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THE Nooner for January 11, 2018

 

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Upward Mobility at Cal State LA

 

DISTRICT UPDATES

  • GOVadded Gloria La Riva (PF)
  • LG: added Lydia Ortega (R)
  • LG: added James Shepardson (D)
  • INS: added teacher/librarian Nathalie Hrizi (PF)
  • BOE4 (SoCal): removed Board of Equalization member Diane Harkey (R)
  • CA49 (Carlsbad): moved from Leans Democratic to Toss-up
  • CA49 (Carlsbad): added Assemblymember Rocky Chávez (R)
  • CA49 (Carlsbad): added Board of Equalization member Diane Harkey (R)
  • AD76 (Oceanside): removed Assemblymember Rocky Chávez (R)

 

QUOTE DU JOUR: Senator Andy Vidak: “Semper in excretia sumus solim profundum variat (We're always in the manure; only the depth varies). We’ll see what actually is grown six months from all of today’s pronouncements and press releases.”

Well, that was a heckuva day yesterday. Let's start on the other big topic and then we'll get to elections and some budget bites. 

HARASSMENT

MENDOZA: Remember this speech (at 1:09:02) about a "leave of absence" by Senator Tony Mendoza pending an investigation of harassment and retaliation? 

You've been had and the Senate's liability if the investigation turns out wrong just went up significantly.

Alexei Koseff and Taryn Luna report in the Bee:

Despite taking a leave of absence while under investigation for sexual harassment, Sen. Tony Mendoza returned this week to his Capitol office and attended a Sacramento event hosted by an interest group.

The Artesia Democrat said he was in town to “confer with legal counsel.” But he also met with his Capitol staff and a proponent of one his bills on Monday to review his legislative agenda. On Tuesday evening, he attended a reception at the Citizen Hotel for the California Contract Cities Association.

In a statement, spokesman Saeed Ali said Mendoza “is faithfully observing the previously agreed upon conditions regarding his work as a Senator on Leave.”

Saeed is a longtime friend, but we need to see the conditions to determine the veracity of this. The article continues:

A spokesman for [Pro Tem Kevin] De León said his office asked Mendoza on Tuesday to return to Southern California. His office said the leave of absence includes all Capitol activities, but it is unclear if the Senate can prohibit Mendoza from attending events outside the Capitol.

. . . 

“Leave means leave,” [Assemblywoman Cristina] Garcia said in a statement. “Mr. Mendoza continues to show his lack of willingness to adhere to the rules he’s been told to abide by in the State Legislature.”

She added that Mendoza’s “actions continue to add insult to injury. This community must take this issue seriously. California Contract Cities should have asked him to leave their event and others should follow suit until this matter is resolved. This shows further how pervasive this culture is and how much work we must do.”

Now, I'm a huge due process guy and accept a paid leave of absence during an investigation. Mendoza has denied any "inappropriate bodily contact." As I wrote before, this is a fundamental misstatement of the law on sexual harassment. 

As a boss, inviting an employee to share a hotel room--if proved true--is highly inappropriate if the accuser makes a legitimate case that there was fear of, or actual, retaliation for the denial of the invitation. That's just as illegal as pinching an employee's ass. 

Anyway, the institution is the employer and is liable. I applaud that de León's office asked him to go home. The Senate is responsible for the employees in Senator Mendoza's office. In particular, during an investigation, there must be an absolute separation of potential witnesses or victims. 

By the way, California readers/taxpayers--you are the institution (and thus the employer) and you're on the hook for liability.

WILKE FLEURY: Our friend Malcolm Maclachlan, formerly of Capitol Weekly, for the legal publication Daily Journal tweets:

"Nonprofit affiliated with CA Legislative Women's Caucus cuts ties with Wilke Fleury law firm sued by woman who said she was fired for signing #wesaidenough letter. Note story paywalled. "

The client is Women in California Leadership, a 501(c)(3) run by the caucus. They were a political reporting, not a lobbying client, which is significant as it crosses over into the firm's core legal practice. The firm also previously ran the reporting for a similar 501(c)(3) serving the Latino Caucus. Both nonprofits solicit money from legislators, who pay for it from campaign funds.

This follows the termination of Latina lobbyist Alicia Lewis, a former legislative chief of staff and lobbyist for the League of California Cities, following her involvement with the letter. Allegedly, there were no specific deficiencies cited at the time of her firing.

Watch other clients follow suit--particularly the lobbying clients, such as the American Association of University Women, California (AAUW). Paraphrasing a respected Sacramento lawyer in response to the situation -- "Great lawyers, but the firm as we know it is dead." 

As I wrote before, the firm has twelve male partners (including two named in December), and only one of which is not white.

The firm earned over $837,000 in lobbying payments in the first three quarters of 2017 (fourth quarter report is due by January 31), although many of these clients likely paid more for non-lobbying professional services, which is the bulk of the firm's revenue. AAUW accounted for $44,643 of this.

