Trump’s tariffs may hurt CA’s budget

With a state budget that’s partially dependent on the income tax generated from stocks, Gov. Gavin Newsom’s administration is not surprised that California’s budget could take a hit from the tariffs imposed by President Donald Trump. Here’s more from CalMatters Capitol reporter Alexei Koseff: 

H.D. Palmer, the spokesperson for Newsom’s Department of Finance, said the governor flagged all the way back in his January budget proposal that broad-based tariffs were the biggest potential risk to California’s economic forecast.

“Now that they’re in place, we’ll incorporate what we believe to be their effect,” Palmer said, though state officials are still consulting with outside experts, such as the UCLA Anderson Forecast, as they wait to see whether the Trump administration sticks with the tariffs and how other countries respond.

The tumbling stock market could take a significant bite out of the state budget next year, because California receives a disproportionate amount of income tax revenue from capital gains earned by the wealthiest taxpayers. That’s especially true with the steep valuation drops this week for major tech companies, many of which are headquartered in California.

The state, whose largest trading partner is China, is also worried about how the tariffs could weaken California’s large manufacturing and agriculture sectors, as well as tourism and major ports in Los Angeles, Long Beach and Oakland.

Palmer said the Department of Finance will finalize its economic forecast by the end of the month as the governor develops a revised budget proposal for May. Finance officials are modeling different scenarios, some of which would require spending cuts, but Palmer declined to share what programs could face reductions if the economy turns south.

• Palmer: “I don’t want to get into that game. That can just kind of inflame concerns that at the end of the day might not be warranted.”

From CalMatters higher education reporter Mikhail Zinshteyn:

Several dozen international students and alumni in California had their visas revoked in the latest crackdown on higher education by the Trump administration.

Students at numerous University of California campuses, including UC Berkeley, UC Davis, UCLA and UC San Diego, have been affected in recent days, and so have six students and alumni from Stanford University, according to several news outlets. At least one student was deported.

UC Davis’ chancellor wrote on Saturday that the “federal government has not explained the reasons behind these terminations.”

Media reports initially said eight or nine international students at UCLA had their visas revoked. But by Sunday morning, a statement from the campus chancellor indicated that the federal Student and Exchange Visitor Program had terminated the visa status of six current students and six former students who were part of an authorized worker program for recent international graduates.

• Julio Frenk, UCLA’s chancellor, in the letter: “The termination notices indicate that all terminations were due to violations of the terms of the individuals’ visa programs. At this time, UCLA is not aware of any federal law enforcement activity on campus related to these terminations.”

How the UC system will respond is an open question. Last Friday the system’s central office released a statement that the UC is “committed to doing what we can to support all members of our community as they exercise their rights under the law.” The system statement then added that the UC “will continue to follow all applicable state and federal laws.”

The Legislature failed five previous times since 2018 to pass a bill banning cat declawing surgery. Now, Assemblymember Alex Lee is taking another swipe at it.

As CalMatters’ Ryan Sabalow explains, the Milpitas Democrat has a measure to prohibit cat declawing, except in cases of medical necessity, such as an infection. His bill would also require vets who perform the surgery to report it to California’s veterinary licensing board.

But the bill, like the other proposals before it, faces stiff opposition from the influential California Veterinary Medical Association. It argues that the Legislature should not be able to dictate what practices vets can use, and many of its members have voluntarily stopped declawing anyway.

The association has donated a total of $677,500 to state lawmakers since 2015, including at least $62,650 to the members of the Assembly Committee on Business and Professions, according to CalMatters’ Digital Democracy database. Though the bill ended up advancing through the committee last week, its future remains uncertain. 

Read more here.

Trump’s policies and rhetoric on tariffs, immigration and transgender people could be chasing international tourists away from California — potentially costing the state billions of dollars, reports CalMatters’ Levi Sumagaysay.

International travel to California is beginning to slow, according to Visit California, a nonprofit that promotes California tourism. In February international arrivals to California dropped by 8.8% year-over-year. This has prompted Visit California to recalibrate its overall visitor spending forecast for this year from $166 billion to $160 billion.

The slowdown has big implications for the roughly 3 million Californians who work in the hospitality and restaurant industries. Canada, for example, is the second-largest source of California’s international tourism revenue after Mexico. But the governments of Canada and other countries have issued travel advisories that warn citizens they risk being detained in the U.S., and one member of Canada’s parliament recently urged Canadians not to travel to the U.S.

In response, White House spokesperson Anna Kelly reiterated Trump’s previous assertions that the U.S. should annex Canada.

• Kelly, in an email to CalMatters: “Canadians will be unburdened by the inconveniences of international travel when they become American citizens as residents of our cherished 51st state.”

Read more here.