For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “Sustainability is Profitability”
- With No More Federal COVID Aid, State Budget Cuts Deepen
- Remote Work Rewriting Tax Codes…and State Revenue
- Newsom’s Water & Land Conservation “Big Hairy, Audacious Goal” Will Be a Work in Progress for Years
- Corporate America Gets Serious About Sustainability
- In a World Gone Mad, Paper Planners Offer Order and Delight
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 OCT. 16, 2020
With No More Federal COVID Aid, State Budget Cuts Deepen
Sacramento Bee
It’s official: Pay cuts for California state workers are here to stay.
Thursday was the deadline for the federal government to send financial aid that could have undone cuts that took effect in July. The reductions will remain in place for two years for most of the state’s 230,000 employees.
Gov. Gavin Newsom and the state Legislature instituted the cuts, which reduce most workers’ pay while giving them two flexible days off per month, as part of the state’s budget response to a projected $54.3 billion deficit. The pay reductions are expected to save about $2.4 billion per year, according to the Legislative Analyst’s Office.
The budget included “triggers” that would have restored $11.1 billion in spending — for state workers, education and other areas — if the federal government provided enough unrestricted aid.
While California has received federal money during the coronavirus outbreak through designated state-federal programs, Congress hasn’t approved a package that would have restored more general spending.
“The federal government has failed to advance any additional economic stimulus package for struggling workers and businesses, nor have they agreed to any relief for state and local governments,” Finance Director Keely Bosler said in a Thursday letter to the Legislature.
The U.S. House of Representatives, with a Democratic majority, approved an aid package called the Heroes Act in May, but the bill didn’t make it past committee hearings in the Republican-held Senate.
The act, with an estimated cost of $3 trillion, would have restored the state’s spending in full, according to Bosler’s letter.
Stimulus talks are still underway in Washington despite an Oct. 6 Twitter post from President Donald Trump saying he had told his representatives to stop negotiating with Democrats until after the Nov. 3 election.
Trump has recently suggested he wants a big package, and Treasury Secretary and House Speaker Nancy Pelosi continue to exchange ideas, though the two sides remain far apart on how much to spend.
The Trump administration appears willing to offer some aid to states, and the Senate plans to hold an unusual late October election year session starting next week to consider a scaled-down stimulus plan. The House does not plan to meet but can be recalled quickly if necessary.
The California Finance Department will continue to “monitor and report on federal developments,” Bosler said in her letter.
Details of state workers’ pay cuts vary depending on their work and which union represents them, but most of the agreements start with a pay cut of 9.23%, the equivalent of two days of work per month. Workers receive two unpaid days off in exchange, which they can bank and use later.
The reductions to their pay are softened by a suspension of the contributions workers normally make to their retirement health care, which for most is a few percentage points.
https://www.sacbee.com/article246477380.html#storylink=cpy
Remote Work Rewriting Tax Codes…and State Revenue
Pew Trusts
Millions of additional people are working remotely, and business experts predict that many of them will continue to do so after the pandemic ebbs. That prospect could lead tax departments in more states to examine the feasibility of taxing remote workers.
Meanwhile, many people who are working at home full-time instead of crossing states lines may owe income taxes to their home state for the first time.
A few areas — the District of Columbia, Maryland and Virginia, notably — have reciprocity agreements that simplify things for taxpayers. Those deals mean taxpayers owe only the income tax of the state in which they live, not the state where they work.
“The nature of work is changing,” said Jared Walczak, vice president of state projects at the Tax Foundation, a think tank that touts lower, more broadly based taxes. “Certainly, we won’t be as remote as we are in the pandemic, but this has been a fairly successful trial run for remote work.”
Prior to the pandemic-induced stampede to work from home, Walczak said, people living in one state and working in another would pay taxes on the income earned in the state where they worked, and then get a credit on their home-state tax form. Now, the home states of people who used to commute out of state but now work at home may claim that tax revenue for themselves.
These situations complicate tax filings, and depending on whether a credit is offered by the home state, raise the specter of workers being taxed twice.
New York, which has had its regulation as part of income tax law from the early part of the 20th century, has a reputation of strict enforcement on out-of-staters working for a New York-based company. It’s called the “convenience tax” because, before the pandemic, it was believed that some people worked remotely out of convenience, not necessity. The pandemic scrambled those semantics, but the tax remains.
