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IN THIS ISSUE – “It Can’t Just Be More CalFire Engines”
CAPITAL BACK TO BUSINESS
- Newsom Signs $15-Billion Legislative Package to Battle “Smash-Mouth Realities of Climate Change”
- California Recovery Lags US; Tax Revenue Beats Forecast
- Legislative Analyst Predicts Strong State Finances
- Governor Ponders Police Reform; Meanwhile, Cities Add More Officers
POST-RECALL
- Newsom Goes Nationwide; Campaigns to Support Virginia Governor
- California Republicans Convene: “What Did We Learn? How Can We Change?”
CALIFORNIA MISCELLANY
- Ports of LA/LB Cargo Ship Traffic Jam Threatens Nation’s Holiday Shopping
- Becerra Begins HHS Tenure in the Back Seat: “He’s Not a Decider”
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 service.
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FOR THE WEEK ENDING SEPT. 24, 2021
Newsom Signs $15-Billion Legislative Package to Battle “Smash-Mouth Realities of Climate Change”
Sacramento Bee
California Gov. Gavin Newsom remembers standing with former President Donald Trump amid the devastation of the Paradise Fire and thinking he wouldn’t see anything like it again in his lifetime.
Two years later, California saw the worst fire season in its history.
Currently, there are 10 large, active wildfires burning across the state and some 2.35 million acres have been destroyed in what the governor sees as direct impact of climate crisis.
Newsom was at the park to sign AB 170, a more than $15 billion package of legislation aimed at combating the impacts of climate crisis, including wildfires. The package, which includes $1.5 billion for wildfire prevention and suppression, is an “unprecedented commitment,” by California, and also invests in drought response efforts and water resilience, clean transportation and sustainable agriculture.
The bill allocates close to $5 billion for immediate drought response, which Newsom said will include water storage in a broad sense. It puts $3.9 billion toward making California a dominant force in the electric vehicle market.
The $1.9 billion in wildfire funds will go to both suppression and prevention efforts, something that has been long overlooked.
“It can’t just be more Cal Fire engines,” Newsom said, as just such an engine passed along the highway toward the fire.
Newsom was pointed in contrasting this legislation with what is happening on the national level, at one point calling out senate minority leader Mitch McConnell to “put down the swords, rhetorically and otherwise,” and take action on what he called the “smash mouth realities,” of climate crisis.
“Here we are in California getting things done,” Newsom said.
The choice of location was an intentional nod to the true and lasting impacts of the climate crisis, beyond the rising temperatures.
“Climate is not just about degrees and decarbonization,” Newsom said.
“You can’t rebuild giant Sequoias. You can replant them and come back in 3,000 years.”
Newsom remembers coming to Sequoia National Park with his dad. He wasn’t able to find the picture of them in front of the General Sherman Tree, but the governor said he was sure one exists. He contrasted that with his own sons.
“I want them to be here. And I want their kids to be here.”
https://www.sacbee.com/news/california/fires/article254465223.html#storylink=cpy
Dept of Finance summary:
http://www.ebudget.ca.gov/BudgetAddendum.pdf
California Recovery Lags US; Tax Revenue Beats Forecast
State Dept. of Finance
California headline inflation rose by 4.4 percent in June 2021 (latest data available) and has averaged 3.4 percent in the first half of the year. By comparison, in 2020, inflation averaged 1.2 percent and 1.7 percent for the nation and the state, respectively.
LABOR MARKET CONDITIONS
The U.S. unemployment rate fell 0.2 percentage point to 5.2 percent in August 2021, with civilian employment increasing by over half a million. California unemployment rate fell 0.1 percentage point to 7.5 percent in August 2021. California civilian employment increased by 57,500 in August 2021 with 55,300 more people entering the labor force and 2,200 fewer unemployed. Compared to February 2020, there were more than one million fewer employed and 450,200 fewer people in the labor force in August 2021. After adding 104,300 nonfarm jobs, California has now recovered 62.1 percent of the 2.7 million jobs lost in March and April 2020. Nine sectors added jobs: government (46,900), leisure and hospitality (33,100), professional and business services (14,000), other services (8,400), financial activities (3,200), manufacturing (2,900), information (2,200), construction (600), and mining and logging (100). Educational and health services (-6,300) and trade, transportation, and utilities (-800) lost jobs.
