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Sat08182018

Last updateWed, 27 Sep 2017 1pm

California’s resistance began before there was a resistance.

When Gov. Jerry Brown unveiled his final budget on Jan. 10, it bookended eight years of a progressive march to reduce greenhouse gases, expand health care, grant more rights to undocumented immigrants and raise the minimum wage to $15 an hour. Along the way, voters have assented by passing temporary taxes on the rich—not once, but twice. The top marginal income tax rate is now 13.3 percent, the highest state income tax rate in the country.

In short, policies that are now labeled acts of resistance to President Donald Trump were alive and ascendant in California long before Trump won the White House. But the contrasts have become much more stark.

Instead of cutting taxes, the Democratic governor and his party’s legislative leaders have passed a gas tax to help pay for aging infrastructure. Instead of trying to shift government out of the healthcare marketplace, California is looking for a way to fund single-payer health care, including coverage for undocumented immigrants. Instead of criminalizing pot, the state is looking forward to collecting taxes on marijuana sales.

In the months between now and the June deadline for a final budget, the governor and the Legislature will hammer out details. The focus this year: what to do with an expected surplus of $6.1 billion—and there are definitely differing opinions all around. Republicans say return it to California’s 40 million residents as a nice tax refund. The governor's priority is to fill up the state’s rainy-day fund. Democratic legislators mostly want to spend it.

“We have a very different approach,” said Assemblyman Phil Ting, D-San Francisco, who chairs the Assembly Budget Committee. “Our focus, the people who we think need tax relief, are the working Californians who are making less than $25,000. That’s where we want to spend our money, making sure they have money to pay rent, to pay for food.”

Rather than giving out “huge corporate tax breaks and a huge tax break for the wealthiest in this country,” Ting has a long list of how he would like to spend that extra money, including:

• Increasing the state’s Earned Income Tax Credit, which puts money into the hands of the working poor.

• Expanding Medi-Cal health care for poorer Californians to cover all remaining uninsured residents, mostly undocumented immigrants.

• Expanding early education for 4-year-olds through preschool and transitional kindergarten programs.

• Increasing college aid.

• Expanding mental and social services to reduce the number of criminals who go on to re-offend.

As supportive as Brown might be of these Democratic aspirations, his administration is urging legislative leaders to proceed with caution. The state’s tax structure is more vulnerable than ever to the stock market gains and losses of its wealthiest citizens, and the governor said California must prepare for the next economic downturn, because a mild recession could wipe away at least $20 billion a year in revenues.

He also warns of uncertainty from Washington, D.C.

“There are certain policies that are radical departures from the norm, and California will fight those, whether it’s immigration or offshore drilling,” Brown said. “We don’t know what will happen. I wouldn’t want to portray a California-Washington battle, although there are some key differences, and we’ll espouse our values.”

Since Brown was elected to begin his second stint as governor in November 2010, the state has climbed out of the recession and enjoyed economic prosperity. The unemployment rate, which topped 12 percent, now stands at 4.6 percent. Since his return, California has added 2.4 million jobs, and hourly wages are up $4.76 an hour. The state, which carried a $25 billion deficit in his first year back, has enjoyed billion-dollar surpluses in recent years, and the state now has a rainy-day fund.

The governor’s proposed $190 billion budget is dominated by spending on education (29 percent) and health care (32 percent). Health care spending has been growing particularly fast since the state embraced the Affordable Care Act, also known as Obamacare. The act not only grew the marketplace for private health plans; it allowed states to expand their Medicaid health insurance programs for the poor.

Because California is among 30 states that expanded Medicaid, the federal government is paying at least 90 percent of the cost for newly eligible enrollees. That has allowed California to draw billions in extra funding from the federal government to bolster Medi-Cal, the state’s version of the national Medicaid program. As a result, the number of people without health coverage in the state has dropped to a historic low: from 17.6 percent in the 1980s to 7.6 percent in 2016. Today, one in three Californians is covered by Medi-Cal.

Public schools too have greatly benefited since the recession, with much of the extra spending on schools going to improve teachers’ salaries.

