For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “Financial storm clouds on the horizon”
Gov. Newsom’s spokesperson on the pending State Budget for 2022-23
STATE BUDGET
- Legislature Sends Newsom “Budget You Ran For Office For”
- Hard Fiscal Times Ahead for California State Coffers
PRIMARY ELECTION
- Primary Election Already Shapes Legislature for 2023-24
- How is California’s “Top-Two” Primary Working Out?
DROUGHT
- Thirsty Californians Not Cutting Water Use
- Colorado River Water Dries Up for SoCal
REGULATORY IMPACTS
- Giant Farmer John Meatpacking Plant Closes Due to High Costs
- Labor Regulators Define Goats as Sheep; Endanger Wildifire Vegetation Management Operations
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 JUNE 17, 2022
Legislature Sends Newsom “Budget You Ran For Office For”
Associate Press & Politico
California lawmakers passed a $300 billion operating budget over the objections of Democratic Gov. Gavin Newsom, highlighting disagreements among Democrats about how to spend a record-breaking surplus that, by itself, is more than most other states spend in a year.
While Newsom does not support the Legislature’s spending plan, lawmakers Monday sent the bill to his desk anyway because the California Constitution requires them to pass a budget by Wednesday or else they don’t get paid. Unlike most states, California lawmakers are full-time and get paid $119,702 per year.
The start of the next fiscal year looms on July 1, less than three weeks away. Yet the budget process will likely extend well beyond that date, as lawmakers pass follow-up measures amending provisions of their spending plan to reflect compromises with the governor. That’s what happened last year, when Newsom and legislative leaders announced an agreement in late June and continued to put finishing touches on it into August.
Newsom and the Democratic-controlled Legislature share general values for state spending and their budget proposals have broadly similar frameworks. But with an unprecedented amount of money at their disposal — unexpectedly strong recovery from the coronavirus pandemic, especially among the wealthiest Californians, has produced a discretionary surplus of almost $49 billion, state officials estimate — they have yet to agree on many of the details.
Under the legislative plan, California would spend $1.7 billion over the next few years to build up its health care and social services workforces, as well $100 million to develop a generic insulin and $100 million to establish trust funds for low-income children who lost parents or caregivers to COVID-19.
Anticipating a U.S. Supreme Court ruling as soon as this month that would overturn constitutional protections for abortion rights and potentially bring a wave of women to California for care, state leaders want to significantly expand abortion access. The budget would set aside more than $130 million to train more providers, enhance clinic infrastructure and security, reimburse providers who care for people without health coverage and establish a statewide fund to help patients with travel costs.
The Legislature overwhelmingly passed the measure, by a vote of 57–16 in the Assembly and 28-8 in the Senate.
The Democratic-controlled Legislature wants to spend more money than Newsom does on education and housing. The lawmakers’ plan would cover college tuition for 150,000 more students than Newsom would.
And lawmakers want to borrow about $1 billion per year and use it to help about 8,000 first-time buyers purchase a home by covering 20% of the price. The plan could potentially lower mortgage payments by about $1,000 per month in a state where the median home price hit a record high of $849,080 in March.
“This is the budget that you ran for office for,” Assemblymember Kevin McCarty, a Democrat from Sacramento, said Monday while urging lawmakers to vote for the bill.
Lawmakers say they can afford to do those things because California’s revenues have soared throughout the pandemic as the rich have gotten richer and pay a higher percentage of their income in taxes compared to other states. This year, California’s surplus — money left over once the state has fulfilled its existing commitments — is more than $97 billion.
But Newsom doesn’t like the Legislature’s plan because he says it would spend too much of the state’s surplus — money that is only available for one year — on things that must have more than one year of funding, mostly for schools and community colleges. The Legislature’s plan would spend $2.4 billion more for ongoing expenses than Newsom’s plan, a disparity that would grow to $5.6 billion by 2026.
While California has lots of money today, the Newsom administration fears the economy is showing signs of stress as stock prices fall and inflation keeps going up because of supply chain disruptions and the Russian invasion of Ukraine.
“Given the financial storm clouds on the horizon, a final budget must be fiscally responsible,” said Anthony York, Newsom’s senior advisor for communications. “The Governor remains opposed to massive ongoing spending, and wants a budget that pays down more of the state’s long-term debts and puts more money into state reserves.”
Lawmakers disagree. They say the extra money they want to spend is small, accounting for less than 1% of total spending. Plus, legislative leaders noted Monday that their plan includes “record-high reserves” — about $700 million more than Newsom proposed — “to protect California during future economic slowdowns.”
