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Happy Humpday! Actually, it's a crappy day, as the great spice and tea shop across the street from the Capitol, The Allspicery, had its door smashed and register crushed last night (Instagram | Facebook). I don't know how much cash was taken, although dark-humored Facebook posters noted that the jar of saffron was probably worth more than the cash in the register. The shop, which celebrated its third anniversary two weeks ago, is closed until further notice.
We just can't have good things.
I'll let you know when they re-open and I hope Capitol-area Noonerites will join in making it their best sales time ever. They are the type of young, creative, independent small business owners we need to support to make the Capitol area a better place to work.
FIRST 100: Today marks the first full 100 days Gavin Newsom has been in office. I'm recording a news segment for Spectrum News as many of you are reading this, and I will give him a B+. After undergrad, it would be an A-, but after law school, hardly anybody gets an A. B+ would be the highest I'd give among the first 100 days of the four governors (Davis, Schwarzenegger, Brown, and Newsom) sworn in during my time in Sacramento.
The high points are his strong command of issues and staffing. He has shown a depth of knowledge that few of us expected. Previous governors have given prepared remarks and handed the mic to staff. That's not what we've seen with Newsom. On budget, wildfires, and PG&E, he has answered reporters' questions with comprehensive knowledge without notes. He has hired a diverse staff of knowledgable folks who are willing to challenge his assumptions and expects them to do so. He also tapped new Lieutenant Governor Eleni Kounalakis, a former ambassador to Hungary, as the lead on California's international economic relationships, creating the first relationship between a governor and #2 modern history. He knows how much the position has been underutilized and is trying to change it.
Areas of criticism include the reshaping of the high-speed rail plan which became vague in the days after the initial announcement that seemed simple. The criticism of the El Salvador trip to investigate the causes of immigration is well placed, although the triage funds for community-based organizations supporting migrants at the border partially offset the trip that seemed more like a tweak of the President.
On housing, he has been bold. I consider that neither a high point nor a criticism. While initially proposing tying gas taxes nearly immediately to local governments that meet housing element expectations, he now has it to begin in 2023, and proposing additional state resources to help communities plan. I give it a neutral as I think it's really a way of getting reluctant communities moving. In some cases, this may be the necessary carrot to get local voters to undo some of the handcuffs they have put on local government officials.
The January budget was smartly crafted for a governor who made a lot of promises on the campaign trail. He proposes a lot of one-time spending, reading the tea leaves that he will likely face a deficit during the next eight years. But, he included enough sweeteners to prod liberal legislators on board. The biggest criticism is his support for a water fee/tax to clean up drinking water in communities with non-potable H2O. There is no California water proposal that doesn't have significant opposition.
All this said, the last time 100 days were truly meaningful was 1933 and there was more opposition to FDR's early leadership than there have been to Newsom's. The next 100 days are more important--getting through the budget's May Revision and working with the Legislature to bring a final budget to fruition. The 100 days after that will be about the flow of controversial bills after the Legislature returns from summer recess and works from August 12 until September 13. There are a lot of big ideas in the mix and Governor Newsom will play a major role using his relationship with Pro Tem Atkins and Speaker Rendon to control what ends up on his desk for signature or veto.
Thank you to the advertisers and subscribers who are allowing me the time to dive more deeply into these issues. I like providing original content to you, particularly when Noonerific readers ask me to look into something more deeply. Sorry for those that haven't received their Nooner mugs as I've been spending more time in research than time in the Capitol lately.
BUDGET WATCH: As we've talked about many times before, April is one of the biggest months for state revenues, expected to account for 15.29% of the current year's projected revenue. January and June are also big because of quarterly filings, particularly of sales and corporate taxes. January has passed and June numbers come in too late for the June 15 budget deadline.