The New York application of the tax was tested in a 2003 case by Edward Zelinsky, who lives in Connecticut but works as a law professor at Yeshiva University’s Cardozo School of Law in New York. Zelinsky argued he should pay New York income tax on only half of his earnings, because he spends half his teaching and research time in New York and half at home in Connecticut.
But the New York Court of Appeals, the state’s highest court, ruled Zelinsky owed New York income tax on his entire salary. The U.S. Supreme Court declined to hear the case. Connecticut eased things a bit by enacting a reciprocity law in 2019, meaning it doesn’t impose Connecticut income taxes on top of the New York taxes. But New York income taxes can be as high as 8.8% while the top rate in Connecticut is 7%.
Zelinsky expects that his situation will become more common post-pandemic. “Even if you believe that the more extreme [work-at-home] predictions are not true,” he said in a phone interview, “we all agree that there is likely to be more work at home and that this is going to be a serious problem. My litigation in 2003 looks kind of quaint when you see what’s going on today. I think it’s very possible that an awful lot of people are going to get caught in a very messy situation.”
James Gazzale, spokesperson for the New York State Department of Taxation and Finance, noted that Gov. Andrew Cuomo, a Democrat, has repeatedly said this is going to be a “challenging” year fiscally, but that won’t change New York’s tax policy. And Freeman Klopott, a press officer in the New York State Division of the Budget, said in an email that his office does not expect a change in revenue.
A federal law could solve the problem. A bill from South Dakota Sen. John Thune, a Republican, called the “Mobile Workforce State Income Tax Simplification Act of 2019,” aims to apply income tax to workers in the state where they reside, no matter where their workplace is located. But the bill has gone nowhere. A version passed the House in 2017, but also stalled.
In February, the Arkansas revenue department roiled the legal tax world by issuing an opinion stating that if a person who had been working in Arkansas, but then moved to another state but continued to do the same work — say, a computer programmer — that worker would still be subject to Arkansas income tax.
“We determined that in this case, even though he was doing it from another state, he was still programming computers in Arkansas,” said John Theis, legal counsel for the revenue department who wrote the opinion. He said the opinion was written for one circumstance but might apply to others, depending on the particulars.
Theis said the constitutional question is whether the taxpayer is getting anything from the state in which his employer is located. He said while certain benefits, like 911 call response, would not apply to someone working remotely, others, such as worker’s compensation, would be provided by Arkansas.
James Gazzale, spokesperson for the New York State Department of Taxation and Finance, noted that Gov. Andrew Cuomo, a Democrat, has repeatedly said this is going to be a “challenging” year fiscally, but that won’t change New York’s tax policy. And Freeman Klopott, a press officer in the New York State Division of the Budget, said in an email that his office does not expect a change in revenue.
A federal law could solve the problem. A bill from South Dakota Sen. John Thune, a Republican, called the “Mobile Workforce State Income Tax Simplification Act of 2019,” aims to apply income tax to workers in the state where they reside, no matter where their workplace is located. But the bill has gone nowhere. A version passed the House in 2017, but also stalled.
In February, the Arkansas revenue department roiled the legal tax world by issuing an opinion stating that if a person who had been working in Arkansas, but then moved to another state but continued to do the same work — say, a computer programmer — that worker would still be subject to Arkansas income tax.
“We determined that in this case, even though he was doing it from another state, he was still programming computers in Arkansas,” said John Theis, legal counsel for the revenue department who wrote the opinion. He said the opinion was written for one circumstance but might apply to others, depending on the particulars.
Theis said the constitutional question is whether the taxpayer is getting anything from the state in which his employer is located. He said while certain benefits, like 911 call response, would not apply to someone working remotely, others, such as worker’s compensation, would be provided by Arkansas.
Newsom’s Water & Land Conservation “Big Hairy, Audacious Goal” Will Be a Work in Progress for Years
CalMatters commentary
Gavin Newsom is fond of declaring “big hairy, audacious goals” and doing something that implies he’s striving to achieve them.
However, he’s been compelled to devote virtually all of his time to managing crises this year: the COVID-19 pandemic, followed by a recession as he shut down businesses to battle infection, a state budget deficit caused by the recession, record heat waves that overwhelmed the state’s power supply, and wildfires of historic proportions.
Managing crises is essentially a reactive process while Newsom fancies himself a proactive striver and doer, not unlike, it should be noted, Jerry Brown in his first stint as governor four decades ago.
Newsom began the year in characteristic form, devoting virtually his entire State of the State address to homelessness and a chronic shortage of housing.
“After decades of neglect and inadequate responses, we are putting our entire state government on notice to respond with urgency,” Newsom declared. “We need a new approach. In the budget I just submitted, I proposed a new California Access to Housing Fund, and, with it, a whole new way of investing in homeless solutions.”
He also declared “a commitment — right now, this year — to major reform that will eliminate red tape, and delays for building critically needed housing — like affordable, multifamily homes — especially near transit and downtowns.”
Never mind. Within days of delivering that speech, Newsom issued his first emergency order on COVID-19.
Newsom is now trying to return to a proactive mode by issuing sweeping executive orders on climate change that make headlines, but really are no more than declarations of lofty intent.
The first declared that California will ban the sale of vehicles powered by internal combustion engines by 2035, but the order only directed the Air Resources Board to explore how that might be done.
The second, issued last week, directed state agencies to devise ways to “protect” 30% of California’s land and coastal waters by 2030 to reduce greenhouse gases and promote biodiversity, boasting that California would be the first state to adopt the “30-by-30” program being advocated globally.
“Once again, California is taking on the mantle of global climate leadership and advancing bold strategies to fight climate change,” Newsom said. “The science is clear that, in our existential fight against climate change, we must build on our historic efforts in energy and emissions and focus on our lands as well.”
But what does “protect” actually mean?
Newsom’s order basically enacts a piece of legislation, aptly named Assembly Bill 3030, that passed the Assembly this year but died in the Senate Appropriations Committee without a vote.
It had an extensive airing in the Senate Natural Resources and Water Committee, whose staff raised the definition question, to wit:
“It is a complicated task to determine how much of the state’s land, water, and ocean resources are already protected, in part because there is no one uniform definition of ‘protection’ in state law. These and similar terms can represent a sliding scale depending on the types of restrictions and allowable uses, including the degree of human access.”
In fact, the meaning of “protect” varies greatly even among its advocates, as the staff report detailed.
That lack of specificity is why those who catch fish, farmers, hunters, housing developers and others opposed the bill. They saw it as carte blanche for state agencies to issue restrictive land use rules.
So Newsom gets another headline attesting to his “bold strategies,” but as with his decree on cars, we won’t know, perhaps for years, whether it has any concrete meaning.
Corporate America Gets Serious About Sustainability
Wall Street Journal excerpt
If Solvay SA SOLVY -1.83% wasn’t serious about sustainability, Ilham Kadri says, she wouldn’t have taken the chief executive job last year.
On her first day at the helm of the nearly 160-year-old Belgian chemical company, Ms. Kadri says, she started to work on a 10-year sustainability road map for the firm that was unveiled earlier this year. Her bonus is tied to the plan, which includes phasing out coal use and cutting a quarter of Solvay’s freshwater intake by 2030.
Her belief in sustainability is rooted in her childhood. She says wastefulness was a luxury she couldn’t afford as a young girl growing up in Morocco without tap water or a refrigerator at home. Decades later, the 51-year-old Ms. Kadri is one the few women of color at the head of a large company.
Solvay landed at No. 52 in The Wall Street Journal’s new list of the 100 most sustainably managed companies, notching high marks on air quality, employee health and safety, and human rights and community relations. To produce the ranking, the Journal’s research analysts screened a universe of more than 5,500 publicly traded companies on various environmental, social and other factors, using publicly available data and an analysis of hundreds of thousands of news articles about the companies. To be included, a company had to meet minimum data-disclosure standards in key categories including the environment, workplace, social issues and business model/innovation.
Ms. Kadri, who at one time worked on wastewater-recycling and desalination projects in the Middle East, says that using less water to make chemicals will save money and help Solvay remain profitable. The company makes ingredients for products ranging from lithium batteries to implanted medical devices.
“Sustainability is profitability,” she says.
CEOs increasingly are embracing the idea that a company’s environmental, social and governance practices will play a role in its future success. For example, a quarter of CEOs now strongly agree that investing in climate-change initiatives could lead to significant new product and service opportunities for their businesses, up from 13% in 2010, according to a 2020 survey of more than 1,500 global CEOs by PricewaterhouseCoopers LLC, an accounting and consulting firm.
“Don’t underestimate the impact of one CEO or one major company making a decision,” says Alan McGill, global sustainability assurance leader at PwC.
Meanwhile, the pandemic and social unrest over racial justice have sped up the pivot to sustainability at many companies this year after both fronts exposed inequality in the economy, says Rebecca Henderson, a Harvard Business School professor.
