Around The Capitol

If you don't see images in this message, click "Display Images" or the equivalent.
Having trouble viewing this email? Click here

Receive this as a forward? Get the Nooner in your e-mail box.
To be removed from The Nooner list, click here.

Become a Nooner Premium subscriber to access enhanced legislative profiles, exclusive election analysis, and downloadable back-end data. | Follow @scottlay

Advertise in The Nooner to reach over 8,000 readers

RECENT PODS:

  • Then There's California (Senate Democratic Caucus): State Senator Bill Dodd and CA Dept. of Health Director (Emeritus), Dr. Karen Smith, MD, discuss the medical, statistical and personal impact of life in California during a pandemic, and how following the advice of health care professionals during this time, can save lives. (2020-04-01)
  • Capitol Weekly Podcast (John Howard and Tim Foster): "KabaTalks" with brothers Brian and John Kabatech, who come from opposite political directions (2020-03-31)
  • Gimme Shelter (Matt Levin and Liam Dillon): Coronavirus and the housing crisis (2020-03-30)
  • Look West Podcast (Assembly Democratic Caucus: Life under quarantine in California (2020-03-30)
  • SacTown Talks (Gibran Macial): Lobbyist John Lovell (2020-03-30) [Youtube]
  • Capitol Weekly Podcast (John Howard and Tim Foster): Carmela Coyle, president of the California Hospital Association to talk about the challenges that hospitals face as they deal with this once-in-a-lifetime pandemic, “an order of potential magnitude that we just haven’t seen before.”

The Nooner for Friday, April 3, 2020, presented by SYASL Partners

  • Nooner Part I
  • Budget
  • Legislature
  • Property taxes
  • Cakeday, Farewell, and Classifieds 

¡Feliz viernes! I guess that doesn't have the same ring to it that it normally does. I used to celebrate the daily email from Google Calendar that said "You have no events scheduled today," while now it saddens me. I think I'm going to put "Shave" as a recurring event, say, every three days. On Sundays, it'll be "Wash sheets and towels." Other days, "Look outside to see if it's raining. If not, water garden."

Okay, before you dive into the news below which has little happy in it, take a moment to watch Alicia Keys' solo performance from home on "A Late Show" with Stephen Colbert last night. She wrote a song about our "Stay at Home" situation to the tune of Flo-rida's "My House" and it's brilliantly funny. If you didn't see it, you can watch it on YouTube. "Toilet pa-pa-pa-per"...

I'm was going to delay this until this afternoon, but worried you wouldn't know when to eat lunch. After all, I'm typing at 11am and Anderson Cooper is on CNN, so I'm thinking it's dinner time. Anyway, I'm splitting it in two and will be back later this afternoon with a COVID-19 update, the new PG&E wrinkle, the issue of placement of homeless into secured motel rooms in Sacramento, and likely more.

Thus, at over 3000 words, I'll wrap this up in a nice little box with a bow on it for you, eat some brunch, and then work on Part II.

I have spellchecked but can't assure you that I haven't made grammatical errors. If you see any, just email me and I'll fix them online. It's just one of those days.

STATE BUDGET: Yesterday, Governor Newsom was the bluntest yet about California's state budget situation during his daily lunchtime presser.  From my chicken scratch (who am I kidding, I type notes much faster than writing and can actually read what I type, Newsom said the phrases "We are working on a workload budget...The January Budget is no longer operable...Everything is on the table."

It's no surprise to those familiar with the budget. We're going on Thelma and Louise with the budget and have no idea how deep the canyon is and won't until the end of July. There are lots of special fund borrowing and deferral options, but I don't think Newsom wants to go there until we know what the actual revenues look like. That issue was created with the deadline shift for personal income taxes from April 15 to July 15 (to align with the feds) as well as the announcement yesterday of the option for businesses to defer sales taxes of up to $50,000 for twelve months interest- and penalty-free.

In the Bee, Sophia Bollag and Adam Ashton write:

California Gov. Gavin Newsom says he is going back to the drawing board for his budget proposal, abandoning the $222 billion plan he laid out in January as the coronavirus pandemic hammers the state’s economy.

“The January budget is no longer operable,” Newsom said during a news conference Thursday. “The world has radically changed since the January budget was proposed, so everything is on the table.”

Californians have filed 1.9 million unemployment insurance claims since March 12, he said.

Soaring unemployment, delayed tax deadlines and a floundering stock market all spell disaster for the state’s revenues, which rely heavily on taxes on the wealthy.

