For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “It diminishes.”
What happens to California’s federal political clout if Republicans gain House control, according to a pundit
- If House of Representatives Goes Red, California Will Be Feeling Blue
- Sole Gubernatorial Debate Turns Personal
- Newsom’s Stealth Digital Juggernaut Raises & Spends Millions Nationwide; Sanders Aide Builds a “Rare” Fund-Raising Operation
- “We’re Number 4!” Governor Trumpets California’s Global Economy…
- …“No, We’re Number 11,” Responds Business Group
- Air Board Revs Up Clean Truck Rule at Contentious Hearing; Supporters, Foes, Legislators & Other States All Testify
- “Builder’s Remedy” May Force Housing Growth on Cities
- Quick Take: CA Business Exits Increase
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 OCT. 28, 2022
If House of Representatives Goes Red, California Will Be Feeling Blue
Sacramento Bee
California’s political clout could be on the brink of a seismic shift. If, as expected, Republicans win control of the House on Nov. 8, some of the state’s most powerful political figures — think Democrats — would see their influence greatly diminished. Most notably, of course, is Nancy Pelosi, who has wielded considerable influence as the House speaker. California is a decidedly Democratic state and Pelosi has been a key force in pushing through party objectives.
She’s far from alone. A long list of Golden State Democrats who now preside over or are senior members of important congressional panels won’t be doing that anymore. That includes Central Valley Reps. Ami Bera, John Garamendi, Doris Matsui and Jim Costa as well as Central Coast Rep. Salud Carbajal. Bottom line: Their ability to pass legislation on such party policy priorities as climate change, or steer money toward concerns such as roads, will become a lot tougher.
“It diminishes,” said Ross Baker, professor of American politics at Rutgers University, of California’s clout if Republicans control the House. How likely is this shift? Republicans need a net gain of five seats nationwide to win control of the House for the two years starting in January. Independent analysts and polling suggest a pickup of eight to 25. California now has 42 Democrats and 11 Republicans in its House delegation — the state loses a seat next year because of population shifts — and many of those Democrats have been around long enough to possess ample power.
“The really big thing is the loss of Pelosi,” Baker said. “So much legislation is written in the leadership suite.” The San Francisco Democrat has been the House Democratic leader since 2003, and speaker in eight of those years.
Californians chair four powerful committees: Maxine Waters at Financial Services, Mark Takano at Veterans Affairs, Zoe Lofgren at Administration and Adam Schiff at Intelligence. Locally, Bera, D-Sacramento, chairs a subcommittee on Asian and nonproliferation issues.
Matsui, D-Sacramento, is a senior member of the Energy and Commerce Committee, which writes health care, environment and business-related bills.
Garamendi, D-Walnut Grove, heads a subcommittee on military readiness. Costa, D-Fresno, heads the livestock and foreign agriculture subcommittee, and Carbajal, D-Santa Barbara, chairs the Coast Guard panel.
What is unlikely to change much is how Congress responds to state emergencies or aid to programs in need.
That is particularly so because the most likely Republican replacement for Pelosi is another Californian, Kevin McCarthy of Bakersfield. “Having the speaker from the state can be pretty helpful,” said Christian Grose, academic director of the University of Southern California’s Schwarzenegger Institute.
McCarthy would be expected to help the state deal with disasters such as wildfires, earthquakes or other emergencies. Where Democratic influence could wane, experts said, is in the distribution of money for projects involving roads or schools.
On broader, more ideologically driven issues, differences are likely to be apparent. This summer’s Inflation Reduction Act, which passed with no House Republican support, had billions of dollars aimed at encouraging people to switch to cleaner energy devices.
Last year’s $1 trillion infrastructure bill, which provided funding to repair and build roads and bridges, received only 13 House Republican votes.
If they win control of the House, Republicans in January would confront a divided government. The current 50-50 Senate could remain Democratic, and Joe Biden will still be president, meaning it would take two-third majorities in each chamber to overcome vetoes.
