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IN THIS ISSUE – “What we have in Gov. Newsom is someone who wants to be seen globally as a climate leader and is building the record to justify that.”

David Weiskopf, NextGen Policy, on the governor’s recent environmental actions  

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. 27, 2023

 

Newsom “Fully Embraces the Role of Climate Governor”

Politico

He’s brought oil companies to heel in Sacramento and railed against their role in causing climate change at the United Nations. Now he is evangelizing environmentalism in China.

Gavin Newsom is fully embracing the role of climate governor.

The California Democrat’s trip to China this week, where he’ll focus almost exclusively on climate change, cements his evolution into a full-blown climate champion. It follows his lawsuit against oil conglomerates and a spate of bill signings that increase costs and environmental restrictions on oil companies.

Newsom’s interest in cutting emissions is natural for the leader of a state that suffers from increasingly intense wildfires, drought and storms. But it’s also smart politics.

“You have all these Republicans and fossil fuel companies that are not going to be doing what needs to be done,” former California Gov. Jerry Brown said in an interview. “So it gives the governor of California a real opportunity. He’s got many punching bags.”

Fighting climate change is a political winner in deep-blue California, where support for ambitious climate policies has risen markedly over the last decade. A clear majority of voters now say those policies are worth the cost. Newsom’s dominance on the issue — and his desires to be a global leader on climate — could help him stand out in a crowded Democratic presidential primary in 2028.

Back home in California, a spate of destructive wildfires has fueled the electorate’s sense of urgency around what many see as an existential issue.

“For independent voters and younger voters and Democratic voters, they view this as a crisis that needs to be solved and I don’t think that was always the case,” said Danielle Cendejas, a Southern California-based political consultant. “We are seeing this in every candidate running for the Legislature, for state, local, federal office, being asked whether they are committed to a fossil-fuel-free future.”

It’s not a full pivot for Newsom, who has championed climate policies for years. But his rhetoric has sharpened recently as he’s pushed climate change toward the top of his agenda.

“It all is very sudden, the interest in climate,” said Sierra Club California Director Brandon Dawson. “As someone who’s painted himself as a climate enthusiast who wants to tackle climate change, the pressure required to get him there is more than expected.”

“It does appear that Newsom is considering running for president in 2028,” said RL Miller, a prominent California Democratic Party environmental activist. “I think he wants to be known as a governor who did a lot of things on climate in California without raising peoples’ rates or jeopardizing the grid.”

Green groups have oscillated between praise for Newsom’s sometimes ambitious swings and exasperation at his otherwise halting or pragmatic approach. But lately he’s been feeling the warmth.

“He is doing more than any previous governor, including Jerry Brown, who was universally regarded as the climate governor,” said David Weiskopf with the left-leaning nonprofit NextGen Policy. “What we have in Gov. Newsom is someone who wants to be seen globally as a climate leader and is building the record to justify that.”

Newsom has pursued a green agenda since his days as mayor of San Francisco, but he spent much of his early gubernatorial tenure managing climate-driven crises like catastrophic wildfires that drove Pacific Gas and Electric into bankruptcy.

Newsom’s first two years as governor also overlapped with the tail end of former President Donald Trump’s term, forcing him to play defense. The state sued the federal government dozens of times, including by fighting to protect California’s stringent vehicle emissions standards.

“He was in response and resilience and recovery mode for the first few years,” said Kate Gordon, who served as Newsom’s top climate adviser during his first term. “It was crisis after crisis after crisis.”

Automobiles became a critical inflection point: Newsom infuriated Trump by recruiting major automakers to align with California’s tougher rules. In a defining moment, he banned sales of new gas-powered vehicles by 2035, marshaling California’s economic influence to reshape a carbon-heavy industry.

“That was the moment where he was able to find his voice” on climate issues, said Jared Blumenfeld, who led California’s Environmental Protection Agency during Newsom’s first term. “Against that backdrop of having to defend California values, one of those values is the environment.”

The momentum built. As the coronavirus pandemic receded, a gargantuan budget surplus allowed Newsom to commit an unparalleled $54 billion to climate programs in a time of federal inaction (that number was trimmed by billions last year as revenues dipped). And after he decisively defeated a recall push in 2021, he was freer to move to the left, Gordon said.

