News

California’s legislative session, which completed its work in the wee hours Saturday morning, was one of the more controversial ones in years, given the degree to which the Democratic majority was able to secure various tax and fee increases. It was also one of the more divisive recent sessions from a partisan standpoint.

. . .Finally, California’s politically powerful unions got many of their priorities through this year’s legislative session. The most far-reaching measure, Assembly Bill 1513, would provide the names and personal information of home-care workers who work for private companies. That would enable unions to contact private-sector workers for organizing purposes.

The Legislature also passed Senate Bill 63, which expands the state’s family leave law, applying it to companies with at least 20 employees. It also passed AB1461, which would require employees at some companies that provide meal-delivery services to get a “food-handlers’ card.” Similar to the home-care bill, unions would then have access to these workers’ private information for organizing purposes.

But despite the upbeat rhetoric, a crisis is looming in the nation’s second-largest school district as enrollment falls from a projected 514,000 in 2017 to 480,000 in 2020. Since the state’s main education funding formula is based on average daily attendance, this could force mass layoffs of teachers or even drastic measures like shortening the school year. A $422 million deficit is anticipated in 2019-20, with red ink after that for as far as the eye can see. None of this comes as any surprise. A blue-ribbon commission’s report issued in November 2015 said L.A. Unified was facing fiscal disaster because of the enrollment declines, which are primarily due to falling birth rates, and because of the cost of pensions and retiree health care benefits. Employee retirement benefits will claim 8 percent of the school budget in 2017-18 and more than double that sum in coming years as the state’s 2014 bailout of the California State Teachers’ Retirement System ratchets up required payments from districts and as more of the district’s aging workforce retires.

University of California President Janet Napolitano has been under siege since March 2016, when state Auditor Elaine Howle released a report that showed that the UC system wasn’t honoring the principle that California students come first. Howle documented how, over the course of nearly a decade, budget-strapped UC had chosen to increase out-of-state students who pay far higher tuition by more than 400 percent – and that some were admitted ahead of nearly 4,300 California students “whose academic scores met or exceeded all of the median scores of nonresidents whom the university admitted to the campus of their choice.” At least initially, Napolitano and some regents dismissed the criticism before finally giving in and capping nonresident admissions last week. But the Golden State’s other giant higher education system – California State University – got the message loud and clear: In-state students must be the highest priority. Last week, CSU formally guaranteed that a qualified California high school graduate will be offered admission to at least one of CSU’s 23 campuses.

San Francisco and San Mateo counties in the Bay Area have passed a grim milestone reflecting extreme housing costs: The federal government now considers households in the counties which make $100,000 a year to be “low income,” making them eligible for federal housing programs for poor families, most notably Section 8 vouchers that allow more than 2.2 million U.S. families to pay only 30 percent of income toward rent.

“Tech companies in San Francisco and San Mateo counties lost 700 jobs from January to February and tech employment has dropped by 3,200 jobs since hitting a peak last August,” the New York Times observed, citing chief San Francisco economist Ted Egan. “Venture capital has peaked and has been going down steadily since 2015,” said Egan. “A lot of the employment in our tech sector is in companies that are not profitable. If they can’t secure new venture funding, some of them run out of cash. If we see a real downturn in the tech sector we could be in a situation where the U.S. economy is doing better than San Francisco’s.”

“As the state prison population comes close to exceeding a court-mandated limit, the California Department of Corrections and Rehabilitation is pursuing new regulations that aim to get more inmates paroled more quickly over time,” the Sacramento Bee reported. “The proposed rules, originating from voter approval of Proposition 57 in November and unveiled [March 24], would allow ‘nonviolent’ felons to first seek parole at the conclusion of the base term for their primary offense, before serving additional time for other charges and enhancements that can add years to their sentence.”

Confusion and uncertainty over the prospect of hitting the magic number has pervaded the challenge of measuring the actual budget itself. Disagreement has not gone away over just how big the number is. “Brown pegs the ‘General Fund’ budget at $122.5 billion and $179.5 billion if special funds — such as those spent on highways — and bonds are included,” wrote Dan Walters in the Sacramento Bee. “But that’s less than half of the true budget, which includes federal funds — especially those for health and welfare services — and such things as the fees on college students and pension checks to retired public employees.”

But now there’s push-back against this tidy assumption about what’s driving the housing crisis, and from an unlikely source: Legislative Analyst Mac Taylor. In “Do Communities Adequately Plan for Local Housing?” – a report prepared by LAO staff but carrying Taylor’s byline – the first central conclusion is that the process under which the state Department of Housing and Community Development works with cities and counties on their general plans to ensure adequate housing isn’t working. It cites little follow-through from many local governments on past promises and notes that many development plans are badly outdated and unusable. It offers suggestions on how the process might be improved to speed construction of housing stock.

“Of the 55,000 bridges across the U.S. that were deemed structurally deficient in a report published by the American Road and Transportation Builders Association, more than 1,300 California bridges fall under that category,” KCRA and the Associated Press reported. “That means that of the 25,431 bridges in the state, 5 percent have one or more key bridge elements – deck, superstructure or substructure – that are considered to be in ‘poor’ or worse condition, the analysis found.”

Fueled by a dated system that does not always respond to market incentives or pressure, costs and surpluses of energy have both grown in California, raising pointed questions about what residents should expect from rates and regulations alike.

Utilities must buy back the electricity at market rates, but they still have this vast – and growing – infrastructure of power plants and utility lines to finance and maintain. The more the utilities raise their rates to pay for these “stranded costs,” the more consumers opt out and install solar panels. That raises the per-capita costs of maintaining that infrastructure, which raises electricity prices – and leads to more people opting out of the system. Advances in battery storage could further diminish the need for power plants that are financed 30 or 40 years into the future.

In a shock critics had warned against, Golden State schools discovered that their nation’s largest pension system, CalPERS, was on track to force substantial budgetary cutbacks on core education spending.

The Brown administration is ending a program that coordinated care for seniors and low-income families because it was no longer cost effective. . . Federal regulations requiring in-home caregivers to receive overtime after 40 hours per week drove the cost of the program up with the minimum wage hike. . . Cutting the program will shift the labor costs onto the counties, which is estimated to cost more than $4.4 billion over the next six years . . . “This would be devastating to counties all over the state,” CSAC President and Alameda County Supervisor Keith Carson said in a statement. “We undoubtedly would have to make cuts in other vital social services to cover these costs.”

Although Americans nationwide have been flooding south and west for years, the Golden State has become an exception. Nearly 62 percent of Americans lived in the two regions, Justin Fox observed from Census figures. “That’s up from 60.4 percent in the 2010 census, 58.1 percent in 2000, 55.6 percent in 1990 — and 44 percent in 1950. The big anomaly is California, which is very much in the West, yet has lost an estimated 383,344 residents to other states since 2010.”

California local governments already have faced 50-percent hikes in their CalPERS payments over the past several years, which has led local officials and pension reformers to increasingly fear a continuing cycle of service cut-backs and tax increases. Indeed, there was some pressure at CalPERS to push the expected return rates down to the 6 percent range, but some officials expressed concern about what this would mean, cost wise, for member agencies.