Good morning, California. 

This is Matt Levin, housing and data reporter for CALmatters. Around the Capitol I’m often known as “the numbers guy” or “the guy who’s always complaining about his rent” or “what’s-his-name with the beard sitting next to Dan Morain.” With a little help from my friends, I’ll be filling in for Dan today and tomorrow.

“I want to thank everybody for working across their differences. That was an important negotiation. And I look forward to signing that bill.”—Gov. Gavin Newsom on AB 392, which would raise California’s legal standard for police to use deadly force. The Assembly passed it last week after reaching a compromise between law enforcement and civil rights groups. Learn more about the behind-the-scenes negotiations from CALmatters’ Laurel Rosenhall on our excellent narrative podcast Force of Law.

Grim homelessness numbers

A homeless man sleeps on Seventh Street between J & K streets in Sacramento.

More depressing news on California’s spiraling homelessness problem.

After cities around the state reported huge upticks in the number of residents living on the street, in cars or in shelters, Los Angeles County—the epicenter of the state’s homeless population—finally reported its numbers yesterday. And those numbers are grim.

  • The county’s homeless population grew 12% from last year, to nearly 59,000 people experiencing homelessness. The city of Los Angeles itself saw a 16% increase.

Los Angeles Mayor Eric Garcetti told the Los Angeles Times: “This work has never been for the faint of heart, and we cannot let a set of difficult numbers discourage us, or weaken our resolve.”

Check out this excellent explainer by LAist on the forces behind the trend, and why some city officials said they were “stunned” by the increase.  The city of Los Angeles spent $619 million on the issue last year.

The surge in the state’s homeless population is becoming a growing political political problem for Gov. Gavin Newsom, especially as efforts to stem evictions and protect tenants against rising rents have fizzled in the Legislature.

  • Newsom’s proposal to double state spending on homelessness to $1 billion should be settled in budget negotiations with lawmakers this month.

Newsom, in response to a question about the new numbers from the Los Angeles Times: “Well, look, I just got here and I think we have to do more, and I’ve been pointed about that. I don’t know that you’ve spent a week with me where you haven’t heard me talking about this issue.”

 


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FSB Core Strategies: Public Affairs. Ballot Campaigns. Legislative & Regulatory Fights


Casinos fight to keep tax break

Native American tribes are lobbying to allow you to keep deducting gambling losses.

Say you have a good night at the casino and win $10,000, only to have your luck run out the next night and lose $12,000.

  • You can deduct your losses against winnings and save yourself when state income taxes come due.
  • That could be seen as a loophole tailored for casinos that depend on high-rollers. But loopholes are in the eyes of the beneficiaries, as Assemblyman Adam Gray, a Democrat from Modesto, is finding.

Gray, who chairs the committee that oversees gambling, is pushing legislation to eliminate the “net wagering losses” deduction.

Depending on how it’s viewed, that step would cost high-rollers $490 million or generate that amount for the state in the coming year, the Franchise Tax Board estimates.

  • Gray proposes to earmark the money to pay for a new University of California teaching hospital at UC Merced and at UC Riverside, and provide clean water for a million Californians who cannot safely drink from their taps. His bill awaits an Assembly vote.

The influential Tribal Alliance of Sovereign Indian Nations, which represents tribes that own casinos, is not pleased:

“Although seemingly popular, elimination of this deduction will have consequences–primarily on tribal governments–which we have not had the opportunity to adequately analyze given the absence of any meaningful consultation with Indian tribes.”


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Soaring college costs, explained

Higher ed in Calfornia is no longer the bargain it used to be.

Once, a California baby boomer, bolstered by the post-war economic boom and the state’s investment in public higher education, could emerge from college with little to no debt.

Today, students graduate with an average of more than $20,000 in debt. California offers more generous financial aid than most other states, but gone are the days of taking free college for granted. Studies show many students struggle to afford food and housing.


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Voters fill Senate vacancies

Democrat Lena Gonzalez has been elected to the state Senate.

Voters in south Los Angeles and the northeast tip of the state—or at least the small number who knew there was a special election happening—got a chance to fill two vacant state Senate seats Tuesday.

  • Since former state Senators Ricardo Lara, Democrat from Long Beach, and Ted Gaines, Republican from Redding, were elected to higher office (Lara as Insurance Commissioner, Gaines to the Board of Equalization), the Legislature’s smaller chamber has been two politicians short of a full house.