“There’s a lot of political capital he got from that,” she said. “And then a couple of years of much less significant climate impacts and a decent budget gave him a lot of runway to do some of the things we’d been talking about from the beginning of his administration.”

Newsom also gained an ally in the White House after President Joe Biden ousted Trump. With a federal foe gone, Newsom turned his attention to another opponent: the oil industry, which despite California’s green image is still active enough to make the Golden State the seventh-largest crude oil-producing state.

But Newsom has worked to hasten the industry’s demise. After multiple false starts in the Legislature, he banned hydraulic fracturing. The state issued almost no permits for new oil wells in the first half of 2023, in a plummet from the thousands handed out in prior years.

In the summer of 2022, an industry group ran ads in Florida assailing Newsom’s climate agenda — an imitation of Newsom’s tactic for provoking Gov. Ron DeSantis that both angered and galvanized Newsom as he prepared a climate push.

Newsom urged lawmakers later that summer to send him a sweeping package of climate bills — and spent political capital to get it done, spurring them to resurrect and pass measures to slash emissions and ban wells near schools and homes over fierce opposition from unions and energy companies.

“There’s no way we would’ve gotten that climate package done last year” without the governor’s engagement, said state Sen. Henry Stern (D-Sherman Oaks). “You’re against these big powers, so unless it’s got supercharged attention and spotlight, these things tend to die.”

Newsom’s advisers said he was motivated by the mounting toll from years of wildfires, droughts, and floods, and his repeated visits to communities reeling from the impacts.

“He has been more aggressive on the policy side and in the rhetoric,” said spokesperson Anthony York. “It’s been a natural evolution, and as the crisis intensifies, the governor’s desire to take action has intensified.”

After Newsom and his team whipped the votes to pass bills vehemently opposed by oil companies, the governor took a victory lap during last year’s Climate Week in New York, telling an audience that “big oil lost, and they’re not used to losing.”

“It was listening to people consistently use old arguments from the oil industry that were analogous to the tobacco world,” said Jim DeBoo, who was Newsom’s chief of staff during the legislative push. “I think you get frustrated and want to push back and call bullshit.”

The governor followed up by calling a special session to clawback oil industry profits that had soared as gas prices spiked. He won a diluted law allowing penalties for excessive earnings that he still trumpeted as proof “we can actually beat big oil.” A few months later, he was touting a lawsuit against the “shameful” companies.

Climate advocates are still wary of Newsom’s support for contested technologies like hydrogen and carbon capture. While he approved a sweeping corporate climate disclosure law, his signing message warning of financial impacts — echoing opponents — raised eyebrows.

And Newsom angered climate advocates by pushing this year to speed clean energy projects by softening environmental laws. But Newsom said California could not achieve its renewable energy targets otherwise. The bigger context: Newsom is increasingly binding his political reputation, and his future, to his climate agenda.

“He has a career ahead of him, a trajectory,” Brown said. “Now whether climate is a great issue for running for president — that I can’t tell you. That’s going to unfold.”

https://www.politico.com/news/2023/10/23/gavin-newsom-climate-china-trip-00122940

 

Will Governor Face More Economic Challenges in 2024?

CalMatters commentary from Dan Walters

While Gov. Gavin Newsom polishes his foreign policy credentials with visits to Israel and China, California is experiencing an economic slowdown that could bode ill for the final three years of his governorship.

The state’s latest employment report, issued last week for September, found fewer Californians employed than there were a year earlier, while the jobless ranks had increased by 144,100. The state’s unemployment rate creeped up to 4.7%, the second highest of any state, while the labor force – Californians working or looking for work – continued to decline.

“Census figures released this week reveal the extent to which households continue to leave California,” Taner Osman, research manager at Beacon Economics, said in an analysis of the job data. “The state’s population has fallen by half-a-million people over the past three years and this is filtering through to the economy, where the labor force has shrunk and employers are struggling to find workers.”

The darkening employment picture is particularly evident in the San Francisco Bay Area, traditionally the state’s most prosperous region, whose high-income technology workers have been a major source of income taxes.