My bet at this point: the firm gets out of the government relations business, which is a relatively small part of its overall business. Other firms will pick up its lobbying clients, which will be fleeing anyway. The big question is whether the well known name Wilke Fleury survives, or if another firm picks up a post-government relations Wilke Fleury.

More likely if the house of cards falls is that practice group areas are picked off by other Sacramento firms looking to beef up targeted areas. We've seen this several times in the Sacramento legal market. 

POLITICS

CA48 (Huntington Beach): Rep. Dana Rohrabacher posts:

I am unequivocally running for re-election and confident that my views reflect the values and the needs of my constituents here in Orange County.  I’ve never run away from a fight over things I believe and I’m not about to start now. I have faith in myself and I have faith in our voters.  I will continue being a strong advocate for liberty, a strong economy and a safe America.  

Of course, Darrell Issa essentially was telling his staff the same thing late last week. I believe Rohrabacher is running for re-election.

In the current political environment, Rohrabacher staying is good news for Democrats hoping to take the seat. A fresh GOP face would provide Democrats a much more difficult challenge, particularly a female face.

CA49 (Carlsbad): It didn't take long after Issa's retirement announcement for Assemblymember Rocky Chávez and Board of Equalization member Diane Harkey to announce that they were in the race to succeed Issa. Chávez comes from the southern, more moderate, part of the district while Harkey hails from the northern, whiter and wealthier part of the district. Of course, Harkey's BOE seat currently covers the entire CA49.

As of September 30, Harkey had $237,914 on hand in her state account, while Chávez had $84,297. However, only contributions totaling $5,400 or under ($2,700 each for primary and general elections) can be transferred to a federal congressional account, and they can't include corporate contributions. This significantly reduces those amounts.

San Diego Rostra's Mason Herron looks at the overlaps of CA49.

Harkey has to be seen as the GOP favorite. Now that the Issa personality is out of the way and with a likely female GOP candidate in a district where Neel Kashkari defeated Jerry Brown by 10 points in 2014 and a 6.7% GOP voter registration advantage, CA49 has to be seen as a "toss-up," even in a Democratic wave year.

The Trump Administration's move on offshore oil drilling, including exempting Florida, may have been the nail in the coffin for Issa and could be for Rohrabacher. Although a majority of Republicans support offshore oil drilling per PPIC polling, this are statewide numbers. Ask south coast residents with ocean front views who lose housing value how they feel, and it becomes a big issus. It will be interesting to see how Harkey, Chávez and Rohrabacher handle this issue.

From what I hear from the Hill, Issa and Rohrabacher were surprised by the announcement of new leases, and not particularly welcome during a midterm election year.

Of course, this all leaders to a chain reaction meaning we have open BOE4 and AD76 districts on the June 5 ballot. I wouldn't be surprised if former assemblymember and OC GOP chair Scott Baugh runs for Board of Equalization since Rohrabacher is running for re-election, and he's sitting on $545,000. And, there's former San Diego councilmember Carl DeMaio who might try to pair up a run for BOE4 with his gas tax repeal. 

 

BUDGET

Lots of good articles today across the papers. I've spent too much time writing and researching this morning up to my deadline. Visit my friend Jack Kavanaugh at Rough & Tumble for a full rundown.

I provided a memo yesterday to paid Nooner subscribers. Here are the introductory grafs:

Governor Brown introduced his eighth and final proposed budget this morning and demonstrated his values, most notably fiscal prudence to prepare for a future recession and “subsidiarity” – flexibility to local agencies rather than prescriptive budget rules.

The clear winners are K-12 schools and the California Community Colleges, which are receiving what advocates for other interests would likely characterize as a windfall, due to a $3.75 billion increase ($651 million for revised 2017-18 guarantee and a $3.1 billion guarantee for 2018-19 billion), with most of the money as discretionary funding. This totals to a roughly 5% increase over the enacted 2017-18 budget, of which about 4.1% is of ongoing funds. 

(Prior-year adjustments generally provide two things—one time funds from the prior-year adjustment and ongoing funds from the increase to the base level.)

The governor also proposes a $4.6 billion spending plan from the “gas tax” and vehicle license fee revenue, clearly setting the argument for rejecting the proposed November ballot measure to repeal the revenue increases.

As always, this is the opening volley. Democratic legislators will argue that the additional funding to the Rainy Day fund should be split with non-Prop. 98 program increases. Republicans likely will argue for a similar strategy, except to use the funding for transportation projects in lieu of the gas tax and VLF increases.

This is a quick-and-dirty summary and may be revised.

Throughout this quick summary, many numbers are rounded and may not total. 

TOP LINE

    • General Fund 2018-19 revenues: $129.8 billion

The “Big 3” revenue sources:

    • Personal income tax (69.3%): $93.6 billion (increase of $2.587 billion over revised 2017-18)
    • Sales and Use Tax (19.4%): $26,151 billion (increase of $426 million over revised 2017-18)
    • Corporation Tax (8.3%): 11,224 billion (decrease of $24 million over revised 2017-18)

General fund carry-over of 2017-18 revenues: $5.4 billion

 

For true budget geeks, the most important pages of the budget summary are Appendices 11 and 12, which show the projected monthly revenues by source for the remainder of 2017-18 and the 2018-19 fiscal year. When we look at the monthly cash reports from the Department Finance, we match them to these documents and you can tell whether the budget estimates are correct and whether the Legislature will have more or less money to spend in developing the final budget.

