POLITICO California Playbook PM: Taking up a collection to close the deficit

Presented by the Electric Trucks Now Campaign: Your afternoon must-read briefing on politics and government in the Golden State

Apr 26, 2023 View in browser   By Jeremy B. White and Blake Jones Presented by the Electric Trucks Now Campaign DIVING FOR DOLLARS: Tough times call for tough measures. The state has a projected $22.5 billion budget deficit and the money has to come from somewhere. Senate Democrats came up with a plan today — and Gov. Gavin Newsom quickly swatted it down. Newsom’s January blueprint sought to slash or defer spending on areas like climate change and transit, spurring pushback from legislative Democrats who believed there was a better way to balance the books. Senate Democrats proposed an alternative: asking corporations to pay more. Their plan would reject Newsom’s proposed cuts in favor of hiking the corporate tax rate for California businesses earning profits of more than $1.5 million. The plan would simultaneously curtail corporate taxes for smaller firms. Democrats said that would allow them to maintain funding without cutting back or dipping into the state’s rainy day fund. The administration said no way. “Governor Newsom cannot support the new tax increases and massive ongoing spending proposed by the Senate today," spokesperson Anthony York said in a statement. "It would be irresponsible to jeopardize the progress we’ve all made together." That budget reserve account presents a third option. Newsom has resisted cracking it open. Senate Democrats would also rather avoid dipping in — but Assembly Speaker Anthony Rendon (D-Lakewood) has repeatedly telegraphed he’d look to tap the reserve if California’s budget outlook remained precarious in May. “That’s what it’s there for,” Rendon told POLITICO in January. (His office did not respond to a request for comment today.) The Senate’s plan shoulders substantial risk, raising the politically tenuous prospect of tax increases in a year when California voters are broadly pessimistic about the economy. Though its rate hike for higher-earning businesses could help senators frame the plan as a tax on wealthy corporations, and a decrease for other businesses allows leaders to pitch their plan as a break for startups trying to get off the ground. But Newsom has avoided talk of boosting taxes the last few months, even spending political capital to defeat a proposed millionaire’s tax in the fall. He has focused instead on targeted cuts as state revenue withered. The Senate’s plan has little chance of becoming law without his support. Newsom’s Department of Finance projected in January that a $22.5 billion deficit was looming. And state income has fallen another $4.5 billion below forecasts since then, increasing the odds that Newsom will have to propose more cuts or drawdowns when he updates his budget proposal next month. HAPPY WEDNESDAY AFTERNOON! Welcome to California Playbook PM, a POLITICO newsletter that serves as an afternoon temperature check of California politics and a look at what our policy reporters are watching. Got tips or suggestions? Shoot an email to bjones@politico.com or send a shout on Twitter. DMs are open! A message from the Electric Trucks Now Campaign: CALIFORNIA MUST VOTE "YES" TO STOP DIESEL DEATH. More than 70 environmental justice, health, labor, business and clean air groups across California are calling on the Air Resources Board (CARB) to vote unanimously for the Advanced Clean Fleet ACF) standard. This historic vote will ultimately put an end to diesel death within a generation by gradually transitioning dirty diesel truck fleets to pollution-free technologies. Tell CARB to vote “YES” on the ACF!   WHAT YOU NEED TO KNOW TODAY DRIVING A HARD BARGAIN — After faltering at the finish line last year, a renewed effort to allow California legislative staff to unionize cleared its first hurdle today. Assembly Bill 1 by Assemblymember Tina McKinnor (D-Inglewood), a former staffer, passed the Assembly Public Employment and Retirement Committee, with Assemblymember Vince Fong (R-Bakersfield) as the lone nay. The bill would allow nonsupervisory staff in the Legislature to form a union and negotiate wages and working conditions — which have long been a point of complaint and concern in the Capitol. Democrats on the committee noted that the Legislature frequently pushes for expanded labor rights in other sectors, and that it's time lawmakers do the same for their staff. One notable amendment, which McKinnor says she plans to adopt, is a provision that would prohibit discrimination against union members based on political party. Assemblymember Tom Lackey (R-Palmdale) said Republican staffers have long received less pay than Democratic counterparts, and wanted to ensure they'd be represented fairly in any collective bargaining unit. — Lara Korte   PLAYBOOK MEET & GREET! We did it before and we're doing it again! Join California Playbook and POLITICO’s growing team in Sacramento at Smic’s Sip & Quip on Thursday, May 11, 2023, for an evening of cocktails and conversation. As POLITICO expands in California, we're convening our most influential readers in Sacramento and beyond. Swing by and have a cocktail on us—you never know who you might run into! Register here.     