“Five years ago, the argument was all about trying to persuade CEOs to take sustainability concerns and move them into the mainstream of the business,” she says. Now “everyone I talk to has the sense they ought to be,” she says.
Christian Klein, the 40-year-old chief executive of German business-software giant SAPSAP -1.24% SE, is among the CEOs whose bonuses are tied to green targets. In the case of SAP, which came in at No. 67 in the WSJ research team’s ranking, that includes a fast-approaching goal of achieving carbon neutrality in direct emissions by 2025.
Years ago, it was much more difficult to convince shareholders that sustainability leads to profitability, says Mr. Klein, who became CEO earlier this year after more than two decades at the company, most recently as chief operating officer.
“That’s not a contradiction anymore,” he says, adding that the business world is realizing that the customers of tomorrow won’t just care about price but about who is leading on environmental and social issues.
He says he is now focused on finding ways for the thousands of businesses world-wide that use SAP’s software to lower their environmental impact, including in their supply chains and manufacturing.
“We believe we can have a huge impact,” Mr. Klein says.
The top leadership at Linde LIN -1.77% PLC, the industrial-gas company that landed at No. 62 on the WSJ team’s list, also sees a clear business case for sustainability. Linde was formed by the merger of Linde AG of Germany and U.S. gas producer Praxair Inc. in 2018.
CEO Steve Angel, who previously ran Praxair, says that for the last 17 years he has focused on making manufacturing more efficient and cleaner, which has translated into cash and emissions savings for both the company and clients.
Mr. Angel sees no conflict between Linde’s short-term profit goals and its longer-term sustainability targets, including achieving zero waste at 450 sites and more than doubling low-carbon energy use by 2028.
“I don’t spend any time during the day worried about an either/or trade-off,” he says
Mr. Angel says he is aiming to turn Linde’s clean hydrogen business into a multibillion-dollar revenue powerhouse, serving companies that want to wean themselves of fossil fuels. Hydrogen produces near-zero emissions when consumed in a fuel cell. Most hydrogen today is produced from natural gas and other fossil fuels, including the $2 billion in annual revenue that Linde already generates from its hydrogen business. Linde says it wants to make more hydrogen using sun and wind power, or as a byproduct of natural-gas production.
Electric-equipment maker Schneider Electric SE, SU 0.68% meanwhile, has been shifting toward sustainability ever since Jean-Pascal Tricoire became chairman and CEO some 14 years ago.
“Your business should go in the direction of the mega trend,” he says. “If your business is going against sustainability, you’re bound to fail.”
Schneider Electric is one of many companies in the Journal team’s ranking whose green efforts have drawn investors. In a note published in May by Credit Suisse, the bank says that Schneider Electric was among the 15 most popular European companies in the 109 ESG funds it tracks.
The French company, No. 85 on the WSJ list, in 2005 began setting sustainability targets and performance trackers that are renewed every three years and linked with managers’ bonuses, Mr. Tricoire says.
“At that time, it was a very lone crusade in our industry,” he says.
Still, there appears a gap between talk and action when it comes to hiring CEOs and executives based on their sustainability experience.
Last year, about 15% of 4,000 job postings for nonexecutive or senior executive positions mentioned sustainability, but only 4% at most required actual experience in it, according to a report by the United Nations Global Compact and executive hiring consulting firm Russell Reynolds Associates.
“Businesses are doing a great job embedding talk of sustainability into descriptions about their company, but are falling short in driving decisions about which leaders to hire based on it,” the report says.
Russell Reynolds CEO Clarke Murphy says he expects that to change in the coming years.
“I don’t think this is just chat, chat, chat.”
In a World Gone Mad, Paper Planners Offer Order and Delight
The Atlantic
Hypnotized, I watched her flip through all the planners, trimmed down into sections of a binder and hole-punched to fit on shiny metal rings. I was astounded by the discipline required, the amount of control she had over her time and task list. She could turn to a page in a book on her desk and know exactly what to do with the next hour of her life. I wondered if I’d just stumbled on the most productive person in the world.
A vocabulary revealed itself. A world of planner obsessives opened up. Plan With Me’s, I soon discovered, were videos of people demonstrating the art of decorating and accessorizing their bound paper planners. The pages came in many layouts: horizontal, with seven paragraphs of plain notebook lines; vertical, with three blank boxes descending down the page for each day; dashboard, with lists for what to do and what to buy each week; hourly, with timelines from 5 am to 10 pm. Now to decorate. You might go spare, and just lay down a few icon stickers for work meetings and the kids’ activities. Or you could go ornate, with dozens of colorful boxes and flower stickers. Your approach might depend on the space you need for planning and the format of the page. Are you working on a typical weekly spread or a travel plan with packing checklists? A memory page with personal pictures or a blank week you might use to practice hand-lettering?
