For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – VOTE TUESDAY!
- Which California Special Interests Spent a Record $740 Million on Propositions?
- Capitol’s Most Enduring Conflict: Business v. Liberal Factions
- Complicated Proposition Politics Illustrated
- Shutdown-Battered Restaurants Seek $100 Million Refund for State Permits
- Disneyland to Email 10,000 Layoff Notices
- World’s Largest Real Estate Firm Leaves CA for Texas;
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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FOR THE WEEK ENDING OCT. 30, 2020
In less than a week, Election Day will be upon us — wrapping up one of the most expensive campaign cycles in California history.
Beyond the nearly $740 million pumped into the campaigns for and against the 12 statewide propositions — a state record — special interest groups have funneled more than $31 million into key state Assembly and Senate races. Though state law caps the amount of money donors can give to a campaign, there’s no limit on how much special interests can spend on their own campaigns praising or trashing a particular candidate, CalMatters’ Ben Christopher and Laurel Rosenhall report.
Here’s a look at four key groups pouring millions into these “independent expenditure committees” — and what they’re hoping to accomplish in the Capitol.
- The oil and gas industry, more than $7 million:Oil and gas companies’ priorities include blocking a potential fracking ban, hindering Gov. Gavin Newsom’s ban on gas-powered cars and fighting efforts to mandate buffer zones around oil wells.
- Prison guards, nearly $4 million:The influential union’s priorities include obtaining better working conditions and fighting certain criminal justice reforms and prison closures.
- Teachers, around $2.5 million:California’s powerful teachers unions want more money for public education and to eliminate certain testing requirements for new teachers.
- Realtors, around $2.3 million:The realtors want pro-housing policy. They also want to block new rent control measures and eviction moratoria.
Big Tech, health care industry groups and other unions are also spending millions on independent expenditure committees. To see where the money is flowing,
The Capitol’s most enduring conflict pits California business interests against a quartet of liberal factions — unions, environmental groups, consumer advocates and personal injury attorneys.
Annually, the four present their legislative agendas via bills authored by allied Democratic legislators, generally seeking more spending, more regulation and/or more opportunities for litigation.
Annually, business and employer lobbies mount opposition to the quartet’s measures, claiming they will adversely affect jobs and the economy.
Despite Democrats’ overwhelming control of the Legislature, business has been surprisingly successful over the years in fending off the quartet’s agendas. That record explains, in part, why three of this year’s 12 statewide ballot measures are high-dollar battles between business and unions.
Proposition 15, arguably the ballot’s most far-reaching measure, is a case in point.
Ever since Proposition 13, California’s iconic property tax limit, passed in 1978, public employee unions have yearned to repeal, or at least modify, its provisions. However, with polls indicating Proposition 13’s continuing popularity, the Capitol’s Democratic politicians are unwilling to directly attack it.
That reluctance forced unions leaders to use the initiative process and they finally settled on a “split roll” in Proposition 15 that would remove some, but not all, of Proposition 13’s limits from some commercial property.
Proponents saw Proposition 15 as the path of least resistance to changing Proposition 13, but as the voting deadline nears, it’s not faring particularly well. Support in the latest UC Berkeley IGS poll is seemingly stuck just under 50% while opposition is increasing. The opposition campaign, financed largely by business and real estate interests, seems to be scoring with arguments that Proposition 15 is just the first step toward repealing Proposition 13.
Proposition 22 is an even more direct business-union conflict. Sponsored by Uber, Lyft and other app-based companies, it would exempt them from a state Supreme Court ruling and a new state law that would force the firms to convert their drivers from contractors to employees.
Proposition 22’s sponsors tried to get a compromise deal in the Legislature that would create a new category of workers who aren’t payroll employees but have some benefits, but unions and their legislative allies weren’t willing to go there. The measure contains some of those spurned provisions.
Polls say it’s too close to call, but whether it passes or fails, Proposition 22 will go into the books as the most expensive ballot measure ever to be placed before California voters, with spending, mostly by proponents, topping $200 million.
However, as with Proposition 15, another very expensive measure, the stakes in the outcome run into the billions, so campaign spending is, in relative terms, just pocket lint.
Proposition 23 is the third business-union clash and like Proposition 22, it is very narrow in scope, affecting just one economic sector, for-profit dialysis clinics, particularly those owned by DaVita, Inc. and Fresenius Medical Care.
It’s the second time that one union, SEIU-UHW West, has sought to impose new regulations on dialysis clinics in apparent hopes of forcing them to recognize the union. The previous effort, Proposition 8 in 2018, failed and while Proposition 23 takes a different approach, the underlying union-management conflict is unchanged.
The campaigns by both sides ignore those dynamics and stress, instead, that they are just interested in the well-being of Californians with kidney failure who depend on dialysis to remain alive.