This type of disagreement is typical in California, where governors usually see their role as stopping the progressive Legislature from spending too much money.
But Newsom’s plan has its own problems. It would leave the state about $25 billion over a constitutional limit on spending over the next two years, a situation the nonpartisan Legislative Analyst’s Office says could push the state over a “fiscal cliff” that could force budget cuts even if state revenues continue to grow.
The Newsom administration has downplayed those concerns, noting their plan would spend 95% of the budget surplus on one-time expenses — money that could be pulled back in an emergency.
One thing Newsom and legislative leaders can agree on is they want to give a portion of the budget surplus back to taxpayers to help them pay for record-high gas prices. But they can’t agree who should get the money, and how much they should get.
Newsom wants to send checks of up to $800 to everyone who has a car registered in the state. The Legislature wants to send $200 checks to people who have taxable income below a certain level — $125,000 for single people and $250,000 for couples.
Newsom’s plan would cost $11.5 billion and taxpayers might get the checks a little faster because the money would come on a debit card. The Legislature’s plan would cost $8 billion, but it wouldn’t benefit the wealthy.
Other lingering disagreements revolve around higher levels of new spending proposed in the Legislature’s budget compared to the governor’s plan. At a Senate budget hearing last week, Erika Li, chief deputy director for the budget in Newsom’s Department of Finance, expressed opposition to several billion dollars in additional ongoing expenses that lawmakers are seeking for universities, housing and social safety net programs.
“Given the uncertainty of the economy and rising inflation, we’re concerned that the Legislature’s budget commits an unsustainable amount to ongoing expenditures,” Li said.
“We should be supporting those families and households, middle class and below, that would be really struggling from these costs versus those with incomes for whom this would not be as much of a problem,” said state Sen. Nancy Skinner, a Democrat from Berkeley and chair of the Senate Budget and Fiscal Review Committee.
Republicans don’t like either plan. Instead, they favor a suspension of the state’s gas tax, which at 51.1 cents-per-gallon is the second highest in the nation.
“There’s nothing in today’s proposal to bring immediate relief for Californians, said Assemblymember Vince Fong, a Republican from Bakersfield and vice chair of the Assembly Budget Committee. “As the state coffers grow, family bank accounts are shrinking and Californians consistently pay more and more to Sacramento and get pennies back temporarily. That is not relief.”
Hard Fiscal Times Ahead for California State Coffers
CalMatters commentary from Dan Walters
California has a near-$100 billion budget surplus, which has set off a completely predictable pit fight in Sacramento over how to spend the extra cash. Let’s take a vote. The best thing to spend the surplus on is:
- A) Expanding social programs or
- B) One-time expenditures (to be safe).
The Democratic majority in the Legislature will choose option A. Gov. Gavin Newsom has been trying to play the adult at the budget table and is pushing for option B. Unfortunately, there should be an option C: none of the above.
While it is understood that our surplus is temporary, even Newsom’s approach misses the underlying issue. The surplus is being driven by California’s personal income taxes. On average, they make up 25% of the state’s revenues, and in fiscal year 2022-23 they will constitute a full two-thirds.
The surplus is driven by the high marginal tax rate on high-income earners. When financial markets are hot, tax revenues surge.
The Department of Finance made this clear in its revenue report when it showed the history of capital gains for taxpayers in the state. This is income earned from various forms of capital transactions — selling property far above its buying price, for example, or income from a tech firm going public. Such income accrues mainly to very high-income Californians, who are subject to the state’s excessively high marginal tax on high incomes. Over the last two years, state income from capital gains taxes has been close to $250 billion, twice as high as ever before and four times the average. A record surplus is no surprise.
What the markets giveth, however, the markets taketh away.
The last two periods of high capital gains occurred in the late 1990s and then again when the dot-com and subprime mortgage bubbles overheated the economy.
When those markets crashed, so too did asset values and, of course, capital gains. Huge budget surpluses were followed by huge budget deficits.
Here we go again.
The last two years might be best characterized as the “stimulus bubble era.” Yes, the pandemic was a tragic natural disaster, but it was a completely different kind of recession with few long-term consequences. A bit of economic help would have served the purpose fine, but instead, in today’s era of populist politics, the stimulus firehose was turned on. The $12 trillion in what was largely unnecessary federal stimulus has set the U.S. economy on fire.
This is what is driving soaring federal as well as state tax revenues. But it can’t last.
