For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “Time heals wounds. We have a job to do.”
Assemblymember Kevin McCarty on the drama-charged election of a new Speaker
- State Fiscal Fortunes Predicted “Less Than Stellar” for 2023
- Gavin Newsom Backgrounder: “Dogged Student of the Game”
- Assembly Dems Pick New Speaker…Drama Worthy of “Succession”
- Will a New Speaker Re-Open Doors in the Peoples’ House?
- California’s Globe-Leading State Recycling Program Targets “Circular Economy”
Capital News & Notes (CN&N) harvests 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 NOV. 18, 2022
State Fiscal Fortunes Predicted “Less Than Stellar” for 2023
Politico’s California Playbook & Legislative Analyst’s Office
The warning signs have been flashing for months, and yesterday the state’s Legislative Analyst’s Office made it clear: California is likely facing a significant budget deficit — an estimated $25 billion next year, with ongoing, albeit smaller, projected shortfalls in years to follow.
Let’s be clear: this is not an absolute certainty. Lawmakers and Legislative staff on Wednesday downplayed the urgency of the LAO’s report. Assembly Budget Chair Phil Ting (D-San Francisco) noted the analyst’s office predicted a budget deficit at this time last year too, and the state ended up with a historic surplus.
“Projections are just that — projections,” Ting said.
But there’s no denying that the economy isn’t great right now. Inflation is up and stocks have been weak for much of the year. Not to mention layoffs at marquee tech companies like Lyft, Meta and Twitter, which have heightened economic pessimism throughout the state.
All those factors have contributed to less-than-stellar revenue figures for the state over the last several months. As the LAO sees it, that means lawmakers are going to have far less wiggle room when they sit down to hash out spending next year.
California over the past few years has enjoyed historic budget surpluses, which has helped lawmakers fund things like a nation-leading $54 billion climate change package and build up the state reserves.
As Christopher Thornberg , a forecasting expert who has advised the state controller’s and treasurer’s offices, puts it, “Last year, it was really fun to be in Sacramento… everyone was trying to figure out how much money they could spend.”
The good news is that a lot of last year’s spending was one-time allocations, not on-going commitments that need to be funded every year. Gov. Gavin Newsom purposefully vetoed several spending bills this year for that reason, and lawmakers in their budget made sure to build up the state reserves.
The deficit projections are “realistic,” said H.D. Palmer, a spokesperson for the administration’s Department of Finance, noting that “the state is in its best-ever position to manage a downturn.”
But the LAO had some suggestions for how Newsom and legislators should balance the 2023-2024 budget and prepare for years of shortfalls — including avoiding using reserve funds and, if possible, in January, “question the administration about the implementation and distribution of recent augmentations.”
Translation: if the state hasn’t sent out some of the money it allocated last year, lawmakers should see about getting it back.
And the Legislative Analyst’s fiscal outlook doesn’t take into account soaring inflation rates or the increasingly likely possibility of a recession. Due to inflation, “the actual costs to maintain the state’s service level are higher than what our outlook reflects,” the analyst’s office wrote.
The estimated $25 billion deficit thus “understates the actual budget problem in inflation-adjusted terms.” And, if a recession were to hit, it would result “in much more significant revenue declines,” meaning California could bring in $30 to $50 billion less than expected in the budget window.
Legislative Analyst’s Forecast:
https://lao.ca.gov/Publications/Report/4646
Gavin Newsom Backgrounder: “Dogged Student of the Game”
SF Standard
At this point, it doesn’t seem to be a question of whether Newsom will run for president—it’s a question of when. Fears of a “red tsunami” in which Democrats would be bounced out of Congress in Tuesday’s election were greatly overblown, giving President Biden some cover. He said on Wednesday he expects to make a decision on running in 2024 early next year. But speculation on Newsom’s future is already well underway.
To better understand what kind of presidential candidate and—gulp—actual president Newsom could be in the future, The Standard interviewed almost a dozen people who have worked with and against him during his time as mayor of San Francisco and governor of California. While the odds of Newsom actually winning a presidential election might seem slim at the moment, the odds of him running—either in 2024 or 2028—most certainly are not.
Newsom’s office did not respond to an interview request or emailed questions for comment for this story, but conversations with campaign consultants, current and former elected officials, and City Hall and state Capitol insiders—most of whom agreed to speak on the condition of anonymity—reveal Newsom to be many things:
A dogged student of the game whose dyslexia gave him fits in school but made him a savant at retaining policy and reciting stats. An aloof colleague who stiff-arms anything beyond surface-level relationships. An orator prone to dropping $10 words when a dime would do. And a calculated gambler who reads the political tea leaves better than most.
