IN THIS ISSUE – “Our Fight Is Not Over”
SACRAMENTO MATTERS
- Legislature Sinks Water Tax for 2018
- State Senate Short-Circuits Western Power Grid Measure
- Legislators May Not Have to Live in Their Districts
- Local Tax Elections Await State Supreme Court Ruling
RESOURCES
- Governor Pressed to Ban Oil Production
- Oroville Dam Repairs Top $1 Billion
- “Zombie Tree” Emergency Ignites Race to Better Manage Timber & Watersheds
- Fires Burn Through CalFire Cash: “Worst is Yet to Come”
CALIFORNIA
- CA Exports Weather New Tariffs, Lower Commodity Prices…So Far
- The State of San Francisco
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FOR THE WEEK ENDING SEPT. 7, 2018
Legislature Sinks Water Tax for 2018
An effort to impose a “voluntary” water tax on residents to pay for safe drinking water projects died in the Legislature when it adjourned late Friday.
Assembly Speaker Anthony Rendon said “a piecemeal funding approach” to the problem “won’t work.”
“The Assembly is committed to identifying a sustainable funding source to ensure safe drinking water for all Californians,” Rendon said in a statement. ”Building on the hard work of Senator Bill Monning and others in this area, Assemblymembers Eduardo Garcia and Heath Flora have agreed to lead our house’s safe water efforts.”
State lawmakers are hesitant to support any new tax increase after Republicans successfully recalled Sen. Josh Newman in June, linking the Fullerton Democrat to the $52 billion gas tax to fund road repairs from 2017.
After failing to win approval of a mandatory tax on water bills earlier this year, Monning introduced a new pair of bills that would apply a voluntary levy on ratepayers of less than $1 per month a few weeks ago. Senate Bill 844 and 845, which were backed by Gov. Jerry Brown, would also establish a required tax on dairies and fertilizer manufacturers.
The politicians gave customers the ability to opt-out of the fee on their water bills to increase the legislation’s chances of success, but ultimately the change wasn’t enough to convince hesitant lawmakers to approve a tax hike in an election year. The bills were expected to generate as much as $100 million per year.
Monning said he was “deeply disappointed” that the bills were not heard in the Assembly and pledged to continue his efforts next year.
“I do want to assure you that our fight is not over,” he said. “It is not over until we win the support necessary to fulfill the fundamental human right to water for all Californians.”
The state has reported that more than 1 million residents face potential exposure to unsafe water, largely in low-income communities, without the funding to fix the problems. A 2018 McClatchy investigation similarly found that 360,000 Californians are served by water systems that violate state standards for nitrates, arsenic, uranium and other pollutants.
https://www.sacbee.com/news/politics-government/capitol-alert/article217664960.html#storylink=cpy
State Senate Short-Circuits Western Power Grid Measure
The leader of the California Senate delayed a closely watched proposal to link oversight of the state’s vast electrical power grid to those in neighboring states.
Senate President Pro Tem Toni Atkins (D-San Diego) released a terse statement saying the bill would not be brought up for a vote before the Legislature’s final adjournment at midnight Friday.
“We will continue this important discussion next year,” Atkins said.
Assembly Bill 813 would have used the state’s grid operator, the California Independent System Operator, as the entity for other states to join. It sought to give the state’s utility companies permission to join the multi-state effort while handing a number of the details governing the transition to the California Energy Commission.
The concept was long championed by Gov. Jerry Brown, and the decision handed the powerful governor a rare defeat by legislative Democrats.
“Without a regional grid, renewable energy cannot expand in an integrated and efficient manner, nor can California continue its climate leadership,” Brown said in a statement. “It is imperative that a regional grid is created at the earliest possible date.”
AB 813 outlined a process to craft the new governance structure for California’s grid operator that would not have taken place until 2021.
The potential for the Trump administration to interfere or block the effort led to a split among environmental groups. Critics argued the effort could link California to states with utilities that rely on coal or other fossil fuels, with disputes ultimately settled by federal regulators.
Supporters, though, said California’s recent success at creating wind and solar energy have resulted in times where excess electricity could have been sent out of state under a regional grid. Selling it to neighboring states at a cheap cost, those groups contend, could undercut higher costs for fossil fuel energy sources and thus use the market as a force for reducing greenhouse gas emissions from utilities.
AB 813 was one of the longest-discussed bills of the two-year legislative session, having been introduced in 2017. Brown’s negotiations with organized labor early in the process were crucial, as unions representing energy workers fretted over a possible loss of construction jobs as a regional grid could inspire more power plants being built elsewhere, and not in California. Some of those unions remained formally opposed to the bill through the final debate on Friday.