As a result, “You’ll find little big legislation,” said John Fortier, senior fellow at Washington’s American Enterprise Institute. But moving even less ambitious bills will likely be tough for California Democrats.
“You had a speaker who has been powerful for a long time,” said Fortier, someone who was close to Californians and understood the state’s politics. While McCarthy is a lifelong, fourth-generation Californian, a graduate of California State University Bakersfield, analysts still see a state congressional delegation dominated by Democrats. And the state’s two U.S. senators are likely to be Democrats.
Because so many of the more senior Democrats are from California, “they now wield a lot of power,” said Grose. “This would be a big change.”
Consider: McCarthy and his allies will now set the policy agenda. And significantly, McCarthy’s most senior and powerful party allies will not be from California — or have much, if any, interest in pushing policy that resonates with the majority of California voters.
It’s unlikely that California Republicans will have the same clout in so many different areas that California Democrats now have. Though many of the state’s Republicans are fairly new to Congress, there are those in positions to assume power:
Rep. Tom McClintock, R-Elk Grove, who’s now seeking an eighth term. He is currently the top Republican on the House Judiciary Committee’s immigration subcommittee, putting him in line to chair that panel if Republicans win the House. McClintock is also a senior member of the Natural Resources Committee.
Rep. Darrell Issa, R-San Marcos, chaired the Oversight and Reform Committee from 2011 to 2015 and is now the top Republican on Judiciary’s courts subcommittee.
Rep. Doug LaMalfa, R-Oroville, is top Republican on the agriculture committee’s panel on conservation and forestry.
Reps. Ken Calvert, R-Corona, David Valadao, R-Hanford, and Mike Garcia, R-Santa Clarita, are members of the appropriations committee, which writes spending legislation. Calvert is also the top Republican on the defense subcommittee.
A Republican-run House is also expected to pursue a far different tax and spending path. California may not see a huge difference in federal funding for projects such as roads or schools — not with Biden as president — but could see less money for more innovative efforts.
The state’s climate change initiatives, for instance, may not receive the support Democrats have provided. Three of the nine Democrats on the House Climate Crisis Committee are Californians; none of the Republicans are.
Republicans are also talking about extending the Trump-era tax cuts, which lowered income tax rates across the board but provided big breaks for business and wealthier taxpayers.
Those tax cuts passed in 2017 without a single Democratic vote. That, though, could benefit affluent sectors of California, whose wealthier residents pay some of the nation’s highest tax rates.
Many Democrats have sought to increase tax rates on long-term capital gains. Republicans have not. Chris Edwards, a fiscal policy expert at the libertarian Cato Institute, said that Republican position could play well in places such as Silicon Valley. “Capital gains are the reward for investing in particularly risky startups,” he said. “That’s what Silicon Valley is all about.
Thus, increasing capital gains taxes would reduce investment in technology startups. It would undermine the Silicon Valley model. “So I think if McCarthy becomes Speaker, Silicon Valley can breathe a sigh of relief in terms of higher capital gains taxes.,” said Edwards, a former senior economist for Congress’ Joint Economic Committee.
https://www.sacbee.com/news/politics-government/capitol-alert/article267785077.html#storylink=cpy
Sole Gubernatorial Debate Turns Personal
CallMatters
After months of an extraordinarily quiet race, in which Gov. Gavin Newsom has barely even acknowledged his own campaign for re-election, the Democrat came out blazing Sunday in the only gubernatorial debate, relentlessly attacking his Republican challenger as a stooge of oil companies who has obstructed his every effort to solve the biggest problems facing California.
The barrage — at times remarkably personal, as when Newsom warned that his “extreme” anti-abortion opponent would force 10-year-old incest victims to carry a pregancy to term — seemed to stun Brian Dahle, a state senator and farmer from rural Northern California, who struggled to respond to some of the criticism.
But Dahle was clear in his message to voters, who will decide this fall whether to give Newsom a second term in the governor’s office: Despite billions of dollars in new funding for everything from schools to homeless services, California is worse off than it’s ever been because Newsom’s solutions are the wrong ones.