In the 2017 tax year, the wealthiest 1.5 percent of Californians — people earning more than $500,000 — paid 51 percent of the state’s total income tax, according to the Franchise Tax Board. Collectively, that group of taxpayers paid about $41 billion in tax.

Tax revenue from capital gains also could plummet in a recession. In 2007, California collected $10.9 billion in taxes from investment gains. That sum crashed to $2.3 billion in 2009, when the state was mired in recession.

In 2017, California collected $14.1 billion from taxes on capital gains, according to state budget documents.

That's the revenue side. They also write about the expense side (if you don't subscribe but can, you should), and in paying for COVID-19 response, we've exhausted at least half the Special Fund for Economic Uncertainties, which is the general reserve, which started at $3.1 billion this year. But, it's more complicated than that. If revenues don't come in from March-June as anticipated, they are paid from that fund barring mid-year cuts.

It's U-G-L-Y.

LEGISLATURE: It is also unclear when the Legislature will reconvene although the planned date of April 13 is not happening, per Senate President Pro Tem Toni Atkins. While the State Senate approved SCR 86 (Atkins) on March 16 before leaving, that allows for virtual committee meetings, but not floor sessions.

Over the weekend and on that Monday before the Legislature departed for nearly a month (and likely much longer), the issue was pondered about whether the Legislature could meet "virtually." After all, by then, K-12 and higher education were already moving in that direction and everybody was talking about Zoom, which I still thought was a high-speed modem.

Well, setting aside all of the Joint Rules which can generally be suspended on a two-thirds vote, we have to go to the state constitution. And there we find a couple of problems.

Article IV, Section 7(a) provides:

Each house shall choose its officers and adopt rules for its proceedings. A majority of the membership constitutes a quorum, but a smaller number may recess from day to day and compel the attendance of absent members.

The word "quorum" is ambiguous and could be challenged in court and, let's face it, there are always would-be plaintiffs against the Legislature.

However, even more problematic may be the transparency provisions in Prop. 54 (2016) that are now found in Article IV, Section 7(c), which provide:

(1) Except as provided in paragraph (3), the proceedings of each house and the committees thereof shall be open and public. The right to attend open and public proceedings includes the right of any person to record by audio or video means any and all parts of the proceedings and to broadcast or otherwise transmit them; provided that the Legislature may adopt reasonable rules pursuant to paragraph (5) regulating the placement and use of the equipment for recording or broadcasting the proceedings for the sole purpose of minimizing disruption of the proceedings. Any aggrieved party shall have standing to challenge said rules in an action for declaratory and injunctive relief, and the Legislature shall have the burden of demonstrating that the rule is reasonable.

(2) Commencing on January 1 of the second calendar year following the adoption of this paragraph, the Legislature shall also cause audiovisual recordings to be made of all proceedings subject to paragraph (1) in their entirety, shall make such recordings public through the Internet within 24 hours after the proceedings have been recessed or adjourned for the day, and shall maintain an archive of said recordings, which shall be accessible to the public through the Internet and downloadable for a period of no less than 20 years as specified by statute.

With SR 86, small Senate committees can probably pull it off with a service like Zoom and a telephone call-in number, but actually pulling it off is another thing. At the time the rule was adopted, only the initial six Bay Area counties were under a "shelter in place of residence" order. Three days later, Governor Newsom issued the statewide order.

Under the constitution's provisions for both quorum and public access and recordings of each speaker, it is not foreseeable that any floor session work can be done remotely.

The biggest issue facing the Legislature is approval of 'A' state budget of any sort that appears balanced by June 15. You may be thinking that, well, most of the "Stay at Home" orders expire at the end of April or May 3 (a Monday). That is true.

However, the "apex" of COVID-19 in terms of maximum resource use (hospital beds, ICU beds, ventilators) in California is currently projected by experts to be April 26. (Select California in the drop-down menu. Projections are ones referenced by the White House task force and are from the Institute for Health Metrics and Evaluation at the University of Washington.)

The peak, however, does not mean that we are in the clear. Dr. Deborah Birx, coordinator of the COVID-19 response for The White House, has cautioned during the briefings that the down-slope of the bell curve will be slower than the up-slope and has a long tail.

An increasing number of sources who don't want to be cited I talk to in both state and local government are saying that they fully expect "Stay at Home" in California to extend through the month of May, usually an intensely busy time in the Legislature. Some are saying June.

