UC regents consider tax hike. Legislators consider cutting cannabis tax. State braces for another challenge to Obamacare and Medi-Cal
Good morning, California.
“People on the street are struggling with severe mental illness and drug addiction, trash is piling up in public spaces, and the homelessness crisis keeps getting worse.”—San Diego Mayor Kevin Faulconer, planning a 2022 ballot measure aimed at combating homelessness, as reported by Politico’s Carla Marinucci.
UC regents mull tuition hike
University of California regents, facing pressure from rising financial aid, salaries, retirement benefits, and other demands, will consider a tuition increase at their meeting in San Francisco on Wednesday.
One alternative: Tuition for California residents would rise $348 per student, though the low-income students would feel little if any of the increase, EdSource’s Larry Gordon reports.
Another alternative: Tuition increases of $606 would be borne by incoming freshmen, with differing amounts in the years ahead. Out-of-state students would face heftier increases.
In-state students pay $12,570 in tuition now.
- Gov. Gavin Newsom proposes $3.9 billion from the general fund—the part of the budget that pays for education—for the 10-campus public university system. That’s 2.5% of the general fund.
- UC requested an additional $447.1 million from the state for 2020-21.
- Newsom offered $217.7 million in his budget proposal earlier this month.
Without the tuition hike, UC’s budget gap would be $250 million in 2020-21.
History: In 1990, California’s general fund accounted for 84% of UC’s core budget. Now, the general fund provides 42% of UC’s budget, with the rest coming from tuition, fees and hefty tuition on out-of-state students.
A cost pressure: The American Federation of State, County and Municipal Employees, which represents UC workers, wants to end out-sourcing.
The Assembly approved a labor-backed measure last year that would have put to a statewide vote a constitutional amendment to curb outsourcing, at an annual cost of $176 million. That measure died on the Senate floor but could reemerge.
Big threat to Medi-Cal expansion
A proposed federal rule threatens Medi-Cal, California’s program that provides health care to 12.8 million low-income individuals at a cost of more than $100 billion a year.
Kaiser Health News detailed the dramatic growth of Medi-Cal—the state’s version of Medicaid. Spurred by the adoption of the Affordable Care Act, otherwise known as Obamacare, enrollment increased in the state by 78% between 2010 and 2019.
Medi-Cal is especially important in the Central Valley, providing health insurance for:
- 52% of Tulare County residents
- 47% of Fresno County residents
- 45% of Kern County residents
The rub: Californians pay roughly a fourth of the overall cost of Medi-Cal. Uncle Sam provides much of the rest.
On Nov. 18, the federal Centers for Medicare & Medicaid Services proposed the Medicaid Fiscal Accountability Regulation. It would strip billions in aid to states.
The Trump administration has tried to unwind Obamacare. Adoption of the rule would be a step in that direction.
In a budget briefing earlier this month, California Department of Finance Director Keely Bosler told reporters the cost to California could exceed $10 billion. Officials are sorting out how to respond.
The California Hospital Association also would be affected, telling its members earlier this month:
- “Through these proposed restrictions, the federal government seeks to drastically restrict state flexibility in operating Medicaid programs and would sharply reduce funding for Medicaid.”
What’s next: The deadline for comments is Feb. 1. The hospital association is asking the feds to withdraw the proposal.
Housing legislation lives
Senate President Pro Tem Toni Atkins intervened to keep alive legislation that would compel cities to allow apartment buildings around transit and in neighborhoods with good schools and jobs.
Remind me: Sen. Scott Wiener’s Senate Bill 50 stalled last year in the Senate Appropriations Committee, when chairman Anthony Portantino, La Canada-Flintridge Democrat, cited concerns that the bill would strip local governments of the power to control housing in their jurisdiction.
Wiener offered some amendments. But the bill still might have died in Portantino’s committee.
On Friday, Atkins pulled the bill from Portantino’s committee, likely clearing a path for a full Senate vote by the end of this month.
Significance: If Wiener, a San Francisco Democrat, wins sufficient votes in the Senate, his bill will face opposition in the Assembly.
Some lawmakers remain concerned that the bill would speed gentrification, force dense housing in suburbs, and would not require enough affordable housing.
Weed tax cut proposal
Seeking to nurture the legal marijuana business, legislators are renewing efforts to cut state taxes on weed so entrepreneurs can better compete on price with the flourishing underground cannabis market.
Legislation by Assemblyman Rob Bonta, an Alameda County Democrat, would cut the tax rate on retail marijuana sales to 11% from the current 15%.