However, if the federal government doesn’t reauthorize the Children’s Health Insurance Program for 1.3 million children, that could add more than $850 million in costs to the state over two years.

Worse, if Republicans in Washington slash Medicaid funding in 2018, the state could lose between $25 billion and $50 billion, said Chris Hoene, executive director of the California Budget and Policy Center, a progressive think tank in Sacramento.

“The reality is California could not afford the scale of the cuts the GOP has been proposing,” Hoene said. “That’s going to put state leaders in a position of deciding who gets state services and how do they fund that.”

Other factors are straining the budget. For example, pension costs for public workers continue to be one of the fastest-growing liabilities—driven by lower investment-rate assumptions, higher health care costs and longer life spans.

Voters, too, could turn on Brown and lawmakers. Early polling suggests Republicans have a decent shot at repealing a gas tax hike that went into effect late last year. Brown said at a press conference Wednesday that he believes a repeal initiative could be defeated.

The Legislature’s nonpartisan budget analyst is also urging lawmakers not to commit to too many new spending programs.

“As it crafts the 2018-19 budget and future budgets, we encourage the Legislature to consider all of the uncertainty faced by the budget in future years and continue its recent practice of building its reserve levels,” the analyst wrote.

On the flipside, Republicans are calling for a tax refund, if not an outright repeal of state income taxes. They argue that California’s high taxes chase residents out of state.

“This surplus is a direct result of Capitol Democrats overtaxing hard-working Californians,” said Assemblyman Matthew Harper, R-Huntington Beach. “Rather than expanding an ever-growing list of government programs, our leaders should figure out a way to return that money to the people who earned it in the first place.”

Assemblyman Vince Fong, R-Bakersfield, said he plans to introduce tax cuts aimed at helping families and small businesses stay in California.

“As we see all too often now, we are losing families and small businesses to neighboring states that have tax burdens much lower than California’s high-priced tax code,” Fong said on Twitter. “We have an opportunity to change that.”

Brown dismissed the refund idea, saying it would only prompt service cuts to public schools and universities later. “If you want to budget responsibly, you need big surpluses in years that are good,” he said.

Still, there’s a growing sentiment that California may have to respond to recent changes in the federal tax plan, specifically a $10,000 cap on state and local deductions that will hit millions of households.

According to the state Finance Department, the average deduction for state and local income taxes alone is nearly $16,000 per return, while state and local property taxes average less than $6,000 per return. Because a portion of those taxes will no longer be deductible, it acts as double taxation for California taxpayers.

Senate President Pro Tem Kevin de León, who is running for U.S. Senate, introduced legislation Thursday to shield Californians from bearing the costs of the tax overhaul. The bill, dubbed Protect California Taxpayers Act, would allow taxpayers to make charitable deductions to the state and receive a dollar-for-dollar tax credit on the full amount of their contribution. By having residents donate to the state government as a charitable contribution, the contribution remains deductible on federal taxes.

“The Republican tax plan gives corporations and hedge-fund managers a trillion-dollar tax cut and expects California taxpayers to foot the bill,” de León said in announcing his legislation. “We won’t allow California residents to be the casualty of this disastrous tax scheme.”

Brown was particularly vocal against the GOP tax proposal, calling it a “tax monstrosity,” but the governor expressed reservations about whether the state could sidestep federal law.

“It looks interesting,” Brown said. “But two questions: Can it work? If it does work, can the Internal Revenue Service issue a regulation and completely subvert it?”

De León responded that he was confident it would work, because similar charitable deductions have already been given out for education-based contributions.

For now, state Democrats are in agreement about a common threat.

Whether it’s federal tax changes or entitlement cuts, the leader of the Assembly, Anthony Rendon, D-Paramount, said he’s most concerned Republicans in Congress and the Trump administration will take another swipe at liberal California in 2018. “We’re worried about the next shoe to drop.”

CALmatters is a nonpartisan, nonprofit media venture explaining California policies and politics.

Published in Politics

In the waning hours of the legislative session, Democrats pushed through new labor requirements widely viewed as retaliation against Tesla, the electric car maker embroiled in a union-organizing campaign at its Fremont plant.