On the beats DRAFTED — Newsom will be leaving California on Thursday to fundraise for President Joe Biden’s reelection campaign in Washington, his campaign spokesperson Nathan Click confirmed. The governor, who has long been rumored to have presidential aspirations himself, has made a point of supporting the president’s 2024 campaign. Newsom alone helped raise more than $200,000 for Biden on Tuesday. He is expected to return to California on Saturday. — Lara Korte Y’ALL COME BACK NOW — A pandemic-era law requiring hospitality employers to give laid-off workers the first shot at new positions would be made permanent under a bill that cleared a Senate policy committee today. State Sen. Maria Elena Durazo, the author of Senate Bill 723, argued at the hearing that “right to recall” rules are especially helpful for older workers, who are less likely to be rehired and have typically accrued higher wages and benefits. The proposal has gotten little pushback from Democrats so far, but it does mirror a bill that Newsom once vetoed for not being tied closely enough to the Covid state of emergency. The bill will now head to the Senate Appropriations Committee. — Alexander Nieves PRIVACY MATTERS — California privacy regulators on Wednesday sent a message to Congress: Don’t take away states’ powers to protect people’s personal data. Their letter, sent ahead of a Thursday House subcommittee hearing on the benefits of a national data-privacy standard, touches on a long-standing point of tension in federal privacy discussions — whether a national standard should override state laws, like California’s, or merely act as a baseline. The California Privacy Protection agency opposes H.R. 8152, the American Data Privacy and Protection Act, saying it sought to “significantly weaken the protections currently in place in the states, including safeguards Californians currently enjoy under the California Consumer Privacy Act.” — Katy Murphy   A message from the Electric Trucks Now Campaign:   AROUND CALIFORNIA — “S.F. port officials hope city can become a hub for wind turbine production,” by the San Francisco Chronicle’s Julie Johnson: The type of floating wind turbines needed to harness California’s blustery coastal conditions are rare — most turbines are affixed to the ocean floor — posing a technically challenging yet alluring opportunity for innovation and industry, according to the Port of San Francisco. Port officials are vying for state approval to establish a manufacturing hub to develop and fabricate a new kind of floating platform necessary to generate energy off California’s coast, where the steadiest wind patterns are found above deep waters. “The jobs that would be created by this industry are exactly the kinds of jobs we’ve all been hoping for,” said David Chiu, San Francisco city attorney and a former state Assembly member who has pushed the development of offshore wind power in California. — “California's downtowns were emptied by COVID: S.F. still reeling but San Diego rebounds,” by the Los Angeles Times’ Alexandra E. Petri: San Diego has bounced back to 99% of previous foot traffic levels while Los Angeles is at 65%, according to a study by the School of Cities at the University of Toronto that recorded foot traffic based on cellphone data in 62 North American cities from 2019 to November 2022. San Francisco remained at only 31% of pre-pandemic levels. Each of California’s largest downtowns has rebounded differently. San Diego was more reliant on tourism and residential development, which helped its recovery. San Francisco, on the other hand, was far more dependent on office workers and has suffered from companies shifting to remote work. The lack of commuter traffic has also devastated that downtown’s retail life. San Francisco leaders have been working to turn things around and prevent what some experts have described as a potential ‘doom loop.   GO INSIDE THE 2023 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is proud to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage, insider nuggets and unparalleled insights from the 2023 Global Conference, which will convene leaders in health, finance, politics, philanthropy and entertainment from April 30-May 3. This year’s theme, Advancing a Thriving World, will challenge and inspire attendees to lean into building an optimistic coalition capable of tackling the issues and inequities we collectively face. Don’t miss a thing — subscribe today for a front row seat.     MIXTAPE – “California poised to ban new diesel trucks,” by CalMatters’ Nadia Lopez. – “A lost California lake has roared back to life. Now some want to make it permanent,” by the San Francisco Chronicle’s Kurtis Alexander. – “Half of people injured in LAPD pursuits are bystanders, report says,” by the Los Angeles Times’ Libor Jany and James Queally. Compiled by Matthew Brown A message from the Electric Trucks Now Campaign: POLLUTION-FREE TRUCK FLEETS = CLEANER AIR FOR EVERYONE. Six out of the top 10 cities in the nation for diesel soot exposure are located in California. The excessive exposure of this pollution to communities of color is one of the clearest examples of environmental racism. A “yes” vote by CARB members will help these residents live longer, healthier lives. Supporting pollution-free truck technologies is also good for businesses and jobs. Fleets and truck owners will save money over the life of their trucks by cutting fuel and maintenance costs. Truck drivers will be given overdue labor protections to prevent exploitation through “misclassification.” And, stronger electric truck standards catalyze investment and market growth that support good clean economy jobs. CARB has the opportunity to clean up our air, save businesses money, protect drivers and create good jobs. Tell them to vote “YES” on the ACF this week!     Follow us on Twitter Katy Murphy @katymurphy POLITICO California @politicoca   Subscribe to the POLITICO Playbook family Playbook  |  Playbook PM  |  California Playbook  |  Florida Playbook  |  Illinois Playbook  |  Massachusetts Playbook  |  New Jersey Playbook  |  New York Playbook  |  Ottawa Playbook  |  Brussels Playbook  |  London Playbook View all our political and policy newsletters Follow us

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