The San Jose Mercury News calculated that the nine-county region has seen declining employment for three straight months as technology companies shed staff.

“The Bay Area economy may have shifted from just treading water to a period of backsliding under the weight of higher for longer interest rates, slowing consumer and business demand, and weaker growth in Asia and around the globe,” Scott Anderson, chief U.S. economist for BMO Capital Markets, told the Mercury News.

The state’s population loss, cited by Osman of Beacon Economics, has taken on a new and ominous aspect, according to recent research by the Public Policy Institute of California. In the past, PPIC’s demographers have said that losses generally were in lower-income Californians seeking lower costs of living. But they now see a significant outflow of higher-income workers and their families – the people who generate the lion’s share of California’s tax revenues.

The PPIC found that “an increasing proportion of higher-income Californians are also exiting the state. The ‘new normal’ of remote work in many white-collar professions has enabled some higher-income workers to move. Politics might also play a role, as conservatives are much more likely than liberals to say they have considered leaving the state.”

No matter what the motives, California’s population drain negatively affects the state’s finances. Newsom and legislators dealt with a $35 billion deficit in the 2023-24 budget enacted in June and expect another $15 billion gap for 2024-25. Sluggish revenues indicate that the shortfall could be worse.

The six-month delay in the income tax filing deadline, from April to October, made revenue forecasting more guesswork than usual. But last week the deadline was kicked back another month, to Nov. 16, meaning Newsom won’t have much hard data as he finalizes his proposed 2024-25 budget in December.

“Through Friday, October 20, the Franchise Tax Board (FTB) has collected $17.3 billion of personal income tax (PIT) and corporation tax (CT) receipts this month,” the state Assembly’s budget director, Jason Sisney, said in an email. “This is far below the $44.9 billion of FTB collections projected for the entire month of October 2023. Given the previous October 16 tax deadline announced in the spring, I expect FTB would have collected over $30 billion by now if receipts were on track to hit that $44.9 billion projection.”

So did the startlingly low income tax revenues Sisney cites stem from corporations and high-income Californians delaying their filings at the last minute, or does it signal a more fundamental impact of a weak economy?

https://calmatters.org/commentary/2023/10/newsom-california-signals-economy-slow/

 

State Revenue Flat in September

Dept. of Finance monthly cashflow report

Preliminary General Fund agency cash receipts were $796 million, or 5.7 percent, above the forecast of $13.974 billion in September largely due to Pass-Through Entity Elective Tax (PTET) payments exceeding the forecast by $918 million for the month. Receipts for the first three months of the 2023-24 fiscal year were $879 million, or 2.4 percent, above the forecast of $35.881 billion. General Fund agency cash receipts for the entire 2022-23 fiscal year were $980 million above the 2023-24 Budget Act forecast of $167.627 billion.

The monthly cashflow assumes an extended payment and filing deadline for Californians in most counties to October 16. The delay affects personal and corporate income tax categories other than withholding, however the extent to which variance relative to the forecast is caused by taxpayers’ behavior differing from assumptions is unknown. On October 16, the delayed filing and payment deadline was further extended to November 16.

Personal income tax (PIT) cash receipts were $16 million above the forecast of $8.561 billion in September. PIT withholding receipts were $202 million below forecast in September, down 0.9 percent year-over-year.

Withholding growth has been somewhat volatile in recent months but remained 3.6 percent higher cumulatively from May to September compared to the same period last year. September PIT refunds were $146 million higher than projected, bringing the cumulative overage since April when the Budget Act forecast was finalized to $1.427 billion. PIT estimated payments, final payments, and other payments combined were $358 million above forecast in September.

Corporation tax cash receipts were $848 million above the forecast of $2.118 billion in September, due to higher-than-expected PTET payments. PTET payments were $918 million above forecast in September and were $2.481 billion higher than projected cumulatively since April.

Corporate tax refunds were $35 million lower than projected in September but were $773 million above forecast cumulatively since April. Excluding PTET payments, net corporation tax revenues were down $70 million relative to the forecast in September and down $962 million cumulatively since April.