Labor unions got lawmakers to insert two sentences into a cap-and-trade funding bill requiring automakers to be certified “as fair and responsible in the treatment of their workers” before their customers can obtain up to $2,500 from California’s clean vehicle rebate program.

At the time, Democrats openly wrestled with the concern that the United Automobile Workers—which is trying to maintain its major role in the auto industry as the companies make big bets on electric vehicles—was expanding its unionization campaign from the factory floor to the Senate floor. Sen. Steve Glazer of Orinda said the state should not “hold our environmental projects hostage to a fight with one progressive employer,” while Sen. Connie Leyva of Chino countered that California shouldn’t want companies to succeed at the expense of workers.

With regulators starting to draft the new rules, a lingering question remains: How far will California—the first state in the nation to approve a $15 minimum wage and a state that has set an ambitious goal to put 1.5 million zero-emissions vehicles on the road by 2025—go in order to graft its blue values onto the green sector?

“In politics, your oldest friends are your best friends,” said Dan Schnur, former head of California’s campaign watchdog agency and now a professor at the University of Southern California. “The tech people may have come to Sacramento with a lot of money and with an agenda that dovetails with the governor and legislators’ policy priorities, but they’re still the new guys on the block. Labor’s been there for a long, long time.”

Now state regulators—at both the state Air Resources Board and the Labor and Workforce Development Agency—will hold public hearings and draft rules for certifying automakers who want their vehicles to qualify for California rebates. The Legislature will then need to approve those.

Among the points of contention:

• What is “fair and responsible” to auto workers?

• How will the state weigh wage and benefit standards, or training and safety requirements, against manufacturing costs?

• How will the state certify vehicles made outside of California, or even out of the country—in places such as in Mexico and China—where wages are lower and labor regulations are less stringent? Or will automakers self-police by adhering to a code of conduct?

Dean Florez, a former Democratic state lawmaker and a member of the air board, said California can have both labor protections and environmental leadership as the state charts new territory.

“We shouldn’t be using public money to fund or support companies that do not meet basic worker protections,” Florez said. “We shouldn’t undercut the labor protections that we have fought for, for so many years. And I think that there is a danger in doing so; I think we would lose the confidence of the public for environmental leadership in the end.”

California’s new requirement will apply to all automakers, but it couldn’t have come at a worse time for Tesla, a company that prides itself on innovation and disrupting the status quo. When plant workers went public with complaints about low pay, long hours and unsafe conditions, Tesla co-founder and CEO Elon Musk labeled labor’s tactics “disingenuous or outright false.”

While making $17 to $21 an hour is above minimum wage, Tesla employee Jose Moran noted that a living wage in the San Francisco Bay Area is a lot higher—around $28. Musk responded that Tesla’s compensation package is higher than those at General Motors, Ford and Fiat when including Tesla’s employee stock program.

The company wouldn’t comment now, beyond referring back to what its policy director Sanjay Ranchod told lawmakers at a September hearing: “The company is committed to protecting the health and safety of its workers, and we are committed to continue and to make progress towards our goal of becoming the safest auto factory in the world.”

The nation’s newest automaker is also on track to be the first to max out on a federal tax credit of up to $7,500 per vehicle. And with its Model 3 sedans pitched as its affordable electric car at $35,000, Tesla will need California’s rebate more than ever to compete against other electric cars such as the Nissan Leaf or Chevrolet Bolt.

Business boosters wonder why the state would single out clean-energy vehicles over gasoline cars for greater scrutiny when 40 percent of the state’s greenhouse gases come from tailpipe emissions. They worry Sacramento’s pro-labor stance will dissuade companies from locating or expanding in California. Already, Tesla located its first battery factory just outside the state line in Sparks, Nev.

Politicians say they want good-paying jobs, and to grow manufacturing and reduce greenhouse gas emissions, “and yet, we’re in the ironic place where Tesla is being attacked by some elected officials relative to whether or not their workers are unionized,” said Carl Guardino, head of the Silicon Valley Leadership Group, a trade association representing nearly 400 Silicon Valley employers, including Tesla.