However, even if the "Stay at Home" order is extended through June, the Legislature would clearly have to come in by June 15 to approve some kind of budget. Well, they are not required to under Article IV, Section 12(h), but they'd be forfeiting their salaries if they do not. Unlike the old days, they can't receive retroactive compensation (including per diem) between midnight June 15 through the time a budget bill is passed (doesn't have to be signed by the governor, but it will be worked out in advance and signed).

So, they'll come in. I know the question, when retail workers have been laid off or furloughed amass, why shouldn't legislators have to line up with them at the unemployment office? Well, legislators are not receiving per diem payments right now when they are not having floor sessions and that's $201/day. They have been out of session for 18 days, which is $3,618 so far. Most legislators continue to receive a salary of $114,877, which sounds like a lot for a laid off or furloughed folks. However, most have signed leases for a Sacramento residence relying on that per diem while also required to maintain a residence in their district (unlike Members of Congress).

Given what the governor said during the presser yesterday as discussed in the prior item and given the fact that we won't know either current year (2019-20) or budget year (2020-21) revenues until after June 15, I would guess that the Legislature convenes at the beginning of June for a short period of time (a day or a couple) to approve what is akin to a federal continuing resolution (extending appropriations at the 2019-20 level) plus additional funds necessary to respond to the COVID-19 crisis and wait until after the July 15 deadline to figure things out.

The complications with the tax deadline shift to July 15 are numerous and not just about how much cash has come in. Unlike the federal government which started the shift, July 15 is in a different fiscal year for the state. (The federal fiscal year begins October 1.)

For good or bad under your opinion, we have lots of legal formulas written in to law that are calculated based on fiscal years. The most notable one is Proposition 98, the minimum funding guarantee for K-12 and community colleges, which has three calculations ("tests") and I'm not sure even those of us who have worked on it for years can wrap our head around it right now.

Given the financial uncertainties and the legal ones they create, I can't imagine that a real budget discussion happens until August. While the Legislature is scheduled to leave August 31 this year, the governor can call a special session(s) that keep them in session beyond that through the sine die end of session on November 30.

Basically, if you're a day-to-day advocate or staffer, don't make non-refundable vacation plans for September this year.

PROPERTY TAX: Also in the presser, Governor Newsom was asked about whether the April 10 property tax deadline would be delayed as many property owners fear the ability to make the payment. He responded that his Administration has been talking to local government leaders about the issue and they don't want a delay unless the state fronts the money. Obviously, that bean counters are concerned about fronting cash because, while it doesn't receive property tax revenue, the delay of the personal income tax from April 15 to July 15 creates a huge cash quandary for the state.

Believe it or not, I feel the pain of local government and this issue in particular. Of my 20 years with the Community College League, I spent lots of time on property tax issues--from cash flow to ERAF (if you don't know that acronym, it's not important, and I don't have time to explain it on this harried morning).

The League operated the borrowing authority for the community colleges to leverage a collection of districts to achieve a better cash-flow borrowing rate for tax and revenue anticipation notes (TRANs) that were just part of normal fiscal years for most of our districts. The same is true for K-12, cities, counties, and special districts -- any local government that relies on property tax revenue that arrives in the months of December and April. For education, the state pays general fund according to a schedule, but for local government, April and December are the big months.

So, agencies borrow cash on the private markets and then repay them in a schedule recognizing these big revenue months. In order to borrow that money, the agencies have to provide elaborate cash flow schedules for the big market credit analysts to assess. Before I was CEO, I was the budget lobbyist, so I was brought it to assess the likelihood of state General Fund would provide for community colleges. Before Proposition 25 (2010), this often included a professional estimate of what the State Budget would include for community colleges months before it was actually approved by the Legislature and signed by the governor. In other words, I had to provide a wild-ass guess to Wall Street credit analysts and possible bond purchasers.

Essentially, many local governments need the April 10 property tax revenue to make bond payments (think of a mortgage balloon). The state is fine delaying the personal income tax deadline to July 15, but that doesn't work for many local agencies.

Some property owners undoubtedly will be unable to pay their April 10 property tax payment because they have been furloughed or laid off. The process of a tax lien that leads to sale is a long process. What can be thought about is forgiving the interest and penalties assessed on late April 10 payments, which I believe is in statute. A large number of property tax payments are made through escrow accounts along with insurance and will be automatically paid.

In other words, I think there is an opportunity to address this issue to the satisfaction of both those who owe taxes and local government short of postponing the April 10 date (provided for in Revenue and Taxation Code §2618).

BALLOT UPDATE: No counties submitted count updates yesterday. The delayed deadline for counties to report is 4/21.