The very pricey campaigns over all three ballot measures, in fact, sidestep the real stakes in their passage or failure. All of the self-interested combatants pretend that they only want to protect the public’s interest.
Several major environmental groups such as the Sierra Club California are urging a no vote against Proposition 22, saying the ballot measure over the future of gig workers could stifle the state’s fight against climate change. The environmentalists’ argument turns on how the state regulates ride-hailing companies’ greenhouse gas emissions.
Sierra Club and other advocacy groups contend Uber and Lyft would have to take more responsibility for their carbon emissions if they’re compelled to pay their drivers as employees under the new state labor law known as Assembly Bill 5. Prop. 22, if it passes, would exempt the companies from AB 5 and allow them to continue paying drivers as independent contractors who are not entitled to state-mandated employment benefits.
Uber and Lyft contest the claim, saying each company is committing millions of dollars to help drivers buy or rent electric cars, regardless of what happens with Prop. 22. Both companies have committed to having all rides given in the U.S. come from electric vehicles by 2030.
Despite being outspent 10-to-1, the opponents of Prop. 22 are hoping those endorsements can make a difference as they race toward the finish line. The latest poll from UC Berkeley’s Institute of Governmental Studies published Monday, Oct. 26 shows that 46% of those surveyed said they would vote in favor of Prop. 22, compared to 42% who would vote against the initiative.
“The folks at Uber and Lyft are very creative and innovative,” said Kathryn Phillips, Director of Sierra Club California. “They’re not insisting drivers be independent contractors out of the goodness of their heart.”
Ride hailing cars represent a small but growing percentage of overall carbon emissions as the service gains popularity. An analysis from the Union of Concerned Scientists found that an average ride-hailing trip produces significantly more emissions than the trips it replaces, because drivers can circle for miles while waiting to give their next ride.
In response, the California Air Resources Board has proposed 60% of the miles driven on ride share trips should come from electric cars by 2030.
Environmental groups say if Prop. 22 passes, it will fall upon individual drivers as independent contractors to switch their cars to electric, not the companies. The groups say a similar example is playing out in the trucking industry, where independent contractors can’t afford to buy more fuel-efficient vehicles to meet the state regulations, according to a report by the UC Berkeley Labor Center.
“Instead of spreading the cost of new cleaner technologies to whole industries, you’re putting that on the backs of workers,” said Carol Zabin, one of the report’s writers.
Also, if Prop. 22 fails, rideshare companies will have to likely pay drivers minimum wage for all hours worked, including the time they spend waiting for a ride. That could push those companies to use their drivers more efficiently, cutting the miles they spend driving around waiting for a ride, said Elizabeth Irvin, Senior Transportation Analyst at the Union of Concerned Scientists.
In response, Yes on 22 spokesman Geoff Vetter pointed to what the campaign sees as the benefit of rideshare on the environment, noting a study showing that some people bought cars after services temporarily pulled out of Austin, Texas.
“Prop 22 would benefit app-based drivers, California’s economy, and our environment because consumers in areas with rideshare services buy fewer cars and take fewer trips,” Vetter said in a statement. “By trying to limit or eliminate access to rideshare services, opponents of Prop 22 would increase the rate of climate change by forcing Californians to drive more often and purchase more personal vehicles.”
Uber and Lyft representatives have also pointed to the efforts their companies have made to help their drivers buy electric cars.
Uber has said it’s committing $800 million globally to help drivers transition to electric vehicles by 2025. Drivers can get extra $0.50 to $1.50 for every trip they complete in an electric car, Uber said. Lyft said it has made 200 electric vehicles available for rental in Denver and hope to expand similar program in California as well.
California’s financially battered restaurants filed government claims this week to recover more than $100 million in fees for liquor and health permits and tourism charges that they say were assessed even though their businesses were shuttered or only partially operating under long-running coronavirus orders.
Few industries have been hit as hard during the pandemic as restaurants, which in California were ordered closed, reopened, closed for a second time and then allowed to welcome customers again, though with restrictions. Those rules vary in the state’s 58 counties and have limited some eateries to takeout and delivery service or outdoor-only dining. Thousands of restaurants have closed permanently.
Owners say one thing has remained constant amid the turmoil. State and county governments have continued to charge fees for liquor licenses, health permits and tourism assessments — even though the restaurants
were closed down by government orders or permitted to operate with limited capacity and dining.The owners contend they have been being unjustly punished for following the law and are being charged for permits they can’t use.“The irony is, they did what they were told and the very entity that told them to close is keeping these fees,” said attorney Brian Kabateck, who is representing restaurants that filed claims against the state and against Los Angeles, Orange, Sacramento, San Diego and Monterey counties. Additional claims will be filed in coming days for restaurants in San Francisco and in Fresno and Placer counties. The move is supported by the California Restaurant Association. “Somebody has to tell them this is wrong and to return the money,” Kabateck said. Kabateck estimated the fees could exceed $100 million statewide.