Legislators May No Longer Have to Live in Their Districts
Before they left town last week at the end of the 2018 legislative session, California lawmakers sent Gov. Jerry Brown a bill that makes it easier for them to live outside the districts they represent.
Senate Bill 1250 by Sen. Steven Bradford, D-Gardena, addresses decades of dispute about where California’s 120 state legislators are allowed to live when holding office. The measure says the address listed on a lawmaker’s voter registration will be accepted as the primary residence — as long as he or she actually lived at the address for an unspecified period of time.
“This bill is about allowing all legislators, who must travel and live in our state capital, to be effective leaders for our representative districts without the fear of being targeted by overzealous prosecutors or political adversaries,” Bradford wrote in a letter supporting the measure.
Bradford’s bill says lawmakers must be registered to vote in their districts, but also specifies circumstances that cannot be used to prove a lawmaker lives outside his or her district:
- Owning or renting a residence outside the district.
- Claiming a homeowner’s tax exemption at an address outside the district.
- Paying for household insurance, utilities or other household services for a home outside the district.
- Having kids in school tied to an out-of-district address.
- Having a spouse or “intimate partner” living outside the district for employment.
- Receiving mail at a residence outside the district.
The bill drew opposition from legislators who believe the measure gives lawmakers a chance to move away from their districts and live in wealthier areas.
“My community is a community that’s often been used as a dumping ground, as a wasteland,” Assemblywoman Cristina Garcia, D-Bell Gardens, said. “When colleagues don’t reside in their district, we forget the problems we have to face.”
“We legislate on experience,“ she added. “We can’t make it easier to skirt the law.”
The issue has troubled lawmakers before. Former state Sen. Rod Wright was found guilty of felony perjury and voting fraud charges four years ago after a jury found that he lied about his address on voter registration and candidacy papers in 2007 and 2008. He resigned from the Legislature and later served a brief stint — 71 minutes — in jail.
Sen. Richard Pan, D-Sacramento, was attacked in his 2014 Senate campaign after The Sacramento Bee reported that he did not live in the Pocket-area condo at which he was registered to vote, but with his wife and children outside his district in Natomas.
During the debate over Bradford’s bill last week, lawmakers explained that they wanted the ability to live outside their districts to keep their families together.
https://www.sacbee.com/news/politics-government/capitol-alert/article217608825.html#storylink=cpy
Local Tax Elections Await Cal Supreme Court Ruling
California’s booming economy is pouring many billions of additional tax dollars into state and local government treasuries.
Nevertheless, the locals – cities and school districts, especially – find themselves in an ever-tightening fiscal vise because mandatory payments into public employee pension funds are growing much faster than revenues.
That’s why dozens of them are asking their voters this year to approve new taxes, although they typically, for political reasons, don’t specify pensions as the reason.
Laws governing those tax elections, however, are in a state of legal flux.
The state constitution separates local tax proposals into those meant for general purposes and those for specially designated purposes. It allows simple majority voter approval of the former and requires two-thirds voter approval for the latter.
Last year, the state Supreme Court shook up those provisions, implying in a Southern California marijuana case that if special purpose tax measures are placed on the ballot by initiative petition, rather than by the local governments themselves, the two-thirds vote threshold might not apply.
The ruling was not definitive, but ever since it was issued, those in the cloistered world of local government finance have speculated about its potential effects. Everyone’s been waiting for a test case and it might be a special property-related tax approved by San Francisco voters on June 5.
Measure C, placed on the ballot by an initiative petition sponsored by members of the city’s Board of Supervisors and approved by 51 percent of its voters, imposes a 3.5 percent tax on local commercial rents, such as office buildings, and a 1 percent tax on warehouse rents.
Entitled “Universal Childcare for San Francisco Families,” the measure dedicates tax proceeds to child care and early childhood education.
Commercial property owners and the Howard Jarvis Taxpayers Association sued, contending that Measure C is clearly a special tax, since its proceeds are designated for one purpose, and thereby needed a two-thirds vote.
It’s evident that tax sponsors see it as a way of converting the Supreme Court’s earlier implication into rock-solid case law, thus making it easier to enact new local taxes. And just as clearly, Jarvis and other plaintiffs in the suit see it as a potential erosion of the constitution’s two-thirds vote requirement for special taxes.