“It’s a lot,” planner influencer Desiree Perez tells me after explaining how involved she is in the planning community, what I call Planner World. She decorates multiple spreads a week, runs popular Instagram and YouTube channels, promotes for Happy Planner, one of the largest planner brands, works a full time job as an administrative assistant, and presumably sleeps at some point. “It is a lot, but I really, really enjoy it so much.”
And the planner world is huge. Over the past decade, planning has grown into a giant online community, with 5.5 million mentions for #planneraddict and 4 million mentions for #plannercommunity. Paper planners, which are commonly thought of as schoolyard tools sold in Target aisles, make up a multimillion-dollar industry. The most recent figure—and it’s safe to assume the numbers have only grown—has the planner industry showing $342.7 million in sales in 2016.
The history of planning is the history of journaling, storytelling, pen, paper, scheduled events, anticipation. Someone, long ago, made a note of something that was going to, or was supposed to, happen. The first recorded American use of a planner as a tool dates back to Colonial America, when Founding Fathers including George Washington would weave blank pages into almanacs, those annual collections of calendars, weather forecasts, tools for finance calculations, political essays, and planting dates, calculated based on the movement of the planets. Washington would keep various diaries dedicated to specific journeys, along with daily logs detailing his difficulties planting tobacco and notes on his slaves and employed artisans. These components were incorporated into daily planners, first in 1773 by Robert Aitken’s self-proclaimed first American daily planner, then in basic ones carried by Union soldiers, then in the Wanamaker Diary, sold by the eponymous department store from 1900 to around 1971. The Wanamaker included historical facts, poems, recipes, seating charts for popular theaters, and dates for social events across the country, as well as advertisements for the store and the brands it sold.
Now that books, calendars, and work itself (thanks Zoom) are almost fully digitized, the rise of paper planners seems inevitable. Planner fans use iCal and Google calendars, too, of course, for the purpose of sharing schedules, but digital alerts and to-dos that disappear after they’re completed make the sense of accomplishment just as evanescent. Writing a task down on paper helps it stick in the brain, and a long list of crossed-out to-dos shows the day’s accomplishment.
The women (and men) in the decorative planner industry grew up on Lisa Frank notebooks and Lilly Pulitzer. The books they use are high-quality, thick paper that take pens and paint with no bleed-through. When I buy books, I rub my hands over the covers, and I delight in turning the pages; I once bought three boxes of a pen I liked; in high school, I created a Choose Your Own Adventure book as a final project: This habit seems made for me. I might find coral and neon-green accents slightly ridiculous, but I can be swayed by a pretty flower sticker. Plus, even though a “Just Be Happy” sticker feels like a challenge—like every stressor can easily be ignored and succumbing to it is my fault—a saying like “Just Trust the Process” can sneak up on me and lift my mood.
It took awhile to get into the habit of writing everything in my brain down, but now I start my day by opening the planner, seeing what I already have to do, and where I can fit in tasks that I enjoy. It gives me a sense of care and luxury. And it feels like meditation: My head empties and clears of stress. And the act of placing a sticker, placing the bookmark, feeling the lack of scratch as the pen glides over smooth paper, also feels like care. The care that went into designing the planner, caring for my schedule, caring about my mental state. When I write down my to-dos and schedule out my day, it’s a way of being nicer to myself, not having to rush tasks I forgot or stress that I’m not getting enough done.
Most planners got into paper planning during a time of personal upheaval, or when their schedule became overly hectic. They tell stories of cross-country moves, demanding jobs, military schedules, and loss of a spouse. They all turned to planning either to help their mental health or to get a handle on their lives.
“The only reason I got into planning was, at the time, I was working two jobs, and for one of my jobs the hours were all over the place,” says Perez, who is a member of the brand Happy Planner’s 2020–2021 Squad. Through the Squad, she receives products from Happy Planner to promote, and she gets mentoring from veteran Squad members. “I was really missing creativity. I was working, working, everything was technology—you’re on computers all day long. I just missed having some kind of creative element in my life, and planning gave me that creativity back, but it also gave me the function that I really needed to get things, like, in order, so it was win-win, since I’m doing something functional, but it’s also fun.”