Bonta estimated 75% of marijuana sales come from the black market.
Bonta, as quoted by The L.A. Times’ Patrick McGreevey:
- “With these steps, we believe that we will be supporting the regulated marketplace for cannabis in California. It will also help reduce and shrink the unlicensed, illicit market.”
Treasurer Fiona Ma embraced the tax cut, as did Republican Assemblyman Tom Lackey of Palmdale.
Gov. Gavin Newsom’s new budget anticipates raising $550 million from cannabis taxes.
In his new budget, Newsom doesn’t call for a tax rate cut but promises to “consider other changes to the existing cannabis tax structure, including the number of taxes and tax rates to simplify the system and to support a stronger, safer legal cannabis market.”
Bill would help market cannabis
Legislation set for a hearing today would allow cannabis companies to provide free samples to educate retailers about the products.
The problem: Proposition 64, the 2016 initiative that legalized commercial marijuana sales, supposedly barred free samples, stating:
- “No licensee shall give away any amount of marijuana or marijuana products, or any marijuana accessories, as part of a business promotion or other commercial activity.”
The Legislature’s staff analysis quotes the bill’s author, Sen. Nancy Skinner of Berkeley, as saying “it is unclear if the proposition intended to prohibit trade samples—a commonly used, noncontroversial business tool.”
Large distributors, a force in Capitol lobbying and in campaigns, are backing Skinner’s legislation.
The Humboldt County Growers Alliance made up of smaller producers is seeking amendments so its members also could provide samples.
- “Our members are incredibly proud of the quality of the products they make, and we firmly believe they are the best salespeople of their story and craft.”
Hollister Ranch fights back
Owners of Hollister Ranch in Santa Barbara County have sued California over legislation that seeks to open access to 8.5 miles of coastline below the 14,400 acres of cattle ranch and exclusive homes.
The suit filed in federal court in Los Angeles by the Sacramento-based Pacific Legal Foundation accuses the state of threatening the landowners’ rights against warrantless searches, seizure of their land without paying for it, and stifling their free speech.
The fight dates to the 1970s.
Gov. Gavin Newsom signed legislation in October directing state agencies to end a fight by enforcing state law requiring access to at least some beaches by 2022. The bill says anyone who obstructs implementation of public access is in violation of state law.
Assemblywoman Monique Limón, Santa Barbara Democrat and the bill’s author:
- “This has been litigated for almost 40 years. That has been a tool Hollister Ranch Association has used to block [access]. This is why the bill is needed.”
Monte Ward, Hollister Ranch Owners’ Association president:
- “With [the legislation’s] vagueness, it is hard to know when we might be accused of having committed a coastal act violation.”
Ward said landowners remain intent on working with state officials on a compromise to provide access to the Gaviota Coast, described by legislative staff as the least-accessible stretch of coastline in California.
Meanwhile, at Martins Beach
The California Coastal Commission and State Lands Commission earlier this month sued billionaire venture capitalist Vinod Khosla to ensure access to Martins Beach in San Mateo County.
- Khosla bought 88 acres above the beach in 2008, including an access road leading to the shore. Access has been in dispute and the focus of litigation ever since.
The Mercury News’ Paul Rogers reports Khosla opens the gate most days. Motorists are charged $10 to drive down the road and park at the beach.
Take a number: 627
San Diego Mayor Kevin Faulconer has announced plans for a measure aimed at tackling homelessness pegged for the 2022 ballot when he might be a statewide candidate.
The Republican said homelessness decreased 9% since he took office in 2013.
The Voice of San Diego’s Scott Lewis questioned that claim. But he cited a Downtown San Diego Partnership count showing that unsheltered homeless people in downtown San Diego numbered 627, down from 806 in 2018.
- Voice of San Diego: “This may be a direct result of two things: the giant tent ‘bridge shelters’ Faulconer and private partners have put up and the pressure of police clean-up efforts.”
Commentary at CalMatters
Mike Madrid, The Lincoln Project: Voters beware of our populist threat. Populism is problematic precisely because it despises compromise under the guise of standing on principle, suggesting that those who collaborate for the greater good lack morality. Compromise is the basic virtue of a democratic republic.
Dan Walters, CalMatters: As strange as it may seem now, California’s state Senate was once a bastion of bipartisan — almost nonpartisan — comity. H.L Richardson single-handedly changed the tenor of California’s Capitol as he championed gun rights and tough anti-crime laws.
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