Thus, the die appears to be cast for a legal showdown. But wait, as the TV peddlers say, there’s more.
As the San Francisco suit was being launched, the state Supreme Court issued another ruling regarding a pension reform initiative sponsored by former San Diego Mayor Jerry Sanders in 2012 and overwhelmingly approved by the city’s voters.
City employee unions waged a legal battle to overturn the measure and won a ruling by the state Public Employee Relations Board that said Sanders was acting as a city official when he sponsored the initiative, not as an ordinary citizen.
Therefore, the board said, as mayor, Sanders was legally obligated under state labor law to “meet and confer” with unions on something that affected their members’ compensation. The Supreme Court upheld the board’s ruling.
Logically, if Sanders was under that legal obligation as an official, then members of the San Francisco Board of Supervisors also were acting officially, and not as ordinary citizens, when they sponsored Measure C. If so, they were placing a special tax on the ballot that would require a two-thirds vote.
Logic does not always prevail in legal battles, but the outcome of this one will reverberate for decades to come.
https://calmatters.org/articles/commentary/required-vote-for-local-tax-increases-in-legal-limbo/
Governor Pressed to Ban Oil Production
The venue was a high-level international climate conference sponsored by the United Nations, but the demonstrators were undeterred.
Anti-oil protesters tried to shout down California Gov. Jerry Brown as he spoke at last November’s climate-change conference in Bonn, Germany, one of many interruptions in his appearances there.
The occasionally feisty governor didn’t miss the opportunity to debate with the “Keep It In The Ground” campaign troops pushing for no new oil or gas drilling anywhere.
“Keep it in the ground? Let’s put you in the ground,” Brown shot back, before veering into a well-worn admonition that the industrial world would suffer if fossil fuels suddenly stopped flowing.
To some it’s jarring to attack the environmental bona fides of a public figure who has been talking about conservation since the 1970s and has arguably signed more environmental legislation than any American governor.
As state attorney general and then governor, Brown has championed regulations supporting clean energy, energy efficiency and a broad suite of laws aimed at reducing greenhouse gases that warm the planet.
But even as they acknowledge those gains, some fault Brown for a persistent and significant blind spot in his green worldview: oil.
Their message: The California governor, widely known as a climate defender, is in fact a climate offender. He should ban fracking in California, stop issuing oil-drilling permits and find a way to wean the state off fossil fuels, his critics say. Now.
The Bonn protestors intend to reprise their political theater at another international climate-change conference, this one hosted by Brown in San Francisco next week. The Global Climate Action Summit will bring together policymakers and business leaders who pledge to reduce emissions that warm the planet.
Some activists are already dismissing the event as “McSummit” and say they’ll attend only to expose Brown’s “hypocrisy” in hosting a carbon-cutting conference in the nation’s sixth-largest oil producing state.
GoFundMe campaigns are underway to send young activists to the Bay Area to participate in marches, which will gather dozens of disparate groups under the ominous-sounding banner of “Brown’s Last Chance.”
A group of Nobel Peace laureates sent a letter to Brown last month praising his leadership on climate issues but adding that the state has a “moral responsibility” to freeze fossil-fuel exploration.
Dozens of elected officials and prominent scientists have joined the campaign, which has some 800 social-justice and environmental groups under its broad umbrella.
The governor declined to comment for this article. His spokesman, Evan Westrup, said the critics are myopic, ignoring the changes already occurring at Brown’s hand.
“Clearly, the world needs to curb its use of oil, and the phase-out is already underway in California, where the state is committed to cutting consumption in half,” he said in an email.
“At the same time, oil production in California has dropped 56 percent. There’s a reason the White House and fossil-fuel companies fight California on almost a daily basis—no jurisdiction in the Western Hemisphere is doing more on climate,” Westrup said.
But not to R.L. Miller, chairwoman of the state Democratic Party’s environmental caucus and president of the political action committee Climate Hawks Vote, which supports environmental issues and candidates.
She said Brown used to be a committed environmentalist, and she gave him credit for promoting solar energy, for example.
But oil exploration is another matter, she said. Like many critics, Miller noted Brown’s controversial dismissal of the state’s top two oil and gas regulators in 2011, two days after they warned the governor that oil activities were imperiling the state’s groundwater.
Industry representatives, who had complained that the state’s enforcement noose was pulling too tightly, welcomed the move. Brown never publicly gave a reason for firing the officials, who serve at the pleasure of the governor.
Two years later, to great fanfare, Brown signed legislation regulating fracking, calling it the toughest in the nation. But the law didn’t go as far as some environmentalists would have liked; they wanted a fracking ban.
