Good morning, California.

“I’d like to say that I surfed the blue wave and I landed on the shore, and I’m here to continue my work.” —Senate Republican Leader Patricia Bates of Orange County, as the 2019 Legislature convened with nearly a 75 percent Democratic majority.

The Capitol convenes

Capitol receptions Monday, for a GOP assemblyman, left, and Dem lawmakers, right.

California’s new Legislature prayed for wisdom, pledged allegiance to the flag, took solemn oaths of office and spoke of their goals for the 2019-20 session.

  • Then they went to Capitol watering holes and restaurants to schmooze with lobbyists and maybe raise money to maintain their gains in the 2020 election that is a mere 23 months away.

In the lobby of 1201 K Street and in the French restaurant-bar off to one side, lobbyists and consultants stood shoulder-to-shoulder.

  • The draw? Returning Democratic Assemblymen Joaquin Arambula of Fresno and Rudy Salas of Bakersfield, plus the newly elected Sen. Melissa Hurtado of Sanger, who unseated Republican Andy Vidak. She was the one they all wanted to meet.

In a cafe across the lobby from the restaurant, Republican Assemblyman Vince Fong of Bakersfield was less of an attraction. Only a smattering of lobbyists paid their respects, owing no doubt to the reality that Republicans hold only 20 of 80 Assembly seats and 11 of 40 Senate seats.

  • At the end of his event, while the Democrats’ party was still going strong, Fong stopped to talk. Republicans need to focus on issues that matter to voters, he said: affordability, housing, education and public safety.
  • The Republicans’ problem? Communicating that from the hole they’re in.

Fong: “We’re going to regroup. We’re going to look at the data and assess our fundraising opportunities. We’re going to have to improve our messaging. We going to have to improve our get-out-the-vote effort.”


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An agenda emerges

A year after the Santa Rosa Fire, homeowners are rebuilding in Coffey Park.

California lawmakers kicked off a new two-year session Monday, a day full of pomp and ceremony and not a lot of substance. But a few eager legislators began putting bills across the desk, giving an early indication of key policy fights that will shape 2019, reports Laurel Rosenhall and the CALmatters team.

  • Some measures reflect policy priorities Gov.-elect Gavin Newsom championed on the campaign trail. Others amount to a take-two for lawmakers who saw their policies stall out or get vetoed by Gov. Jerry Brown.

Click on the story for the full picture, but here are a few early themes:

  • Preschool. Stars are aligned to expand early childhood education, if the economy holds out. Newsom wants it, Democrats want it, Stanford experts in education want it. Assemblyman Kevin McCarty got the ball rolling Monday with a $2 billion proposal to broaden access for low-income toddlers.
  • Redevelopment redux. Gov. Jerry Brown dumped redevelopment in 2011, as part of his push to balance the state budget. Now there’s nostalgia for the $1 billion a year or so the funding source used to provide for low-income housing. Sens. Jim Beall and Mike McGuire and Assemblyman David Chiu introduced a couple of versions of Redevelopent 2.0.
  • Wildfire. Assemblyman Jim Wood of Sonoma County has legislation to hasten, broaden subsidize and better codify local fire preparedness, but this issue is tough. Pasadena Assemblyman Chris Holden held his proposal to stretch last year’s PG&E liability relief to cover potential costs of the devastating Camp Fire.

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A sign of what's at stake

Camp Fire smoke covers the Butte Creek on Honey Run Road in Paradise.

Facing huge losses from the Camp Fire, a small Merced County insurance company was declared insolvent Monday. The Butte County catastrophe killed at least 85 people and destroyed 13,000 homes.

  • The question: Is Merced Property & Casualty Co. of Atwater a canary in the insurance industry’s coal mine, or a one-off?
  • The answer: Probably neither, but it does foreshadow what awaits incoming California Insurance Commissioner Ricardo Lara who takes office next month.

Merced Property has $64 million in liabilities from losses in Paradise, and $23 million in assets, The Sacramento Bee reports. The declaration by a Superior Court judge Monday allows the Department of Insurance to take it into receivership. The California Insurance Guarantee Association covers policyholders for up to $500,000.

  • Rex Frazier of the Personal Insurance Federation of California, an insurance trade group, said a few other small companies—Merced Property had less than .5 percent of the market—could be in trouble, but not larger insurance companies.

Bigger players will appeal to the Insurance Commissioner for permission to raise insurance rates, and, failing that, will look to limit their exposure. But this, too, is part of what Gov. Jerry Brown called “the new abnormal.”

Frazier: “For the big companies, what you’ll start seeing is a gradual unannounced pullback where they will take on less risks.”


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Calfornia's loss, Texas' gain

McKesson Corp., the nation’s biggest U.S. pharmaceutical distributor by revenue, is moving its headquarters from San Francisco to Texas.

McKesson CEO John Hammergren: “Making this move will improve efficiency, collaboration and cost-competitiveness, while providing an exceptional work environment for our employees.”

Gov.-elect Gavin Newsom, in an impromptu press conference covering an array of topics on the Assembly floor, said Monday McKesson has been rumored to be leaving his hometown for years.

Newsom: “It’s unfortunate. We should always make a case for our state and we certainly need to be competitive. …. We can do only so much to influence those decisions.”

Newsom noted that “California’s economy is growing disproportionate to the rest of the nation. Companies are moving into the state, not just out of the state.”

  • As McKesson says adios, it takes $198 billion in California revenue with it.

Scientist to get the star treatment

Scientist Arlene Blum will be inducted into the California Hall of Fame.

Arlene Blum isn’t the Sundance Kid, doesn’t sing like an angel, and didn’t throw one of the greatest curveballs ever. But she did sound the alarm on dangerous chemicals and, in the process, helped save lives.

  • Tonight, she will get the red carpet treatment with Robert Redford, Joan Baez and Fernando Valenzuela, as a member of the latest class of inductees into California’s Hall of Fame in Sacramento.

“Totally surprised. Delighted,” Blum said by phone from the Berkeley Hills.

Washington Post, 1978: Blum was among the scientists who warned about Tris, a flame retardant then used in children’s pajamas that was a carcinogen and got absorbed into children’s blood. In the 2000s, she led the charge against the same basic substance in products including couch cushions, baby pads and other furnishing; the chemicals can interfere with brain development.

Gov. Jerry Brown moved to ban the substance in 2013, noting that California women have much higher levels of toxic flame retardants in their breast tissue than women in other states and countries.

Blum on her induction: “It is a sign good science can move governments and business.”

Commentary at CALmatters

Marcie Frost, California Public Employees’ Retirement System: The California Public Employees’ Retirement System is building for the future and staying true to its mission of providing retirement security to public sector workers while respecting the taxpayers who benefit from their dedicated service. My hope is that everyone’s grandparents who depend on us will be able to retire in dignity.

Dan Walters, CALmatters: When Jerry Brown departs the governorship, he will leave behind a barely-started, financially and managerially challenged bullet train project. Getting on track or abandoning it will fall to successor Gavin Newsom.

Please email or call me with tips, suggestions and insights, [email protected]org, 916.201.6281. Shawn Hubler, [email protected]edits WhatMatters. Thanks for reading, please tell a friend and sign up here.

See you tomorrow.