Overstimulated economies begin with a bang, but fizzle in the face of inflation and rising interest rates. All those tax revenues built on capital gains will start falling or, more likely, dry up. But not according to the state Department of Finance’s revised revenue estimate. In the department’s outlook, the economy will cool, but only modestly.
While we can debate how far and how rapidly state tax revenues will fall, the idea that they will plateau is nonsensical. The debate over how much of the surplus to spend on ongoing versus one-time expenditures is a dangerous red herring. California should be preparing instead for the $40 billion budget deficit coming at us.
This view is, of course, a political nonstarter. Tragically, there has been little opposition to the administration’s view or even discussion among business leaders, the government bureaucracy or former officials. Have we forgotten the fury of voters that pushed Gray Davis out of the governor’s office in 2003? Do we really not remember Controller John Chiang issuing IOUs to pay the state’s bills because we ran out of cash?
Buckle up. It’s going to be a rough few years.
Primary Election Shapes Legislature for 2023-24
Politico
One week after Election Day, the next California Legislature has taken visible shape — as have some of November’s marquee multi-Democrat contests. In one-party California, Democratic differentiation has eclipsed partisan affiliation. Interest groups spend millions of dollars to paint Sacramento a particular shade of blue, and dozens of open seats have intensified a scramble to shape a decade of governance. Several races for open Democratic seats effectively ended last week as voters elevated a Democrat and a Republican, all but ensuring the Democrat wins in November. A few others will proceed to money-soaked Dem-on-Dem matchups.
Here are some takeaways, keeping in mind we don’t yet have final vote tallies:
TO THE CENTER: Some Assembly Democrats preferred by business groups and/or the real estate industry are on glide paths to November blowouts as they look to match up with Republicans, in a few cases surpassing labor and the left’s favorites to get there. The victors include Juan Carrillo in AD-39, and Blanca Pacheco in AD-64. Diane Papan is positioned to face a token Republican in AD-21, but Giselle Hale is only around 500 votes from vaulting into a top-two spot.
TO THE LEFT: Progressive incumbent Assembly member Alex Lee will face a Republican in November despite real estate interests spending heavily to elevate another Democrat. Democrat Corey A. Jackson wasn’t labor’s top pick in AD-60, but he drew progressive support and defeated business favorite Jasmin Rubio. The outcome in AD-30 is harder to neatly categorize: Dawn Addis — whose supporters included agriculture, correctional officers and charter schools — surpassed real-estate-backed Zoe Carter and YIMBY-beloved Jon Wizard (charter schools bet well overall, with at least four and up to six of their chosen Democrats poised to claim Assembly open seats).
INCOMING: A few other Democratic contenders for safe seats will eschew Republican opponents in November after consolidating broad support in the primary. That includes Avelino Valencia in AD-68 and Daniel Hertzberg in SD-20. They both have ties to the members they seek to replace: Valencia works for outgoing Assembly member Tom Daly, and Hertzberg is the son of termed-out Sen. Bob Hertzberg. Fresno City Council member Esmeralda Soria was the clear Democratic favorite in AD-27, but a D+16 is no sure thing in the Central Valley.
BRAWLS: Several Democrat-dominated races that generated huge spring spending will yield fall sequels. Business-backed Lily Mei will likely go another round with labor-loved Aisha Wahab in SD-10. Alameda labor leader and union money beneficiary Liz Ortega will face business favorite Shawn Kumagai in AD-20. We’ll get a rematch in AD-35 between Leticia Perez and Jasmeet Bains, who has drawn heavy medical sector support but finished far behind Perez.
Sacramentans could have two Dem-on-Dems: centrist Angelique Ashby versus further-left Dave Jones for Senate and Stephanie Nguyen against real-estate-and-charters supported Eric Guerra for Assembly, if Guerra retains his tenuous hold on second place.
Two other Dem-on-Dems will go to Round Three in contests that have already drawn heavy spending. Business-backed David Alvarez has a huge margin over labor-preferred Georgette Gómez in a special election to represent open AD-80 for the rest of the year, and left pick Tina McKinnor narrowly leads industry choice Robert Pullen-Miles in an AD-62 special. In both cases, they’ll also vie in November for a full term – elections that will test the value of short-term incumbency and the “Assembly member” ballot designation it brings.
THE RIVAS FACTOR: Assembly member Robert Rivas ’s path to the speakership runs through this incoming class. So it’s worth noting that five of the Assembly Democrats he’s supported will face Republicans in blue districts, one of whom already publicly pledged allegiance; four more will face other Democrats.
How is California’s “Top-Two” Primary Working Out?
