In summary

Bill capping rent increases passes. Who won and lost in AB5 gig workers fight. Newsom realizes most of first-year agenda.

Good morning, California.

“The gig economy is based on incredible future technologies but with outdated feudal work relationships. It’s the only f-word I’ll use in this speech.”—Assembly Speaker Anthony Rendon, urging Assembly members to vote for Assembly Bill 5, the landmark bill that requires companies to treat workers as employees and provide them benefits, rather than independent contractors.

  • Previously, Rendon called the companies feudal, with an alliterative modifier.

Rent cap bill will affect millions

Rent cap legislation has been approved.

Millions of California renters are about to receive some of the nation’s strongest protections against rent hikes and evictions. 

California apartment owners are OK with that, CalMatters’ Matt Levin writes.

The legislation approved Wednesday will limit annual rent increases to 5% plus the rate of inflation, typically 2%-3%, and give tenants more protection against eviction.

Gov. Gavin Newsom intends to sign the legislation, authored by Assemblyman David Chiu, a San Francisco Democrat. The legislation doesn’t extend to most single-family homes that are rentals.

Landlords and another backer, the California Business Roundtable, hope the bill will blunt support for a broader rent control initiative, aimed for the November 2020 ballot.

Unfinished business: Legislation stalled to expand the renters’ tax credit. The credit for low-income renters has been fixed at $60 since 1979.

The proposal by Sen. Steve Glazer, an Orinda Democrat, would have helped 2.4 million low-income renters by more than doubling the credit, with more money for renters with children. 

Why it failed: A $500 million a year cost to the state budget.

Who’s in and who’s out in AB 5 fight

Assemblywoman Lorena Gonzalez hugs Speaker Anthony Rendon after AB 5 passes.

The battle over California’s landmark worker-classification bill came down to which workers were included and excluded.

With the labor-backed measure awaiting Gov. Gavin Newsom’s expected signature, CalMatters’ Judy Lin reports on who’s in and who’s out. Many industries mounted lobbying efforts to gain carve-outs

Higher-paying professions generally succeeded in getting carve-outs from the bill:

  • Physicians, dentists, veterinarians, lawyers, architects (but not landscape architects), engineers, accountants, brokers, real estate agents and commercial builders. 

Commercial fishermen, licensed manicurists and newspaper carriers got exemptions of between one and three years.

Far more businesses failed to escape the bill’s mandate. They’re generally in industries that organized labor seeks to organize, including:

Uber, Lyft, DoorDash and Postmakes, independent truckers, commercial janitorial services, hospitals and health care companies, and unlicensed manicurists. 

Also failing to gain carve-outs: campaign workers, strippers and rabbis. 

Companies will be expected to treat those workers as employees, not independent contractors. 

Except the fight is far from over:

  • The trucking industry warned that 70,000 truckers will be forced to abandon their vehicles and lose control of their schedules. 
  • Hospitals fear they’ll have a hard time contracting out medical services such as physical therapy, optometry and audiology.

What’s next: Newsom and some legislators say they want to continue negotiating.

Uber, Lyft and DoorDash put $90 million into a campaign account. Don’t be surprised if they use that money to push an initiative and a referendum for the 2020 ballot. A referendum would place the measure on hold, pending a statewide vote.

What’s on Newsom’s plate

Gov. Gavin Newsom

Gavin Newsom began his first year as governor with surpluses of money in the budget ($21 billion) and Democrats in the Legislature (about 75%), a combination that has helped him realize some, but not all, of his year one agenda, CalMatters’ Laurel Rosenhall writes

Money for preschool? Check. 

Extra year of tuition-free community college? Check. 

Asterisks on that bill to tighten vaccine exemptions? Not so much.

Now the legislative year is drawing to a close, with much incoming legislation: Bills to curb the gig economy, regulate charter schools, strengthen gun control and let student-athletes profit from their fame all went to the governor this week, and several re-dos of bills that Jerry Brown vetoed. 

Check out CalMatters’ gubernatorial bill tracker to keep track of what the governor will sign and veto between now and his deadline, Oct. 13.

Newsom loses opportunity zones

President Donald Trump

The Democratic-controlled Legislature refused to back Gov. Gavin Newsom’s $100 million-a-year tax break for investors who develop low-income housing and green technology projects in economically distressed areas of the state.