In a result that surprised nobody, Democrat Lena Gonzalez defeated a Republican challenger to represent Lara’s old district, which includes heavily blue portions of Long Beach, Bell Gardens and Los Angeles.

  • Gonzalez, the daughter of a Teamster and aerospace worker, served on the Long Beach City Council and worked for Microsoft before running for state Senate.
  • She will be the 37th woman serving in the Legislature this session, an all-time high.

As of Tuesday night, votes were still being counted in the all-Republican contest to replace Gaines’ seat, which represents mostly rural parts of the northeast corner of the state.

  • Assemblymen Brian Dahle and Kevin Kiley have waged a nasty intraparty campaign against each other, featuring photoshop antics and lawsuits.
  • Shocker of  all shockers: Turnout for an off-year special election in June was expected to be dismal.

The two new senators can begin their work in Sacramento as early as next week, giving Senate leader Toni Atkins an additional Democratic vote to get tough legislation across the finish line.

L.A. Unified tax measure trailing

Los Angeles teachers went on strike in January.

Early returns suggest a parcel tax ballot measure that aimed to generate $500 million annually for the Los Angeles Unified School District will not receive enough voter support to pass.

As of late Tuesday night, the tax had received 51 percent of the vote with 4 percent of precincts reporting—it needs two-thirds to win.  

The measure drew endorsements from wealthy Angelenos such as Clippers owner Steve Ballmer and Mayor Eric Garcetti, along with district leaders and the local teachers union.

  • But its success was always an uphill climb. Anti-tax groups fought the measure vigorously.
  • Also: Unlike school bonds, parcel taxes require a two-thirds vote to pass, making them historically difficult sells.

Without funding from Measure EE, L.A. Unified would have to look to another source to help shore up a budget forecast that county overseers have warned could leave the district of 621,000 kids in financial distress.

  • Meanwhile, state legislators this year have proposed a constitutional amendment that would lower the parcel tax threshold to 55 percent, saying the two-thirds requirement is “anti-democratic.”

Dems split on anti-poverty bill

Gov. Gavin Newsom touts the benefits of an expanded Earned Income Tax Credit.

Both Gov. Gavin Newsom and state Democratic lawmakers agree an expanded Earned Income Tax Credit would be one of the most effective ways of helping California’s working poor.

They just have different ideas for funding it.

  • As the Legislature enters final budget negotiations, Newsom is pushing to pay for the “centerpiece” of his anti-poverty agenda—a proposed $600 million expansion of the state credit—through a separate tax bill that would conform some aspects of California’s tax code to the federal government’s, reports CALmatters’ Jackie Botts.
  • The governor’s funding proposal modifies the state tax code to increase net revenue, a move that requires a two-thirds vote in the Legislature to pass.
  • This has some Democrats leery of a contentious vote, a year after former Sen. Josh Newman was recalled from his Orange County seat after voting to raise California’s gas tax.

At a roundtable on Tuesday, Newsom asked working single mothers to share how the Cal-EITC had helped them.

  • Also present were some unlikely guests, leaders of small business and taxpayer groups, who said they won’t oppose the governor’s funding scheme—an apparent attempt to convince Democrats that the vote to fund the expansion would be politically safe.

 Newsom: “It’s one of the centerpieces of our budget, perhaps the most significant anti-poverty initiatives that we’ll be passing this year.”

Newsom’s proposal includes raising the current maximum eligible income from $24,950 to $30,000 and increasing the credit amount for workers with young kids.

  • The governor said the state EITC is also an important “educational tool” to raise awareness among families about their eligibility for the federal EITC.
  • One other key difference between lawmakers and the governor: Both the Senate and Assembly proposals would allow some undocumented immigrants to claim the credit. Newsom’s proposal would not.

Jackie’s new to the Capitol and wants your tips on poverty issues. You can follow her on Twitter @jackie_botts  and email her at [email protected]

 

Commentary at CALmatters

Jared Martin, California Association of Realtors: In this legislative session, our state’s leaders have spoken with great passion about solving the housing crisis. They say this is the most critical issue facing California. They question how our state’s future will look if we don’t act now. Yet lawmakers haven’t been willing to take the tough votes to move forward meaningful policy that advances the solution: supply.

Dan Walters, CALmatters: California’s vaccination controversy has a symbiotic relationship with the nation’s abortion debate.

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

See you tomorrow.