Good morning, California. Ben Christopher is filling in for Dan Morain, who is off this week.

“His impending deportation and permanent separation from his family and removal from his community further justifies this exercise of executive clemency.”—Gov. Gavin Newsom’s pardon letters to both Kang Hen and Hay Hov, two Cambodian refugees who served time in California state prison and are at risk of being deported. For a powerful tale of what goes into these pardon and clemency decisions, click here.  

Hold onto that surplus...

Shares of Apple and other tech stocks fell hard on Monday.

Stocks sank Monday as the tit-for-tat trade war between China and the Trump administration escalated over the weekend. California tech stocks fared particularly poorly.

  • That includes Cupertino’s Apple, which had a double-whammy of a bad news day: Not only is it vulnerable to tariffs (Apple both sells and assembles iPhones in China), but the Supreme Court also announced it will allow an antitrust lawsuit against the tech giant to proceed.

Brief me: On Friday, the White House announced a 25 percent hike on some $200 billion worth of Chinese goods. China responded by ratcheting up taxes on American products, vowing, according to The Los Angeles Times, to “never surrender.”

Expect a rough ride, said Lynn Reaser, former chief economist to the state Treasurer’s Council of Economic Advisors.

Reaser: “Disruptions to supply chains are likely to impact most of the state’s corporations. Retailers would also be substantially impacted should 25 percent tariffs be placed on another $325 billion of goods imported from China.” Reaser also warned that the resulting “plunge in capital gains could quickly erode the state’s surplus.”

The trade war has already hit the state’s massive agricultural sector, as Martha Groves reported last month for CALmatters.

By the numbers: California imported 30 percent of all of the stuff that Americans bought from China last year.

Meanwhile, a great trans-Pacific shipping race is underway, and California is the finish line. As KQED reported, businesses rushing to get their goods to market before the new rate hikes helped break a 92-year record at the Port of Oakland, which offloaded more than 80,000 shipping containers in April.


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Abortion fears in a CA tax fight

A Supreme Court ruling on a CA case may be a sign on women's rights.

What does an epic lawsuit over the tax bill of a California tech entrepreneur have to do with abortion? Maybe a lot, U.S. Supreme Court observers are positing.

On Monday, the high court ruled in California’s favor in a nearly-three-decade-long fight to collect state income taxes from Gilbert Hyatt, a rich inventor who moved to Nevada just before cashing in on a big patent.

  • The Franchise Tax Board found that Hyatt was actually, secretly still living in California and thus liable for taxes here.

Hyatt sued the state for invasion of privacy and more, in complex litigation that has already been appealed to the U.S. Supreme Court twice.

  • But this 5-4 conservative majority ruling—that states are shielded from private lawsuits filed in other states—is not only a victory for California but a potential setup for a much further-reaching strategy, report Slate and The Los Angeles Times.

Slate:  Writing for the majority, Justice Clarence Thomas “overturned a 40-year-old precedent for the simple reason that five conservative justices didn’t like it.”

Justice Stephen G. Breyer, dissenting: “Today’s decision can only cause one to wonder which cases the court will overrule next.” As a hint, Breyer cited a 1992 case in which the justices, 5-4, reaffirmed a woman’s right to an abortion.

LA Times: “Many abortion rights supporters fear that Justice Brett M. Kavanaugh could provide the court’s conservative bloc a fifth vote to overturn some or all of the court’s abortion rulings.”


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Health care roadshow

Gov. Gavin Newsom wants to discuss health care ideas.

Pressured to expand health insurance and nursing a big, fat, state surplus, Gov. Gavin Newsom is planning a multi-city tour to talk about health care.

  • The governor will begin at a Covered California sign-up location in Sacramento, where he will host a roundtable on his plan to expand subsidies for those buying health insurance on the state exchange. Newsom will also visit San Francisco, Los Angeles and San Diego.

Also up for discussion:

  • A single-purchaser system for prescription drugs, a proposal the governor first made on his first day in office.
  • Expanding Medi-Cal for all eligible residents under the age of 26 regardless of immigration status. As CALmatters reported last week, that put him at odds with progressives in the Legislature who want to expand coverage to all eligible undocumented immigrants.

Newsom promised to push the state toward a single-payer health insurance system. This tour addresses that promise—but so far, it’s a very small push.

Newsom’s statement: The governor will discuss ways to work “with Congress to create a robust federal waiver to allow the state to move toward single-payer and creating a commission to do the planning necessary for a transition under a Democratic president.”

Big price, small loans

A bill seeks to cap interest rates on loans up to $10,000.

The business of extending pricey credit to the state’s poorest borrowers, a few thousand dollars at a time, has been booming since the Great Recession.

  • Now consumer groups are backing a bill by Assemblywoman Monique Limón, a Santa Barbara Democrat, that would place an interest rate cap of roughly 38 percent on loans up to $10,000.

Here’s a jaw-dropping statistic from my report for CALmatters: Between 2009 and 2017, the amount of money that non-bank lenders have handed out with triple-digit interest rates has increased by 4,000 percent.

  • Consumer groups say these loans take advantage of low-income borrowers’ desperation and often make a bad situation worse.
  • But lending groups say the rate cap will drive them out of the state and that the remaining alternatives—pawn shops, loan sharks and bankruptcy—are worse.

