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IN THIS ISSUE – “Standing Up to a Bully”
EXECUTIVE ACTIONS
- Newsom’s Budget Speech Previews POTUS Run?
- “Heightened Risks” for California Coffers
- Governor Presses Homeless Initiative
- Orange County Cities Feud Over Homeless Housing
- State Rolls Out Down-Sized Delta Tunnel Plan
REALITY CHECKS
- Middle Class Adds to California Exodus: “Not the Golden State Any More”
- Insurance & Adaptation Not Enough – Growing Economic Impact of Climate Change
- Investment Bankers Turn Climate Change Activists
FOR THE WEEK ENDING JAN. 17, 2020
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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Newsom’s Budget Speech Previews POTUS Run?
CalMatters Commentary
Gov. Gavin Newsom’s nearly three-hour-long presentation of his second budget last week was peppered with scornful references to President Donald Trump, some in response to reporters’ questions, others unprompted.
The governor repeatedly drew contrasts between California’s policies under his governorship and those of Trump on homelessness and other issues, implicitly contending that the nation would be better off if it were more like California.
“If I’m not willing to stand up to a bully,” Newsom said at one point, “if I’m not willing to stand up to someone who is attacking immigrant communities and refugees and attacking people working very hard every single day to feed their families, then I don’t belong here.”
“We don’t need Donald Trump. … I’m the homeless czar in the state of California,” Newsom replied to a question about Trump’s criticism on the issue and his threat to intervene if the state fails to deal with it.
Gloomy Republican and media depictions of the state, Newsom quipped, are a “California derangement syndrome” — a play on the “Trump derangement syndrome” that’s said to drive Democrats into extremes in opposition to the president.
The flip side of Newsom’s holding up California as an example to be emulated, of course, is that as he runs for re-election this year, Trump will also cite California as a negative example of what Democrats will wrought should they regain power in Washington, playing up such issues as rampant homelessness.
A current article in National Review, a conservative magazine, by Will Swaim, president of the California Policy Center, provides the gist of what Trump’s campaign is likely to say about California — and Newsom — to voters in other states.
“I still get buzzed when I recall that a majority of Californians looked at what Gavin Newsom allowed while mayor of San Francisco — rampant homelessness, transportation gridlock, failed public projects, a widening income gap, sidewalk needles, and human, er, waste — and decided they wanted that for the whole state. They elected him governor in 2018 and now complain that California is going to hell,” Swaim writes.
What’s the end game, one might wonder, as Newsom vies for national attention — sending help to earthquake-stricken Puerto Rico over the weekend generated oodles of media coverage, for example — and anoints himself as a leader of the anti-Trump “resistance.”
It’s pretty obvious that the governor of California wants to be president of the United States someday. Willie Brown, the former Assembly speaker and Newsom’s political patron and predecessor as mayor of San Francisco, says in an interview with Politico, “he is still on track (for the White House), he’s doing what he needs to do…”
So what are Newsom’s chances of segueing from the governorship to the presidency?
Timing is a problem. Were Trump’s re-election bid this year to fail and a Democrat take up residence in the White House, Newsom would likely be blocked until 2028, when he would be gone from the governorship and the political spotlight — unless, of course, he’s succeeded Dianne Feinstein in the U.S. Senate by then.
Newsom’s ambitions would be best served by a Trump win this year, which would set up a 2024 run.
The economy is another paradoxical aspect to Newsom’s presidential prospects. He boasts of California’s strong economy, which provides the tax revenues he needs to finance his ambitious plans for expanding health care, early childhood education and other services.
However, that strong economy is also one of Trump’s best arguments for re-election. A recession this year would hurt Trump, but also force Newsom to scale back those plans.
https://calmatters.org/commentary/president-gavin-newsom-trump/
State budget:
“Heightened Risks” Ahead for California Coffers
Legislative Analyst
Despite its positive near-term picture, the budget’s multiyear outlook is subject to considerable uncertainty. In addition to describing the condition of the budget under the Governor’s proposal, this report discusses tools the Legislature can use to mitigate against these heightened risks.
https://lao.ca.gov/reports/2020/4135/budget-overview-2020.pdf
Governor Presses Homeless Initiative
CalMatters
Declaring that moral persuasion and economic incentives aren’t working to bring people in from the sidewalks, Gov. Gavin Newsom’s task force on homelessness called for a “legally enforceable mandate” that would force municipalities and the state to house the growing number of homeless Californians.