He accused the governor of focusing more on national issues than those plaguing the state, a claim that Dahle has repeated with increasing frequency in recent months as Newsom launched broadsides against the leaders of GOP states and speculation mounted that he is laying the groundwork to seek higher office.
“I want to start out by thanking the governor for taking time out of going forward on his dream of being president of the United States and actually coming to California and having a debate,” Dahle said. “Californians are suffering. They’re fleeing California and they’re going to other states where he’s campaigning nationally.”
The exchange prompted the debate moderators to ask Newsom whether he would commit to serving out the full four years should he win another term.
“Yes,” Newsom said. “And I’ve barely been out of state. I was out of state for a few hours to take on his party and [the] leader of his party, Donald Trump, who he is a passionate supporter of.”
The one-hour debate, hosted by KQED at its San Francisco headquarters, is unlikely to change the contours of a race that public polls show Newsom is expected to win by double digits. It aired live on the radio and online Sunday afternoon, as many viewers were tuned to NFL games instead.
Here are some of the other highlights:
Newsom immediately sought to draw a contrast with Dahle on abortion. While the governor has spent millions to air a television ad touting Proposition 1, a ballot measure that would put the right to abortion into the state constitution, a campaign account controlled by Dahle donated $20,000 this month to defeat it.
Dahle, who calls himself “pro-life,” denied that. A spokesperson later said it was an in-kind contribution, because Dahle’s campaign shared polling it had conducted with opponents of Proposition 1.
“You’re not pro-life. You’re pro-government-mandated birth,” Newsom said. “What my opponent believes is some 10-year-old that’s raped by her father should be forced to bear her brother or sister. His position is extreme.”
Dahle did not discuss the specifics of his beliefs about abortion. He instead lambasted Newsom for adding hundreds of millions of dollars in new money for abortion services in the latest state budget, including $20 million to help women from outside California travel here for the procedure.
“He wants to make this a sanctuary state where all of Americans can come here and get an abortion at the expense of Califonia taxpayers,” Dahle said. “I know that’s a great platform when you’re running for the president of the United States. But here in California, people are struggling, and yes, I would absolutely take that out of the budget.”
Yet Dahle said that, as governor, he would allow some funding for abortion services if necessary to reach a budget deal with a Democratic-controlled Legislature.
Dahle tried to focus on the high cost of living in California, as exemplified by gasoline prices that are nearly $2 per gallon more than the national average.
He said the state is affordable only for Newsom’s wealthy friends, blaming overly burdensome environmental regulations and climate policies that Dahle believes are the wrong priority at a time when the state is deep in drought and struggled to keep the lights on during a recent historic heat wave.
“We have no water. We have no electricity. We have no plan,” Dahle said.
Rather than the inflation relief rebates that the state began sending out to most Californians this month, or the special session that Newsom plans to call later this year to tax oil industry profits, Dahle once again urged Newsom to suspend the state’s gas tax, which he argued would provide more immediate assistance to drivers.
But when pressed by Newsom about how to ensure that oil companies, which pay the tax, would actually pass along all those savings to consumers at the pump, Dahle could only offer, “Well, we make sure that they do it.”
Newsom denounced Dahle’s answers as ripped from “Big Oil’s talking points.” The governor bragged that gas prices were down 65 cents per gallon since their peak after he ordered the state to transition early to its cheaper “winter blend” of fuel. Prices remain so much higher than the rest of the country, he said, because the oil industry is gouging Californians.
“There’s no justification — none, whatsoever — for these outrageous, usurious costs,” he said.
By the end of their hour together, the candidates fell into a familiar pattern.
Newsom would trumpet some historic funding in the latest state budget — the highest per-pupil spending ever for K-12 schools, two dozen positions in the Department of Justice to combat fentanyl trafficking, a new court to compel more homeless people into treatment — and blast Dahle for voting against it.
