Aiming to short-circuit an idea that has long captured the imagination, if not yet the votes, of legislators, a study backed by California Chamber of Commerce has found that adopting a business service tax—i.e., a tax on lawyers, accountants and consultants—would hurt the economy and put the state at a competitive disadvantage.
The 56-page report released Wednesday took aim at Sen. Bob Hertzberg’s SB 522, which would set the stage for updating California’s sales and use tax by expanding the levy to business services. Although the concept of a business services tax has been repeatedly blocked—business interests oppose it and SB 522 hasn’t even been heard this year—Hertzberg has been among policymakers calling on the state to modernize its tax structure, and the Los Angeles legislator’s measure could form the basis of an overall tax overhaul in 2020.
Such a rethinking, he says, would reduce budget volatility and capture a greater share of tax revenues in the expanding economy. (Read our explainer on taxes here.)
California has evolved from an agricultural and manufacturing-based economy to one dominated by the service industry. According to Hertzberg’s office, sales and use taxes made up 61% of the state general fund in 1950. Today, they account for only 30%. Meanwhile, personal income taxes accounted for 12% of the general fund in 1950 compared to 70% today.
That tax structure has made state coffers more reliant on the income of high net worth Californians, which can decline dramatically in a downturn. It’s a volatile cycle that tends to create boom-and-bust revenue patterns. Would a business service tax improve that? Read More
When Uber and Lyft began trading on Wall Street as idealistic, tech-disrupting startups, some of their earliest investment came from the nation’s largest public pension funds.
Since then, their reputations have become less wholesome: Not long ago, an alliance of Uber and Lyft drivers wrote the California Teachers’ Retirement System, cautioning against investment in companies that exploit workers and destabilize the tax base, as critics say the sharing economy has done.
CALmatters took the questions posed by Gig Workers Rising and Mobile Workers Alliance in their letter (embedded below) to former state Treasurer and Controller John Chiang, who got CalSTRS to agree to work toward divesting in an earlier set of alleged corporate bad guys, gun manufacturers and dealers. (The California Public Employees’ Retirement System declined.)
Chiang knows the issues well. For private workers without retirement security, he championed the CalSavers program to set up retirement savings accounts for low-wage workers. During his unsuccessful bid for governor, he championed affordable housing and backed Medicare for all.
Some of the most contentious ideas California lawmakers were considering this year—to expand internet privacy protections and require denser housing development—were jettisoned Thursday as the Legislature culled hundreds of bills in a fast-and-furious annual procedural ritual.
Decisions on the “suspense file,” as it’s known, mark a do-or-die moment in the lawmaking process. Reeled off at auctioneer-like speed, the pass-or-hold calls are traditionally made with little or no public discussion or explanation.
Officially, the practice lets beancounters in each house weigh costly proposals against each other and prioritize how the Legislature should spend taxpayer dollars. Unofficially, it’s a way for powerful lawmakers to quietly kill bills before they get to the floor of a chamber—without debate or even a public vote.
The Assembly appropriations committee considered 721 bills Thursday, a bigger load than at any time in the last decade. Lawmakers—aware of swelling tax revenues and a new governor who campaigned on an agenda to expand government services like health care and child care—have been pitching plenty of ideas for spending money. The Senate, which has half as many members as the Assembly, considered 355 bills in its appropriations lightning round.
Despite Democrats holding roughly three-quarters of the seats—the largest majority since the 19th century—the influence of big business was evident in many of their decisions, revealing the Legislature’s varying shades of blue. Tech, oil, insurance companies and other moneyed interests succeeded in killing some measures backed by advocates for privacy, the environment and mental health. Read More
Editor’s note: This story was updated at 12:24 PM, May 27 to reflect new comments from Senate Pro Tem Toni Atkins.
Shock. Depression. Relief.
Those were just some of the reactions as the year’s most controversial state housing bill met its sudden demise. But very few people—supporters, opponents, and even the author himself—can claim to have seen this coming.
In a procedural vote this morning, Senate Bill 50, which would have prohibited many cities from banning four-to-five-story apartment buildings around public transit and effectively ended local zoning rules exclusively reserved for single-family homes, failed to advance out of a key state Senate committee.
Its fate dealt an unexpected setback to pro-development forces in the state Capitol and a major victory for defenders of local control over housing decisions. It also throws an obstacle into Gov. Gavin Newsom’s path as he tries to goad the state into building a lot more housing. Read More
Vivian Song of Sacramento tries to keep up with the latest makeup trends. While she pays attention to the ingredients in her beauty routine, she says others are clueless.
“Not a lot of girls know what they’re putting on their face,” she said. “Whatever’s trending, they’re going to put it on.”
Vivian Song, 19, says she wears organic makeup to alleviate breakouts. Photo by Elizabeth Castillo for CALmatters
California’s Legislature considered banning the sale of of cosmetics containing any of at least 15 toxic chemicals and minerals—including formaldehyde, asbestos and mercury. But after major pushback from powerful players such as the California Chamber of Commerce, which put the bill on its annual list of “job killers,” Assembly Bill 495 failed to survive its first committee hearing.
“The goal of this bill is to bring California up to par with the majority of European and other nations that have already banned these cosmetics with highly toxic chemicals,” said Democratic Assemblyman Al Muratsuchi of Torrance, the bill’s author. “We certainly don’t want to kill jobs, but we want to make sure that these products are not being sold when there’s strong scientific evidence indicating there are harmful impacts on women, men and children.” Read More
In the past decade, California has adopted more than a half-dozen laws intended to prevent bullying, strengthen suicide prevention and cultivate inclusive learning environments for LGBTQ students in the state’s public schools.
But the state’ school districts are implementing these new laws inconsistently, according to a new sweeping report-card style analysis from the Equality California Institute.
As an emotional, hours-long hearing last week on statewide sex education guidance underscored last week at the state Board of Education, California has been slow in general to fully embrace new laws aimed at deterring discrimination against lesbian, gay, bisexual, and transgender students, along with those questioning their sexual identities.
Public middle and high schools were required to follow the sex ed laws in the California Healthy Youth Act beginning in 2016, but the state Board of Education just last week approved a new framework for teaching sex education. The state board came up with the framework—teaching recommendations by the state that educators are not required to follow—after two years of public deliberation.
Equality California’s analysis, published Monday, used a 90-question survey covering school climate, curriculum, teacher training, suicide prevention and transgender students to rate school districts’ LGBTQ policies on a three-tier, color-coded scale. Read More
Buoyed by California’s strong economy, Gov. Gavin Newsom sent state lawmakers a revised budget on Thursday that boosts his already-hefty January proposal to $213.6 billion. Ka-ching!
Public schools will reap most of the gains if the Democratic-controlled Legislature rolls with him. Newsom also upped his ante on the housing crisis with a proposed $1 billion more to combat homelessness.
Still, Californians can expect some fiscal debate: Some Democrats want to go further on Medi-Cal spending, and others are leery of Newsom’s tax ideas, such as the sales tax break he wants to give on tampons.
And Newsom acknowledged the lessons of past budget exuberance, sounding for all the world like a certain frugal predecessor. Here are five key takeaways:
Public schools will be #winning Read More
On Christmas Day 2003, Matthew Sievert, the only child of a single mother and California state worker named Stepheny Milo, was removed from life support. He’d gone out to a Sacramento park the night before to meet an ex-girlfriend, and had been gunned down. He was 19.
The playground where he was ambushed is five miles and a world away from the white-domed Capitol that was his mother’s workplace. His murder, though, would touch not only those halls, but some of California’s best-known political figures.
Initially, it would touch lawmakers, co-workers and lobbyists who sought to comfort Milo, an administrator for the Assembly’s Republican caucus. Later, it would touch Democratic Assembly Speaker Anthony Rendon of Los Angeles, who in 2014 married the sister of Chan “John” Lam, one of the young men convicted of killing Sievert.
In February 2018, it would touch then-Gov. Jerry Brown, whom Rendon asked to read his brother-in-law’s petition for mercy. Ten months later, just before Thanksgiving, Brown reduced Lam’s sentence. Lam could be released this year, 16 years after the murder.
Few governors would ignore such a request from a legislative leader. Beyond that, a comparison of Brown’s action on similar cases supports his and Rendon’s assertion that Lam got no special treatment.Read More
California’s generational changing of the guard showed in the governor’s office on Tuesday as Gov. Gavin Newsom rolled out proposals to lift taxes on diapers and menstrual products—ideas his predecessor vetoed—and reiterated his desire to spend billions of dollars from the state budget to expand services for kids.
Joined by his wife, Jennifer Siebel Newsom, and several female legislators, Newsom cast the proposals as actions to help California families while making good on a major theme of his gubernatorial campaign. Doing more for the youngest Californians is not only a policy agenda for the new governor, but also an opportunity for him to build a political image that highlights his own status as a parent of four children.
Fatherhood—and an interest in the public policies that impact parenting—have emerged as a stark contrast between Newsom, who is 51, and former Gov. Jerry Brown, 81, both Democrats. Brown, who once studied for the Roman Catholic priesthood, is childless.
“There is nothing more important we can do than support parents,” Newsom said. “It’s part of a larger agenda you’re going to hear a lot more from us about.”
Newsom’s new proposals include doubling the tax credit for families with children under age 6, expanding the number of low-income Californians who qualify for the Earned Income Tax Credit, and spending $80.5 million of the taxes reaped from legal marijuana sales on childcare. Read More
Gun control, school spending, curbs on greenhouse gases: With Democrats holding more power at the Capitol than they’ve had since the 19th century, California’s legislative pipeline is full this year with big, blue-state ideas.
In theory, no Democrat’s bill should be left behind. But that’s not what’s happening, and the reason is roiling both sides of the aisle in Sacramento.
The complaint? Democrats who lead legislative committees are using a powerful tool to kill bills before they even get a vote.
The tool? Simply doing nothing.
Under a rule the California Assembly put in place at the start of the current session, committee chairs can decide whether to bring a bill assigned to their committee up for consideration. As key deadlines came and went this month for bills to move out of committee, chairs used the new power to quash bills by just not scheduling them for a public hearing. Read More