California is home to about 10,000 auto industry workers, virtually all from Tesla. That’s compared to 38,000 in Michigan, 24,000 in Kentucky and 20,000 in Ohio, according to the U.S. Labor Department’s Bureau of Labor Statistics.

Union representatives say the goal is not to slow the production of clean-energy vehicles. Rather, they maintain that if taxpayer money is being used to help sell cars, then it’s up to the state to make sure it results in good-paying jobs.

“This is all part of our work at the labor movement to make sure there’s accountability for public investments,” said Angie Wei, an influential lobbyist for the California Labor Federation, the umbrella group for unions including the UAW. “If we’re going to put taxpayer money into it, then we’d sure better be getting something out of it for jobs.”

The union also is trying to maintain its role as the auto industry makes big bets on electric vehicles. Just this year, Volvo and GM announced plans to phase out conventional engines. The union can also use a win in labor-friendly California after losing an organizing effort at a Nissan plant in Mississippi, a right-to-work state.

It’s worth noting the Nummi plant that Tesla took over in Fremont was represented by the union before the joint venture between GM and Toyota closed in 2010.

“It is about Tesla, and it isn’t about Tesla,” Wei said. “We had a gas-and-combustion industry that for decades created good middle-class jobs. They’re now being replaced by electric vehicles. This is our new economy, and with major public investment. The question is: Are we going to allow the auto industry to create and maintain middle class jobs? Or are they going to become the next Walmartization of the economy?”

Sacramento has placed itself at the forefront of cleaning up the environment. Gov. Jerry Brown and fellow Democratic lawmakers have pitched California as a model to the world for reducing air pollution and greenhouse gases that contribute to climate change, in direct response to the Trump administration’s anti-regulatory philosophy.

But California has also had a longstanding relationship with labor unions, boosting the minimum wage and offering access to paid sick and family leave. In recent years, the California Labor Federation has successfully pushed legislation to protect immigrant workers from threats of deportation and expanded authority for the state to go after employers who skirt overtime or minimum-wage laws.

Lobbying reports show Tesla spent $189,237 on lobbying in the three-month cycle during which the bill was debated, compared to $103,351 for the labor federation. But labor’s might comes also from being able to mobilize its members on issues and during elections.

Democratic lawmakers who struggled to prioritize the interests of two political allies will have more to soul-searching to do next year. Democratic Sen. Scott Wiener of San Francisco, who has a record of advancing the green economy and supporting prevailing wage to maintain union pay on public works projects, said he was unhappy that the so called “Tesla rule” had been inserted at the last minute. “This is significant and important enough that it should be vetted through a normal legislative process with public scrutiny. That, to me, is the best way to come to the right solution,” he said.

His fellow Democratic lawmaker and San Franciscan Phil Ting, who chairs the Assembly Budget Committee and authored the measure, insisted it strikes “a good middle ground.”

“We could have said, ‘You’re not going to get any money unless your workforce is unionized.’ That could have been something we inserted. We didn’t,” Ting said in an interview. “Having said that, we also could have done nothing. So if you look at the two extremes where we could done nothing or we could have dictated the type of workforce, I think this is the middle of those extremes.”

Ultimately, the decision to unionize remains up to workers. Michael Catura, 33, a battery-pack line worker who has been at Tesla for nearly four years, said he supports joining the union, because it would mean a higher wage and seniority for him. As the son of a postal worker, Catura said he has been disappointed that he has been passed over for promotions because supervisors can play favorites. He said he started at $17 an hour and now makes $21 an hour.

Catura has one message for Elon Musk: “I would tell him, ‘Hey man, scratch my back, and I’ll scratch yours. Give us more than just a bone.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

The “protest pit” outside of the Republican Presidential Debate at Saint Anselm College in Goffstown, N.H., on Saturday evening was a fenced-in area in a field about a quarter mile down the road from the main entrance to the campus.

Bumper to bumper traffic ran in front of the pit—odd, given that NH State Police were letting few cars on the campus. Most were told to turn around. No one that Republican leadership didn’t want in was getting anywhere near the Carr Center, where the debate was taking place.