If there is a consensus to be found on Newsom, it’s that no one seems to know the real Newsom. His true character and motivations remain distant, apart, enveloped in a fog that traces back to San Francisco.
https://sfstandard.com/politics/gavin-newsom-president-san-francisco-governor-biden-harris/
Assembly Dems Pick New Speaker…In a Drama Worthy of “Succession”
CalMatters & Politico’s California Playbook
It was like a Sacramento episode of “Succession”: Following months of backroom jockeying, closed-door meetings and controversial fundraising practices, Assembly Democrats — including some who haven’t yet won races too close to call — announced Thursday evening a transition plan for the speakership, one of the most powerful roles in the state Capitol.
Emerging from a ballroom at the Sacramento Convention Center, Rivas, a Hollister Democrat, said the Democratic caucus had unanimously voted to retain Rendon, a Lakewood Democrat, as speaker until the end of June, when Rivas is scheduled to finally assume the influential role overseeing the lower house of the Legislature.
“We have such a large caucus here in the state Assembly. Excited that we had the opportunity to walk out of there united,” Rivas said. “This was about unity. It was about bringing our caucus together, about planning for the future.”
Rivas originally challenged Rendon for the speakership, one of the most powerful positions at the state Capitol, in late May, but was blocked during a tense six-hour caucus meeting in which Rendon refused to step down and Rivas was unable to muster enough support to force him out. He has been speaker since the beginning of 2016, the longest reign since the 1990s, when California voters adopted term limits. He will term out in 2024.
The Assembly Democrats are now expected to vote on Dec. 5, the first day of the new legislative session, to formally adopt the transition plan. Because they hold a supermajority of seats in the chamber, they do not need Republican votes to elect a speaker.
Rivas, who was first elected in 2018, would become speaker on June 30 — at the conclusion of the state budget process and more than a year after Rivas first announced that he had enough support to take over as the Assembly leader.
Though he was flanked by dozens of colleagues, who rode down an escalator together cheering at the end of the meeting this evening, Rivas was notably not joined by Rendon, who did not appear publicly after the vote.
“I will continue working for the Californians who need it most, and keep putting power in the hands of my members, especially those who are underrepresented,” Rendon said in a statement. “I look forward to working with Assemblymember Rivas in anticipation of a smooth transition in 2023. Now, it is time to work together for California.”
The two faced off throughout the summer and fall in a battle of influence within the Assembly caucus, particularly among the candidates for an unusually large number of open seats this election.
But the caucus — which numbered 63 at the meeting— aimed to project unity as a resolution to the drama finally emerged this evening.
Assemblymember Kevin McCarty, a Sacramento Democrat who was a top Rendon ally, stood beside an emotional Rivas as the speaker-designee recounted his rise from the son of farmworkers to the peak of California politics.
“Time heals wounds,” McCarty said. “We have a job to do.”
The protracted standoff profoundly divided the caucus. That went beyond bruised feelings and mutual distrust. It manifested in an unprecedented campaign break, with a parallel Rivas-aligned operation challenging the speaker-centric system. The Rivas team seeded a PAC to shore up prospective Democratic allies, prompting Rendon-world grumbling about wasting resources on safe seats. Frontline Democratic candidates would get visits from Rendon allies one weekend and Rivas’ people the next.
The duration of the caucus meeting underscored the fluidity of the situation. Both camps spent months maneuvering and parsing the Assembly rules governing leadership selections. Parliamentarians arrived and conferred with Rivas’ people around the four-hour mark yesterday.
At one point, multiple sources told us, Rendon floated making Assemblymember Evan Low his successor in exchange for Rendon staying on — a surprising move, given that Rendon last year punished Low for seeking the speakership by stripping him of his influential committee chairmanship. Low then joined the Rivas coalition and was, at one point, widely viewed as the likely next Appropriations chair.
Term limits made Rendon’s 2024 departure inevitable. Rivas ascended with the help of numerous members who have been elected in the last couple of cycles, just as Rendon did when he compiled the votes in 2016. Many of Rendon’s longtime lieutenants departed this year. Soon Rivas will preside over a transformed caucus: At least 15incoming members were in Sacramento yesterday to choose their next speaker. Soon enough they should see him in power.
MORE:
Will a New Speaker Re-Open Doors in the Peoples’ House?
CalMatters commentary from Dan Walters
Last week, following a six-hour closed-door meeting of the state Assembly’s dominant Democrats, Speaker Anthony Rendon and Assemblymember Robert Rivas simultaneously issued press releases.
“I’m pleased to retain my colleagues’ support to continue as speaker of the California Assembly and leader of our Democratic caucus,” Rendon declared.
“I am honored that my Democratic colleagues have instilled their trust in me to lead the Assembly,” Rivas said.
Huh?
