The ripple effects of Proposition 22 are still reverberating in California labor politics — and could rear up in this year’s election.
CalMatters is dedicated to explaining how state government impacts our lives. Your support helps us produce journalism that makes a difference. Donate now.
Nearly two years after California voters approved a ballot measure to exempt gig-economy giants including Uber, Lyft, Instacart and DoorDash from a controversial state labor law, the political ripple effects of Proposition 22 are still reverberating across the Golden State — and could rear up in this year’s election.
First up: Instacart. Political observers this week noticed that Instacart, which as of last month was valued at $24 billion, had reached a tentative agreement with Gov. Gavin Newsom’s Office of Business and Economic Development for a $21 million California Competes Tax Credit, which is available to businesses that want to move to or stay and grow in the Golden State.
- Under the tentative agreement — which could be approved at the tax credit committee’s next public meeting on April 21 — Instacart is required to “hire full-time employees and invest in office space, tenant improvements, computer equipment and furniture and fixtures as part of its expansion in San Francisco.” Without the tax credit, Instacart certified in its application, the “project may occur in another state.”
- Willie Rudman, assistant deputy director of communications for the governor’s office of business and economic development, told me in a statement: “Award of the credit will incentivize Instacart to create 1,155 new, full-time jobs in California with average wages of $130,000 and not less than $55,000. … Instacart would also make at least $21 million of capital investments for additional office space in San Francisco to accommodate the growth. For further context, Instacart currently operates two U.S.-based headquarters in both San Francisco and Atlanta, Georgia. It has existing engineering, corporate and business support teams based out of its secondary headquarters in Atlanta that can house the company’s planned expansion.”
- If Instacart doesn’t “fulfill all the terms of its agreement,” Rudman said, “the state will recapture the unearned credits.”
But the proposed deal didn’t seem to sit well with Lorena Gonzalez, who is incoming leader of the California Labor Federation and as a state Assemblymember authored Assembly Bill 5, the highly contentious law that made it harder for companies to classify workers as independent contractors and required them to offer more benefits.
Gig-economy companies poured nearly $206 million into Prop. 22 to exempt themselves from AB 5 — and saw their valuations soar by $10 billion the day after voters approved it. (However, there’s an ongoing legal battle over Prop. 22’s constitutionality.)
- Gonzalez tweeted: “Just a reminder; Instacart spent tens of millions to pass Prop. 22 so they could avoid paying their workers minimum wage, unemployment insurance & social security, now they want a $21 million tax-credit.”
- Instacart did not respond to a request for comment.
Meanwhile, Lyft has plowed more than $8 million into qualifying a measure for the November ballot that would hike taxes on Californians earning more than $2 million a year, the San Francisco Chronicle reports. Under the proposed initiative — also backed by various labor and environmental groups — the money would be used for funding rebates and other incentives for buying electric cars (45%), developing electric-vehicle infrastructure such as charging stations (35%), and preventing and suppressing wildfires (20%).
- Incidentally, state law requires Lyft and Uber drivers to log 90% of California miles in electric vehicles by 2030.
- And California’s clean-air regulators on Tuesday unveiled a far-reaching proposal requiring a ramp-up in sales of zero-emission cars, culminating in a ban on new gasoline-powered cars by 2035.
A message from our Sponsor
The coronavirus bottom line: As of Monday, California had 8,529,333 confirmed cases (+0.2% from previous day) and 88,748 deaths (+0.2% from previous day), according to state data now updated just twice a week on Tuesdays and Fridays. CalMatters is also tracking coronavirus hospitalizations by county.
Other stories you should know
1. Newsom caught up in high-profile lawsuit
On Wednesday, Newsom’s first full day back at work after a family vacation to Central and South America, he signed into law a bill strengthening protections for patients undergoing treatment for substance use disorders. But that news was overshadowed by an explosive Bloomberg report that found a top lawyer for California’s anti-discrimination agency resigned Tuesday night, alleging that Newsom’s office was interfering in the agency’s sexual discrimination and harassment lawsuit against video game publisher Activision Blizzard Inc.
- Melanie Proctor, assistant chief counsel for California’s Department of Fair Employment and Housing, also accused Newsom of abruptly firing her boss, chief counsel Janette Wipper.
- Proctor wrote in an email to colleagues obtained by Bloomberg: “The Office of the Governor repeatedly demanded advance notice of litigation strategy and of next steps in the litigation. As we continued to win in state court, this interference increased, mimicking the interests of Activision’s counsel. … Justice should be administered equally, not favoring those with political influence.”
- Erin Mellon, a Newsom spokesperson, told The Verge: “Claims of interference by our office are categorically false. The Newsom administration … will continue to support DFEH in their efforts to fight all forms of discrimination and protect Californians.”
- A few weeks after the state filed its July 2021 discrimination lawsuit against Activision, board member Casey Wasserman donated $100,000 to Newsom’s anti-recall campaign, Politico reported Wednesday night. And as CalMatters political reporter Alexei Koseff noted, former Activision CEO Eric Hirshberg in September donated $25,000 to Newsom’s reelection campaign.
2. Another SF school shakeup
In other big resignation news: Joe Ryan Dominguez, the principal of San Francisco’s elite Lowell High School, announced Wednesday that he plans to resign at the end of the school year after just one year on the job — and slammed the beleaguered San Francisco Unified School District on his way out.
- Domingeuz wrote in an email to parents: “The decision to leave SFUSD is solely based on my desire to apply my passion for education in a district that values its students and staff through well organized systems, fiscal responsibility and sound instructional practices as the path towards equity.”
- The San Francisco school board’s controversial decision to change Lowell’s admissions policy helped fuel the successful recall of three members earlier this year.
- And a March feature in the New Yorker highlighted Dominguez’ frustration with the school board’s vision for transforming Lowell into a more equitable campus, as well the district’s financial instability.
3. Debating Prop. 13’s legacy
How is it possible that the owner of a 6,740-square-foot San Francisco mansion worth an estimated $9 million paid $5,625 in property taxes in 2020 — barely more than the $5,240 paid by the owner of a 991-square-foot Richmond home worth $331,000? Answer: Proposition 13, California’s landmark 1978 ballot measure that capped property taxes at 1% of a property’s assessed value and pegged the assessed value to the property’s original purchase price, rather than what it could fetch in today’s market.
- Indeed, Prop. 13 has not helped all homeowners equally, according to a new report based on a study by the Tax Fairness Project and the San Francisco Bay Area Planning and Urban Research Association.
- The report, which focused on Oakland, found that homeowners in wealthy neighborhoods with large white populations — where property values have risen faster relative to other neighborhoods — received thousands of dollars more in Prop. 13 tax breaks than homeowners in neighborhoods with large Black, Asian and Latino populations, the Mercury News’ Jesse Bedayn reports for CalMatters’ California Divide project.
- Jacob Denney, a report co-author: “The wealthiest neighborhoods receive the most (tax breaks), which helps them build more wealth for communities that were already benefiting from lots of wealth.”
- Susan Shelley, a spokesperson for the Howard Jarvis Taxpayers Association: “You can look at the data any way you want,” but raising property taxes would “knock the middle class of California out of homeownership.”
Other things worth your time
Prison, probation, a missed warrant: Sacramento shooting suspects’ troubled route to K Street. // Sacramento Bee
Seven men charged with gun trafficking in Inland Empire, ‘ghost guns’ among 30 firearms seized. // Los Angeles Times
At least 9 claims of drugged drinks at Wine County bar shock Healdsburg. // San Francisco Chronicle
Former executive gets prison for $1 billion solar fraud. // Associated Press
San Francisco spent $250,000 on a database that’s never been used. // San Francisco Chronicle
For the first time in over 30 years, there’s a real race for Alameda County sheriff. // Oaklandside
In governor’s race, challengers attack Newsom’s record on homelessness. // Los Angeles Times
University of California buys $6.5M home for its president. // Berkeleyside
He wanted to work on an old car in his yard. Now he owes $573K in Sacramento code violations. // Sacramento Bee
Homeowner sues city after it denies his plan for affordable housing. // San Francisco Chronicle
San Diego adds new incentive to spur more low-income ADUs. // San Diego Union-Tribune
Efforts to restrict development in wildfire zones fall flat in Sacramento. // San Diego Union-Tribune
California Joshua tree isn’t threatened, state regulators say. It could bring more development. // Los Angeles Times
Q&A: California state lobbying with Chris Micheli. // Sacto Politico
Kindergarten may change drastically in California if two new bills pass. // EdSource
Feral cats have invaded the Oakland Coliseum. // Oaklandside
See you tomorrow.
Tips, insight or feedback? Email firstname.lastname@example.org.
Follow me on Twitter: @emily_hoeven
Subscribe to CalMatters newsletters here.