CalMatters
By happenstance, last week’s “top two” primary election marked the 10th anniversary of the system that dramatically changed California’s political dynamics.
Prior to 2012, California had a closed primary system in which registered voters of the two major parties separately chose their parties’ candidates to face each other in the general election.
Critics said the system had a polarizing effect because candidates won their nominations by appealing to activist elements which tended to be very liberal in the Democratic Party and very conservative in the Republican Party. The rising numbers of independent voters, registered in neither party, were discouraged from participating in primary elections, which affected the outcomes of other issues, such as ballot measures.
In a top-two system, labeled a “jungle primary” by its opponents, all candidates for an office are listed on the same ballot and the two top finishers, regardless of party, then duel in the November general election.
It came about because in 2009, Democratic leaders of the state Senate desperately needed one more vote to pass a controversial budget and turned to moderate Republican Sen. Abel Maldonado to provide it. However, Maldonado — with the support of then-Gov. Arnold Schwarzenegger — insisted that his vote hinged on placing the top-two primary before voters.
Democrats eventually agreed and Proposition 14, creating the top-two system, appeared on the June 2010 primary ballot with Maldonado and Schwarzenegger contending that it would give moderates and pragmatists in both parties better chances of winning legislative and congressional seats. The leaders of every political party opposed the measure, but voters passed it handily.
Has it worked as promised? Mostly, yes.
As Republicans became largely irrelevant in the Legislature, business groups such as the California Chamber of Commerce nurtured business-friendly Democrats, using the top-two system. Although Democrats have supermajorities in both legislative houses, the substantial blocs of moderates have blunted efforts by progressive groups to enact their left-leaning agendas — single-payer health care being the most obvious example.
The system has its drawbacks, such as inviting mischievous tactics. For instance, operatives of one party sometimes clandestinely recruit multiple candidates in the other party to fragment the vote and help two candidates of the same party finish 1-2 in the primary. It’s happened a couple of times.
A variation of that trick, employed by Democrats in recent years, including this one, is encouraging voters of the opposing party to favor the most conservative Republican candidate, thereby making it easier for the Democrat to win.
Gavin Newsom’s 2018 campaign for governor devoted a lot of attention to Republican candidate John Cox, helping him finish second in the top-two primary, because Newsom did not want to face Democrat Antonio Villaraigosa, the former mayor of Los Angeles, in November.
The top-two system inadvertently allowed Republicans to shoot themselves in the foot this year when six of them ran in state Senate District 4, which sprawls through 13 mostly rural counties southeast of Sacramento and has a GOP voter registration plurality.
With so many running, they fragmented the GOP vote, thus allowing two Democrats, Tim Robertson and Marie Alvarado-Gil, to finish 1-2 and handing the seat to the other party.
“This is the nightmare scenario… A lot of people thought that they would have a chance to win. So they jumped in, but they split the votes and that’s unfortunately what can happen,” Joseph Day, Stanislaus County’s Republican chairman, told GV Wire.
Notwithstanding those and other similar top-two outcomes, it remains a more democratic — with a small “d” — way of choosing candidates by forcing them to appeal to a wider array of voters.
Thirsty Californians Not Cutting Water Use
NY Times California newsletter
As California increasingly slips into extreme drought and calls intensify to reduce water use, the state’s water savings in 2022 remain bleak.
The average Californian used 83 gallons of water per day in April, compared with 73 in April 2020. That’s far from the 15 percent decrease that Gov. Gavin Newsom has called for as our reservoirs and the snowpack dwindle. (This underperformance has persisted since January.)
But, as is often the case with such an enormous state, the overall numbers only tell part of the story.
Yes, the average Californian used 83 gallons of water per day in April, but San Franciscans consumed less than half of that at 40 gallons per day. Meanwhile, residents of Riverside County used 137 gallons.
One factor here is spring weather: April was unusually dry in Southern California, while it rained in the Sacramento, Bay Area and North Coast regions, so “savings were largely concentrated in the northern part of the state,” said Marielle Rhodeiro with the California State Water Resources Board while presenting the data during the board’s meeting last week.
But wide variation in water usage across California’s 58 counties exists every month and every year, weather patterns notwithstanding. Take a look at these numbers from 2021 as a whole:
Counties with the highest per capita residential water usage
- Lassen (201 gallons per day)
- Tehama (167)
- Calaveras (163)
- Shasta (151)
- El Dorado (144)
Counties with the lowest per capita residential water usage
- San Francisco (40 gallons per day)
- Santa Cruz (51)
- Humboldt (58)
- San Mateo (64)
- Santa Clara (65)
As you can see, there’s a fivefold gap between the biggest and smallest water users, the data shows. Some of that, experts say, may be because of drought awareness and differing cultural norms around water conservation, as well as older housing stock in some regions that tends to have less water-efficient plumbing.