“His blind spot is bigger than just fracking; it’s really the entire oil industry,” Miller said. “He goes out of his way to be friendly to them.” She calls Brown “Chevron’s stenographer.”
Critics howled again last year when oil interests were given key concessions so that Brown’s signature climate policy—the cap and trade system for reducing industrial pollution—could be extended. The governor himself lobbied legislators for passage.
“We are a nation-state in a globalizing world, and we’re having an impact,” Brown said at the bill-signing ceremony. “You’re here witnessing one of the key milestones in turning around this carbonized world into a decarbonized, sustainable future.”
Hollow words, to Miller.
“If he’s serious about climate change, as serious as he sounds, he needs to come to grips with this industry,” she said. “He hasn’t done that.”
Brown has approved more than 20,000 new drilling permits since 2011. But his staff points out that fewer than 1,500 have been issued in the last two years, mirroring the decline in the price of oil and in statewide production.
In fact, Westrup said, Brown was recently criticized for not doing enough to help energy interests, when a group of legislators threatened to block a budget increase for more oil-field inspectors and regulatory staff. The lawmakers complained that the state had created a permitting backlog.
Oil interests, like many others, have donated to the governor’s campaigns and causes. Chevron and Occidental oil companies, for example, have contributed hundreds of thousands of dollars since 2010 to Brown’s gubernatorial runs and the two charter schools he founded in Oakland. Occidental gave $250,000 to a Brown-backed ballot-measure effort about two months after the 2011 oil-regulator firings.
But those who say Brown is in the thrall of oil interests misread the governor, according to Bruce Jennings, formerly a senior environmental advisor to the California Legislature.
Jennings, whose 2017 book, “The War on California: Defeating Oil, Oligarchs and the New Tyranny,” examined the oil industry’s considerable influence in the state, said Brown is simply a pragmatist.
The governor puts high-level climate policies first and has been willing to allow other initiatives to be subsumed by the necessary deal-making, Jennings said; Brown has disappointed some activists precisely because his rhetoric has promised so much.
“The legacy of his administration … then becomes a kind of ‘crimes of omission,’ ” Jennings said.
With about four months left in his final term, Brown has a desk full of climate-change initiatives he’s pushing, to cap off his public service. But some environmentalists won’t see that as a win.
“His climate policy will not be complete or successful unless it addresses both fossil-fuel consumption and fossil-fuel production,” said Kassie Siegel, director of the Climate Law Institute for the environmental group Center for Biological Diversity.
“He has to do this, or his legacy will be failure,” Siegel said. “There is nowhere in the world better suited than California to get started on a phase-out of fossil-fuel extraction.”
https://calmatters.org/articles/jerry-brown-california-environmental-policy-critics-oil/
Orovile Dam Re-Build Tops $1 Billion
The price tag for the 2017 crisis at Oroville Dam has surged past $1 billion.
The state Department of Water Resources revealed a $1.1 billion cost estimate for the massive repair work at America’s tallest dam. The cost of the emergency response, and the subsequent repairs to the dam’s two flood-control spillways, has periodically risen since officials made their initial estimates following the crisis, which triggered the evacuation of 188,000 residents.
DWR spokeswoman Erin Mellon, citing the enormity of the repair project, told reporters on a conference call that cost estimates “may be adjusted further” as work continues into 2019. DWR said it expects to have the dam’s two spillways substantially rebuilt by Nov. 1 and ready for the winter rains.
The state expects the federal government to pick up the lion’s share of the costs.
The initial cost estimate was pegged at $200 million. In January, DWR officials said the price had grown to $870 million.
Mellon said the rising costs include more money to excavate the hillside beneath the dam’s emergency spillway, road construction and removal of debris and sediment from the Feather River channel at the base of the two spillways.
Since the crisis, state officials have said they expect the Federal Emergency Management Agency to reimburse the state for up to 75 percent of the costs, with the local water districts that store water behind Oroville Dam covering the rest.
So far Mellon said FEMA agreed to pay 75 percent of the $116 million in costs submitted by the state. That figure hasn’t changed since January. Mellon said the state is still submitting expenses to FEMA for possible reimbursement, but the process could take a long time before it’s all sorted out.
But the possibility that FEMA could reject some of the state’s funding requests have lingered since the spring 2017 when then-DWR Director Bill Croyle told a legislative hearing that FEMA could reject reimbursement if the agency believed the crisis was caused by poor maintenance.