Sales and use tax cash receipts were $91 million below the forecast of $2.788 billion in September. Sales and use tax receipts were $54 million above forecast for the entire 2022-23 fiscal year and were $104 million below forecast in the first three months of the 2023-24 fiscal year.

California’s personal income increased by 4.7 percent in the second quarter of 2023 and was 4.9 percent above the second quarter of 2022. Growth was mainly driven by wages and salaries, although all components contributed. California’s share of U.S. personal income was 13.7 percent, down from 14.1 percent in 2020 and 2021 and just below the 2019 average of 13.8 percent.

California’s unemployment rate increased by 0.1 percentage point to 4.7 percent in September 2023, as unemployment rose by 19,000 persons, civilian employment fell by 36,000 persons, and 18,000 people left the labor force.

California’s labor force participation rate decreased from 62.5 percent in June to 62.3 percent in September 2023, following three consecutive months of labor force declines. The state added 8,700 nonfarm payroll jobs in September, while August’s month-over job gain was revised down from 23,100 to just 3,200 jobs.

Five of the eleven major sectors added jobs in September, driven by gains in private education and health services (18,200), followed by leisure and hospitality (11,300), trade, transportation, and utilities (2,400), construction (2,200), and government (300). Six sectors lost jobs: professional and business services (-10,900) had the largest job loss of any sector, followed by information (-7,300), manufacturing (-4,600), financial activities (-1,600), other services (-1,100), and mining and logging (-200).

Year-to-date through August 2023, California permitted 113,000 housing units, up 4.5 percent from July, but down 7.7 percent from August 2022. August 2023 total permits consisted of 55,000 single-family units (up 1.8 percent from July, but down 18.4 percent year over year) and 58,000 multi-family units (up 7.1 percent from July and up 5.5 percent year over year).

The statewide median price of existing single-family homes increased to $859,800 in August 2023, up 3.3 percent from July 2023 and 2.4 percent from August 2022. Sales of existing single-family homes in California totaled 254,740 units (SAAR) in August 2023, down 5.3 percent from July and down nearly 19 percent from August 2022.

https://storymaps.arcgis.com/stories/a45b84c232184afea0c34b47365a6c70

 

Groundwater Law Includes Local Groups & Small Farmers in Adjudication

Sacramento Bee

Governor Gavin Newsom signed a bill into law last week that will incorporate environmental justice principles in legal disputes that stands to impact future groundwater use decisions across California’s agriculture dominated regions.

The law, AB 779, will require state courts to consider water use by small farmers and disadvantaged communities when settling those disputes, which historically skew in favor of larger agricultural businesses.

California is implementing the 2014 Sustainable Groundwater Management Act, which aims to address groundwater depletion across the state. Solving disputes through adjudication in the courts costs millions of dollars in legal fees and takes years.

“Small farmers and disadvantaged communities are underrepresented in adjudications because of their high costs and long duration,” said Julia Stein, deputy director for UCLA’s Emmett Institute on Climate Change and the Environment.

“This law takes steps to ensure those communities have access to information about adjudication proceedings and that the court takes their water use into account.”

The law was inspired by historic and ongoing groundwater disputes underscoring the issue, such as in Southern California’s Cuyama Valley outside Santa Barbara.

Much of the state’s severely overdrafted groundwater basins are located in the San Joaquin Valley, where disputes could be settled through future adjudication. In that process, a court defines the legal rights each agricultural, residential or municipal entity has to groundwater in the area.

California Courts have adjudicated approximately 30 groundwater basins. Small farmers who utilize the overdrafted Cuyama Basin have called for a boycott of products sold by Bakersfield-based carrot giants Bolthouse Farms and Grimmway Farms, whom its detractors refer to as “Big Carrot.”

The two companies are responsible for the majority of the region’s groundwater pumping. Bolthouse and Grimmway shocked many smaller farmers in the region when they triggered a groundwater adjudication process after a years long collaborative effort established a sustainable groundwater management plan for the basin, taking them to court instead.

Brenton Kelley, watershed and advocacy director of Quail Springs, a small permaculture educational nonprofit farm in the Cuyama Valley, called their filing a “phenomenal turning point.”