Then Dahle would counter that it was all talk and Newsom had done nothing to actually solve the problem.
MORE:
Politico
Gov. Gavin Newsom has quietly built a digital juggernaut as he coasts to reelection next month.
It’s another development sure to stoke speculation about his next move. But so far, the California Democrat has been using it for the benefit of others.
Newsom tapped his email list and fundraising events to help spread more than $6 million to other Democratic candidates and causes ahead of the election, advisers tell POLITICO, with much going to fellow gubernatorial candidates. He’s planning to do more for other candidates before Nov. 8.
On Saturday, Newsom will make his debut on the 2022 trail when he drops into New Mexico for an event with Gov. Michelle Lujan Grisham, who is being hammered over crime and the slow pace of the economic recovery by Republican Mark Ronchetti, a veteran TV broadcaster. The race has become sneakily competitive, and big-name Democrats are parachuting into Albuquerque, with President Joe Biden set to visit Nov. 3, after a recent stop from Vice President Kamala Harris.
Newsom also is spending the final week of the election stumping for House and other downballot candidates in his home state. So far, his political committees have given or raised nearly $3 million to candidates for governor and $430,000 more for the House, including in every competitive contest in California.
As Newsom’s imprint on the midterms takes shape, it also renews questions about his plans outside serving a second term at the Capitol, which would take him through 2026.
There’s been relentless chatter about his ambitions since last year when he fended off the recall against him and then began waging aggressive campaigns against the Republican governors of Florida and Texas — in addition to calling out fellow Democrats for being feckless in the face of growing attacks against them from the right.
Newsom’s team is increasingly cognizant that each of the moves he makes are viewed through the prism of a future presidential run, despite repeatedly professing his support for President Joe Biden in 2024 and pledging that under no circumstance would he challenge him.
But few Democrats find themselves in such advantageous positions. Newsom has raised $113 million since fighting the recall attempt, including about $20 million through the digital operation.
Those are considerable sums for a state official. And they underscore that Newsom has been able to build what few others in the party can lay claim to: a major digital apparatus allowing him to play in 2022 despite mostly staying off the trail until late.
Newsom’s online footprint grew considerably in the last year and change. It’s been spearheaded by Tim Tagaris, one of the party’s foremost digital operatives who stood up Sen. Bernie Sanders’ (I-Vt.) pioneering fundraising operations in 2016. Newsom boasts an email list of more than 6 million names, up from 250,000 when Tagaris started ahead of the recall.
“It sucks that the far-right dragged the state through this recall, but the governor is stronger on the other end for it — and it’s helped him raise a bunch of money for other Democrats across the country, as well,” Tagaris told POLITICO in a rare, on-the-record interview.
“It’s pretty easy for federal candidates, particularly in tough Senate campaigns, to build strong and robust digital operations,” he added. “The ability to do it for non-federal candidates is just really rare.”
MORE:
“We’re Number 4!” Governor Trumpets California’s Global Economy…
Governor’s Office
According to Bloomberg, California is poised to overtake Germany as the world’s 4th largest economy, continuing to outperform the nation and other countries in GDP growth, companies’ market value, renewable energy and more.
“While critics often say California’s best days are behind us, reality proves otherwise – our economic growth and job gains continue to fuel the nation’s economy,” said Governor Newsom. “California’s values and entrepreneurial spirit have powered this ascent to becoming the 4th biggest economy in the world, and we’ll continue doubling down on industries of the future, like renewables and clean energy. I feel tremendous pride in California’s resilience, leadership, and our formula for success.”
Governor’s Media Release:
https://www.gov.ca.gov/2022/10/24/icymi-california-poised-to-become-worlds-4th-biggest-economy/
…“No, We’re Number 11,” Responds Business Group
CA Business Roundtable
Recent reports, including an opinion piece from Bloomberg, have argued that California is poised to become the 4th largest economy in the world. However, the data shows that California will likely remain in 5th place, which it achieved not through growth of the state economy, but through contraction of the UK economy in the wake of Brexit.