In January, a team of independent engineers concluded that poor maintenance was a factor in the emergency, along with poor design and construction. The forensic team said the state and federal officials who inspected Oroville Dam relied too heavily on visual inspections, ignoring blueprints, construction records and other documented clues that could have warned them about the dam’s troubled flood-control spillway long before it fractured in February 2017.
The team said the spillway failure at Oroville was likely caused by longstanding problems with cracks in the concrete and a faulty drainage system underneath the concrete chute that was too thin in places.
Mellon said the forensic team’s conclusion isn’t expected to jeopardize reimbursement by FEMA. The team “clearly stated that the incident couldn’t have been prevented based on what was current practices on inspections and evaluations by dam owners and regulators, both state and federal,” she said.
Neither spillway has been activated since spring 2017. State officials said the main spillway could have been safely used if water levels had risen high enough at Lake Oroville.
Oroville’s crisis began Feb. 7, 2017, when a giant crater appeared in the dam’s main spillway as heavy rains soaked Northern California, prompting dam operators to reduce water releases in an effort to limit the damage.
As the reservoir filled, water poured over the never-used emergency spillway, which rests atop an unlined hillside that holds back the lake.
The hillside began eroding. Fearing it would collapse and unleash “a wall of water,” law enforcement ordered the immediate evacuation of 188,000 downstream residents. The crisis passed when dam operators dramatically ramped up water releases from the main spillway, lowering lake levels.
Residents were allowed to return home after two days, but the water releases destroyed much of what was left of the main spillway, necessitating the two-year repair effort led by contractor Kiewit Corp. of Omaha, Neb.
https://www.sacbee.com/news/state/california/water-and-drought/article217824370.html#storylink=cpy
“Zombie Tree” Emergency Ignites Race to Better Manage Timber & Watersheds
In the Sierra Nevada, a 400-mile range of tilted granite along the state border with Nevada, entire mountainsides have turned red and gray with the dying needles of ghostly, water-starved trees.
Left alone, the dead trees now standing will rot and fall, tumbling one on top of another like piles of gigantic pick-up sticks. Scientists say this tangled mass of timber represents a fire hazard of unprecedented size and intensity.
With the Sierra’s zombie-like trees ready to start dropping, land managers are racing to remove the dead wood before it ignites or crashes onto houses or roadways. More than a million trees have so far been felled, overwhelming sawmills and biomass plants. But an estimated 127 million and counting remain, threatening the region with fires of such ferocity that some scientists have compared the potential heat to World War II firestorms at Dresden and Tokyo.
A century of fire suppression has produced too many trees — in some places five times the historic number, explained Malcolm North, a U.S. Forest Service scientist with the Pacific Southwest Research Station. And too little precipitation during the state’s five-year drought, which ended in 2017, has left these trees weak and vulnerable. The combination has been deadly, he said. “We just have too many straws in the ground for a very limited amount of water.”
The scale of the dead-tree emergency has created widespread consensus about a management tool as counterintuitive as it is familiar: fire. An ecological process as essential as sunshine and rain, state and federal officials and conservationists now agree that fire is crucial to the Sierra forests’ future in order to jumpstart natural regeneration and reduce the threat of even more wildfires.
Politicians and agency and timber industry officials have long argued that the best way to reduce this woody buildup is to log, and that is one of the tools being used. But the sheer acreage, mostly in inaccessible backcountry, has forced the realization that setting prescribed fires in areas of high tree mortality is the best option to lessen future fire danger.
“If we do nothing we’re going to have much more severe fires, more smoke, and potential damage,” said Scott Stephens, a fire science professor at the University of California, Berkeley. “There isn’t a no-fire option.”
Historically, fire charred 553,000 acres annually on federally managed Sierra forests, according to scientific reports. Today both state and federal agencies are setting progressively ambitious goals toward returning natural fire to the landscape. Supported by organizations as disparate as the Sierra Club and the California Forestry Association, the U.S. Forest Service, the California Department of Forestry and Fire Protection, and the Sierra Nevada Conservancy signed a 2015 memorandum endorsing expanded use of fire.
The Forest Service goal for California in 2019 is 250,000 acres of fire and “mechanical thinning,” which is using equipment to remove smaller trees. The California Department of Forestry set 60,000 acres as this year’s target for prescribed fire and other fuel-reduction efforts on non-federal lands, with 500,000 acres as a goal using logging and forest thinning as well as fire. “Those targets are what’s required to make an ecologically meaningful difference,” says Helge Eng, California’s deputy director of resource management. Governor Jerry Brown allocated $256 million to support these efforts.