He has participated in the groundwater sustainability process through SGMA, but can’t afford a lawyer to participate in adjudication.

“As soon as this suit landed from those plaintiffs, the two largest carrot growers in the nation, against every groundwater user in the basin, it was insulting,” he said. “There’s no way I can speak up in court without paying a lawyer to do it for me.” Representatives for both carrot giants have said that they filed for adjudication to ensure sustainability of the basin and set guidelines for all property owners, not to increase their own water use.

Neither company responded to requests for comment before deadline. “By filing the adjudication,” Grimmway wrote in a statement to the Bakersfield Californian, “the parties involved believe it will not only ensure sustainability of the basin but also protect the groundwater rights of all water users, including small pumpers and the Cuyama Community Services District, in accordance with California law.”

The new law aims to balance the scale between large growers who can afford a protracted legal proceeding and those of small farmers or other less resourced groups that can’t afford years of legal fees — including small farms, small municipalities or tribal governments.

Authored by Assemblymember Lori Wilson, D-Suisun City, the law will require courts to consider “the water use of and accessibility of water for small farmers and disadvantaged communities” and allow the court to refer adjudications to state water agencies.

It also requires courts to provide all pleading and briefing materials to the local groundwater sustainability agency (GSA). Lastly, the law would prevent groundwater over-pumping during the adjudication process by forcing litigants to stick to existing groundwater sustainability plans.

Several water districts opposed the legislation, including Indian Wells Valley Water District, Searles Valley Minerals, Inc., Sierra Shadows Ranch, Meadowbrook Dairy, and Mojave Pistachios, LLC.

https://www.sacbee.com/news/politics-government/capitol-alert/article280611194.html#storylink=cpy

 

California Labor for Climate Jobs – New Union Group Pushes for Green Energy Job Funding

LA Times commentary from Boiling Point

Norman Rogers has worked at the West Coast’s largest oil refinery for nearly a quarter-century — and he’s ready to be part of the fossil fuel industry’s undoing.

Rogers is a vice president at United Steelworkers Local 675, whose thousands of members include Rogers and his colleagues at the Marathon oil refinery near the Los Angeles port. Local 675 is one of more than a dozen labor unions that launched a new political coalition Tuesday that will lobby California to help fossil fuel workers transition to clean energy jobs — and push state officials to protect those workers from extreme heat and other dangers of global warming. “The writing is on the wall about what’s going to happen next,” Rogers told me, referring to the inevitability of fossil fuel jobs going away. “We’re either going to be proactive about it, or we’re going to get run over by it.”

The unions behind California Labor for Climate Jobs represent teachers, utility workers, farmworkers, janitors and more. They’re calling their initial policy platform the California Workers’ Climate Bill of Rights. It urges policymakers to invest in safety nets for oil and gas industry employees, including healthcare coverage and relocation, and to fund training that prepares those employees for similarly well-paying union jobs in climate-friendly fields.

The workers’ bill of rights also urges state officials to protect indoor and outdoor workers from deadly heat and lung-scarring wildfire smoke — threats that are getting worse and worse as temperatures rise with the burning of fossil fuels.

“We’re looking at a huge restructuring of the economy — probably the biggest since World War II,” said Kathryn Lybarger, a gardener at UC Berkeley and president of AFSCME Local 3299, which is also part of the new coalition. “We’ve got to make sure that as we shift to a low-carbon economy, that the jobs and those rights and protections are just as good.”

These types of proposals aren’t exactly new. I wrote two years ago about an academic report — endorsed and funded by many of the same unions — finding that California could provide an equitable transition to fossil fuel workers at a cost of $470 million a year, or just 0.02% of the state’s expected gross domestic product. There have been increasingly loud calls for state lawmakers to safeguard workers from extreme heat.

But the new coalition arrives on the political landscape amid continued sparring over how to build a clean energy future that works for everyone.

As I’ve written in recent weeks, there’s no shortage of well-meaning people who understand the severity of the climate crisis but are convinced that certain climate solutions do more harm than good. Some critics say sprawling solar energy farms can disrupt sensitive desert landscapes, while others argue that rooftop solar incentives are driving up electricity rates.