  • Ballots counted: 9,605,197
  • Ballots counted are up +12.4% from 2016's 8,548,301
  • Turnout in 2016: 8,548,301 of 19,023,417 registered 15 days out (46.49%)
  • Turnout so far in 2020: 9,605,197 of 20,660,465 registered 15 days out (46.40%)  

No changes in state legislative or congressional races are expected, so I'll start doing the strikethroughs on the districts pages and working on the November general analyses for ATCpro subscribers. Because of the stupid way I wrote the script, I need to tackle all 154 districts before the strikethroughs are posted. I'm about halfway through.

cakeday, farewell, and classifieds after the jump...

Probolsky Research

CAKEDAY: We have no cakedays today (that I know of)!

FAREWELL: Bill Withers (1938-2020)

I usually only include Capitol-related focus in farewells. This one, however, hits me hard this morning. In 1987, I spent six months at the National Jewish Center for Immunology and Respiratory Medicine. There were tough days including time in ICU (something we hear too much about these days).

Anyway, that summer, my peers experiencing inpatient stay and I would constantly join together to sing "Lean on Me." Of course, we were introduced to the song not by the amazing Bill Withers, but rather Club Nouveau's pop version, which had just won the Grammy for Best R&B Song. At the time, I didn't know that it was written and performed first by Withers, that Club Nouveau was from Sacramento, or that I would end up spending my career in California's Capitol.

Bill Withers's version | Club Nouveau's version

As most of us are home for an undetermined period of time, the song is more appropriate than ever. Reach out to your friends and family during these times. It has never been easier to remain connected, even if not in person.

Sometimes in our lives we all have pain
We all have sorrow
But if we are wise
We know that there's always tomorrow
 
Lean on me, when you're not strong
And I'll be your friend
I'll help you carry on
For it won't be long
'Til I'm gonna need
Somebody to lean on
 
Please swallow your pride
If I have things you need to borrow
For no one can fill those of your needs
That you won't let show
 
You just call on me brother, when you need a hand
We all need somebody to lean on
I just might have a problem that you'll understand
We all need somebody to lean on
 
Lean on me, when you're not strong
And I'll be your friend
I'll help you carry on
For it won't be long
'Til I'm gonna need
Somebody to lean on
 
You just call on me brother, when you need a hand
We all need somebody to lean on
I just might have a problem that you'll understand
We all need somebody to lean on
 
If there is a load you have to bear
That you can't carry
I'm right up the road
I'll share your load
 
If you just call me (call me)
If you need a friend (call me) call me uh huh(call me) if you need a friend (call me)
If you ever need a friend (call me)
Call me (call me) call me (call me) call me
(Call me) call me (call me) if you need a friend
(Call me) call me (call me) call me (call me) call me (call me) call me (call me)

Thank you Bill, we leaned on your words in 1987 in Denver and now again from our homes around the world.

 

Classifieds

Add your classified now both in The Nooner and online for $50/week or $150/month by emailing scottlay@gmail.com, with a headline, a summary of up to 200 words, and what you'd like the end date to be. You can attach a PDF or provide a link for a bigger job description/info to apply. [Other advertising options]


Southern California Democratic Member of Congress seeks District Director

Southern California Democratic Member of Congress seeks District Director to oversee all operations of the district offices, including the development and implementation of policy objectives, strategies and operating plans, as well as direct all activities and staff of the district offices. This individual also serves as the primary liaison between the Congresswoman and constituents and special interest groups in the district; and, acts as an advisor for the Congresswoman on local concerns, district issues and politics, and other developments throughout the region.

Candidates should have a minimum of 3-5 years of management experience, a strong ability to provide necessary organization, leadership and motivation to manage a Congressional office; excellent oral and written communication skills; and thorough knowledge of the legislative process. Candidates should submit a cover letter, resume, and appropriate writing samples to CA26Resumes@gmail.com with just “District Director” in the subject line.

The McGeorge School of Law, University of the Pacific

In addition to a well-respected JD, the McGeorge School of Law, University of the Pacific, offers the Master of Public Administration (MPA) and the Master of Public Policy (MPP) degrees. Both full-time students and those earning a professional degree while working succeed in the program. Our focus on the interconnections of law, policy, management, and leadership provides unique competencies for your success. Students gain a foundation in statutory interpretation and regulatory processes critical to governance. Learn at a beautiful campus three miles from the State Capitol:
go.mcgeorge.edu/publicpolicy or publicpolicy@pacific.edu.

Political Data Inc.
For 30 Years PDI has been California’s premier data vendor. Now, you can get live online trainings on the newest PDI software every week: