stellar French dip sandwiches. Capitol Weekly’s Tim Foster has been known to rhapsodize about the spicy roast beef Bud’s Diablo, and the pastrami on rye is the best around, at least until the Solomon’s Delicatessen opens—don’t hold your breath.
- Empress Tavern: 1013 K St.
- Bud’s Buffet: 1016 10th St.
- Solomon’s Delicatessen (coming? Soon?): 730 K St.
Zia’s Delicatessen is a family-owned Italian deli that cranks out a roster of balanced, simple sandwiches. Standouts include the Viagreggio (turkey and smoked mozz.), Zia’s (egg and veg frittata wedge), and if you wanna go all out, the best meatball sandwich around. All the sandwiches are best on a soft, glossy roll.
Mother is a small vegetarian spot, also operated by Empress proprietors Mike Thiemann and wife Lisa, and its chicken-fried oyster-mushroom po’boy and salted cookies are nouveau Sacramento classics. Mother takes lunch orders online, making it a convenient, meat-free option.
– Zia’s Delicatessen: 1401 O St.
– Mother: 1023 K St.
Forget In-N-Out Burger. We have those too, yawn. It’s all about Jimboy’s Tacos, a Mexican-style fast-food place started in the 1950s. There’s one with a drive-thru on 29th St. Plans to open another Jimboy’s near the Capitol in the Downtown Commons are in the works. It’s considered a baller move in Sac to roll up to a late-night party with a big platter of the original ground-beef or bean-and-cheese taco.
– Jimboy’s Tacos (with drive-thru): 1420 29th St.
– Jimboy’s Tacos (at DoCo, coming soon): 405 K St., Ste. 220
Fine dining, old school
Until fairly recently, there were basically only a small handful of fine-dining spots downtown. Fancy we are not.
Ella Dining Room & Bar is the spot for happy hour for political types. The house-made gin and tonic is bracingly bitter and rightly legendary. You can’t go wrong with any seafood at Ella, including anything raw from the cold bar.
The Waterboy opened in 1996, and it shows in the funky art and black-and-white rattan chairs, but the ’90s are cool again, right? A meal at The Waterboy will always be delicious and have flawless service. Chef Rick Mahan introduced Sacramento to sweetbreads, and his crispy prep of these tasty glands smothered in demi-glace still sets the bar. Be sure to save room for the daily crostata for dessert.
- Ella Dining Room & Bar: 1131 K St.
- The Waterboy: 2000 Capitol Ave.
Fine dining, new school
Both of these places were opened by former business partners who opened LowBrau together (also known as “BroBrau”—avoid). As with many breakups, sometimes people have to go their separate ways to truly shine.
Canon has the better food and drink. The often savory and complex cocktails are the most sophisticated you’ll find here, and they offer a few well-chosen European wines. Chef Brad Cecchi is one of the only Sacramento chefs creating audacious and interesting dishes like his tamarind consommé with coconut dumplings, served from a teapot.
Beast + Bounty is like the person in the breakup who gets a dramatic haircut and starts wearing crop tops. It’s got on-trend millennial pink and tropical plant accents and a seriously good burger. Also notable are the salads, which often have a spicy chili or cilantro accent. The wine list is terrible, and the dishes seem a bit confused at times.
– Canon: 1719 34th St.
– Beast + Bounty: 1701 R St.
Delaine Eastin, the former California schools chief and legislator whose longshot bid for governor fizzled last year, has been in enough elections to know the difference between a stormy campaign season and a fundamental shift in the political climate.
Which is why the Democrat told a post-election symposium last week there’s something familiar about the political moment at hand. The rhetoric of President Trump, she said, reminds her of when then-Gov. Pete Wilson championed a trio of conservative ballot measures more than two decades ago.
“They were being poked in the eye by a bully,” Eastin said of young and minority Californians in the ’90s. “When you look at Trump, what you see is the worst of that, quadrupled.”
Eastin and several political consultants and researchers who spoke at the UC Berkeley event seemed to reach a common conclusion: The Trump legacy could last for years, perhaps toppling the modern dominance of older, white voters who, until now, were the most likely to show up on election day.
“I think there’s a new awakening in California that elections actually matter,” said Ace Smith, a Democratic strategist.
A long-term Trump effect could be a fatal blow to the state’s atrophied Republican Party. Half of the GOP seats in California’s congressional delegation were lost in November. Its standard bearer, gubernatorial candidate John Cox, received only 38% of the vote against Gov. Gavin Newsom. Republican caucuses in the state Senate and Assembly are now at their lowest levels since the 19th century. And this was only the midterm election.
What happens when the president is on the ballot next year?
“It’s time to look at another path,” former Assembly GOP leader Kristin Olsen said to those who believe in traditional Republican principles. She told the Berkeley audience that it’s unclear “if the [state] party can outlast Donald Trump’s presidency.”
The once-powerful Republican brand — which helped elect all but three governors in the 20th century — has steadily weakened over the past 25 years, with Wilson —fairly or not — blamed for embracing the 1994 ballot measure aimed at curbing the costs of illegal immigration. The schism between Republicans and the state’s rapidly diversifying population widened with the passage of a 1996 statewide ballot measure attacking affirmative action and another in 1998 to limit bilingual education. A generation of Californians never forgot.
“The political forces that form your opinion when you’re young carry on,” said Mark DiCamillo, director of the UC Berkeley poll.
California voters raised on the memories of 2018 could carry today’s political views for decades. And they’re already engaged: People 34 and younger cast ballots at a much higher rate in 2018 than in previous midterms, according to a new analysis by the for-profit research firm Political Data.
Perhaps just as consequential are those turned off by the Trump era. Political Data’s report found a number of young Republicans — generally more reliable voters than their Democratic-leaning peers — failed to show up in 2018. And broadly speaking, GOP voters in several key congressional races either didn’t vote or, as political strategist Mike Madrid pointed out, made the once-unthinkable decision to vote for a Democrat.
“I don’t think that will be healed for many election cycles to come,” Madrid, a former political director of the California Republican Party, told the Berkeley audience.
But turning points don’t always present a clear path ahead, and Democrats also face challenges. The era ushered in by Trump is already sparking intraparty battles over liberal versus centrist policies. The sage observation by Eastin, who entered politics in 1980, is that uncertainty is everywhere.
“We are in a changing time,” she said.
Californians with unhealthy drinking water pleaded for help from lawmakers this week, but many of them made one thing clear: They don’t want the state to levy any kind of tax for improvements that would get them safer water.
“We just upped our water rates, and to turn around and give them a tax on their meter is just not feasible,” said Maxine Israel, Director at the Cabazon Water District, which serves about 2,500 customers near Palm Springs.
She was among dozens of water experts and advocates who crowded a hearing on Wednesday to discuss how the state can deliver system improvements that would help nearly 1 million Californians who lack access to safe drinking water.
Gov. Gavin Newsom last month released a state budget that called for a new fee on drinking water to fund drinking water projects. He did not release many details, but the proposal was characterized as similar to a 2017 bill by Sen. Bill Monning, D-Carmel, that would have generated $140 million a year for water projects.
Newsom just after releasing the spending plan called attention to the drinking water proposal by visiting communities in Stanislaus County that are known for delivering water from wells that are contaminated with nitrates and arsenic.
“It’s a disgrace that in a state as wealthy and resourceful as ours that a million-plus people don’t have access to safe, clean drinking water,” he said during his January visit to a neighborhood in Ceres known as the Monterey Park Tract.
Monning’s proposal included a 95 cent monthly tax on residential customers, along with other fees attached to fertilizer purchases and dairy and feedlot production.
“We believe the ratepayer piece is the critical component to creating a guaranteed and predictable source of funding,” Monning said.