A government claim, filed for individual restaurants and on behalf of other businesses in the sector, is a required initial step before filing a class-action lawsuit against government agencies in California. Officials have 45 days to respond. Walter Schild, who owns the 33 Taps Hollywood gastropub in Los Angeles, said he pays about $7,000 annually in government fees beside property taxes — ranging from his liquor license to a levy on his valet service.He’s said he’s been unable to get the fees reduced or delayed and is now being charged with late fees of up to 50% for failing to pay, even though the restaurant has been closed for all but about a month since mid-March.With the restaurant closed, Schild has no income. He was recently forced to shutter another restaurant southeast of Los Angeles in Orange County because of the financial strain and laid off 30 employees. The Hollywood restaurant lost money when he attempted takeout and delivery, and the lack of tourists gutted what would be the eatery’s usual customer base.“We have been pleading with our legislators for fee relief,” Schild said. “It’s been tough.”The restaurant association previously urged Democratic Gov. Gavin Newsom to hold a special session of the Legislature to work on an aid package for their businesses.
Under state rules, counties with the highest infection rates are limited to outdoor dining only, along with takeout and delivery.If those rates improve, restaurants can operate with 25% capacity indoors or 100 patrons, whichever is fewer. Even under the least restrictive rules, indoor capacity can only reach 50%.Industry officials have said the rules will doom many more restaurants. California has nearly 60,000 restaurants that employ approximately 1.5 million workers. “Even when the restrictions are lifted, the devastating impact on the restaurant industry will extend for years,” Jot Condie, who heads the restaurant association, said in a statement. “Easing fees would help enable establishments to stay open and keep vulnerable workers employed.”
Disneyland to Email 10,000 Layoff Notices
When California’s theme parks closed in March, employees of Disneyland, Universal Studios Hollywood and other parks were left in limbo, displaced from jobs through no fault of their own, with no idea when — or if — they will be called back.
Walt Disney Co. plans to lay off 28,000 people across its theme parks, products and experience divisions, with about 10,000 of those layoffs hitting the Disneyland Resort parks, hotels and stores in Anaheim, according to company sources. Notifications for those layoffs are expected to reach workers via email by Sunday. Universal Studios Hollywood has already reduced its workforce by as many as 7,000 employees through furloughs, layoffs and cuts to work shifts.
The lucky ones have landed new gigs. Many others continue to collect unemployment checks, holding out hope that they will soon be called back to work alongside co-workers they consider family. But the state has tied the reopening of the theme parks to getting a handle on the pandemic, making a reopening date difficult to predict.
Meanwhile, many theme park staffers are trying to cope with depression and anxiety.
Dallas Business Journal
CBRE is trading in its Cali-cool shades for a pair of cowboy boots.
The world’s biggest real estate services firm is moving its headquarters from Los Angeles to Dallas, the Dallas Morning News reported.CBRE is the latest Fortune 500 giant to relocate to North Texas, as the company boasts the No. 128 spot on the 2020 list, and the next in a long line of companies coming to DFW from California.
Last year, McKesson Corp. left San Francisco for Las Colinas, just after Core-Mark Holding announced it would leave the Bay Area for Westlake. More recently, Charles Schwab nailed down Jan. 1 as the official move-in date for their Westlake campus headquarters.Company CEO Robert Sulentic, who headed the Dallas-based developer Trammell Crow Co. when it was acquired by CBRE in 2006, already has an office in the Texas city and splits his time between there and L.A.The move is seen as a symbolic boost for the Dallas-Fort Worth area, which according to the Dallas Morning News led the country in commercial real estate sales through the first nine months of 2020.
New York Times
While President Trump has campaigned on a promise to preserve America’s reliance on fossil fuels — championing coal in 2016 and fracking for oil and natural gas this year — blue states like California have moved in the opposite direction, requiring utilities to use increasing amounts of wind and solar power each year. Last year California generated roughly half of its electricity from renewable sources and is serving as a testing ground for the type of transition away from coal, oil and natural gas that Joseph R. Biden, Jr., has promised to pursue if he is elected president.
Overall, fossil fuels still dominate electricity generation in the United States. But the shift from coal to gas and renewable technologies has helped to lower carbon dioxide emissions and other pollution.Last year, natural gas was the largest source of electricity in 20 states, while wind emerged as a leader in Iowa and Kansas. Coal remained the primary power source in 15 states – about half as many as two decades ago.Below, we have charted how electricity generation has changed in every state between 2001 and 2019 using data from the United States Energy Information Administration. Scroll down or skip to your state: