California, U.S. on collision course on welfare work requirement

President Biden signed on Saturday a last-ditch bill to raise the national debt limit that includes Republican-forced provisions for stricter work requirements on welfare recipients.

But California is headed in the opposite direction. And that could lead to the state losing a big chunk of the federal grants that fund its CalWORKS program.

As Jeanne Kuang from CalMatters’ California Divide team explains, the state Assembly passed a bill  last week that would loosen state welfare-to-work eligibility requirements and cut back on sanctions, or penalties, against individuals who violate work rules.

The proposal has its drawbacks: California could lose $185 million out of the $3.7 billion a year it gets from the federal government if it doesn’t meet its work metric. Supporters of work requirements also argue that incentivizing people to work will drive down poverty and dependence on public benefits. 

But data shows that while employment did slightly increase when the federal government enacted stricter work requirements for welfare recipients in the 1990s, poverty did not drop.

Meanwhile, California has historically taken a different approach. Unlike some other states, it continued to give cash aid to children in the 1990s, even after their parents were cut off from benefits for violating program work rules. And in 2012, California included a list of eligible activities that went beyond the federal definitions of work.

That helps low-income parents such as Summer Pratt, who receives CalWORKS benefits while attending college because it counts toward the state’s work rules.

• Pratt, a mother currently enrolled at Sierra College: “The money itself has been a tremendous help in allowing me time with my kids and to do schoolwork, and allowing me not to have to go into the workforce yet.”

The push to reform parts of CalWORKS still needs the approval of the state Senate and Gov. Gavin Newsom. As for the new federal welfare rules outlined in the debt ceiling package, of California’s three Democratic Senate candidates, only Rep. Adam Schiff voted to pass the debt  deal while Reps. Barbara Lee and Katie Porter did not. Advocates of California’s measure say the federal government has threatened the state with welfare fines before but never enforced them.

More impact of national issues: Migrants flying on a privately chartered plane from Texas arrived unannounced in front of the Sacramento Diocese Office on Saturday. A representative from the charter service that operated the plane said the flight was “something that the government ran,” according to The Sacramento Bee. The passengers, most of them men, hailed from Venezuela and Colombia.

Gov. Newsom and Attorney General Rob Bonta are investigating and working with Sacramento Mayor Darrell Steinberg and local nonprofits to process the immigrants and provide food and shelter as they await further arrangements. Bonta’s office confirmed the passengers had documentation from the Florida state government.

In 2022, Florida Gov. Ron DeSantis flew migrants to Massachusetts to protest what he viewed as liberal immigration policies. After announcing he planned to continue this practice, the Florida Legislature granted him an additional $10 million in February to transport more migrants.

• Mayor Steinberg, in a statement: “Is there anything more cruel than using scared human beings to score cheap political points? Sacramento represents the best of American values. We always welcome ‘the tired, the poor and the huddled masses,’ and we always will.”

An Emmy for CalMatters: CalMatters won its first Emmy on Saturday night for a TV segment based on the award-winning “Trial by Fire” series by Julie Cart on post-traumatic stress faced by firefighters. It was a collaboration with Julie Watts of CBS Sacramento, who accepted the award from the Northern California chapter of the National Academy of Television Arts & Sciences. Another CalMatters-CBS collaboration, focused on a wage theft investigation by the California Divide team, was also nominated. Read more about the Emmy nominations from our engagement team.

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1 CA home builders’ new bargaining chip

For decades, the power dynamic between cities and housing developers rested mostly with the former — local officials were the ones who got to decide what gets built, where and under what conditions. This left developers to take part in “creative groveling” if they wanted to get their projects approved and lock in business.

But due to the unearthing of a 33-year-old housing law, developers now have a powerful new bargaining chip, writes CalMatters’ housing reporter Ben Christopher.

Known as the “builder’s remedy,” the provision outlines an opportunity window — the time between when a state-mandated local housing plan expires and a new plan awaits approval — that developers can exploit to build as much as they want, wherever they want, as long as at least 20% of the proposed units are reserved for lower income residents. 

The law has been on the books for years, but its provision remained under the radar until a UC Davis law professor stumbled across the policy and tweeted about it in 2019. When the state housing department took notice, it began listing the “remedy” as a possible consequence if cities and counties didn’t plan enough housing.