More:
https://e360.yale.edu/features/fighting-fire-with-fire-california-turns-to-prescribed-burning
CalFire Burns Through Cash: “Worst is Yet to Come”
The Delta Fire is one of 17 major wildfires currently burning in California, according to Cal Fire. On Thursday, officials offered two measures of how much these fires are costing the state and its residents.
Ken Pimlott, the director of Cal Fire, told legislators that his agency had nearly run out of money.
Mr. Pimlott reported that Cal Fire had already spent $432 million of its budget this year and had only about $10 million left. He requested an additional $234 million.
“Climate change-driven extreme weather conditions continue to drive intense and large fires,” he told legislators in a letter.
Separately, Dave Jones, California’s insurance commissioner, announced that insured residential and commercial losses from two destructive fires over the summer had reached $845 million, a significant sum although much less than the $12.8 billion in losses last year.
But Mr. Jones warned that fire season was far from over, pointing out that 17 of the 20 most damaging fires in the state’s history — fires in which the largest number of buildings burned — occurred after Sept. 1.
“Fire officials and experts warn that potentially the worst is yet to come,” the commissioner’s office said in a statement.
CA Exports Weather New Tariffs, Lower Commodity Prices…So Far
Known disruptions and unknown uncertainties in the international trading system failed to stall growth in California’s merchandise export trade in July, according to a Beacon Economics analysis of U.S. trade statistics released this morning by the U.S. Census Bureau.
Foreign shipments by California businesses totaled $14.01 billion for the month, a nominal 5.3% gain over the $13.30 billion recorded one year earlier.
Although exports of manufactured goods were up 9.6% to $9.18 billion from $8.38 billion in July 2017, exports of non-manufactured goods (chiefly agricultural products and raw materials) slipped by 5.6% to $1.51 billion from $1.60 billion. The value of re-exported goods remained unchanged at $3.32 billion.
California accounted for 10.5% of the nation’s overall merchandise export trade in July, down from 10.9% last year.
“With America’s trading partners selectively targeting U.S. exports in the current tariff quarrels, it’s not surprising that growth in the much-in-demand products of California’s high-tech industries contrasted with an expected 10% drop in tariff-saddled agricultural exports,” said Jock O’Connell, Beacon Economics’ International Trade Advisor.
The state’s agricultural exports were early targets of retaliatory tariffs after the Trump administration imposed additional duties on steel, iron, and aluminum imports in May. One result is that July shipments of almonds, California’s leading farm export, to China and Hong Kong were down 35% from last year. Worldwide, California almond exports were off by 13.1%.
California merchandise exports in the first seven months of 2018 amounted to $103.83 billion, 6.4% higher than the $97.57 billion during the same period last year.
The Census Bureau reports that California was the state-of-destination for 17.2% of all U.S. merchandise imports in July, with a value of $36.84 billion, up just 0.9% from the $36.53 billion in imported goods in July 2017. Manufactured imports totaled $32.48 billion, a decline of 2.4% from the $33.27 billion recorded one year earlier. Non-manufactured imports in July were valued at $4.36 billion, 33.7% higher than the $3.26 billion reported in July 2017.
For the first seven months of the year, California imports totaled $249.37 billion, up 1.7% from $245.13 billion during the same period last year.
“California’s top trade partners are Mexico, Canada, and China,” said Robert Kleinhenz, Economist and Executive Director of Research at Beacon Economics. “Successful trade negotiations with all three countries are essential to the long-term health of our state’s significant foreign trade/logistics sector and the industries that comprise our trade flows. Trade restrictions that harm one sector of the state economy ultimately have negative effects on other sectors as well.”
(To calculate a California state trade balance, please see our caveats about state-of-destination import statistics at the end of this report.)
As always, Beacon Economics cautions against reading too much into month-to-month fluctuations in state export statistics, especially when focusing on specific commodities or destinations. Significant variations can occur as the result of unusual developments or exceptional one-off trades and may not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months for which data are available (i.e., May-July) with the corresponding period in the preceding year.
California’s merchandise exports during the May-July period totaled $44.57 billion, a nominal gain of 6.6% from the $41.80 billion in the same three months one year earlier.
On the plus side, shipments of Computer & Electronic Products (computers and peripherals; communication, audio, and video equipment; navigational controls; and electro-medical instruments) moved up by 6.9% to $11.17 billion from $10.45 billion. The state’s exports of Transportation Equipment (automobiles, trucks, trains, boats, airplanes, and their parts) improved by 11.0% to $5.02 billion from $4.52 billion.