The proposal, which came as Newsom kicked off a weeklong tour of the state aimed at drawing attention to the homelessness crisis, urged the Legislature to put a state constitutional amendment on the November ballot that would force California cities and counties to take steps to provide housing for the more than 150,000 Californians who lack it, or face legal action.
Such a measure would require a two-thirds vote of both legislative houses to be brought to voters. California law does not now penalize the state or local governments for failing to reduce their homeless populations, or to make housing sufficiently available to people without it.
Los Angeles County Supervisor Mark Ridley-Thomas and Sacramento Mayor Darrell Steinberg, who co-chair the governor’s 13-member Council of Regional Homeless Advisors, have been advocating some sort of enforceable “right” to sleep indoors since the U.S. Court of Appeals for the Ninth Circuit struck down laws against homeless camping. That ruling, which the U.S. Supreme Court let stand just last month, dramatically limited cities’ enforcement options, finding it to be cruel and unusual punishment to prosecute people for sleeping on the street if sufficient shelter isn’t available.
“California mandates free public education for all of its children and subsidized health insurance for its low-income residents. It requires its subdivisions to provide services to people with developmental disabilities and foster children,” the commission wrote in a letter signed by both elected officials.
“Yet everything that state, county and city governments do to alleviate this crisis is voluntary. There is no mandate to ensure people can live indoors, no legal accountability for failing to do so, no enforceable housing production standard and no requirement to consolidate and coordinate funding streams across jurisdictions. The results speak for themselves.”
The proposal, however, so far lacks specifics on how taxpayers would pay for such a mandate. The letter released by the task force, which includes local elected officials from large and small cities, states that “more state resources will undoubtedly be required” but includes no estimate.
And the issue of who is actually overseeing the state’s disparate homelessness initiatives — across multiple bureaucracies from prisons to healthcare — is still pressing, at least according to the homelessness task force. One of their key recommendations would “create a single point of authority of homelessness in state government,” suggesting a high-level official that reports directly to Newsom. Another calls for a comprehensive accounting of existing funding for homelessness, housing, mental health and substance abuse treatment.
Still other recommendations have already been incorporated into Newsom’s proposed homelessness budget, including a “flexible fund” that service providers can tap for uses from emergency rental assistance to building shelters. The task force also proposed revamping the state’s health insurance program to draw down more federal dollars for homelessness-related services, a key pillar of the strategy Newsom unveiled last week. Doing so would require a waiver from the federal government.
Oakland Mayor Libby Schaaf, a member of the task force, said that Medi-Cal reform proposal is key to their blueprint.
“Housing is health,” she said. “And to recognize that health dollars should appropriately be used to support housing is a very important part of our recommendations.”
More controversial proposals included an executive order expanding the state’s new rent-gouging law to cover more households and legislation exempting from environmental review any new housing project for people at risk of homelessness.
The council’s recommendations stop short of Steinberg’s and Ridley-Thomas’ initial call for a “right to shelter,” which would not only have required cities to provide immediate beds, but also obligated people experiencing homelessness to come inside. But it adds momentum to the strategy of elevating litigation as a tool to accomplish what compassion and money haven’t been able to do.
Newsom, visiting a homelessness program in Nevada County, said he “would lean in the direction” of speedily deploying a legal “obligation” to supply sufficient services and housing, adding that “a number of cities and counties” have volunteered to do demonstration projects over the next several months, “not the next few years.” (Ridley-Thomas later said he would propose such a pilot in L.A. County this week.)
“I broadly have been encouraging this debate about obligations,” the governor said, adding that “there’s a distinction between rights and obligations.”
Without elaborating on that distinction, he seconded the task force’s point that many of the state’s responsibilities stem from legal mandates: “We do it in almost every other respect,” Newsom said. “On this issue we don’t and I think that’s missing. The question is how do you do it…. This is not black and white. This is tough stuff.”
Municipalities made it clear they would need more clarification.
“A legally enforceable mandate can only work with clarity of who’s obligated to do what and what new sustainable resources will fund it; that’s the ticket for clear expectations and accountability,” said Graham Knaus, executive director of the California State Association of Counties, in a statement.
Steinberg, meanwhile, called Monday’s proposal an improvement on the original “right to shelter” concept, saying a mandate by any name would still have the force of law. The point, the mayor said, is to give the courts a legal “last resort” to address pleas to supersede political gridlock, just as federal laws have in the past armed judges to combat other social crises. “It’s analogous to desegregation,” Steinberg said.