BUILDING ACTIVITY AND REAL ESTATE
California permitted 120,400 housing units (54,600 multi-family units and 65,800 single-family units) in July 2021 on a seasonally adjusted annualized rate (SAAR) basis. This was up 3.5 percent from 116,300 units in June 2021 but down 6.2 percent from the 128,300 units permitted in July 2020. Year-to-date through July 2021, California permitted 123,200 units on average, compared to 101,400 units in the same period in 2020 and 107,600 units in the same period in 2019. The statewide median price of existing single-family homes reached a new record of $827,940 in August 2021―the fifth record high in the past six months. This was up 2.1 percent from July 2021 and up 17.1 percent from August 2020. Sales of existing single-family homes in California totaled 414,860 units (SAAR) in August 2021, down 13.3 percent from July 2021 and down 10.9 percent from August 2020. This was the second consecutive year-over-year decline for sales volume and the seventh month-over-month decline in the past eight months.
MONTHLY CASH REPORT
Preliminary General Fund agency cash receipts for the first two months of the 2021-22 fiscal year were $3.527 billion above the 2021-22 Budget Act forecast of $19.342 billion. Cash receipts for the month of August were $1.986 billion above the forecast of $10.959 billion. Preliminary General Fund agency cash receipts for the entire 2020-21 fiscal year were $4.783 billion above the 2021-22 Budget Act forecast of $201.775 billion, or 2.4 percent above forecast.
Personal income tax cash receipts to the General Fund for the first two months of the fiscal year were $2.563 billion above the forecast of $12.602 billion. Cash receipts for August were $1.344 billion above the forecast of $6.459 billion. Withholding receipts were $1.125 billion above the forecast of $6.098 billion. Other cash receipts were $142 million above the forecast of $1.169 billion. Refunds issued in August were $102 million below the expected $693 million. Proposition 63 requires that 1.76 percent of total monthly personal income tax collections be transferred to the Mental Health Services Fund (MHSF). The amount transferred to the MHSF in August was $24 million higher than the forecast of $116 million.
Sales and use tax cash receipts for the first two months of the fiscal year were $670 million above the forecast of $4.476 billion. Cash receipts for August were $628 million above the month’s forecast of $3.24 billion. August cash receipts include a portion of the final payment for calendar year second quarter taxable sales, which was due August 2. August cash receipts also include the first prepayment for calendar year third quarter sales.
Corporation tax cash receipts for the first two months of the fiscal year were $329 million above the forecast of $956 million. Cash receipts for August were $46 million below the month’s forecast of $353 million. Estimated payments were $36 million above the forecast of $210 million, and other payments were $54 million above the $220 million forecast. Total refunds for the month were $136 million higher than the forecast of $77 million.
Legislative Analyst Predicts Strong Tax Revenue
Legislative Analyst’s Office
The Legislative Analyst’s Office currently projects there is a strong chance collections from the state’s “big three” taxes—personal income, sales, and corporation taxes—will exceed the budget act assumption of $170 billion in 2021-22.
Our current best estimate is that the amount of unanticipated revenue likely will fall somewhere between $5 billion and $25 billion. As reflected by the width of this range, with so much of the fiscal year ahead of us there remains significant uncertainty about how much the state ultimately will collect. We also caution that the implications of unanticipated revenues for the state’s budget are not straightforward. As we discuss here, an additional $1 of unanticipated revenue results in, on average, about $0.40 of additional state surplus.