Exports of Non-Electrical Machinery (machinery for industrial, agricultural and construction uses as well as ventilation, heating, and air conditioning equipment) rose by 8.6% to $4.54 billion from $4.18 billion. Shipments of Miscellaneous Manufactured Commodities (a catchall category of merchandise ranging from medical equipment to sporting goods) edged higher by 0.6% to $4.16 billion from $4.14 billion.
Chemical exports (including pesticides and fertilizers; pharmaceutical products; paints and adhesives; soap and cleaning products; and raw plastics, resins, and rubber) gained 14.0% to reach $3.52 billion from $3.09 billion. Shipments abroad of Food & Kindred goods inched up by 1.3% to $2.27 billion from $2.24 billion.
Exports of Electrical Equipment and Appliances moved up by 9.1% to $2.07 billion from $1.89 billion. Exports of Petroleum and Coal Products surged by 31.9% to $1.22 billion from $923 million. Exports of Fabricated Metal Products grew by 11.1% to $1.16 billion from $1.05 billion. Waste & Scrap exports soared by 24.6% to $1.15 billion from $925 million.
On the minus side, exports of Agricultural commodities not unexpectedly slipped by 10.0% to $2.77 billion from $3.08 billion, as shipments of fruits, nuts, wines, and dairy products all faced higher tariffs abroad.
Mexico built on its rank as California’s most important export destination during the year’s second quarter. Shipments south of the border grew by a robust 19.0% to $7.94 billion from $6.67 billion. Canada retook second place among the state’s second largest export markets, with shipments increasing 5.1% to $4.53 billion from $4.31 billion. China placed third with $4.30 billion, up 4.1% from $4.13 billion. Japan came fourth with imports of California goods totaling $3.20 billion, a gain of 6.7% from $3.00 billion during the same period one year earlier. Exports to fifth-place South Korea rose 1.2% to $2.46 billion from $2.43 billion.
Despite steady growth in exports to China, Japan, and South Korea, the state’s overall export trade with the economies of East Asia edged up by just 2.7% to $15.73 billion from $15.32 billion. Meanwhile, California’s exports to the European Union increased by 7.1% to $7.84 billion from $7.32 billion.
Emphasizing the size of California’s stake in the future of the North American Free Trade Agreement, Mexico and Canada together accounted for 28.0% of California’s merchandise export trade in the latest three-month period, up from 26.2% during the same period one year ago. Exports to the state’s two neighbors soared in value by 13.4% to $12.46 billion from $10.99 billion.
https://beaconecon.com/products/trade_report
SAN FRANCISCO — To the uninitiated, the bright-orange, Tic Tac-size specks scattered on the sidewalks, wedged into the openings of heating grates and piled in small mounds along curbs here are a bit of a mystery.
They are the sterile plastic caps to hypodermic needles, tossed aside by the scores of heroin addicts who dwell outside Twitter and Banana Republic and City Hall. The local government distributes them free to protect drug users from disease.
At the same time, the city has banned the use of another plastic item: the drinking straw. The law’s supporters say it will prevent a million straws a day from washing into the San Francisco Bay.
“Napkins, straws, and bags are available upon request,” reads a footnote on the menu of the Sentinel, a walk-up sandwich shop in the city’s thriving financial district. “You can still get needles for free though. Welcome to SF.”
The streets of San Francisco — hilly, curvy, cinematic and, in recent years, a bleak showcase for the mentally ill and economically displaced — have long reflected this eccentric city’s governing priorities and many civic contradictions.
Some are easy to make fun of, the utopian fantasies of a place famous for pursuing its own artisanal world view.
But a new mayor has taken office. She is, at least for the moment, trading San Francisco’s liberal-laboratory style of local government for a practical, down-and-very-dirty approach that is reflected in what she said she wants as her legacy.
“I want people to walk around this city and think, ‘Wow, it’s so clean here,’ ” Mayor London Breed said during a recent interview. “I want people just hanging out in front of where they live and enjoying the weather, people of all races, able to live in dignity because they have a home and are able to make ends meet.”
Simple and hugely complex.
Breed is the first African American woman to run San Francisco, emerging from a close election in June that was largely about how the city is changing and what should be done to preserve its character.
In recent years, that question has centered on an expanding tech industry, an economic bonanza that most cities would simply celebrate. But the investment and jobs have come with rising housing costs, rapid neighborhood redevelopment and an exodus of longtime residents, including those from her own black community.