For April, this week is the biggest because, well you know, that thing on Monday. Through March, year-to-date revenues were $2.218 billion below projections due to a January shortfall in Personal Income Tax (PIT) revenues. Those projections were built on top of a surplus of year-to-date revenues of over $2 billion at the end of November at the time budget-writers were making projections for the assumptions included in the proposed budget for 2019-20, which begins July 1. Looking at those numbers, the PIT assumptions for the "current year" (2018-2019) were increased by $3.56 billion, and the "budget year" (2019-20) projections were increased accordingly. Those assumptions thus were a big part of the one-time (from current year) and ongoing (from budget year) proposals in the January budget.
Because January was so sluggish, to meet the annual projections, we need a big April to be on track for the projections included in the Governor's January Budget. Otherwise, the May Revision of the Governor's Proposed Budget will need to be pared back. To Governor Newsom's credit, he was quite prudent in January with major deposits in the state's reserves and one-time pay-downs of the state's unfunded pension liabilities. So, if revenues don't materialize as projected in January, it likely won't be the bloodbath we've seen in some previous years.
Anyway, this situation has we budget geeks closely watching the daily collection reports from the Franchise Tax Board of the collections of PIT, which accounts for 78.12% of the month's projected revenues.
The numbers are particularly volatile this year because of the low-balling of withholding tables under the new federal tax plan, which is also used to calculate state personal income tax plan. As many of you know, the tables are withholding too little for most salary employees and refunds are lower or taxpayers used to a refund needed to write a check. That's not a criticism of the tax plan per se, although I have them. An ideal withholding table would have the average taxpayer receiving next to nothing back or paying only a little. Just year has just been plain confusing for taxpayers, accountants, and budget analysts alike.
The good news is that through yesterday's reports, total collections (payments, refunds, and withholding) are about $300 million (~3.9%) above forecast.
In ordinary Aprils, collections will drop off significantly after yesterday's report as most personal income tax payments and refunds are made electronically. However, again, this is a year of uncertainty. Taxpayers love to claim refunds electronically, so the vast majority of those have been paid out by the state and are included in the above numbers. However, to the extent taxpayers owe, they might be more likely to have returned to the traditional method of writing checks.
Optimists watching the daily collections are looking for the next few days to come in above projections, as checks take longer for the state to receive and process. Another factor for the remainder of the year is that many taxpayers are increasing their withholding after having the pain of writing a check for the first time in many years. That could increase PIT collections in May and June.
In summary, we're still about $1.9 billion short in Personal Income Tax collections for the current year, but it's too early to fret. Even if April doesn't fill the January hole, there's a significant chance that by the time the year is settled, it very well could hit the target. The only challenge will be crafting a May Revision for the Legislature's consideration that will know where the numbers land when the dust settles.
After the jumpity jump jump, can Congressmember Eric Swalwell run for both President and re-election?
DOUBLE VISION? I haven't written about it here but a smart reader asked the question yesterday--can Congressmember Eric Swalwell (D-Livermore) run for both President and re-election to the House in the March 4, 2020 primary election? The answer is likely yes.
Unlike the statutory prohibitions on holding incompatible offices for other elected and appointed officials found in in Gov't Code §1099, the Legislature determines the qualifications of its members other than explicit limits in the California Constitution. It is unlikely that California Constitution Art. IV, Section 5(f) applies to the Legislature barring an explicit inclusion of the word Legislature in that statute, which the Legislature itself wrote.
The last case in the Legislature that I recall was in 1994, when Dick Mountjoy (R) ran for re-election to the Assembly and also for a State Senate seat. However, the Senate seat was a special election, so the primary elections were not concurrent.
This brings us back to one of the most dramatic moments in modern California history, which took an explicit vote of the Legislature to kick Mountjoy out of the Assembly to assume the State Senate seat to create a path for the Democrats to maintain control of the Legislature for another year through a series of machinations. I can't do justice with in this space. If you have James Richardson's book Willie Brown: A Biography on your bookshelf, good for you. It's one of the most important books on our Sofa Degree list. It's Spring Recess, read the pages beginning on 376 for perhaps the most dramatic legislative story in many of our political lifetimes.
Again, that was a special election situation that landed Mountjoy in two legislative offices in December 1994 after the previous month's elections. I don't know of any other way that someone couldn't be prohibited from filing in concurrent Assembly and State Senate primary elections. Nevertheless, in Swalwell's case, it likely is irrelevant.