https://lao.ca.gov/LAOEconTax/Article/Detail/698
Governor Ponders Police Reform; Meanwhile, Cities Add More Officers
CalMatters
As Newsom decides whether to sign a package of bills that would reform California’s criminal justice system — such as by creating a process to yank badges from bad cops, offering greater access to police records and protecting protesters from rubber bullets — some of the cities that slashed law enforcement budgets in the wake of George Floyd’s murder now appear to be backtracking amid an uptick in homicides and violent crime. On Wednesday, San Francisco Mayor London Breed announced a plan to crack down on organized retail theft by hiring more police investigators and community ambassadors and upgrading an online crime reporting system. On Tuesday — a day after Oakland saw its 100th homicide of the year — the city council votedto fund a new police academy and to study adding another one next year. Also Tuesday, the Los Angeles City Council signed off a new law that limits protesters’ ability to gather outside private residences and forbids people from carrying certain items, such as knives and pepper spray, in city buildings.
Los Angeles City Council President Nury Martinez: Many protests are “completely out of control. … This is about protecting our family members, our children and our neighbors from aggressive, targeted protests at all hours of the day and the night.”
Newsom Goes Nationwide; Campaigns for Virginia Governor
Politico
Gov. Gavin Newsom’s latest fundraising pitch ties the California Democrat’s recall win to Virginia Democrat Terry McAuliffe’s battle against “ultra-right, Trump-loving” Glenn Youngkin with just a few weeks to go before the election. “In our recall, there were Virginians who donated and sent texts to keep California blue. Now we’re hoping to return the favor when Terry McAuliffe needs it most.”
California Republicans Convene: “What Did We Learn? How Can We Change?”
Associated Press
California Republicans are eager to move on from their failed effort to unseat Democratic Gov. Gavin Newsom in a recall election and focus on U.S. House races next year that could determine which party controls Congress and whether House GOP leader Kevin McCarthy advances to the speaker’s chair.
A three-day convention of party delegates that starts today will include its share of soul searching and finger pointing over the recall loss last week. The party faces the harsh reality that Republicans haven’t won a statewide race in California since 2006 and its ranks continue to wither in the heavily Democratic state.
But the focus is on the future and the possibility that Republican House victories could help McCarthy, of Bakersfield, depose House Speaker Nancy Pelosi, a San Francisco Democrat.
Democrats hold 220 House seats, Republicans 212, with three vacancies. California’s congressional delegation is far more lopsided: 42-11 in favor of Democrats — but that’s an improvement for the GOP.
In 2020, Republicans regained four California House seats and leaders are making preparations to defend them and even expand that list in the upcoming midterm elections, when the party that holds the White House typically loses seats.
While the GOP remains predominantly white, the party won those California seats last year with diverse candidates – two female South Korean immigrants and two men who are sons of immigrant parents from Mexico and Portugal – and by tapping into voter discontent over high taxes, spiking crime rates and homelessness.
California is losing one House seat because of once-a-decade reapportionment, when districts are redrawn to reflect population shifts. That will cut California’s representation to 52 House seats, still the largest of any state.
It’s difficult to make predictions about specific districts until new boundaries are announced later this year, which could shade some districts more Democratic, others more Republican.
But the scuffle already is underway. The American Action Network, a conservative group with ties to House GOP leadership, has been running TV ads in Democratic Rep. Josh Harder’s district in the Central Valley. They fault congressional liberals for runaway spending and taxes and seek to link Harder to Pelosi’s “socialist agenda.”
Inevitably, the recall failure will set off a fresh round of introspection over how the party can become more competitive. Newsom beat back the attempt to remove him with a landslide margin.
It’s become routine – California Republicans lose big, statewide races, debate change, then lose again. In the last two U.S. Senate races, a Republican couldn’t even finish among the top two vote-getters in the primary, meaning the candidates facing off in the general election were both Democrats.
With the recall loss, “What did we learn? What can we change?” asked Matt Shupe, who heads the Contra Costa County Republican Party and advised GOP gubernatorial candidate Kevin Faulconer during the recall. “Six months ago, I thought the recall was ours to lose. Then we lost it.”
Shupe said unsupported claims of a rigged election circulated by former President Donald Trump and some other Republicans might have depressed turnout. Another disappointment in his home county was a lack of volunteer enthusiasm – those campaign foot soldiers who knock on doors and make phone calls to drive up turnout. While 400 people signed up to help, only about 30 participated, he said.
