Good morning, California.

“Swalwell’s pugnacity, which has helped deliver him more than 500,000 Twitter followers, is matched by his keen personal ambition.“—L.A. Times reporter Mark Z. Barabak, detailing Democratic Congressman Eric Swalwell’s entry into the 2020 presidential race.

Swalwell, of Dublin, says he won’t run again for his congressional seat, which will set off a scramble for his successor. A potential candidate to watch: Democratic state Sen. Bob Wieckowski of Fremont.

Newsom finds a mission in immigration policy

Gov. Gavin Newsom and Jennifer Siebel Newsom listen to a recital of violins by Salvadorans.

On his second day in El Salvador, Gov. Gavin Newsom said he hopes to help steer U.S. immigration policy, much as former Gov. Jerry Brown influenced climate change policy.

  • CALmatters’ Elizabeth Aguilera, in San Salvador with the governor, reports that Newsom said he intends to use his first foreign trip as governor to better understand and confront the root causes driving Central Americans to seek refuge in the United States.

Newsom: “The one area that California should do more is on immigration policy.”

Newsom, whose trip is gaining international attention, met with President Salvador Sanchez Ceren and U.S. Ambassador Jean Elizabeth Manes, an appointee of President Barack Obama. Trump’s nominee to replace Manes has not been confirmed.

  • After meeting with humanitarian, LBGT and women’s rights advocates, Newsom said: “We have a unique responsibility and an opportunity to advance a different conversation.”

Immigration policy is the federal government’s responsibility. But CALmatters Ben Christopher writes that California legislators are spending money to welcome migrants in various ways, including:

  • Providing money to nonprofits that shelter immigrants.
  • Offering legal aid to undocumented immigrants.
  • Paying health care costs of children, regardless of their or their parents’ immigration status.

The question: What more can Newsom do?  TBD.

A $5 billion corporate tax proposal

Certain corporations might have to pay significantly higher state corporate taxes.

Corporations earning $10 million or more in California would pay significantly higher state corporate income taxes—and far more if their chief executives make large salaries, under legislation proposed Monday.

Legislation by Democratic Sen. Nancy Skinner of Berkeley and Democratic Assemblywoman Buffy Wicks of Oakland would raise the corporate tax rate, now 8.84%, to at least 10.84%.

  • The rate would rise to 14.84% if the CEO’s pay is 300 times or more the median employee’s income.
  • That would be the highest corporate tax rate of any state, according to the Tax Foundation.
  • The tax would generate $5 billion a year or more.
  • The Department of Finance estimates corporation taxes will generate $13.1 billion this year.

Skinner: “Increasing taxes on big corporations and incentivizing those corporations to pay their employees higher wages is a progressive way to capture new funding for our schools and other programs, while reducing the income inequality of regular Californians.”

History: In 1996, Gov. Pete Wilson, Republican Assembly Speaker Curt Pringle and Democratic Senate President Pro Tem Bill Lockyer agreed to cut the corporate rate to 8.84 percent from 9.3 percent.

Lockyer said then: “Those of us who are advocates of education and have worried about the magnitude of the tax think this is an acceptable and balanced compromise and protects education.”

What’s ahead: The bill has not faced its first hearing, and would need a two-thirds vote for approval. Skinner has shown an ability to win passage of major legislation.

For a report on 2019 tax proposals by CALmatters’ Judy Lin, click here.


Legislation would curb charter schools

Assemblywoman Christy Smith, left, authored legislation to curb charters.

When teachers unions call for reform in California’s charter school laws, they point to the phenomenon of so-called “far-flung” charter schools.  

  • A loophole lets school districts authorize and oversee charter schools outside their boundaries. A few small, financially strapped districts have exploited it, and collected accompanying administrative fees, CALmatters’ Ricardo Cano reports.
  • Democratic lawmakers are seeking to curb far-flung charters, urged on by teachers unions—and informed by hard experience, Cano notes, laying out the history of this year’s attempt.

What’s ahead: On Wednesday, the Assembly Education Committee will begin hearings on bills that would curb the growth of charters from an assortment of angles.

  • Teachers’ unions and charter school advocates fought to a draw over legislation in past years. The political calculus has changed.
  • Union allies chair the Assembly and Senate education committees, and Gov. Gavin Newsom and Superintendent of Public Instruction Tony Thurmond won election in 2018 despite millions spent against them by charter school forces.

A flurry of health care bills

None of the proposed state bills would create a Medicare-for-all single-payer system.

Twenty-two bills before the Legislature aim to make health care more affordable and accessible, according to a count compiled by a consortium of news organizations led by the USC Center for Health Journalism News Collaborative.

Proposals, some of which compete, include:

  • Assembly Health Committee Chairman Jim Wood of Santa Rosa is carrying legislation to establish a tax credit for individuals earning between 400 and 600 percent of the federal poverty level who buy insurance on the state’s Covered California exchange.
  • Senate Health Committee Chairman Richard Pan of Sacramento is carrying a bill to limit the amount consumers contribute to their premiums and subsidize copayments and deductibles for people earning between 200 and 400 percent of the poverty level, or $65,840 to $100,400 a year.
  • Gov. Gavin Newsom wants to extend Medi-Cal coverage to low-income immigrants who are under age 26 and aren’t entitled to coverage under the Affordable Care Act because they are undocumented.
  • Separate bills would extend Medi-Cal eligibility to all undocumented adults whose incomes are low enough to qualify—at a cost of $3 billion.

The bills stop short of a Medicare-for-all single-payer system, though it remains a concept Newsom and many other Democrats say they support.

Wood’s view: “Until we have a federal administration willing to work with us, single-payer health care is impossible to accomplish.”

And that won’t happen any time soon.

Take a number: $58,400

President Donald Trump, pictured in 2018, was in Beverly Hills on Friday for a fundraiser.

As Gov. Gavin Newsom headed to El Salvador on a fact-finding mission, and the president traveled to Beverly Hills to raise money on Friday, they shared something in common: West Hollywood nursing home operator Lee Samson.

Showing that campaign money is a tie that can bind the most bitter political rivals, Samson hosted Trump at his Beverly Hills home Friday night for a fundraising dinner for the president’s 2020 re-election campaign. In 2017, Samson gave the maximum donation to Newsom’s gubernatorial run, $58,400.

Commentary at CALmatters

Matt Horton, Milken Institute’s Center for Regional Economics: The federal opportunity zone program created by the 2017 tax overhaul enables investors to defer capital gains taxes on funds invested in designated communities. Opportunity zones offer one path forward that relies on private capital to bear the cost.

Dan Walters, CALmatters: A state Supreme Court decision tightening the definition of an employee has become a big legislative issue, putting an assemblywoman in the spotlight.

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See you tomorrow.