The task force’s proposal would let a “designated public official” sue the government for not doing enough to offer emergency and permanent housing to the homeless. A judge could then intervene to force a city to approve an emergency shelter, for example, or redirect budget funds to homelessness services.
State and local governments in recent years have poured billions into combating homelessness, only to watch the problem worsen as ever-rising rents drive Californians to the streets faster than they can be re-housed. On Friday, for the second straight year, Newsom proposed more than $1 billion in new state funds to fight homelessness, calling it “the issue that defines our times” in California. But the state’s “point-in-time” homeless count jumped 17% between 2018 and last year.
San Diego County Supervisor Nathan Fletcher, a task force member, said leverage is needed.
“We do the things we are required to do first… then for everything else we try very hard,” said Fletcher. “Absent a legally enforceable obligation, I believe people will continue to try very hard.”
But a legal mandate would arm jurisdictions to tackle “the underlying problem which is poverty,” rather than appease communities with shelter beds, he said.
Steinberg and Ridley-Thomas floated the idea of a statewide “right to shelter” law last year. Spurred by decades-old litigation, New York state has a “right to shelter” policy that makes its state and local governments legally liable for having emergency shelter beds available for every unhoused person.
While many credit “right to shelter” for New York’s success in reducing the number of people sleeping on the streets, Newsom and advocates for the homeless have balked at the idea. Some advocates fear it would divert finite funding from permanent supportive housing, which experts say is a more long-term, albeit expensive solution; others worry about cost and potential civil liberties violations that might arise from requiring a homeless person to accept shelter if it’s available.
“The reason why right to shelter is a mistake is because it diverts resources from the solution, which is housing, not shelter,” said Sharon Rapport, California policy director for the Corporation for Supportive Housing and a member of the task force.
Under the policy proposed by the task force, a local government would be required to develop a plan to house the vast majority of its homeless people within “an aggressive but reasonable period of time.” “Reasonable” is not defined in the letter.
However Steinberg said that, in the case of Sacramento, “aggressive but reasonable” might mean a 1,500-person annual reduction in the city’s 5,500-plus homeless population, and housing the “the vast majority” within five years.
Advocates on the homelessness issue said more specifics are needed, but applauded the task force’s recommendations as a philosophical pushback, at least, against efforts to criminalize living on the streets.
“Any kind of policies that are promoting locking up people or warehousing people or punishing people for being homeless, the council is saying those policies have been very ineffective in the past,” said Rapport.
The city of Bakersfield recently proposed ramping up enforcement of low-level drug offenses to get people off the streets there, and advocates have expressed concern that the Trump administration’s threats to do something about homelessness in California may involve heavier use of law enforcement.
The task force also called for a single point-person on homelessness, a Newsom campaign promise that devolved in his first year into confusion over who, at any given point, was his “homelessness czar.”
Various administration members, including Steinberg and Ridley Thomas, Secretary of Health and Human Services Mark Ghaly, and advisor Jason Elliott, have filled the role — so many that last week, Newsom headed off press questions by declaring tartly, “You want to know who’s the homeless czar? I’m the homeless czar in the state of California.”
California has strict laws that make it difficult to detain mentally ill people against their will for a prolonged period of time. Families of homeless loved ones struggling with schizophrenia or other disorders often blame the Lanterman-Petris-Short Act, a late 1960’s law intended to curb the overuse of asylums, for precluding necessary care. New York’s commitment laws are less stringent.
While Newsom talked vaguely of reforming the law last week, such reforms are conspicuously absent from the task force’s report.
Orange County Cities Feud Over Homeless Housing
Orange County Register
Santa Ana filed a lawsuit this week against Orange County and three South County cities, alleging the communities are dumping their homeless in Santa Ana and not doing their fair share to provide shelters.
In a complaint filed Monday, Jan. 13, in federal court, Santa Ana sued Dana Point, San Clemente and San Juan Capistrano, in addition to the county, saying that homeless people are taken to Santa Ana for shelter and then left there when their temporary housing ends. Others are brought to Santa Ana “and ultimately abandoned,” the lawsuit alleges.
“Regardless of the intent as to how or why homeless individuals are brought to Santa Ana, the impact is severe and burdens its residents,” the lawsuit states.
The lawsuit seeks unspecified monetary damages from the county as reimbursement for money spent on homeless services. The lawsuit also seeks a ruling prohibiting the county and the three cities from transporting people who are homeless to the Santa Ana Armory, an emergency shelter that operates during winter months.
Asked to respond to the lawsuit, Orange County officials forwarded comments Tuesday from Orange County Supervisor Andrew Do, who slammed the city and called the lawsuit “political grandstanding.”
Santa Ana, Do wrote, “ignored the homeless problem right outside City Hall for decades.”
“It was the county that cleaned up the Santa Ana Civic Center and the Santa Ana riverbed,” Do wrote, refuting claims that homeless people are being shuttled to Santa Ana. “From the beginning, I have been clear that Santa Ana residents should not bear the brunt of the homeless crisis and other parts of the county need to step up.”
San Clemente officials declined to comment on the specifics of the lawsuit, writing in an email that the litigation “lacks any legal foundation and has no merit. The city of San Clemente is confident that it will be dismissed.” In San Juan Capistrano, City Manager Ben Siegel declined to comment, other than to say his city is evaluating the lawsuit. Meanwhile, Dana Point City Attorney Patrick Munoz sent Santa Ana a letter Tuesday demanding it be dismissed from the lawsuit, which it called “harassment and a waste of taxpayer resources.”
There’s been a sharp increase in homelessness in recent years, reaching a crisis point in some communities. Only last week, California Gov. Gavin Newsom ordered vacant state land be used to house the homeless. Newsom, who toured a homeless shelter in Riverside on Tuesday, recently asked state lawmakers for a $750 million fund to build housing for the state’s homeless and help those at risk of homelessness make their rent.
In Santa Ana, some residents regularly gripe on social media about the county’s plan to build another homeless shelter, with 425 beds, on Yale and Fairview, near several schools and parks. “Save our community!” read flyers posted on Facebook to protest the shelter county supervisors approved last November.
The impacts of homelessness on Santa Ana “have been staggering,” according to the lawsuit. Officials found 6,860 homeless people in Orange County last April, according to a federally mandated count. Santa Ana, the second-largest city in Orange County, had the greatest concentration:1,769, including 830 with no shelter.
In 2018-19, the city spent more than $16 million to provide fire, police and other services to address homeless-related issues “at the expense of core services to Santa Ana residents,” the lawsuit stated. The estimated cost for fiscal year 2019-20 is expected to rise to $25.4 million, the lawsuit continues.
“For decades, Santa Ana has borne the largest and most inequitable burden of addressing and relieving homelessness in Orange County,” the lawsuit states.
Among the city’s complaints: the county’s jail – located in Santa Ana – doesn’t transport homeless inmates to their hometown upon release; the county backed down from adding emergency shelter beds on county-owned properties in Irvine, Huntington Beach and Laguna Niguel following opposition from those cities in 2018; and the county’s only emergency shelter, known as the Courtyard, is in Santa Ana, near homes, schools and a park. (The planned Yale Street shelter is expected to replace the Courtyard.)
San Clemente, Dana Point and San Juan Capistrano are providing housing for their homeless by using the Santa Ana Armory instead of providing their own shelters, the lawsuit alleges.
Last month, the San Clemente council closed its emergency shelter, saying it would meet court mandates on providing beds for the homeless by offering transportation to locations where the homeless could access a ride to armories in Santa Ana and Fullerton. The transportation, San Clemente officials said, would include bringing the homeless back to the city during the day, upon their request. But Santa Ana officials argued in their lawsuit that “there is no absolute or legal requirement” for the homeless to return to San Clemente.
Dana Point and San Juan Capistrano, the lawsuit continues, “are reported to join San Clemente to share the cost for this transportation.” In Tuesday’s letter to John Funk, Santa Ana’s assistant city attorney, Dana Point’s Munoz wrote that the south county city “has no custom, policy or practice to transport homeless persons to the Armory Shelter in Santa Ana.”
State Rolls Out Down-Sized Delta Tunnels
Associated Press
California’s governor has restarted a project to build a giant, underground tunnel that would pump billions of gallons of water from the San Joaquin Delta to the southern part of the state.
Gov. Gavin Newsom’s administration on Wednesday issued a Notice of Preparation for the project, which is the first step in the state’s lengthy environmental review process.
Last year, Newsom halted a similar project that would have built two tunnels for the same purpose. The new project will have only one tunnel, and it will carry less water. State officials don’t know how much it will cost.
“This project would help safeguard a vital source of affordable water for millions of Californians,” said Karla Nemeth, director of the California Department of Water Resources.
The tunnel would be a major addition to the State Water Project, the complex system of reservoirs, aqueducts and pumping plants that deliver water to more than 27 million Californians and 3 million acres of farmland. The water comes from rain and snow in the Sierra Nevada mountains.
State officials say they need the tunnel because intake for the current system is only 3 feet (0.91 meters) above the average sea level, making it vulnerable to climate change.
The San Joaquin Delta is home to nearly 750 species of plants and wildlife. It’s also critical part of the breeding network of wild salmon. The Sierra Club California has opposed diverting water from the Delta because the organization is concerned about how it would impact fish and wildlife.
“We anticipated that there might be an effort to employ a list of efficiency, conservation, and other measures to reduce dependence on a tunnel before moving forward on such a massive and environmentally harmful project,” Sierra Club California Director Kathryn Phillips said. “Now we’ll have to focus a lot of time and energy on battling the tunnel again.”
Other groups praised the project because they said it would modernize the state’s aging water distribution infrastructure.
“This plan will help guarantee the reliable source of water we need to support additional housing necessary to meet the needs of California’s population,” said Dan Dunmoyer, president and CEO of the California Building Industry Association.
https://apnews.com/f2b187166795fb8fddbadee1f930c295
Notice of Preparation:
https://water.ca.gov/News/Public-Notices/2020/Jan-20/Delta-Conveyance-NOP
Middle Class Add to California Exodus
NPR
In 2017, Susanna Cardenas-Lopez left her home in Salinas to visit her brother in Idaho. Three days into her trip, she called her husband and told him they needed to move there.
Back in Salinas, Cardenas-Lopez and her husband were left out in the cold after their landlord decided to stop renting the home they lived in. They couldn’t afford anything else, so they had to move in with a family member, which was stressful.
Now in Idaho, she and her husband have free time and money left over at the end of each month. There’s a bonus — the area is significantly safer, she said.
“I feel like it’s a dream with the quality of life we now have,” Cardenas-Lopez said. “Yes, the pay is less, but that just doesn’t even seem to matter to me. At least we have enough to pay our rent and bills.”
Many of her family members face the same situation. Five months ago, her 35-year-old daughter, son-in-law and grandchildren left Salinas after their rent increased from $1,300 to $2,000 in just three years, she said.
“I love California, but it’s just not the Golden State in my eyes anymore,” she said.
Cardenas-Lopez isn’t alone. U.S. Census Bureau numbers show that the middle- and lower-classes are leaving California at a higher rate than the wealthy. Many who have left in recent years say they simply couldn’t afford to stay.
In the second quarter of 2019, the San Francisco Bay Area topped Los Angeles, Washington and Chicago when it came to people leaving major U.S. cities. It was second only to New York City. More than 28,190 people departed the Bay Area during those three months, close to double 2017’s rate, according to a regular migration report from real estate brokerage Redfin.
In 2018, according to the U.S. Census, 38,000 more people left the Golden State than moved there for the second year in a row. However, the population is still rising from the birth rate. California added 141,300 residents between July 2018 and July 2019, bringing the state population to an estimated 39.96 million people, according to the California Department of Finance.
A recent Edelman Trust Barometer survey found 53% of residents and 63% of millennials were considering leaving the country’s most populated state because of its high cost of living.
The majority of people leaving reported an annual income of less than $100,000, while the state has seen an influx of those making $100,000 and more.
According to a 2018 United Way Cost of Living report, Latino and African-American households struggle at the highest rates in California; the cost of housing is their largest burden.
Still, state demographers said a mix of factors likely are playing into the flight of the impoverished, elderly and those on fixed incomes.
“Moves relate to relative employment situation and they do relate to costs and amenities,” said Eddie Hunsinger, a demographer with the state Department of Finance. “They also, too, move at different stages of life. It’s generally a mix of factors going into migration.”
Hunsinger added that even when people are leaving the state in droves, there is still a steady flow of people moving into California.
Randa Moore, who used to live in Santa Rosa in Sonoma County, said the No. 1 reason she left for Florida was the cost of living.
“We were working 10-16 hours a day, seven days a week, every holiday, and were still struggling to buy groceries,” she said.
Now, Moore rents a three-bedroom home with a pool for $1,400 a month and has money to spare.
“The difference is in the thousands of dollars and hours working,” she said. “We don’t make California money anymore, but we actually have more money at the end of the month.
“Do I miss it?” she asked. “I miss what it used to be. Before the industries were destroyed as well as the middle class. It seems it’s become a two-class system, the haves and the have-nots. The poor have no chance to survive.”
California is attempting to address the housing issue. Gov. Gavin Newsom has committed $1.75 billion to fund new building projects to tackle California’s housing crisis. In October, Newsom signed various housing bills, including one that capped rent increases and stifled evictions.
“We’re living in the wealthiest as well as the poorest state in America,” Newsom said when he signed the bills. “Cost of living. It is the issue that defines more issues than any other issue in this state.”
Between 2010 and 2017, negative domestic migration to the state increased annually, according to the California Association of Realtors. In the same period, the median cost of a home in California doubled; in the Bay Area, it tripled.
“About 32% of households in California can afford to buy a median-priced home, which is around $600,000,” said Oscar Wei, the realtor association’s senior economist and director of research. “Compared to 2012, we were at 52% (across the state). In San Francisco and San Mateo only 12 or 13% of residents can afford to buy a median-priced home there.”
In San Francisco, a median-priced home costs around $1.5 million.
Wei said states with a low cost of living or no income tax can tempt people by offering wages that aren’t quite middle class in California, but would put them above-average elsewhere.
“In California, to buy a median price home it requires an income of $100,000,” he said. “In Arizona, you can buy a median-priced home with an income of $50-$60,000.”
While Wei does not expect housing prices to drop the way they did at the end of the last decade, when the housing bubble burst, he does anticipate price drops in the next five to ten years if the housing crisis isn’t addressed.
“We have been seeing some companies leaving So Cal and the Bay Area,” said Wei. “Toyota and Nissan left Southern California, and home prices might have slowed down but they haven’t dropped really significantly.
“If the housing affordability issue isn’t addressed in the next five to ten years we will see companies starting to move out,” he said. However, he didn’t think enough companies would move out over a short enough period to truly tumble housing prices.
“After all,” he said, “California is a good place to live. It’s the cost that is an issue.”
Pat Tollefson, who said her great-great-grandfather, Joseph Fredrick Snyder, was an early settler of Salinas in the 1860s, moved to Washington state with her husband three years ago, after spending her first 60 years in California.
“We love California, but the state pushed us out,” she wrote to The Salinas Californian on Facebook.
“The first year (we were in Washington), our Prius California renewal registration was due at a cost of $290, but we transferred the registration to Washington state at a cost of $63,” she said.”That was just one surprise benefit!”
Tollefson said they found the cost of purchasing a home, as well as utilities were lower than they had paid in California. The lower cost of living, combined with their access to nature has helped lower their stress.
Salinas realtor Chris Barrera has worked for Windermere Valley Properties for five years. In the last few years, he has seen more and more clients cite cost of living as a main reason they are leaving California.
He estimated about a quarter of the 20 clients he works with a month felt they could no longer afford California. Most are in the service industry or live on a fixed income, and many are leaving for Texas and Idaho, states with a low or no income tax, and a low cost of living.
“People are being priced out,” Barrera said. “I have a lot of clients who are selling and they’re just tired of California politics.
“Monterey County is one of the most expensive places to live in the U.S., and the only other option is to have numerous families living at one property,” he said.
That creates its own problems, and can push people out.
“When does this stop?” Barrera asked. “When does this start evening out? All of us are going to be in that situation one day when we retire. To have to leave where our family is and where we were brought up just because we can’t afford it is pretty sad.”
Those who leave California don’t always leave it behind, though. Communities that sometimes double as support groups have sprung up online for former Californians. Here, they can complain about their former state, or even their new one, while still maintaining that they’re glad they left.
Some also say politics, not just taxes, play a role in their decision to leave.
In “CA Exodus and Ex-CAers,” a Facebook group for ex-Californians and those planning to leave, the banner photo is an altered “Now leaving California” sign. It reads: “Was it something we taxed?”
Here, a couple hundred members share California laws and regulations they find ridiculous or costly, affirming their and other members’ decision to leave. Mostly, though, they share stories of other Californians leaving California.
“I joined this group so I would at least have others to commiserate with,” said group member Melinda Temblador, who said she left “Commiefornia” because of “the high cost of everything, extreme moral decay and (being) pretty sick of bearing the cost of freeloaders for their free medical, free college, free free free stuff while I slave away staying awake at night wondering how I’m going to pay for my daughter’s college but the illegal next door gets it for free.
“If you sense a lot of anger on my part,” she wrote, “You would be correct. We absolutely made the best decision to flee. Have no regrets and are actively helping several family members to leave ASAP as well.”
Other group members echoed Temblador’s sentiments, adding that the state’s liberal bent left them feeling frustrated and isolated.
“I guess maybe it helps to solidify the fact we are not alone,” said Jonathan English Olmstead, who plans to leave California. “In this state, being a devoted Christian and Republican you feel as though you are the only one with these views.”
Not everyone is taking off for cheaper or greener pastures. Some have instead resorted to subletting or moving in with family to meet increased rental prices.
Marina native Raycheal Jarvis said she and her family, including four children, are living with her in-laws. Jarvis wanted to stay in Marina where “where neighbors still look out for one another,” but, she said, commuters to San Jose are snapping up properties at sky-high prices. Jarvis is looking at other options, but so far, it seems the only place she and her family can afford housing is outside of the area.
“We don’t make enough to afford a home big enough to raise our family,” she said.
Insurance & Adaptation May Not Be Enough – Growing Economic Impact of Climate Change
Wall Street Journal excerpt, 1/16, no link
Last year Australia’s central bank hoped that several interest-rate cuts would mark a turning point for its slowing economy. That was before the worst bushfires in Australia’s history hit tourism, consumer confidence and growth forecasts for this year. There is now a good chance the bank will cut interest rates again soon.
Welcome to a world in which climate change’s economic impact is no longer distant and imperceptible. Puerto Rico never fully recovered from Hurricane Maria in 2017. Extreme drought in California and poorly maintained utility power lines led to severe wildfires in 2018, the utility’s bankruptcy and blackouts last year.
Climate change can’t be directly blamed for any single extreme weather event, including Hurricane Maria, California’s wildfires or Australia’s bushfires. But it makes such events more likely. “They are starting to be more than tail events, they’re starting to affect economic outcomes,” Robert Kaplan, president of the Federal Reserve Bank of Dallas, told an economic conference earlier this month.
Climate crises in the next 30 years may resemble financial crises in recent decades: potentially quite destructive, largely unpredictable and, given the powerful underlying causes, inevitable.
Every year, the World Economic Forum asks business, political, academic and nongovernmental leaders to rank the most probable and consequential risks, from cyberattacks to fiscal crises. This year, ahead of its annual meeting next week in Davos, Switzerland, climate-related risks took the five top spots in terms of probability, the first time a single issue had done so in the survey’s 14-year history.
Of course, economies have always been vulnerable to natural disasters. Before the modern industrial era, crop failures were a leading cause of recession. The monsoon season remains a key economic variable in India, and the Tohoku earthquake and tsunami in 2011 tipped Japan into recession.
And while estimates of climate’s economic impact are suffused with uncertainty, they don’t suggest any major economy will be pushed into recession, much less depression.
Studies reviewed by David Mackie of JPMorgan Chase suggest climate change could reduce global gross domestic product by 1% to 7% by 2100, assuming “business as usual” (i.e., absent policies to mitigate emissions of carbon dioxide). Given that the impact is spread out over 80 years, in which per capita incomes probably rise 300% to 400%, even larger climate change impacts would appear small, he said.
Aggregate changes in GDP, though, can be misleading. As global temperatures climb, the probability of extreme temperatures and events and the associated economic consequences should rise more.
This relationship is driven home in a study released Thursday by the McKinsey Global Institute. It estimated that “unusually hot summers” affected 15% of the Northern Hemisphere’s land surface in 2015, up from 0.2% before 1980.
McKinsey estimated that climate change made the European heat wave that in 2019 killed 1,500 in France 10 times more likely and the forest fires that devastated northern Alberta in 2016 up to six times more likely.
Looking ahead, assuming business as usual, McKinsey projected the probability of a 10% drop in wheat, corn, soybean and rice yields in any given year will rise from 6% now to 18% in 2050. Such a change wouldn’t cause food shortages but could cause prices to spike. The probability that a catastrophic cyclone disrupts semiconductor manufacturing in the western Pacific will double or quadruple by 2040. Such an event “could potentially lead to months of lost production for the directly affected companies,” McKinsey said. The probability of rain heavy enough to halt the mining in southeastern China of rare-earth elements, vital to many electronic devices, will rise from 2.5% now to 6% by 2050.
Such an exercise comes with plenty of caveats. The projections make no allowance for adaptation, though no doubt some outdoor activity will move indoors, some businesses will relocate from flood plains, and insurance will cushion the cost for many.
But adaptation goes only so far. Humans can’t survive prolonged high heat and humidity beyond certain thresholds. Those thresholds are rarely met now, but will be reached regularly in some regions by 2050.
Adaptation and insurance may be deemed too costly. “Underinsurance may grow worse as more extreme events unfold, because fewer people carry insurance for them,” McKinsey predicted.