Those seemingly contradictory statements reflected a political deal that apparently settled a months-long conflict over who would occupy the Assembly’s top position.
Months earlier, Rivas had declared that he had the votes to oust Rendon but the speaker refused to step aside and a power struggle ensued, each man trying to get as many of his supporters elected as possible.
Ultimately, just two days after the election, a bargain was struck. Rendon, speaker for the last six years, would remain in the position until June 30, 2023, after which Rivas would assume it.
Both were winners, in a sense.
Rendon will be forced out of the Legislature by term limits in 2024 and thus, as a practical matter, would have had to relinquish the speakership sometime next year anyway. He now would leave the office a few months early, but at least would not suffer the ignominy of being forced out.
On the other hand, Rivas will achieve his long-sought goal of becoming speaker with all that entails in terms of power over the internal workings of the California Assembly and their effect on legislation.
Whether the deal or what it brings make any real difference to nearly 40 million Californians is problematic. There are few, if any, ideological differences between the two Latino politicians and the most interesting aspect of moving from Rendon to Rivas is that the latter represents a rural district in the Salinas Valley, interrupting the tendency of legislative leaders to hail from big cities.
A Rivas speakership would be remarkable only if he did something about the ever-growing tendency of the Legislature to become more secretive in how it handles the public’s business.
Secrecy was the mode of legislative operation for more than a century, but in the 1970s, procedural reform took root. The hitherto opaque process of drafting a state budget was opened up for public and media scrutiny, new laws were passed to shine light on campaign contributions and lobbying activity, and the public was even granted access to the Legislature’s internal spending.
The reformist era lasted for more than three decades, reaching its zenith when voters took away legislators’ power to redraw their own districts after each census and gave it to an independent commission.
Over the last decade, as Democrats achieved legislative dominance, they clamped down on public access and input.
Legislative hearings on bills have been severely truncated. Pro and con advocates are given only a few minutes to speak and public testimony has been virtually abolished.
Each year, hundreds of bills are shuttled into the “appropriation committees” in both houses and their fates are simply announced with no explanation.
After Democrats persuaded voters to eliminate two-thirds votes for budgets, they began loading up budget “trailer bills” with countless special interest goodies and major changes of policy that bypassed even cursory public input.
Budgets and trailer bills are written completely in secret and the public is given only 72 hours to peruse thousands of pages of dense legislative language before they are passed into law — and only then because a 2016 ballot measure requires the 72-hour notice.
If Rivas really wants to make a difference, he would allow some sunshine into the increasingly dark Capitol.
https://calmatters.org/commentary/2022/11/california-assembly-speaker-deal/
California’s Globe-Leading State Recycling Program Targets “Circular Economy”
Sacramento Bee’s Capitol Alert newsletter
Tuesday marked “America Recycles Day,” and CalRecycle director Rachel Machi Wagoner took the occasion to announce that the state’s recycling rate has dropped to 40% in 2021, down from 42% in 2020.
That’s the bad news.
The good news is that Wagoner says her agency has a way to improve that rate; she wants to add a fourth “R” to “Reduce, Reuse, Recycle:” Re-manufacture.
“The bigger story in my mind is the fact that we’re changing paradigms here in California,” Wagoner said in an interview with The Bee.
Specifically, Wagoner wants to see California create a “circular economy,” where used goods stay in California and get repurposed or re-manufactured for further use in the Golden State.
An example would be recycling batteries for their lithium, which can be used to make new products, she said.
To that end, the state is investing $800 million into building out the infrastructure for that circular economy; that includes money for grants to businesses and local governments.
“It’s really meant to be that jumpstart to a sustainable circular economy,” Wagoner said.
CalRecycle has its hands full after the Legislature and Gov. Gavin Newsom passed and signed 15 bills related to recycling reform, including a bill that allows for wine and liquor bottles to be recycled as part of the Beverage Container Recycling Program.
Wagoner also pointed out a bill that requires retailers to come up with a plan to address recycling needs in their communities. Current statute allows retailers to pay an “in-lieu” fee to get out of having to accept cans and bottles.
The new law removes that option, and forces them to establish a co-op and submit a plan for how they will serve their region.
“What this really is meant to do with the (California Refund Value) is make sure every penny gets back to the consumer,” Wagoner said.
One area where California could stand to improve is in food waste.
Wagoner said that Californians throw away 7.27 billion meals every year.
“That’s a lot of money that we’re leaving on the table,” Wagoner said.
Wagoner said that while the California Legislature has given her agency plenty of work to do to comply with the new laws and regulations, there’s more work to be done. The governor’s office, lawmakers, state and local governments and private partners all need to work together to identify the big picture, she said.
“We can do better. We are doing better. We’re going to continue to do better,” Wagoner said.