The October 2022 World Economic Outlook Database from the IMF and California Data from the Bureau of Economic Analysis (BEA) show that California is still in 5th place. In fact, California’s economy would have to grow by more than a quarter to overtake Germany.
California’s competitiveness is hampered by its ongoing cost-of-living crisis. While the state’s GDP might be higher, the high and growing costs of housing, energy, food, and other essentials means the dollar here does not go as far as it does in other countries. Using the same sources and adjusting California’s GDP based on the BEA regional price parity index, GDP by purchasing parity sinks California to 11th place, struggling to stay above Turkey.
CA Business Roundtable Media Release:
CalMatters
Environmentalists and trucking industry groups sparred with clean air regulators yesterday over a contentious proposal to phase out California’s big rigs and other trucks with internal combustion engines, and force manufacturers to speed mass-production of electric trucks.
The California Air Resources Board held its first public hearing on rules that would ban manufacturers from selling any new fossil-fueled medium-duty and heavy-duty trucks by 2040. The new rules would also require large trucking companies to convert their fleets to electric models, buying more over time until all are zero-emission by 2042. The move is part of the state’s wider strategy to end its reliance on fossil fuels and cut planet-warming emissions.
“California is leading the transition to wide-scale electrification of trucks and buses,” said board chair Liane Randolph. “These actions can show the world how to simultaneously address the climate crisis, improve air quality and alleviate key concerns identified by communities.”
The proposed regulation received fiery criticism from both sides, as 167 members of the public lined up to speak at today’s hearing — which started at 9 a.m. and lasted well into the night.
In a letter to the air board, a group of state legislators, including Democratic Sens. Nancy Skinner of Berkeley and Josh Becker of Menlo Park, and Assemblymember Cristina Garcia of Bell Gardens, agreed with environmentalists. They note that these changes are achievable due to this year’s massive $54 billion climate investment, which includes $10 billion in state funding to rapidly deploy electric vehicles and charging stations.
The climate package allocates billions for electrifying medium- and heavy-duty trucks, including $1.1 billion for zero-emission trucks, buses, off-road equipment and fueling infrastructure and $400 million for charging stations at ports. Truck drivers and companies could receive additional benefits through the federal Inflation Reduction Act, which includes a 30% tax credit for zero-emission commercial vehicles and charging stations.
But in a separate statement, some legislators including Democratic Assemblymembers Blanca Rubio of Baldwin Park, Carlos Villapudua of Stockton and Rudy Salas of Bakersfield — especially those from rural areas or with high concentrations of fleet operators in their districts — sided with the trucking industry, saying the proposal is too “aggressive” and places many financial burdens on fleet operators.
They also said the plan fails to address many technical challenges, such as the toll electric trucks will have on the grid as power demand grows, and the fast-charging needs of heavy-duty rental vehicles like water and dump trucks that operate in remote locations.
A coalition of representatives from several states, including New York, Washington, Wisconsin and Connecticut, urged the board to adopt the rule and said they would move to implement it in their states too.
“The board’s approval of the advanced clean fleet regulations will enable New York and other states to adopt those regulations to support the needed transition to zero emission transportation and cleaner, healthier communities,” said Jared Snyder, the deputy commissioner for Air Resources, Climate Change and Energy at the New York State Department of Environmental Conservation.
Environmentalists and public health groups called for a tougher rule that would speed up the 100% electric truck sales requirement to 2036 instead of 2040, while trucking companies said the proposal ignores concerns about electric vehicle costs and technology, lack of infrastructure and the loss of good-paying jobs.
The Air Resources Board is expected to hold a second hearing on the proposal and vote in the spring.
Jeff Cox, a truck driver of 24 years and owner of the Madera-based trucking company Best Drayage, worries the rule could drive many family-owned fleet operators out of business – especially those with certain types of trucks that the regulation would affect first.