The long-simmering tension between fossil fuel workers and environmental activists is another example of that sparring.

I saw it firsthand last week, while writing about billions of dollars in federal funding for clean-burning hydrogen fuel. Many union groups celebrated, seeing the money as a great tool for transitioning fossil fuel workers to well-paying jobs that match their skill sets. Many environmental justice activists, meanwhile, protested bitterly, seeing hydrogen as more often than not a false climate solution that will lead to continued air pollution in low-income communities of color.

I asked Ari Eisenstadt, energy equity manager for the California Environmental Justice Alliance, whether groups such as his need to be more sympathetic to fossil fuel workers. He acknowledged the importance for high-paying jobs but also noted that the low-income communities of color his group defends are “almost always made up of the same people as labor communities.”

What’s the point, he asked, of throwing those families an economic lifeline while continuing to foul their air?

“You can’t have a lifeline if you’re dead because you have cancer from air pollution,” he said.

Just about everyone agrees that climate activists and organized labor are better off working together — an approach exemplified by the national BlueGreen Alliance. Although the new California coalition is made up exclusively of unions, it’s taking a similarly inclusive approach: Keep fighting for good jobs, but pair that with a push for renewable energy. Make strong wages and a healthy climate part of the same campaign.

The challenge is working through issues where climate activists and labor unions fiercely disagree.

Take rooftop solar: When I asked Lybarger if there are clean energy jobs that the new coalition considers insufficiently well-paid or lacking in opportunity, she pointed to the largely nonunion rooftop solar industry. It’s a long-standing point of contention that prompted labor unions to take part in a successful campaign to slash financial incentives for rooftop solar in California.
Like everything else in life that matters, resolving these tensions won’t be easy. Especially not at the rapid pace necessary to slash planet-warming pollution and prevent heat waves, fires and storms from getting far deadlier and more destructive.

But at least there are people trying. At least we can all play our small roles.

 

Newsom is a Top Biden Campaign Fund-Raiser

Sacramento Bee

California Gov. Gavin Newsom is more than just a top surrogate for President Joe Biden — he’s also a top fundraiser.

Newsom has been rounding up small-dollar, grassroots donor support for the Democratic incumbent president, according to a report from Bloomberg, Federal Election Commission records show that Biden has amassed more than$39 million in donations smaller than $200.

Nathan Click, who speaks on behalf of Newsom’s campaign, said the governor has raised $4 million since March of this year for Biden, including $3 million in in-person events and from major donors and $1 million from small-dollar givers.

 

RIP: Phil Isenberg, Legislative Powerhouse

Capitol Weekly

Phil Isenberg, a former Sacramento mayor and one of the most influential Democratic members of the Assembly in the 1980s and 1990s, died Thursday after a short illness. He was 84.

A UC Berkeley-educated lawyer whose public career spanned 50 years, Isenberg worked for a time for Willie Brown’s San Francisco law firm as he rose in Democratic politics in the 1960s.

Later, he became Assemblyman Brown’s lead staffer when Brown chaired the powerful Ways & Means Committee, served as Sacramento mayor from 1975-1982, and won an Assembly seat in 1982 representing Sacramento.

“Phil was more than a staffer,” Brown said in an interview Thursday, referring to Isenberg’s time as the chief aide on Ways & Means. “He was more like one of my children. He was really talented, bright and able, and fully principled.”

Isenberg, said Brown, made sure that Brown knew as much if not more about bills than the legislators who were carrying the measures.

“Everything he did and said was for the benefit of the Brown operation,” Brown said, “and he did everything he could to make sure the Brown operation was working for the people.”

In the Assembly, Isenberg was an inside player known for his quick wit, focus on detail and policy, and an ability to form alliances with Republicans. He focused on judicial issues and the environment, working to preserve the Sacramento-San Joaquin River Delta and negotiating a deal to help save Mono Lake.

As chairman of the Judiciary Committee, he shepherded legislation merging the old municipal and superior courts into a single trial court system, and fashioned the way in which the state would fund the trial court system.

MORE:

https://capitolweekly.net/phil-isenberg-1929-2023/