The shifts have made the city, once a cradle of counterculture and now a mecca of the mainstream economy, among the most exciting and puzzling in the nation.
It is a magnet for young tech talent and a public venue for despair, a place with the lowest percentage of children of any major American city that can spend weeks debating the pricing for permits to test on-street delivery robots. It spends more than a quarter-billion dollars a year on issues surrounding its 7,500 homeless — and has the third most billionaires of any city in the world.
All of this can be seen on its famous streets.
In January, United Nations special rapporteur Leilani Farha walked them, comparing some of the conditions she saw there with poverty in Mumbai. This in a city where the median household income for home buyers is now $303,000 a year, a historic high.
“You begin to wonder about all the tax dollars and whether they are being spent in the right way,” said Jeffrey Ouyang, a 10-year city resident who works for the tech start-up Zumper, a real estate search site.
Ouyang, 33, said he believes poverty and homelessness have gotten progressively worse despite the city’s rising tax base.
“You begin to think about impact,” he said, “and whether we have any of it right.”
None of this is a mystery to Breed, who was raised in San Francisco’s public education and housing systems. A former county supervisor, Breed said she is growing into the snap-to power that comes with the mayor’s office, saying the promotion helps getting the simple things done quickly.
Among Breed’s first decisions was to deploy a five-person Public Works crew to do nothing but clean the streets of human feces — it was, in fact, dubbed the “poop patrol” — as the city has received more than 14,000 reports about human waste this year alone.
This is the near-term problem, Breed said, while the plastic-straw ban looks further ahead. As she put it, “You can walk and chew gum at the same time.”
“There are things that matter now, and there are things that matter for the future of our planet and the next generation of people growing up in this city,” she said. “We can’t just think about what we need to do now.”
Even those “now” items take time in a city as expensive as this one.
For instance, Breed said she wants to add nearly 50 Public Works employees assigned to keep the streets clean. She has the money to do so. But the hiring will be difficult.
Among the current governing paradoxes for Breed and other civic leaders is what might be called the inside-outside problem.
Walk along Market Street, once a seam line separating glamorous San Francisco from some of its seedier southern neighborhoods. Now it is a stretch that features among other new landmarks the offices of Twitter. The building, linked to another by a skywalk, includes a “permission-only” courtyard accessible from the street.
Behind glass on one side of the narrow courtyard is SF Fitness, its spinning class packed during a recent lunch hour. The Market, an upscale takeout place, is on the other side, and in the middle there is an outdoor fire pit where employees gathered on a foggy afternoon to eat noodle soup and sandwiches.
Just outside the gate is what amounts to an open-air heroin shooting gallery on the sidewalks of Market Street. The telltale orange caps are bountiful. Black metal bins, labeled “Biohazard,” are set out for syringe disposal.
Behind a cluster of nearby lunch trucks serving tuna poke and tacos al pastor, a half-dozen men worked small needles into their arms during the same lunch hour, one sprawling back on the hard ledge where he sat after doing so.
“I’ve just never seen so many people shooting up on a walk to work as I have recently,” said Holly, a 27-year-old who recently moved here from Los Angeles and declined to give her last name for fear it might get her in trouble with her employers. “I know I am part of the problem, the high housing costs, and I’m not proud of that. But I really hope this city is focused on this drug use.”
Breed and others want to move the drug use indoors, providing so-called safe-injection sites where addicts will have privacy and clean needles pending a hoped-for rehabilitation. The state legislature recently approved a measure allowing San Francisco to begin a three-year test program.
Visiting a model safe-injection clinic this week, Breed announced that she wants to open a real one “as soon as possible,” a tacit statement of resistance to federal drug policy. She said the city would first have to determine how to protect the clinics’ operators from federal prosecution, which has been threatened.
The city also wants to move tech workers outdoors, at least during mealtimes. Under a measure before the city government, new tech companies would not be allowed to open on-site cafeterias, long a lure to would-be employees, hoping to better spread the wealth from within the city’s insular tech offices to the local restaurants and lunch trucks just outside.
Tech leaders oppose the measure. But much of the business community, often viewed here as more problem than partner, says Breed is on the right track.
“We’re feeling encouraged about the progress we’re seeing and the plan that is beginning to take shape,” said Kevin Carroll, executive director of the Hotel Council of San Francisco. “As a city, just working to keep the streets clean is a huge priority, and we’re seeing that now.”