Bloomberg Tax’s Laura Mahoney reports that the first-year governor hoped to capitalize on part of the 2017 tax cut approved by President Donald Trump and the then-GOP-controlled Congress, which created so-called opportunity zones.

  • California has 879 census tracts that qualify for the tax break. 
  • 46 states have enacted state opportunity zones.

Organized labor opposed the concept, viewing it as a give-away to wealthy investors that would cost the state tax revenue. Legislation failed to materialize in this final week of the legislative session.

  • Mahoney quoted Newsom spokesman Jesse Melgar: “The administration remains committed to advancing the key priorities of affordable housing and green technology.”

In other words, the concept is dead for the year but could emerge in 2020.

Anti-vaxxers’ long shot

Anti-vaccine advocates on Wednesday outside the governor’s office

Anti-vaccine advocates took the first step toward placing referendums on the November ballot to block legislation intended to halt bogus medical exemptions granted by doctors to parents who don’t want to vaccinate their kids.

They filed applications with the California Attorney General to begin the process of qualifying two referendums for the 2020 ballot to repeal two pieces of legislation signed into law earlier this week.

Long odds: Backers would need to gather 623,212 valid signatures of registered voters, a complicated process that would cost more than $1 million.

What if: The legislation would be placed on hold, if the referendums qualify for the November 2020 ballot. If voters support them, the legislation would not take effect.

Anti-vaxxers, many of them with school-age children, remained in the Capitol on Wednesday.

Legislators have received threats. Sen. Richard Pan, the Sacramento Democrat who authored the legislation, has been the target by racist epithets and a physical assault:

  • Pan: “For all their right to protest and referrrendize, I hope they respect our rights to be safe, to go about our communities free from the danger of communicable diseases.”

Capitol police have not broken up the demonstrations.

  • Assemblywoman Lorena Gonzalez, a co-author of the bill, represents a low-income part of San Diego, and tweeted: “If constituents from my district waged months-long social harassment campaigns against a member, threatened them w/death, harassed & threatened their family… then came to the Capitol and disrupted session for hours… they would definitely be arrested.”

Like pulling teeth

Dentist bill stirs passion.

It’s hard to imagine a more arcane piece of legislation than Assembly Bill 1519, a seemingly routine proposal to reauthorize the Dental Board of California. 

But the bill contains a provision aimed at stopping the burgeoning business of self-applied teeth straighteners. The heavily advertised businesses offer consumers a chance to bypass the need to visit a dentist or get an x-ray, and thus promise a low-price alternative to orthodontia.

One of the companies, SmileDirectClub, intends to go public.

Assemblyman Evan Low, a Democrat from Campbell carrying the bill, calls the companies marketing the technique “sleazy,” and cites instances of people being harmed by the devices. His bill would require a dentist to review x-rays prior to correcting misaligned teeth. That would disrupt the startups’ business model. 

  • Sen. John Moorlach, a Republican from Costa Mesa: “I wonder why a bill that should just be extending a sunset would have something so controversial in it.” 
  • Sen. Steve Glazer, a Democrat from Orinda, argued for the measure: “In the case of alignments where you are moving the bones of someone’s mouth, standards of care require that you have a full examination which in many cases will include an x-ray.”

Dentists back the bill. So-called teledentistry companies are opposing it, as is the trade group Technet and, interestingly, actress Patricia Arquette. Her dentist founded one of the companies.

Commentary at CalMatters

Maurice Hall, Environmental Defense Fund: Our amazing natural underground storage for groundwater is the critical foundation of our entire water system. Water from our rivers and streams leaks into the aquifer. If we don’t manage groundwater pumping, levels of groundwater as well as rivers and streams will decline, compromising the wildlife, farms and cities that depend on them.

Dan Walters, CalMatters: Conflicting Superior Court decisions will force the state Supreme Court to clear up the uncertainty it created over the vote requirement for some local tax increases.

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Dan Morain joined CalMatters in March 2018. He is the former editorial page editor of The Sacramento Bee. Morain also spent 27 years at The Los Angeles Times, and has covered the Capitol since 1992.

Ben covers housing policy and previously covered California politics and elections. Prior to these roles at CalMatters, he was a contributing writer for CalMatters reporting on the state's economy and...