A generation ago, California was a reliable win for the GOP in presidential elections. The Republican-rich suburbs of Orange County, south of Los Angeles, were a foundation block in the modern conservative movement that led to the rise of the Reagan revolution.
Over time, a changing economy and growing diversity reshaped the state’s politics, giving California its prominent Democratic tilt.
Election losses have led to friction over whether the party needs to adjust its political compass. Then-Gov. Arnold Schwarzenegger, a GOP centrist elected in a 2003 recall election, once recommended distilling the state party’s platform into as little as a single page focusing on lower taxes, limited government and a strong national defense, while avoiding national schisms over gay rights, gun control and abortion.
It didn’t happen.
The latest round of self-examination comes as the national GOP continues to search for a way forward after Trump’s tumultuous presidency.
The state party has long been unsettled by rivalries between moderate and conservative factions. Turnout in the recall fell well below expectations — Trump earned 6 million votes in his losing effort in California against Joe Biden in 2020, but only about 4.5 million voted to recall Newsom.
And even in the midst of a heated campaign the state GOP continued to shed voters – a drop of nearly 50,000 between February and August, leaving the party with about 24% of registered voters statewide. Democrats account for nearly 47%.
Among possible replacement candidates in the recall, the centrist Faulconer was trounced by Larry Elder, a conservative radio talk show host who supported Trump. Elder got nearly 50% of the votes among 46 candidates but the contest was rendered irrelevant when voters chose to keep Newsom.
Longtime conservative activist and blogger Steve Frank, who unsuccessfully sought the party’s top job in 2019, said frustration within the GOP ranks could lead some activists to start operating outside the umbrella of the state party.
“They didn’t see the state party being a factor in the recall,” Frank said. Lacking a meaningful voter-registration effort “you expect to lose.”
Ports of LA/LB Cargo Ship Traffic Jam Threatens Nation’s Holiday Shopping
BBC
Some 65 cargo ships have been forced to queue outside two of America’s biggest ports, in the latest sign of supply chain disruption hitting the US.
The ships are stuck outside the ports of Los Angeles and Long Beach, California, which handle 40% of all cargo containers entering the country.
Before Covid, it was unusual for more than one to wait for a berth.
The backlog is linked to surging demand for imports as the US economy has reopened.
Retailers and manufacturers have rushed to place orders and restock their inventories, but the global shipping system is struggling to keep up.
It’s contributed to shortages of children’s toys, timber, new clothes and pet food, while also pushing up consumer prices.
Gene Seroka, head of the Port of LA, last week warned that a “significant volume” of cargo was “headed our way throughout this year and into 2022”.
“We continue to monitor a host of variables; disruptions continue at every node in the supply chain,” he said.
Together, LA and Long Beach are the main seaborne gateway to the US, particularly for imports from China.
And on Saturday a record 73 ships were stuck outside – almost twice as many as at the same time in August.
Some cargo ships have been diverted because of the backlog, which is preventing thousands of containers from being unloaded.
But nearby ports like Oakland do not have the capacity to deal with the volume of trade.
At the Port of LA alone, the amount of cargo handled is up 30% this year so far, compared with the whole of 2020.
The US Toy Association, which represents 950 toy firms with a US presence, has warned the crisis in California could affect many of its members going into the all-important holiday season.
Its members sell three billion toys a year, 85% of which come from China.
“The larger retailers we work with have relationships with the shippers, and they can weather this storm fairly well relatively speaking,” boss Ed Desmond said.
“It’s really the small companies that are facing the brunt of this impact. They really don’t have the leverage or the size to have those annual contracts.”
The Californian ports have now agreed to expand the hours during which trucks can pick up and return containers to try to ease the backlog.
They are also working with the White House Supply Chain Disruptions Task Force, which was set up in June to try to alleviate bottlenecks.
Other ports such as Savannah in Georgia have also seen record shipping congestion, while the nation’s second busiest entry point – New York – said it faced transit issues outside the port.