Powerful lights shone down on the scene from one side—lending it an eerie cast. Behind the fence facing the road were a couple hundred supporters for a few of the Republican candidates. But that was just the first layer: Behind them were about 500 activists with the Fight for 15 campaign—organized and bankrolled with $30 million as of last August by the Service Employees International Union (SEIU). Union leaders had bused in SEIU staff and members; student activists; and allies from other unions and immigrant organizations from around the region—at least 13 busloads from southern New England overall, according to the campaign’s registration form for the event. It was a respectable showing, if not the “massive crowd of underpaid workers” that SEIU’s press release had promised.

So there they were. Supporters of a $15 an hour federal minimum wage, a fairly diverse group, standing in a snowy field on a back road, enthusiastically waving banners—some quite creative, cylindrical and glowing from within like Japanese lanterns—and periodically trading chants with the mostly white right-wing activists in front of them.

Their presence was part of the tactic to raise the profile of the Fight for $15 campaign by protesting presidential debates and other high-profile events like the Super Bowl in recent months. That makes sense.

What doesn’t make sense is why SEIU pulled out 500 people onto a chilly windswept hill in suburban New Hampshire to protest for a laudable reform that their chosen presidential candidate, Hillary Clinton, absolutely does not support.

Clinton, like Barack Obama, has come out in favor of a $12 an hour minimum wage. Bernie Sanders, the only candidate whose politics are in line with labor unions like SEIU, is also the only candidate who publicly supports the Fight for $15 campaign’s main goal—a $15 an hour minimum wage. That’s barely a living wage at all in many parts of the country, and hardly the huge ask that opponents make it out to be, especially given the wage freeze imposed on most Americans by corporations and our political duopoly since the 1970s.

Yet the leaders of the 1.9 million member SEIU backed Clinton last November, joining the heads of a number of other large American unions in supporting the candidate with a proven record of pushing policies completely antithetical to union demands. They have already pumped millions to Clinton super PACs over the heads of their largely voiceless members.

In response, a coalition of progressive unions and activist union members has formed Labor for Bernie to win as many union endorsements for Sanders as possible, even as Sanders has amassed a $75 million warchest from mostly small donations—without the truckloads of cash that labor unions have traditionally lavished on Democratic candidates over the past few decades.

With Sanders doing very well in the NH polls and possibly capable of staying in the race all the way to this summer’s Democratic National Convention, it appears SEIU leadership made a serious miscalculation this election. The fallout from that miscalculation is already playing out in the very state where they organized the standout for their Fight for $15 campaign over the weekend, and where a key primary is taking place today.

Two New Hampshire SEIU locals—560 (Dartmouth College workers) and 1984 (NH State Employees’ Association)—broke ranks with SEIU leadership last fall and backed Sanders for president. Both locals were present in Goffstown on Saturday.

Whether Bernie Sanders wins the nomination and election or not, current SEIU leadership—and the leadership of every union marching in lockstep with the worst elements of the Democratic Party—is going to face increasing pressure from its rank-and-file members to stop supporting pro-corporate anti-labor candidates like Clinton. Likely culminating in major grassroots insurgent campaigns aimed at removing union leaders perceived as sellouts—as has happened on many occasions in labor history. It remains to be seen whether such internal reforms will happen before the major unions collapse under the death of a thousand cuts being inflicted on them by their traditional political enemies and their erstwhile allies alike.

SEIU and less democratic unions like it could forestall the looming civil war in their own ranks—and increase the American labor movement’s chance of survival—by learning from the more democratic practices of the 700,000 member Communication Workers of America (CWA)—whose leadership stepped aside last year and let their members directly decide: a) If they should endorse any candidates for POTUS, and b) Which candidate they should endorse.

CWA members, some 30 percent of whom are Republicans, voted to back Sanders in December.

Jason Pramas is the Boston Institute for Nonprofit Journalism’s network director. He has been a member of three SEIU locals (925, 285 and 888) over the past 18 years, and helped lead a successful union drive with SEIU Local 509 last year—at the cost of his job.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

This report was produced by the Boston Institute for Nonprofit Journalism and is part of their “Manchester Divided” coverage of the madness leading up to the 100th New Hampshire presidential primary.

Published in Politics

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