Mary Jackson, CEO of the Online Lenders Association: “People find ways to work around some prohibition. Look at what happened when we banned alcohol.”

California v. Trump, again

Attorney General Xavier Becerra

California has filed its 48th lawsuit against the Trump administration. This time, the state is going to court over whether state Medicaid payments can be used to pay union dues.

  • Roughly 500,000 homecare workers in California are paid by Medi-Cal, the state’s Medicaid program. About half belong to unions. As a consequence, a portion of their paychecks from the state go to organized labor.
  • Two weeks ago, the Trump administration’s Department of Health and Human Services introduced a new rule banning states from diverting federal health care dollars toward unions.
  • In their lawsuit, California, along with Washington, Connecticut, Oregon and Massachusetts, accused the White House of trying to “reinterpret the Medicaid Act in service of anti-union objectives.”

This is an important fight for organized labor. As unionization rates have fallen, groups like the SEIU have campaigned to organize non-traditional union workers and even independent contractors who are paid by the state—including child care workers.

  • The suits marks an achievement of sorts for Attorney General Xavier Becerra. His office has now filed as many suits against the Trump administration in a little over three years as Texas filed against the Obama White House in eight.

You can read about each of California’s anti-Trump lawsuits here.

Is police power waning?

A panel on police transparency hinted at political change.

The political power of police isn’t what it used to be in Sacramento. That was one takeaway from a panel discussion on police misconduct and transparency hosted by CALmatters and the First Amendment Coalition Monday.

Nancy Skinner, a Democratic state senator from the East Bay: “The Legislature’s respect for the job of law enforcement is still intact, but I think what we’re seeing is that the Legislature is more aware and more responsive to these legitimate issues that the public has raised around use-of-force.”

Skinner authored SB 1421, which makes once-secret police records available to the public if an officer uses lethal force or is found to have engaged in certain misconduct.

  • The law has prompted a dozen lawsuits, as the police departments argue that it does not apply retroactively.

David Mastagni, also on the panel and a lawyer who represents police unions, warned that publicly disclosing these records could violate the privacy of crime victims, including human trafficking survivors.

But Thomas Peele, a reporter for the Bay Area News Group, dismissed that concern: “We’re not getting the names of victims…and no responsible news organization would use them anyway.”

The political shift could have major consequences this year as state lawmakers debate new bills aimed at reducing police shootings. Listen to the entire discussion here.

  • And if you aren’t already subscribed, check out Force of Law, Rosenhall’s podcast on the politics and human consequences of police shootings in California.

It's getting hot

California and Texas lead in heat-related job sickness.

After four farm workers died of heat in 2005, then-Gov. Arnold Schwarzenegger directed labor officials to develop standards requiring water, shade and breaks to protect people working outdoors in extreme heat.

  • Now California is preparing to protect workers against excessive indoor heat. California would be the first state to have outdoor and indoor heat standards, writes Marjie Lundstrom of the investigative nonprofit news organization FairWarning.

Gov. Jerry Brown signed legislation in 2016 requiring the Department of Industrial Relations establish an indoor rule by January, affecting warehouses, restaurants and many other businesses. That deadline came and went, but the department issued a proposed regulation last month:

  • Regulations would kick in when indoor temperature reaches 87.
  • Businesses led by the California of Chamber of Commerce seek to shape that regulation, including asking that it apply when thermometers hit 95.
  • A final rule won’t be in place until 2020, maybe 2021.

Excessive heat killed 783 workers and seriously injured 69,374 between 1992 and 2016, the U.S. Bureau of Labor Statistics reports.

  • California and Texas have the unwanted distinction of leading the nation in numbers of heat-related sickness. Kansas, South Carolina and Nebraska have led in rates of heat-related illness.

California is acting as the U.S Occupational Safety and Health Administration fails to come up with national heat standards.

  • Advocacy groups led by Public Citizen filed a petition last July, the month when most heat-related deaths occur, seeking a national standard. Rising heat brought about by climate change makes clear the urgency for such a standard, they say.

Meet our new reporter

Rachel Becker will cover the environment.

Please welcome CALmatters’ newest staff writer, Rachel Becker, who will be adding her considerable expertise to that of Julie Cart in covering California’s environment.

Rachel comes to us from The Verge, where she was a San Francisco-based science reporter, covering environmental issues from toxic algae to nuclear waste to  California wildfires. She has degrees in science from Stanford and Harvard, and a degree in science writing from MIT.

  • As a journalist, she has also worked with NOVA Next, National Geographic News, Smithsonian, Slate, Nature, Hakai Magazine and others. Follow her on Twitter at 

Commentary at CALmatters

Heidi Sanborn, National Stewardship Action Council: California has struggled to cut cigarette butt litter for decades. But with the rise in popularity of small cigars with plastic filters and e-cigarettes, the waste problem is getting worse. Senate Bill 424 would require companies that make them to help clean up their mess.

Dan Walters, CALmatters: Los Angeles Unified School District wants voters to approve a new tax, but it’s undermining its pitch by incompetent—or duplicitous—actions.

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

See you tomorrow.