“Currently congestion is related to cargo moving from the port, such as trucks and freight rail, due to record-high cargo volume,” spokeswoman Amanda Kwan told the BBC.
Last month port bosses across the US told the Wall Street Journal they saw the bottlenecks lasting as long as summer 2022.
By tonnage, about 70% of all US-international trade moves by water through America’s ports.
Becerra Begins HHS Tenure in the Back Seat: “He’s Not a Decider”
Politico
WASHINGTON — As President Joe Biden’s health secretary, Xavier Becerra runs the sprawling department responsible for delivering on the administration’s vow to end the coronavirus pandemic. But when Biden’s senior health officials gathered one Sunday in August to make the high-stakes decision that all adults should get Covid-19 booster shots, Becerra wasn’t included on the call.
The nation’s top health official was instead preparing for a multi-day tour up the East Coast to tout Biden’s broader agenda, while others including Surgeon General Vivek Murthy and CDC Director Rochelle Walensky mapped out the specifics of the government’s booster strategy.
The episode, described by two administration officials, was emblematic of Becerra’s first six months atop the Department of Health and Human Services. During a period dominated by difficult choices and intense debates over the direction of the pandemic response, the former lawmaker and California attorney general has ceded much of the authority to the White House and government scientists — and seldom been the one giving orders.
Administration officials say Becerra’s limited role has left the government without a strong intermediary between a fast-moving White House and HHS’ methodical scientific agencies — contributing to breakdowns in coordination that have hampered the response and fueled accusations of political interference.
Becerra has steered clear of internal policy debates that have raged between HHS’ public health agencies, according to interviews with a dozen current and former administration officials and others familiar with the situation.
And he’s played a secondary role in selling those Covid-19 policies to the public, often taking a back seat to subordinates like Murthy, Walensky and top infectious disease doctor Anthony Fauci.
“They brief him,” one person close to the pandemic response team said. “But he’s not a decider on response activities.”
Becerra’s reticence represents a sharp contrast from past administrations, where the HHS secretary had historically been highly visible in tackling top-tier health issues. And it’s noteworthy as health agencies under him feud with the White House over key aspects of the response.
That shift reflects the degree to which the White House has consolidated power over the response under coronavirus coordinator Jeff Zients, a Biden confidant who oversee his own pandemic team. It’s also the consequence of a concerted effort to lean on the administration’s top medical experts to steer the Covid-19 effort — and a recognition of Becerra’s own lack of experience as a public health policymaker and communicator.
But the results have proved particularly painful in recent weeks, as disagreements within the government over boosters left the public confused and Biden’s plans for the vaccination campaign’s next critical step up in the air.
“Normally, there’d be an internal process to figure out where we’re all going to land” led by the HHS secretary, said a person familiar with the situation. “Instead, it’s playing out in public.”
In an interview, Becerra told POLITICO he believes he’s “absolutely” been empowered as part of the Covid-19 response, and he emphasized his department’s involvement in the booster debate and other aspects of the effort.
“HHS has fingerprints on everything that’s being done on Covid,” he said. “And our team has worked — not only well, but successfully — with the White House to try to really communicate information and get out the facts and use the science, and so we’ve been an integral part of this.”
The health secretary defended the decision to preemptively set a Sept. 20 target date for distributing booster shots to all U.S. adults, while also insisting the plan was always dependent on getting sign-off from the CDC and Food and Drug Administration.
And he disputed the notion he’s been removed from major policy decisions, arguing that the pandemic response has been a team effort — with his job being to translate the scientific decisions made by the government’s health experts into concrete initiatives.
“What I think HHS does very well is, it takes all that expertise and that science, and it helps package it better for practical applications,” said Becerra, who added that he’s routinely briefed on the direction of the Covid-19 response.
Indeed, HHS has helmed on-the-ground programs advocating for the vaccines and targeting underserved communities. It’s deployed so-called surge response teams of medical personnel to aid hard-hit states. The department is also responsible for doling out billions of dollars in relief funding authorized by Congress.
Yet HHS’ central role underscores the extent to which Becerra himself has stayed on the margins of the public-facing response effort. To date, he has not participated in any of the administration’s Covid-19 briefings, where officials routinely roll out new policies and messaging.
Within the health department, officials said a team of public health specialists including top CDC, FDA and National Institutes of Health officials have led the daily work on the pandemic response — often working directly with the White House.
“Becerra’s clearly got a different perspective,” said Eric Topol, director of the Scripps Research Translational Institute, referring to his involvement in health issues as a 12-term lawmaker and as California attorney general. “But he hasn’t had any face in the pandemic.”
White House spokesperson Kevin Munoz said Becerra is leading a department with myriad responsibilities. “The secretary has been a strong partner to the White House on a number of important issues, including to our Covid response team. We are stronger because of his leadership,” Munoz said.
Becerra’s lower profile is in part a consequence of the structure that Biden installed when he first assumed office — putting Zients in charge of a dedicated White House pandemic team with broad authority to direct response efforts across the government.
The approach is similar to the Obama administration’s strategy for passing the Affordable Care Act, which assigned a White House office to craft the policy and left implementation to the health department.
“Covid is an all-hands-on-deck issue,” said former HHS Secretary Kathleen Sebelius. “[Becerra] has a role in all that … but President Biden also wanted people who did nothing other than wake up in the morning and think about Covid.”
But it’s also a recognition of Becerra’s own personal background. He has no medical expertise and had not previously held a top health policy position.
That has limited Becerra’s ability to contribute to the in-depth debates underpinning the direction of the pandemic response, two administration officials said.
Rather, Becerra has spent nearly every other week away from Washington, stumping for Biden’s agenda around the country and promoting the Covid-19 response in local communities.
Those are tasks tailored to Becerra’s strengths as a speaker and politician, said people involved with the pandemic response, who described him as widely liked within the Covid-19 operation and a willing team player.
Still, as fissures emerged over the direction of Biden’s vaccination campaign, some privately questioned why Becerra had not taken a stronger hand in managing relations between the White House and his department’s public health agencies.
At the White House, officials grew increasingly frustrated at the CDC over the pace of its vaccine research — and their inability to push the agency to move faster, for fear of violating Biden’s pledge to let his scientists lead the response. The CDC and FDA, in turn, have clashed over how much power each should have in determining the specifics of the looming booster rollout.
Those tensions spilled into public in recent weeks, punctuated by the resignations of two top FDA vaccine regulators who later publicly opposed the plan to give boosters to all Americans.
“Part of the reason this is happening is nobody is calling balls and strikes on FDA and CDC,” said a person involved in the Covid-19 response. “You don’t want the White House to be telling FDA and CDC what to do, but there’s nothing wrong with Becerra telling them what to do.”
Becerra downplayed the wrangling over the booster rollout, chalking it up to an eagerness to give Americans a sense of what to expect.
“They said, we’re going to shoot for a goal — we’re forecasting for you what we think is going to happen,” he said. “And so we may tell you a day or a week or what we think, but it’s all, again, subject to what the science says.”
Yet in a sign that the department is trying to tighten up its messaging, HHS recently brought on well-known Democratic communications specialist Leslie Dach to help better coordinate Covid-19 communications across the department.
Among Becerra’s critics and supporters alike, the health secretary’s quieter role on Covid-19 has driven concern that it will be equally difficult to establish himself as a leader on other big priorities, as well as to convince Biden to invest heavily in the rest of HHS’ agenda.
The White House is largely steering the administration’s efforts to slash drug prices and expand Medicare benefits as part of a massive social spending package in Congress, while leaving the policy specifics to Democrats on Capitol Hill to hash out.
HHS recently grew more involved in that process, people familiar with the negotiations said. But for months, it was unclear to those closely following the drug pricing issue who at the department was even in charge of it. When reporters began surveying lobbyists and advocates on the question earlier this summer, some named Sarah Despres, Becerra’s counselor for public health and science.
That turned out to be wrong — and caused a stir within the department when it appeared in print.
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