Good morning, California. Happy, uh, Tax Day.

“Where we lived was not Mar-a-Lago. We lived right smack in the middle of the middle class.”—U.S. Rep. Eric Swalwell, speaking in his hometown of Dublin at Sunday’s rally to kick off his campaign for the Democratic presidential nomination.

Vanishing board-and-care homes

A board-and-care facility in San Francisco

Board-and-care homes for people living with mental illness are vanishing at an alarming rate, worsening the housing crisis for this vulnerable population, CALmatters contributor Jocelyn Wiener reports.

  • One reason: Although housing values are soaring and the minimum wage is rising, reimbursement rates have stagnated. The government-set reimbursement rate of less than $35 a day per resident is supposed to cover shelter, three meals and 24-hour care. 

Experts use words such as “dire” to describe what’s happening as these homes disappear.

  • San Francisco has lost a third of these facilities for people under 60 in the past seven years.

Operator Larry Mateo closed his five homes in San Francisco. One is for sale, and two others are being rented to young people who can pay high rates commanded in the city:

“I don’t have payroll, I don’t have to go buy groceries, I don’t have to deal with clientele.”

Lisa Kodmur, a Los Angeles County health care consultant: “If legislators don’t get onto this, we’re in big trouble. We will see more homelessness, more incarceration, more institutionalization, more people living on the streets.”

Sacramento Mayor Darrell Steinberg, founder of the Steinberg Institute, a mental health care think tank, said:

“The losses here are only making an already horrendous problem worse.”

For past installments of this CALmatters series, click here and here.

Newsom's wildfire proposal sparks reaction

Gov. Gavin Newsom is getting pushback by lawmakers on some proposals.

Let the wildfire negotiations begin: PG&E stock popped, but lawmakers are balking at provocative proposals put forward by Gov. Gavin Newsom’s “strike force” for recovering the increasingly staggering costs of climate-driven wildfires.

Especially hot: A suggestion that California reduce utilities’ liability when they aren’t at fault by overhauling inverse condemnation law.

  • Under the state’s version of inverse condemnation, utilities are liable for any wildfire damage traced to their equipment even if they were not negligent in maintaining it.
  • Newsom recommends a fault-based standard, which would shift more risk to insurance companies and uninsured property owners, CALmatters’ Judy Lin reports.
  • Insurance companies could raise rates dramatically or stop offering coverage.

Newsom wants legislation in the next 90 days. Changing liability law will be the new governor’s first real test as a chief executive at persuading legislators. Gov. Jerry Brown took a stab at it last year without success.

Assembly Utilities Committee Chairman Chris Holden, who was involved in the failed 2018 effort: “Inverse condemnation is a hornet’s nest.”  

Consumer Watchdog, an L.A.-based advocacy group, was quick to lay down a marker:

“A vote on a utility bailout is an existential moment for politicians who have taken utility money, junkets and drinks.”

Check out CALmatters’ explainer to learn more about why wildfires are getting worse.


Mike Spence’s spiral ends

Former West Covina mayor Mike Spence

Mike Spence’s downward spiral ended Thursday at the Folk Inn, a motel near Ontario Airport where police suspected he died of an overdose. He was 52.

  • Spence was a conservative, often bombastic voice in politics for more than two decades. He served on the West Covina City Council and was its mayor, before being unseated last year, after he had been found unconscious from an overdose in a Costa Mesa motel room.

Until recent years, Spence kept his alcoholism and addiction to methamphetamine hidden from the public, though not from family and friends.

He lost a Republican Assembly primary in 2016 by a mere 947 votes to Republican Assemblyman Phil Chen of Diamond Bar in what has been a Republican seat.

He crashed into a utility pole shortly after, and pleaded guilty to driving under the influence. The drug was meth, the San Gabriel Valley Tribune reported.

That plea prompted San Bernardino County Supervisor Curt Hagman to fire him as his chief of staff, a position Spence held when Hagman was in the Assembly and on the board of supervisors.

  • To many journalists, Spence was a source for the conservative view, as when I caught up with him after Sen. John McCain selected Sarah Palin as his running mate at the 2008 Republican National Convention.
  • Spence was in a fancy hotel banquet room in Bloomington, Minnesota, with the Council on National Policy, the influential group of religious conservatives, and couldn’t be happier:

“She is a hero for us. She took on the Republican sellouts who just want to hold onto power.”

That banquet room was a long way from the Folk Inn.

Taking aim at state tax breaks

Democratic Sen. Hannah-Beth Jackson of Santa Barbara is scrutinizing tax breaks.

Look for organized labor and liberal organizations to challenge the wisdom of state tax breaks aimed at providing incentives for research, manufacturing and other economic activity.

Sen. Hannah-Beth Jackson, a Santa Barbara Democrat, has introduced legislation to require an analysis of 10 large tax breaks. If they fail to deliver economic benefits, they would be jettisoned.

  • The California Tax Reform Association, a liberal, labor-backed organization, estimates the 10 biggest “tax expenditures” cost the state—or saved taxpayers—$85 billion during the past 10 years.
  • Given how California funds education, public schools have lost out on $35 billion during that time.

It’s complicated: A simple majority of the Legislature can approve a tax credit, and politicians like to bestow gifts on favored groups. Repeal requires a two-thirds majority, never easy.

Topping the list: The research and development tax credit, which allows companies to get credits to cover some research-related costs, saving them $2 billion a year.

  • Its boosters included the late John Vasconcellos, a San Jose Democrat who was among the most liberal legislators during his 38 years in office but who understood his Silicon Valley constituency.

Other potential targets of Jackson’s legislation are state sales tax exemptions for:

  • Farm machinery.
  • Meat and fish, and seeds and plants used for food, along with fertilizer for those plants.
  • Customer computer programs.
  • Airline fuel for international flights.

Jackson’s bill has not been set for a hearing. It could become part of a tax overhaul this year and next.

Take a number: $4.3 billion

Netflix is a California company that benefitted from a federal tax overhaul.

At least 60 companies reported that their 2018 federal tax rates amounted to effectively zero under the 2017 federal tax overhaul, the Center for Public Integrity reports.

The report: “Instead of paying $16.4 billion in taxes, as the new 21 percent corporate tax rate requires, these companies enjoyed a net corporate tax rebate of $4.3 billion.”

Chevron and Netflix are two California-based companies on the list.

Commentary at CALmatters

California voters have the power to tax.

Robert Gutierrez, California Taxpayers Association: Death and taxes are all but certain. But the bright side is that the power to tax ultimately lies with the people, as Californians have the constitutional right to vote on local taxes, and the right to elect state officials with taxing power.

Dan Walters, CALmatters: Local officials still don’t like having to tell voters how proposed bond issues will affect their property taxes and may seek relief from the Legislature.


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See you tomorrow.