He argued that the proposed fund, which has been called a “water tax” by critics, would make money consistently available for the operation and maintenance of water treatment plants in addition to the construction and improvement of them.
But some advocates aren’t convinced that a tax is the best way to address the state’s clean water crisis.
“Why create a new tax when you have a huge budget surplus?” says Cindy Tuck, a deputy executive director at the Association of California Water Agencies (ACWA).
California state government is on track to accumulate a $14.8 billion surplus, and the state is on pace to fill reserve accounts with an additional $16 billion, according to a November report from the Legislative Analyst’s Office.
The water agency association and the California Municipal Utilities Association support alternative legislation that would establish a “drinking water trust,” which would be funded initially with an infusion from the general fund during a surplus year.
Paul Jones, general manager of the Eastern Municipal Water District in Riverside County previewed the proposal and said it could cover operations, maintenance, and consolidation costs, among other things.
The outline cheered lawmakers who want to pay for drinking water improvements without making a new fee.
“I like the trust idea, I think it’s definitely viable” Assemblyman Devon Mathis, R-Visalia, said. “Quite frankly I think anything is better than a tax.”
While campaigning for president in 2016, Donald Trump promised a cheering Fresno crowd he would be “opening up the water” for Central Valley farmers who’d been victimized by “insane” environmental rules to protect fish.
Trump took one of the most aggressive steps to date to fulfill that promise Tuesday by proposing to relax environmental regulations governing how water is shared between fish and human uses throughout the Central Valley. The U.S. Bureau of Reclamation released an 871-page “biological assessment” of conditions in the Delta that it said is designed to “maximize water supply and delivery” while maintaining protections for fish.
But environmental groups said the move would put new strains on the Valley’s struggling salmon and smelt populations — and could also force the state to cough up some of its urban water supplies to keep the fish from declining further.
Just a few weeks ago, former Gov. Jerry Brown’s administration agreed to surrender some of the State Water Project’s supplies to the federal government’s Central Valley Project. The state project primarily serves urban populations, which lean Democratic, while the federal project delivers its water to rural San Joaquin Valley, a bastion of pro-Trump Republican voters.
The new plan by the Trump administration poses a direct challenge to Brown’s successor, Gavin Newsom, who so far has said little about water policy. His fish and water agency chiefs said they were still reviewing the document Tuesday.
“Our review will take a hard look at the proposed operations, focus on the biological needs of important fish and wildlife species, and determine whether the Bureau responded to our previous concerns,” said Chuck Bonham, director of the Department of Fish and Wildlife.
Farmers welcomed the document. Mike Wade of the California Farm Water Coalition called it an antidote to outdated rules that ”have failed all parties — fish and wildlife, communities, and farmers.”
“We have to do better than what we’ve done,” Wade said.
Environmentalists were appalled.
“It sure looks like a plan for extinction,” said Doug Obegi, an attorney with the Natural Resources Defense Council.
Obegi said the proposed rules would relax a number of standards for the federal Central Valley Project, which includes dams such as Shasta, the state’s largest in the northern Sacramento Valley, as well as the massive pumping stations at the south end of the Sacramento-San Joaquin Delta.
Federal officials, however, said they’re simply trying to build more flexibility into a system that they say is overly rigid.
Russ Callejo, a Bureau of Reclamation project manager, said in an interview that the proposal would give project operators more leeway in managing crucial conditions such as Delta salinity levels, cold water requirements in the Sacramento River, and restrictions on Delta pumping that confuse migrating fish and draw them into harm’s way.
Because of state and federal endangered species protections, the two projects often have to throttle back their deliveries in order to protect the salmon, smelt and other imperiled Delta fish species, allowing water to follow its natural course to the Pacific Ocean. Callejo said the new plan would rely more “on what the fish are doing and where they’re located … as opposed to a rigid ‘this is what you’ll do.’”
He said he couldn’t speculate how much more water the proposal would free up for human demands.
“That number’s not ready right now,” said Callejo.
Environmentalist critics say what the Trump administration is proposing would allow the federal government to walk away from many pumping restrictions, such as a requirement that the Sacramento River below Shasta Dam be kept cold enough to protect spawning salmon.
Trump’s proposed changes could put state officials in a bind. The State Water Project traditionally relies on the feds’ scientific data to get permits from the California Department Fish and Wildlife to operate the state pumps.
Obegi said the science in Trump’s proposal is so indefensible that the wildlife agency could force the State Water Project to dial back its pumping to compensate for increases in federal pumping and avoid violating the state’s Endangered Species Act.
Trump’s plan would mean “the state has to pump less to meet its obligations” to meet state law, said Obegi, the environmentalist attorney. He said it’s unclear whether the state could use the Endangered Species Act to force the feds to back down.
The two projects have historically operated in tandem, under the same general rules.
“Now we’re in a new situation where, well, this is uncharted territory,” said water expert Jeff Mount of the nonpartisan Public Policy Institute of California.
It’s not clear how much the State Water Project stands to lose. The project’s largest contractor is the Metropolitan Water District of Southern California, with 19 million customers, but it also serves the Kern County Water Agency and some other farming districts.
Roger Patterson, Metropolitan’s assistant general manager, said he hadn’t reviewed the massive document in its entirety and was reluctant to comment on its ramifications for his agency’s supplies.
“We want to have changes that are scientifically supportable, and … the critical criteria that both projects have to operate are the same,” he said. “You can’t operate to different criteria.”
The environmental proposals are the latest chapter in the Trump administration’s ongoing efforts to bring more water to Valley farmers as the Department of Interior, which oversees water in the West, is being run by Acting Secretary David Bernhardt, a former lobbyist for the largest and most influential Central Valley Project member agency — the Westlands Water District. Trump announced Monday he was nominating Bernhardt to be secretary permanently.
Westlands officials played a key role in bringing Trump to Fresno to campaign in 2016.
A month ago, under pressure from Interior, the State Water Project coughed up an average of 100,000 acre-feet of water a year to the feds’ Central Valley Project. In exchange, the farmers who rely on the CVP agreed to relinquish water to fish through a complicated and tentative plan brokered by former Gov. Brown.
The new proposal is a separate proceeding that stems, ironically, from a plan launched by Trump’s predecessor, Barack Obama.
In 2016, with fish populations in decline, the Obama administration started taking a fresh look at decade-old environmental restrictions governing the Delta pumps. At the time, administration officials believed Obama would be succeeded by fellow Democrat Hillary Clinton and the environmental rules would be tightened.
Instead, Trump has made it clear that he wants environmental rules streamlined to push more water to the Valley through the Delta pumps. Trump signed a memorandum in October that ordered his staff to review a broad swath of federal water regulations in order to “eliminate all unnecessary burdens” to free up water for human use.
Twenty years ago, Martin Quezada was told the end was nigh. The sun was setting on the typewriter. Computers were king.
Twenty years later, Quezada’s shop, International Office Machines in San Gabriel, is still in business. The downturn happened. But it did not defeat Quezada, now 61, who kept his doors open.
He had loyal customers — small-business owners set in their ways, retirees unwilling or unable to learn to use a computer. He branched out into copiers and printers. He held on.
Then young people took an interest in antique typewriters.
A group of street poets brought Quezada several to repair. The typewriters were used to write poetry on demand for passersby.
“At Santa Monica Pier and Seal Beach, those trendy places,” Quezada said.
People ask Quezada to fix old typewriters they purchased on the internet. He sometimes buys them himself at thrift shops and flea markets. He recently found an Underwood from the 1940s at a yard sale.
In his backroom workshop on a recent afternoon, Quezada pulled handfuls of desiccated ribbon from the 70-year-old machine. He removed the rolling pin-like platen and coaxed tiny springs into place with hooked instruments that resemble dental tools.
If a reporter were not present, he said, he would talk to the typewriter, expressing his frustration with the machine’s finicky innards.