Lawmakers who embrace the policy represent a shift in how housing is viewed in California. As the affordability housing crisis worsens and the state faces a looming goal of building 2.5 million new housing units by 2030, legislators have passed measures to wrest away control from local governments, requiring them in some cases to approve housing proposals as long as the developers meet certain requirements.

And developers are eager to leverage the loophole. Last fall, the real estate company WS Communities proposed building more than a dozen residential high-rises in Santa Monica, prompting concern (likely on purpose) from locals who feared they were “going to never see the sun again,” according to Ben.

• Dave Rand, an attorney for WS Communities: “The old games of begging municipalities for a project and reducing the density to get there and kissing the ass of every councilmember and planning official and neighbor — that’s the old way of doing things. Our spines are stiffening.”

Fresno housing: A CalMatters live event, in partnership with Fresnoland, will focus on housing affordability in Fresno. It is scheduled for 6-7 p.m. on June 15, in person at the Fresno Art Museum and virtually. Sign up here to attend.

2 High-tech payday loans?

You might have heard of or seen ads for new cash advance apps. These are services that provide cash to workers ahead of their payday, and are either connected with employers’ payroll systems or directly deduct money from customer bank accounts on a set date.

But critics say these companies are just high-tech versions of storefront payday lenders that prey on the poor, according to CalMatters’ economic reporter Grace Gedye. 

The comparison has major implications: California regulates traditional payday loans, capping the interest rates that can be charged. Now officials want the state to be the first to impose similar rules on “earned wage access” companies, which until now have been operating in a legal gray area — and the industry is not happy about it.

When the state’s financial regulators looked into data from several companies in 2021, it found that the fees and tips users paid were comparable to payday loan costs, which are known to have exorbitant interest rates. For example, $9 in fees for a 10-day loan of $100 would amount to an annual interest rate of 330%. 

Regulators have proposed requiring these companies to register with the California Department of Financial Protection and Innovation, or obtain a license. The department would also cap any charges, including tips and fees.

But the companies and industry trade groups are pushing back, arguing that their products don’t really count as loans, that tips and optional fees shouldn’t be considered charges and that their services provide customers greater control over their finances. Researchers from the federal government also found that advances from earned wage access companies generally cost less than payday loans.

The rules are expected to be finalized by March 2024.

3 Another step toward Sites Reservoir

From CalMatters’ environment reporter Alastair Bland:

A long-awaited major reservoir project in Northern California crossed a hurdle Friday when water officials formally approved the water right application for the proposed Sites Reservoir — potentially advancing it into the final months of what has been 40 years of discussion, planning and controversy. 

“We are excited to move into this next phase of the permitting process,” said Jerry Brown, executive director of the Sites Project Authority, which represents local water districts pursuing the project. 

He called the proposed $4 billion reservoir in Colusa County “a key component of new infrastructure to manage California’s water in light of our changing climate.” The reservoir would augment the water supply for San Joaquin Valley farms and cities in Southern California and the Bay Area. 

Environmentalists, however, say filling the 13,000 acres with water will increase the strain on the Sacramento River’s ecosystem, notably its faltering Chinook salmon runs. 

Among the next steps in advancing the Sites project is a review in which the State Water Resources Control Board will ensure enough surplus water is available in the Sacramento River watershed to operate the reservoir without infringing on existing water rights. Protests against the approval must be submitted to the water board by Aug. 1.

The 2014 Proposition 1 water bond will provide $875 million of the estimated cost, with much of the rest expected to come from federal loans to water suppliers. 

Proposed for construction in the hills abutting the west side of the Sacramento Valley, the reservoir would hold 1.5 million acre-feet of water and has been considered by advocates a much-needed boost for the state’s fragile water supply. Sites, its backers say, will allow the state to better capture water during wet years, when large volumes of runoff typically flow into the ocean, partly due to lack of storage space. 

Friday’s step forward for Sites comes two weeks after Newsom announced plans to expedite environmental review of new infrastructure projects, including reservoirs. A key legislative budget committee, however, delayed consideration of the governor’s bills.

California’s water crisis, explained: CalMatters has a detailed look at how California might increase its water supply, and a dashboard tracking the state’s water situation. There’s a lesson-plan-ready version of the water explainer — especially made for teachers, libraries and community groups — as part of the CalMatters for Learning initiative.

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