But most of it can be chalked up to something Californians either love, or love to hate: our yards. “The biggest driver of the difference is outdoor water usage,” said Jay Lund, co-director of the Center for Watershed Sciences at the University of California, Davis.
Half of California’s annual water usage is considered environmental water, meaning it flows through protected rivers or supports wetlands in wildland preserves, according to the Public Policy Institute of California. The other 50 percent is for human use — 40 percent for agriculture and 10 percent for urban use, split between indoor (drinking water, showers) and outdoor (lawns, washing cars).
But the relatively warm, dry weather in California tips the scales toward outdoor consumption. Plants quickly evaporate water, so keeping them green here is more water-intensive than, say, on the East Coast, where it rains in the summer.
In dense, urban environments, people tend to have smaller yards, so there’s less green to water. And in cooler, coastal regions, water demands dip even further as there’s less evaporation. That’s how you end up with San Francisco’s low water consumption rate.
And in a place like Lassen County, in the northeastern part of the state, yards are much larger and lead to more irrigation, especially as the weather heats up. “It still gets very warm in the summer time, so if you keep your property green, you spend a lot of water,” Lund said.
So you can see why California so far has focused its drought restrictions so heavily on yards.
In January, state officials announced penalties for watering yards after a rainstorm. Starting this month, the Metropolitan Water District of Southern California, one of the largest water distributors in the nation, restricted outdoor watering to one day a week. Also this month, the state banned irrigation of decorative grass at businesses and other commercial properties, the most drastic statewide cut to address the drought so far.
Colorado River Water Dries Up for SoCal
Tucson Daily
The largest single batch of water-use cuts ever carried out on the Colorado River is needed in 2023 to keep Lakes Mead and Powell from falling to critically low levels, the U.S. Bureau of Reclamation commissioner told a congressional hearing Tuesday.
Between 2 million and 4 million acre feet of water use must be cut for 2023 across the river basin to cope with continued declines in reservoir levels, said Reclamation Commissioner Camille Touton.
This comes as the West continues to struggle with ongoing conditions of “hotter temperatures, leading to early snowmelt and dry soils, all translated into low runoff and the lowest reservoir levels on record,” Touton said.
“The normal drier, warmer West is what we’re seeing today,” said Touton, testifying before the Senate Committee on Energy and Natural Resources in Washington, D.C.
A 2 million to 4 million acre-foot cut would slice anywhere from 14% to 28% of the entire river basin’s total annual average water consumption in recent years.
Touton warned the committee that the bureau has authority to act unilaterally to impose water use curbs to protect the river system and its reservoirs, “and we will protect the system.”
But for now, the bureau is pursuing a “path of partnership” with the seven river basin states and with tribal leaders. The hope is to get some kind of agreement by mid-August. That’s when the bureau schedules its river water deliveries each year for the following year.
While top federal officials have issued similar threats to impose solutions on at least three occasions since 2005, they’ve always backed off after the states eventually agreed on lesser measures to address a growing supply-demand deficit in the basin.
The measures included a 2007 set of federal guidelines to manage the reservoirs; separate 2019 drought contingency plans for the river’s Upper and Lower Basins; and the “500-plus” plan that calls for Lower Basin states to reduce water use just this year by an extra 500,000 acre feet to prop up Lake Mead.
Arizona, Nevada and California are in the river’s Lower Basin.
But those measures have continually fallen short as continued warm, dry weather has kept the reservoirs plunging. Currently, Lake Powell stands at 27% of its total storage capacity and Lake Mead is at 29% of capacity.
While officials have expressed faith in the spirit of cooperation that has led to numerous interstate water agreements in the past century, “faith alone is not enough,” Touton testified.
“We need to see the work. We need to see the action,” Touton said. “I ask Congress today to keep pushing us back to the table and I ask our partners to stay at the table till the job is done.”
She noted that the bureau will celebrate its 120th birthday on Friday, commemorating federal passage of the 1902 Reclamation Act, pushed by President Theodore Roosevelt as a way of maximizing development of water resources, particularly in the West.
“The challenge we’ve seen today is unlike anything we’ve seen in our history —one of immediate action,” Touton said.