“I will say some things to the machine. I think it helps, when I let him know how I feel.”
But Quezada’s admiration for the machine is clear. The Underwood and its kind “are like Mercedes, like Rolls Royces,” he said.
They belong to an era before planned obsolescence, when people did not just replace, but repaired, what they owned.
Unlike the pager, the PDA, the floppy disk and the VCR, the typewriter has escaped the heap of gadgets defunct and disused. The reason, according to Steve Soboroff, president of the Los Angeles Police Commission and typewriter collector: Its slow pace is meditative, not frustrating, an exercise in deliberateness closer to engraving than typing on a computer.
“In a world that’s too fast and too easy, a typewriter slows you down,” he said. “If you type a word wrong, it’s wrong. If you miss a space, you missed it. That’s endearing to people now.”
And a typewritten letter is no arrangement of light on a computer screen but a thing, Soboroff explained, a physical expression of thought and care and courtesy. It tells its recipient: You are worth the time it took to type this.
If Soboroff is soliciting donations for a charitable cause, he will type the overture with one of his typewriters. Maybe the 1932 Royal Model P once owned by Ernest Hemingway, or the 1936 Corona Junior used by Tennessee Williams.
“If I send a typewritten letter, I get a 70 percent return rate. If I send it on a computer, it’s about 3 percent,” he said. “It’s unbelievable. If I want a response, I’ll type the letter.”
The typewriter, that is to say, is no charmless, soulless device. In Hollywood, it has famously transcended being a thing to become almost a character: In movies from “The Shining” — “All work and no play makes Jack a dull boy” — and “All the President’s Men” to “Schindler’s List.” In the adaption of Stephen King’s novel “Misery,” the typewriter is literally a tool of salvation, used to kill the villain.
Richard Polt, a philosophy professor at Xavier University and self-professed owner of 300 typewriters, said the machines’ performative use has helped spur a renaissance.
“Street typists,” like Quezada’s poetic clientele, became popular in New Orleans and have spread throughout the United States, Polt said. “Type-ins,” or gatherings of typewriter owners at coffee shops and pubs, are “a lot of fun,” he added, as are letter-writing parties.
“There’s this irrational, immediate love of the thing,” Polt said of the typewriter, “like a musical instrument that invites you to create an infinity of things.”
Refurbished, oiled and polished, Quezada estimates the Underwood could sell for $600.
Interest may have been rekindled in the typewriter. But it is not enough to offset what Quezada lost when they tumbled out of use in the late 1990s. Catering to curiosity is no substitute for the contracts with businesses and school districts that sustained his shop for decades.
When Quezada left his Mexican home state of Chihuahua in 1987 to join his sister in San Gabriel, the shop she owned with her husband — an Italian immigrant who repaired typewriters as a boy in Salerno — had servicing contracts with school districts in San Gabriel, El Monte, Whittier and Alhambra.
In the summer, when students were gone and the schools wanted classrooms full of typewriters repaired, the shop had so much business it had to hire temporary workers, Quezada said.
“Around 1980, every little town had a shop that repaired and sold typewriters. A typewriter was expected to be serviced and repaired, and it was expected to last 20, 30 years.”
Quezada took over the shop in the mid-’90s. It wasn’t long before computers were supplanting the typewriter. Though he’s held on, business gets leaner every year, the new interest notwithstanding.
But what else can he do? Besides, he feels there is an importance to his work, beyond providing him a livelihood. Those who come to his shop, to buy a typewriter or have one fixed, need his help to communicate.
“Like the poets, they want to communicate how they feel. It’s important,” he said. “Or older people who cannot write anymore. I have older customers — they say they have to write something, and they cannot hold a pen and cannot use a computer.”
He carries the old Underwood outside, satisfied that its innards are clicking. The sun is setting. He sprays the typewriter down with WD-40 and scours it with a toothbrush. Beneath the blackened bristles, in the fading light, it begins to gleam.