Some on Wall Street are starting to treat climate change the way they regard financial crises. “Climate change is almost invariably the top issue that clients around the world raise with BlackRock,” Chairman and CEO Laurence Fink told chief executives this week in explaining why climate would be a key criterion in how BlackRock Inc. invests its $7 trillion of client money. For businesses, mandates—private or government-driven—pose a risk distinct from climate change itself. Car companies are now spending heavily to market electric vehicles with no assurance they will be profitable.
Some central bankers are also talking about climate risk the way they talk about financial crises. Christine Lagarde, the newly installed European Central Bank president, told European parliamentarians last fall, “At a minimum…[the ECB’s] macroeconomic models must incorporate the risk of climate change.”
Yet worrying about it isn’t the same as doing something about it. Unlike financial crises, neither Wall Street nor central bankers have the tools to alter the forces making climate crises more likely: rising carbon dioxide emissions and economic development in vulnerable regions. Only political leaders can—and it isn’t clear they will.
The Madrid climate summit in December “is the most recent example of countries failing to cooperate to create a global emissions trading regime,” Mr. Mackie said. “Most likely, business as usual will be the path that policy makers follow in the years ahead…[which] increases the likelihood that the costs of dealing with climate change will go up as action is delayed.”
Investment Bankers Turn Climate Change Activists
Wall Street Journal excerpt, 1/14, no link
BlackRock Inc. said it would take a tougher stance against corporations that aren’t providing a full accounting of environmental risks, part of a slew of moves by the investment giant to show it is doing more to address investment challenges posed by climate change.
Among the moves, BlackRock said it would be increasingly disposed to vote against management and boards if companies don’t disclose climate change risks and plans in line with key industry standards.
BlackRock is also pulling back from thermal coal producers in actively managed debt-and-equity portfolios by mid-2020, a move that will lead to $500 million in sales. It will expand the range of sustainable investment products as well as double to 150 the number of exchange-traded funds that address environmental, social and governance challenges.
BlackRock is the world’s largest asset manager, with about $7 trillion under management. It has risen on the back of index funds that trade on exchanges and through these funds has extended its reach across nearly every company and is part of the retirement accounts of millions of people around the world. The firm also sits at the backbone of Wall Street as its software is used by banks to monitor their risks.
The firm said it is putting the focus on sustainability because the costs of climate change have ramifications on the price of assets and the financial ecosystem.
“Climate change has become a defining factor in companies’ long-term prospects,” BlackRock Chief Executive Laurence Fink said in his annual letter. “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”
The letter is a reflection of Mr. Fink’s towering influence over companies. But the letter has rankled some rivals who have sometimes grumbled about what they consider to be a moralistic tone.
The rise of index funds transformed three firms into major forces in corporate America and thrust them into the public spotlight. The biggest—BlackRock, Vanguard Group and State Street Corp. —hold roughly a fifth of the S&P 500 through funds they run for investors. They can cast critical votes and have the ears of chief executives. How they exercise this power—or choose not too—has ripple effects across markets.
All three have faced questions over their responsibilities as shareholders on behalf of investors in funds they run. In years past, these firms have targeted gender diversity in boardrooms among other issues.
Lately, there has been increased pressure on them to do more on climate change.
BlackRock’s offices around the world have been frequented by activists who blast the firm for being slow to act on green issues. The firm has debated a question internally: how can BlackRock ensure it has public support to operate in the countries where it does business as it continues to grow?
The firm said it would provide more information on data on the carbon footprint and other potentially controversial holdings in its mutual funds. It also said it would disclose more details of its conversations with the companies its funds invest in. BlackRock also recently said it had joined Climate Action 100+, the world’s largest group of investors by assets pressuring companies to act on climate change.
The moves come as regulators are scrutinizing funds with environmental and social aims, in an effort to determine whether the claims by various asset managers are at odds with reality.
It is a hot corner in the investment management world. Funds focused on sustainability attracted a spike in interest in the past year. U.S. open-ended funds and exchange-traded funds focused on those strategies took in over $20 billion in net flows in 2019, nearly four times more than in the previous year, according to Morningstar Inc.
BlackRock has its eyes on a bigger presence in that market. That could help it win over younger investors and millennials who want to invest money in line with personal values.
The firm wants to increase assets it manages in so-called sustainable strategies to more than $1 trillion from $90 billion today.
“Over the next few years, one of the most important questions we will face is the scale and scope of government action on climate change, which will generally define the speed with which we move to a low-carbon economy,” Mr. Fink said in his letter.
He added that “while government must lead the way in this transition, companies and investors also have a meaningful role to play.”