 

Probolsky Research

 

PENSIONS: The Bay Area News Group's Dan Borenstein writes that the Brown Administration was hit with an adverse pension appeals court decision over pension "spiking" last week, but it's likely not the final word as two other cases are pending before the California Supreme Court.

 

#CAKEDAY: Happy birthday to Alex Gallardo-Rooker, Bernie Rhinerson, and Aishia Wahab!

 

 

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TOP HEADLINES ON AROUNDTHECAPITOL.COM AS OF 12:00PM
Governor Brown's Proposed Budget Has Only Modest Boost For Health Care | Kpbs
Kenny Goldberg @
kpbs.org
Despite a projected $6.1 billion surplus, Governor Jerry Brown's proposed budget calls for only a modest increase in heath care spending.

California Lawmakers Have A $190.3-billion State Budget Plan To Consider. Here's Some Of What It Would Pay For
John Myers @
latimes.com
Gov. Jerry Brown unveiled a $190.3 billion spending plan on Jan. 10. Here are some of its more important components.

Senator Scott Wilk responds to Governor Brown's proposed budget
wilk.cssrc.us
I thank Governor Brown for his commitment to building a strong budget reserve and will work with him to protect it from raids by...

Jerry Brown Wants Florida Off-shore Oil Drilling Exemption | The Sacramento Bee
Adam Ashton And Angela Hart @
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The go-to source for news on California policy and politics

Downplaying The Threat Of Repeal, Brown Offers Spending Plan For $4.6 Billion In New Gas Taxes And Fees
Patrick McGreevy @
latimes.com
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Trump Targets Feinstein On Twitter | The Sacramento Bee
Emily Cadei @
sacbee.com
The go-to source for news on California policy and politics

Senator Janet Nguyen Issues Statement in Response to Governor Brown's 2018-2019 Budget Proposal
nguyen.cssrc.us
s intent to allocate $15.5 billion over 5 years for the High Speed Rail project opens the door to more wasteful spending of taxpayer dollars on a project that is...

After Oroville Disclosures, Embattled California Water Agency Names New Director | The Sacramento Bee
Dale Kasler @
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By Dale Kasler

Department Of Water Resources Chief Ousted After Report Blames Oroville Dam Crisis On Lax Safety Culture
Ralph Vartabedian @
latimes.com
Grant Davis, chief of the state's Department of Water Resources, is ousted just days after an investigation report found the agency has a flawed safety culture.

New marijuana crackdown policy could become election-year headache for GOP

Attorney General Jeff Sessions’s push for more enforcement of marijuana laws has opened divisions within his own party.

Senator Andy Vidak's Statement on Governor Brown's Proposed Budget
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ll see what actually is grown six months from all of...

Senator Mike Morrell Responds to Governor Brown's Proposed 2018-19 State Budget
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the focus should be on making sure these...

Senate Republican Leader Bates and Senator Nielsen Respond to Governor's 2018-19 Budget Proposal
cssrc.us
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GOP Assemblyman Rocky Chavez Announces He'll Run For Darrell Issa's U.S. House Seat
latimes.com
Share this update

Senate Republicans Respond to Governor's 2018-19 Budget Proposal
cssrc.us
Members of the California State Senate Republican Caucus have issued the following statements in response to the

Senator Jeff Stone Statement on Governor's Proposed Budget
stone.cssrc.us
As usual, the Governor gave a good speech this morning. He talked about fiscal restraint, paying down debt and...

After Two GOP Retirement Announcements This Week, Rep. Dana Rohrabacher Says: 'you Can Count On Me'
latimes.com
With the announcements of two congressional retirements in less than a week, many California politicos are wondering who could be next ...

Grand Jury Subpoena Issued In Rep. Duncan Hunter Criminal Investigation - The San Diego Union-tribune
Morgan Cook @
sandiegouniontribune.com
Hunter's contributions are dominated by defense contractors and transportation companies whose businesses are affected by the committees on which he serves.

Stockton City Council Votes To Go Ahead With Advance Peace Program - Capradio.org
Rich Ibarra @
capradio.org
Capital Public Radio, Inc.7055 Folsom BoulevardSacramento, CA 95826

Proposal For $9 Tolls On Bay Bridge, $8 On Other Bridges Gets Big Boost - San Francisco Chronicle
sfchronicle.com
A measure to raise Bay Area bridge tolls to $9 on the Bay Bridge and $8 on others over several years took a major step forward Wednesday when a key transportation committee unanimously recommended putting it before voters in June.

Treasury Inspector General Finds No Political Meddling in Tax Analysis
ALAN RAPPEPORT @

The Treasury Department’s failure to provide an economic analysis of its $1.5 trillion tax plan had prompted an inquiry into whether political meddling played a part.