Touton’s comments, far more pessimistic about the river’s immediate situation than any bureau official has ever made, come a little less than two months after the Interior Department, the bureau’s parent agency, agreed to prop up Lake Powell to the tune of nearly 1 million acre feet this year.
It did that by first releasing a half-million acre feet into Lake Powell from the upstream Flaming Gorge Reservoir at the Utah-Wyoming border, and second, by holding back 480,000 acre feet in Powell that had been slated to be released this year to Lake Mead.
Giant Farmer John Meatpacking Plant Closes Due to High Costs
Associated Press
Meat-packing giant Smithfield Foods said Friday it will close its only California plant next year, citing the escalating cost of doing business in the state.
The Farmer John meat-packing plant in Vernon, an industrial suburb south of Los Angeles, will shut down in February, with its 1,800 employees receiving severance and job placement support along with bonuses for those who choose to stay on the job until the closure, said Jim Monroe, vice president of corporate affairs.
Some workers, who on average earn about $21 per hour, also will have opportunities to relocate to other facilities owned by the Virginia-based Smithfield Foods Inc.
The Vernon plant slaughters pigs and packages products such as ham and bacon. Some operations will be moved to other facilities in the Midwest, but the overall reduction in processing capacity is prompting Smithfield to reduce its sow herd in Utah. The company also said it is exploring ways to exit its farms in California and Arizona.
Monroe said operating costs in California are much higher than in other areas of the country, including taxes and the price of water, electricity and natural gas.
“Our utility costs in California are 3 1/2 times higher per head than our other locations where they do the same type of work,” he said.
The Vernon plant has been the target of repeated protests by animal rights activists over its treatment of hogs. It also was hard-hit during the COVID-19 pandemic, with some 300 employees exposed to infections in 2020. Several were hospitalized.
California’s Division of Occupational Safety and Health fined Smithfield Foods about $60,000 for safety violations that exposed workers to infection.
Labor Regulators Define Goats as Sheep; Endanger Wildifire Vegetation Management Operations
Sacramento Bee
The clock is ticking for Tim Arrowsmith and his goats.
Arrowsmith owns Blue Tent Farms in Red Bluff, home to more than 2,000 head of goats — goats whose brush grazing helps reduce wildfire risk across the state, including in Elk Grove and West Sacramento. He said in an interview with The Bee that he could be forced to sell his herd if the state doesn’t change its interpretation of a labor law requiring him to pay overtime to his seven goat herders. They typically work eight hours a day but also live on the job and are on-call 24-7.
Goat herds are a primary tool in wildland fire risk abatement.
What’s happening?
Until recently, the California Employment Development Division held that goat herders, like sheep herders, could be paid an alternative minimum wage — $2,488.97 a month — in lieu of the standard minimum of $14 an hour for employers like Arrowsmith.
However, Arrowsmith said that on March 1 he learned that the California Labor Commissioner’s Office determined that the alternative minimum wage only applies to sheep herders, not to those who herd other livestock, including goats.
The Department of Industrial Relations, which oversees the California Labor Commissioner’s Office, said this was nothing new and that the agency “has consistently determined that the alternative minimum wage applies only to workers engaged in sheepherding, and not herding of other livestock.”
Arrowsmith said this interpretation is proving costly.
“It takes a wage from about $4,000 a month to about $14,000 a month,” he said.
Arrowsmith has been lobbying government officials, including Gov. Gavin Newsom; Katie Hagen, the director of the Department of Industrial Relations; and Nancy Farias, the director of the Employment Development Department, to change the interpretation.
He said that he will be renewing the visas for his temporary ag workers, many of whom come from Peru and elsewhere overseas, in the next 30 to 60 days.
“And at that point, this language has to be changed or we’ll have to look at selling our herd,” he said.
Assembly Republican Leader James Gallagher, R-Yuba City, drafted a letter to Hagen and Farias on May 16, along with 21 other lawmakers — Assemblymembers and Senators, Republicans and Democrats — calling on the directors to “correct this error” so that goats like those belonging to Arrowsmith can continue doing their work.
“Goats, like sheep, are used for vegetation management and fuel load reduction. In agriculture and flood control systems (i.e. levees), these livestock are used for vegetation management; preventing the need for machine operated control or herbicide application,” Gallagher wrote in his letter.
In a statement to The Bee, the California Department of Industrial Relations said that, “Both EDD and the Labor Commissioner are aligned that sheep and goat herders perform nearly identical work, although the statute provides an alternative minimum wage only for sheep herding. The state is actively exploring options.”