Good morning, California.

“Wait till next year. You’ll have to listen for four hours. I love this stuff.”—Gov. Gavin Newsom, speaking for roughly 100 minutes about his $209 billion budget proposal. 

A new governor in town

Gov. Gavin Newsom proposes a $209 billion state budget.

Bullish, unapologetically liberal and displaying an inner budget nerd many Californians might have expected more from his predecessor, Gov. Gavin Newsom unveiled his first-ever proposed budget Thursday.

  • The $209 billion spending plan, released on Newsom’s fourth day in office, was less restrained than Gov. Jerry Brown’s proposals, which Brown typically treated as lowball opening bids in a long negotiations, but also followed Brown’s example, salting away big savings.
  • Newsom earmarked a chunk of what he counts as a $21.4 billion surplus to pay down unfunded pension liabilities by $4 billion—a potential boon to school districts that prompted Los Angeles Unified to announce a revised offer to its teachers’ union, which is preparing to strike.
  • Newsom wants to use fat state coffers to pay down debt, boost education, child care and health care programs, and tackle housing and homelessness, write Judy Lin and Laurel Rosenhall of CALmatters. The Legislature has until June to approve the 2019-20 budget. Newsom must sign it into law by July 1.

Newsom spoke for 100 minutes—extraordinarily long for a governor on any topic—only occasionally referring to notes, not needing to call on aides, and leaving plenty of time to answer reporters’ questions.

San Francisco Chronicle: “Newsom earned a reputation for wonkishness long before he was sworn in as governor … and that enthusiasm for eye-glazing detail was fully evident Thursday.”

Noteworthy provisions:

  • For public schools, a nearly $3 billion increase, to $80.7 billion.
  • For higher ed, $17.2 billion, a 5.1 percent increase.
  • For undocumented immigrants, health care regardless of immigration status for people under age 26, at a cost of $260 million.
  • No tuition increases at University of California or California State University System, and tuition-free community college.
  • For the poor and mentally ill, significant increases in CalWorks payments and for mental health care.

L.A. Times: “The long list of new ideas is made possible by a continued strong economy, marking the seventh consecutive year in which tax revenue collections are expected to outpace official estimates.”

Affordable housing—or else

Newsom has put teeth in his housing plan.

Expect pushback to the sweeping housing proposals Gov. Gavin Newsom outlined in his budget Thursday, which would undercut local control and the California Environmental Quality Act to increase the state’s housing supply.

Levin: “From major funding increases for affordable housing, to his threat to take away any city’s transportation dollars if it doesn’t meet its housing quota, Newsom’s plans match the audacious ambitions he outlined in the campaign.”

Provisions include a $500 million carrot to encourage cities to approve projects quickly, and a stick: taking transportation funding from local governments that fail to meeting housing goals.

  • Newsom would waive environmental regulations to speed construction of housing for low-income people and people who have mental illness.

The resistance: Local governments, who won’t want to lose control of their own affairs; environmentalists and others who defend CEQA; and neighborhood NIMBY groups.

Taxes to come

Newsom's budget gives—and takes away.

To pay for some of his biggest ideas, Gov. Gavin Newsom proposes raising taxes on some people—generally people with the most money. Here are a few his administration has talked about.

  • Payroll tax: To provide paid leave of up to six months for new parents, Newsom needs to come up with funding. Details are to be determined, but possibilities include increasing the payroll tax on higher earners.
  • Individual mandate, California-style: Taking a page from the Affordable Care Act, California would require people to have health insurance, or pay an annual fee of up to $795  if they opt out. The Republican-controlled Congress ended the national mandate in 2017, but the California fee would generate $500 million to subsidize health care for people who sign up for Covered California, the state version of Obamacare.
  • Clean water tax: About 1 million Californians don’t have ready access to clean drinking water. Reviving a proposal that died in the Legislature last year, Newsom proposes seeding a fund with state money and levying a small tax on drinking water to help disadvantaged communities clean up contaminated water systems. Details to come. 
  • Federal tax conformity: Newsom proposes to bring California income tax law in line with aspects of President Donald Trump’s 2017 tax overhaul, limiting deductions wealthy individuals can take on their losses and for certain fringe benefits.

He’d use the proceeds to expand a tax credit aimed at low-income workers by:

  • Giving an extra $500 to workers who have kids under age 6.
  • Providing the credit to people earning up to $15 an hour.
  • Making payments monthly, rather than when people file their income tax returns.