Assuming he is still in the presidential race, when Congressmember Swalwell casts his ballot for the March 4, 2020 primary election, he is not voting for himself on the ballot. Rather, he is voting for delegates pledged to a candidate who will decide who will be the party's nominee at the Democratic National Convention. That's what we all will be doing for respective party conventions. In the end many or--if the Democratic field stays even partially as broad as it is now--a majority of, delegates will be casting the ultimate deciding vote on the nominee for a candidate to whom they were not originally pledged.
Even in the General Election, voters are not voting for a person, they are voting for electors to the Electoral College.
After thinking about it overnight, I believe strongly that Swalwell can file for both re-election to CA15 and for President of the United States by the December 6 deadline.
Nevertheless, that's not political advice and it is a risky move. In ordinary circumstances, Swalwell would win easy re-election to his congressional district. However, his presidential bid is based on being a "favorite son" of Iowa, where he was born, with a central issue of gun control. Gun control is popular it parts of the district, but his main message, where he spends his time, and the breadth of the Democratic field allows others to step up to attend events in the district and talk about district-specific issues in a manner in which Swalwell won't be doing on his frequent television appearances.
Only one candidate has stepped up as others are looking at it--new Hayward councilmember Aisha Wahab (D). Wahab, born in New York City and raised in the Bay Area, has a compelling story as a businesswoman who was placed in foster care along with her sister after her parents died. Wahab will be making the argument of becoming the first Afghan-American in Congress in a district that will almost certainly be majority-minority citizen voting-age population after the 2020 Census (who knows after redistricting). She will be 33 and is a woman of color looking at a primary that will likely see energized turnout among traditionally low-propensity voters since likely over 70% of California voters will be voting at the same time as the caucuses in Iowa and three other states vote before Super Tuesday.
While Alameda is not expected to be a Voters Choice Act county in 2020, 72.85% of Alameda County (89% of CA15) voters cast their votes by mail last November. Contra Costa, the other part, was 68.8%, and bother percentages will likely be higher for the primary. These voters will be sorting their mail on February 3 and finding their ballots--on the day that newspapers are reporting the results from the previous night's Iowa caucuses. A week later is the New Hampshire primary.
Swalwell can run for both in the March 4 primary, but as I said, it is risky, particularly if Wahab is on the ballot. And if Swalwell decides to go for both offices, he knows of that primary risk. Remember, he was elected to Congress in 2012 by taking on the Establishment and unseating fellow Democrat Pete Stark.
PG&E, #CAKEDAY and more after the jump!
WHO WANTS TO BE A MILLIONAIRE? Okay, Bill Johnson is already a millionaire, having just completed a stint as the head of the Tennessee Valley Authority.
The new PG&E boss will receive $6 million in cash and stock awards annually according to a fililng yesterday with the Security and Exchange Commission, as well as a one-time $3 million transition payment, which is subject to a claw-back if he leaves or terminated with cause within the first twelve months of employment, which begins May 1. He will also receive "standard relocation expenses" pursuant to company policies and stock options.
In the Bee, Dale Kasler reports:
"Mindy Spatt of San Francisco consumer advocate The Utility Reform Network called Johnson’s compensation 'outrageous' in light of PG&E’s difficulties in paying wildfire victims.
PG&E spokesman Andrew Castagnola said the utility doesn’t plan to pay Johnson with ratepayer dollars."
NOT HORSING AROUND: Los Angeles District Attorney Jackie Lacey has formed a task force to investigate the horse deaths at Santa Anita, reports Hannah Fry for the LAT. Fry writes "
The task force will include deputy district attorneys and law enforcement officials within the D.A.’s office whose goal will be to determine “whether unlawful conduct or conditions affected the welfare and safety of horses” at the park, Lacey said."
#CAKEDAY: Happy birthday to SF Supervisor Matt Haney and Vivek Viswanathan!
CONGRATULATIONS! Assemblymember Marc Berman and Aimee Gildea were married over the weekend in St. Helena.
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