Money flows to Sacramento as Newsom administration again slaps at GM and Toyota

Good morning, California.

“President Trump talks a lot about America’s economic growth under his presidency, but when you look behind the numbers, you see that it’s California’s growth that has provided the economic rocket fuel for the nation.”—Gov. Gavin Newsom, on a projection that California will have a budget surplus of at least $7 billion in the next fiscal year.

Budget surplus grows

Legislative Analyst Gabriel Petek . (Photo by Judy Lin for CalMatters.)

Predictions of an economic slowdown aside, California is expected to have an additional $7 billion surplus. Given existing reserves, California could start the 2020-21 fiscal year with $26 billion beyond its expenses, Legislative Analyst Gabriel Petek said Wednesday.

Petek attributed the $7 billion surplus in part to the economic expansion dating to 2009, and to decisions made by voters, former Gov. Jerry Brown and past legislatures:

  • Proposition 2 of 2014 requires the state to place a portion of its revenue into a savings account known as the “rainy day fund.”
  • Propositions 30 of 2012 and 55 of 2016 raised income taxes.
  • Brown and legislators used relatively conservative revenue estimates and constrained spending increases.
  • Petek: “All of these things contribute to particularly strong fiscal trends over an extended period of time.”

Petek’s analysis warns that “there likely is greater risk in the economic outlook for 2020‑21 than in previous budget cycles,” and said a recession could strike in early 2021. 

The budget is a sort of economic indicator. When times are good, California collects more income, sales and corporate tax revenue. Budget deficits occur in recessions.

The L.A. Times: State employment officials estimate that California is responsible for more than 15% of the nation’s job growth since 2010.

California slaps GM, Toyota again

In 2018, California Air Resources Board Chairwoman Mary Nichols, Attorney General Xavier Becerra and then Gov. Jerry Brown announced California would fight the Trump administration to roll back fuel efficiency standards. The fight continues.

California is boycotting the L.A. Auto Show in a slap at Toyota, General Motors and other car companies that are siding with the Trump administration in its effort to strip the state of its power to regulate auto emissions.

Car companies use the show, which starts Friday, to tout their green vehicles. But California Air Resources Board Chairwoman Mary Nichols said Wednesday that state officials would skip the show for the first time in decades, telling reporters:

  • “We’ve seen too much of talking out of both sides of their mouths coming from some of the larger companies and we simply can’t go along with it politely.”

In addition to Toyota and GM, car companies siding with Trump include: 

  • Fiat-Chrysler, Hyundai, Isuzu, KIA, Mazda, Mitsubishi, Nissan, Subaru, Suzuki, Aston Martin, Maserati, Ferrari, and McLaren.

Gov. Gavin Newsom last week declared the state would cease buying vehicles from automakers that are siding with Trump against California, as CalMatters’ Rachel Becker reported.

  • The state spent $27 million on GM vehicles last year, more than any other automaker. 
  • GM’s revenue in 2018 was $147 billion.

There is nothing to prevent the feds from taking a similar action by boycotting Ford, Honda, VW and BMW, car companies that have agreed to follow California’s auto emission regulations, Nichols acknowledged.

Family leave expansion ahead

California is lagging other states is family leave.

California was first in the nation to offer workers paid time off to care for a new baby or sick family member. That was 2004. Now, at least five states have passed laws that offer workers more paid family leave than California. 

Familiar ring: Earlier this year, Gov. Gavin Newsom and lawmakers approved two additional weeks of paid family leave to Californians. Beginning in July 2020, workers will be entitled to eight weeks of leave. 

In a hearing in Sacramento on Wednesday, Sen. Hannah-Beth Jackson, a Santa Barbara Democrat, and Assemblywoman Lorena Gonzalez, a San Diego Democrat, signaled they will push to further expand the paid leave program next year, perhaps to 12 weeks, and ensure that more low-wage workers can use the benefit.

  • Jackson: “While California was once in the lead on this issue, we are no longer in the lead. And it is time for us to catch up. … We need to again become the state that invents the future on this.”

What’s ahead: Newsom has set a goal of ensuring that every baby is cared for by a family member for the first six months of life. Expect more moves in that direction in 2020.

Mental health parity is elusive

Photo illustration

As many as one in four Californians who have private insurance and suffer from mental illness or substance abuse needed to go outside their network to find a treatment bed, a new report shows.

The study by Milliman, a risk management and healthcare consulting firm, covers the period 2013-17 and looks at all 50 states. 

California fared better in mental health care delivery than some states in certain areas. But it was among the laggards in the percentage of people who needed to go outside their networks for in patient treatment beds—25.4%, compared with the national average of 17.2%.

Why it matters: Stephen P. Melek, one of the study’s authors, notes that going outside provider networks means families must pay more out of pocket:

  • “They may say, ‘We won’t get treated because we can’t afford it.’”

California’s situation was worse in 2017 when 25.4% of privately insured patients had to go outside their network for treatment beds than in 2013 when 14% had to go outside their networks.

Kaiser Health News, reporting on the Milliman study, noted that despite a congressional mandate passed 11 years ago to provide so-called mental health parity, insurance companies still provide more coverage for physical illness than mental illness.

  • Kaiser: “The barriers to parity continue despite a bipartisan consensus that more must be done to confront the nation’s devastating opioid epidemic, rising suicide rates and surging rates of teen depression and anxiety.”

To read a past CalMatters report on mental health parity, please click here.

New law in 60 seconds

New law expands the right to sue over childhood molestation.

California is expanding the right of adults who were victims of childhood molestation to sue private institutions and public schools. That’s the focus of CalMatters’ latest #CALaws2020 60-second video, put together by videographer Byrhonda Lyons and reporter Elizabeth Castillo. 

To be notified when each new CalMatters video gets posted, please subscribe to our YouTube page.

Commentary at CalMatters

Barbara Barrigan-Parrilla, Restore the Delta: The Newsom administration needs to make clear where it stands on Delta management. More importantly, the Newsom administration must act on its water values forcefully, and not succumb to the water grab being orchestrated by the Trump-Bernhardt-Westlands alliance.

Dan Walters, CalMatters: U.S. Sen. Kamala Harris’ run for the presidency is collapsing. She now must concentrate on winning re-election in 2022.

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See you tomorrow.

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