“Obviously we all want cleaner air, but this would be catastrophic to the industry,” he said. “We’re operating in an already challenging environment. To add something else that is this drastic would be very harmful. Getting the cart before the horse isn’t going to help matters by forcing the purchase of a vehicle that doesn’t exist today,” he said. “This is both impractical and impossible to comply with.”
California often leads the country in passing stringent emission reduction standards. The new rule would lead to a transformation of the trucking industry, affecting about 1.8 million trucks on state roads. It builds on other mandates to reduce emissions in the transportation sector, including the gas-powered car ban adopted earlier this year and clean trucks regulation passed in 2020.
But environmental groups often say that while the air board’s regulations on the transportation industry are well-intentioned, they don’t go far enough to reduce the production or use of fossil fuels.
Andrea Vidaurre, a policy analyst at the People’s Collective for Environmental Justice, said the effects of toxic diesel emissions from big rigs and other heavy-duty trucks in heavily polluted communities underscores the need for California to accelerate the transition. Diesel exhaust can lead to several health problems, including asthma and other respiratory illnesses, and increase the risk of hospitalization and premature death, according to air board staff.
“Our communities who are majority immigrant and Black have to deal with higher levels of asthma, respiratory issues, cancers and literally shortened life because of the pollution caused by diesel trucks,” she told the board. “Please use this opportunity to transform this logistics system that historically has done so much harm. Its future doesn’t have to. Please strengthen the rule.”
Randolph, the board chair, said it would be “counterproductive” to pursue some actions that environmentalists were calling for, including reducing the fleet size or moving up timelines for some truck classifications, suggesting that it “might create more burden than is necessary” for the trucking industry. She did, however, support the idea of moving up the manufacturer production timeline, which many board members also agreed with. The board directed staff to assess that possibility and other changes to the rule to address charging, grid and vehicle availability challenges.
“We as a board should discuss the possibility of an earlier 100% sales to 2036 and really push manufacturers to step up and make these vehicles available,” she added
MORE:
“Builder’s Remedy” May Force Housing Growth on Cities
CalMatters e-newsletter
A specter is haunting California’s affluent suburbs and beachside communities: The “builder’s remedy.”
It’s the reason that a single developer submitted plans for 4,500 apartments in Santa Monica — more new units than the city has built in a decade.
It’s why notoriously housing-averse Redondo Beach may be forced to permit 2,300 new units along its waterfront.
And it’s why, as one reporter put it, developers “could get streamlined permits to build Central Park’s glass skyline on Fulton Street in San Francisco.”
Let’s back up.
In California, the state sets housing goals for local governments. Under a decade-old law, cities and counties that fail to meet those goals or submit their plans on time have to allow any housing anywhere at any height or density, as long as 20% of the new units are deemed “affordable.”
This “builder’s remedy” policy spent most of its statutory life gathering dust. But in the last few years, the Legislature has passed a series of laws to give it teeth, and the state’s housing agency has hired a team of new enforcers.
According to a tally by the Los Angeles Times, 124 cities across southern California are currently out of compliance with state law. The deadline for northern California is January.
That has cities across the Bay Area scrambling to write housing plans— though not all of them are particularly credible. Wealthy enclaves have recently “allowed” new housing in an active creek bed, at the site of an unsuspecting business and at its own city hall.
But some locals are getting the message.
Piedmont Mayor Teddy Gray King: “I’m not going to tell our city attorney to try to fight these allocations, because we would lose…That’s totally irresponsible. And it’s a lousy way to behave.”
Quick Take: CA Business Exits Increase
A report by Hoover Institute senior fellow Lee Ohanian and Spectrum Location Solutions President Joseph Vranich finds that 352 companies moved their headquarters from California between 2018 and 2021. Twice as many businesses left last year (153) than in 2020 and 2019 and three times as many as in 2018. The top destinations: Texas (132), Tennessee (31), Nevada (25), Florida (24) and Arizona (21).
https://www.hoover.org/sites/default/files/research/docs/21117-Ohanian-Vranich-4_0.pdf