Newsom steps into PG&E ownership fight, mending the DMV, and Trump’s food stamp cuts

Good morning, California.

“Just an hour ago, the entire computer system was down. I love it, on the day of the press conference. Just perfect. But it’s back up.”—Gov. Gavin Newsom, as he described plans to overhaul the California Department of Motor Vehicles.

Newsom steps into PG&E bankruptcy

Acting on behalf of Gov. Gavin Newsom, the California Public Utilities Commission is seeking to block, for at least two weeks, an effort by hedge funds to intervene in the Pacific Gas & Electric Co. bankruptcy and compete for control of the troubled utility.

U.S. Bankruptcy Court Judge Dennis Montali is expected to consider the question in San Francisco today.

Attorney Alan Kornberg, representing the commission, and Stephen Karotkin, representing PG&E, sent an email to the court saying that “at the request of the Governor’s Office and the CPUC, the parties have been asked to agree to a two-week adjournment” in the proceedings.

That delay would give the state and PG&E time to “determine the most appropriate plan” forward, the email says.

Hedge funds led by New York-based Elliott Management, which own PG&E bond debt, are making a multi-billion-dollar play for ownership of California’s largest utility, and want equal footing with the current ownership group in the bankruptcy proceedings.

Separate funds that hold PG&E equity control the company, oppose competition from the bond holders, and, the email says, support the two-week delay.

The email doesn’t state that Newsom is siding with the current ownership. But a delay would slow momentum the Elliott group has been gaining. 

• Labor representing PG&E workers leans toward the Elliott group.
• Victims of wildfires ignited by PG&E equipment support the delay.

PG&E money matters

Why are hedge funds fighting so hard for control of Pacific Gas & Electric Co.? Take a look at The San Francisco Chronicle’s report on three firms:

• Abrams Capital Management of Boston, Redwood Capital Management of New Jersey and Knighthead Capital Management of New York. 

The Chronicle’s J.D. Morris calculates they’ve earned a collective $450 million on shares they bought in the days before and after PG&E filed for bankruptcy. 

• The Chron: “Three years ago, hedge fund managers controlled about 3% of PG&E’s stock, according to Bloomberg data. Now, that figure is around 50%.”

Newsom rolls out DMV plan

Governors for decades have tried—and failed—to fix the Department of Vehicles. Now, Gov. Gavin Newsom is taking a crack at it.

• But first: Don’t bother going to the Department of Motor Vehicles this morning. All 172 field offices will be closed until 1 p.m. as staff undergo training.

Why? 28.2 million Californians are expected to visit field offices by October 2020 to get Real IDs — a federally mandated update to California identification cards. The cards will be required to board a plane or enter government facilities. 

Newsom established a task force, and on Tuesday, he unveiled the team’s 18-page report, which urges:

• A reduction in the number of in-person visits to the DMV, the use of DMV “pop ups” at the offices of major employers, and self-service kiosks.
• An awareness campaign to tell Californians about the Real ID.
• A roll-out of credit card use at the DMV, starting with a pilot at the Davis field office in September, expanding to Fresno, Victorville and Roseville by October.
• Increased training of staff and IT stabilization.

Newsom’s new budget includes an infusion of $242 million to hire scores of staffers. The goal is to reduce wait times and improve customer experience, if not calm their anger. 

• Newsom: “We’re digging out of a hole. We could find ourselves back in a hole next year. But I’m confident that once we get through the challenges of next year, we’ll come out stronger. This is a multi-year process.”

Mr. Gordon goes to the DMV

Gov. Gavin Newsom’s choice to turn around the Department of Motor Vehicles is a 59-year-old veteran of Cisco Systems who hopes his tech and entrepreneurial background can bring the department Californians love to hate into the 21st century.

Newsom said Gordon “randomly went on a website and applied” for the director position after a frustrating visit to a DMV field office. Gordon did not want to be “that guy” who complains but doesn’t pitch in to make things work.

• Gordon: “I know that we have tremendous work ahead of us. We will not modernize the DMV overnight. But I will commit to you that I will lead the department with a laser focus on customer service.”

Gordon, who resides in San Jose, most recently was managing partner at zTransforms, a business-consulting group. He’s previously worked in executive-level positions in the private sector, including vice president of technical services at Cisco Systems and vice president of global service operations at Becton, Dickinson and Company.

He is not registered with a political party.

Trump’s cut to food aid

To save $3 billion a year, President Donald Trump’s administration announced plans Tuesday to take food assistance away from 3 million Americans.

The Western Center on Law & Poverty estimates that 120,000 California familes—perhaps 250,000 individuals—would be affected.

About 2 million Californians receive meals through CalFresh, also known as Supplemental Nutrition Assistance Program, or, in past iterations, food stamps. It’s the government’s most far-reaching anti-hunger program.

• People on the program receive an average of less than $1.50 per meal.

Trump’s administration intends to start requiring that states check assets of people receiving food aid. 

California is one of 40 states that do not require such a check. Gov. Arnold Schwarzenegger, a Republican, signed legislation in 2007 ending the asset test. 

Schwarzenegger’s goal: Encourage people receiving food aid to work, to save and to collect the federal earned income tax credit, a benefit intended to help low-wage workers. Older people could receive food aid without including their 401(k) retirement savings.

Far more Californians are eligible for food aid than collect it, CalMatters’ Jackie Botts reported last week.

Gov. Gavin Newsom on Tuesday called Trump’s proposal “a talking point of a lot of the talking heads on one of the networks,” a reference to Fox commentators who claim people on food stamps are ripping off the government.

What’s ahead? “There is not a state in the country that is probably more aggressive in pushing back from a litigation perspective, so that will be analyzed by the lawyers.”—Newsom.

• P.S. Have you had trouble signing up for CalFresh? If so, Jackie Botts wants to hear from you. Please fill out this questionnaire.

It comes down to guns

America’s embrace of gun ownership makes police work more dangerous in the United States than in other developed countries, a phenomenon that contributes to officers killing nearly 1,000 people each year, UC Berkeley criminal justice expert Franklin Zimring concludes.

CalMatters reporter Laurel Rosenhall interviewed Zimring for the Force Of Law podcast, which is following California’s attempt to reduce police shootings. The latest episode focuses on the dangers police face on the job.

The rate of fatal assaults on American officers is 25 times greater than on British police and 40 times greater than on German police. Similarly, the rate of police shootings in those nations is a fraction of what it is in the United States, Zimring found.

•  Zimring on guns: “They make police patrolling much more dangerous in this country than in other countries. And because they are dangerous for police, police are much more dangerous and much more apt to use life-threatening force against civilians.”

Commentary at CalMatters

Courtney Reynaud, California Association of Collectors: It wasn’t front-page news when the U.S. Consumer Financial Protection Bureau sued two of the biggest credit-repair companies in America: Lexington Law and CreditRepair.com. But it got the attention of consumer advocates and should get the attention of lawmakers. 

Dan Walters, CalMatters: State and local tax revenue is up sharply—at odds with the propaganda from those who want to tax more.