He’ll call it the “working families tax credit” rather than the current “earned income tax credit.” Whatever the name, 2.4 million families stand to benefit. 

Prison officers make a $2 million statement

San Quentin State Prison.

The California prison officers’s union gave $2 million to a committee that would unravel key parts of initiatives promoted by Gov. Gavin Newsom and Jerry Brown to ease prison crowding and reduce sentences for certain low-level offenders.

The measure headed for the 2020 ballot would force an increase in prison spending. Pushed by Democratic Assemblyman Jim Cooper, a former Sacramento County Sheriff’s captain from Elk Grove, the initiative would:

  • Restrict parole for some felons considered nonviolent.
  • Make felonies out of theft-related crimes now considered to be misdemeanors.
  • Require DNA samples from people convicted of misdemeanors.
  • Increase prison costs by tens of millions as more inmates are incarcerated.

The Cooper initiative would reverse aspects of Newson’s Proposition 47 of 2014, and Brown’s Proposition 57 of 2016. The initiatives eased sentences for low-level offenders and resulted in certain criminals getting released or not sent to prison.

  • The California Correctional Peace Officers Association contributed the $2 million at the end of December, though it was not disclosed until earlier this week.

On Thursday, Newsom proposed spending $12.5 billion on the Department of Corrections and Rehabilitation, a decrease of $13 million reflecting that there will be 1,360 fewer inmates in the coming year.

  • A bargaining chip? Newsom and the union are preparing to engage in negotiations over a new labor contract. Each 1 percent raise translates into a $50 million cost.

Devin Nunes 90210

Recommended reading: A fascinating tale by Reveal about an all-out effort by former Beverly Hills school board member and Republican donor Lisa Korbatov to enlist congressional Republicans to persuade the Trump administration to block $1.2 billion for L.A. Purple Line subway, which would run beneath Beverly Hills High School.

  • Usually, congressional members try to help their states obtain federal money. But Congressman Devin Nunes, a Tulare Republican and Trump ally, was one of five California Republicans who signed a letter in June urging Transportation Secretary Elaine Chao to block the federal aid.
  • In November, voters ousted three of the five—Mimi Walters, Dana Rohrabacher and Steve Knight, each of whom received Korbatov’s donations during the 2018 campaign.

Seems familiar: In 2017, Nunes went out of his way to block $650 million in federal funding for improvements for the CalTrain commuter line between San Jose and Francisco.

  • At the time, Nunes pointed out that Peninsula residents “aren’t willing to give up their water that’s coming from Hetch Hetchy” to irrigate farms in his district. “So you’re not going to get me to feel too bad for one of the richest places on the planet not having a train.”

The feds ultimately provided the funding for CalTrain. And the Purple Line funding continues for now, as Reveal’s reporters Lance Williams and Matt Smith illustrate. Check it out.

Trying to salvage the GOP

Jessica Patterson, running for California GOP chairwoman.

With support from several GOP leaders, Republican operative Jessica Patterson will announce her candidacy today to become chair of the California Republican Party.

  • A veteran of numerous campaigns, Patterson has run California Trailblazer, which seeks to recruit candidates. Former Assemblyman Travis Allen of Orange County and long-time party activist Steve Frank also are running. The party will pick its leader next month.

The victor faces a daunting task after the 2018 wipe-out. In the 80-seat Assembly, only 20 are Republicans. The GOP holds 11 of 40 state Senate seats, and Republicans lost seven congressional seats in California.

Patterson is opposed to abortion and for the Second Amendment: “We’re going to rebuild a GOP team that takes the fight to the Democrats, raises money, registers voters, turns them out to vote and wins elections.”

Commentary at CALmatters

Anna Rodriguez, SEIU Local 521: As California looks to build the ramp that will help young people from disadvantaged backgrounds cross the opportunity gap, it is critically important that early educators fighting to give our kids a stronger future have a voice in building the system that best serves children and families. That’s why this year we at Service Employees International Union will continue our fight for legislation allowing us to form a union.

Dan Walters, CALmatters: Jerry Brown is a hard act to follow but his successor as governor, Gavin Newsom, acquitted himself well – if very lengthily – in presenting his first state budget on Thursday. For nearly two hours, Newsom explained his $209.1 billion 2019-20 budget and fielded questions from reporters, displaying in minute knowledge its provisions and underlying issues.

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See you Monday.