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For an hour and a half Wednesday morning, May 29, California lawmakers lined up to speak for or against—mostly for—one of the most high-profile bills of the year. One member of the Assembly, a former state cop, choked back tears as he wrestled with the implications of his vote.

But when the rolls opened on Assembly Bill 392, which would make it harder for police to legally justify killing a civilian, the tally wasn’t even close: The Assembly passed the bill, 68-0, with 12 members abstaining.

Wednesday’s vote pushes California one step closer to enacting use-of-force standards that would be among the strictest in the country. If AB 392 is signed into law, police would only be able to use lethal force if “necessary” to defend human life.

The current standard, established by the U.S. Supreme Court, allows the lethal use of force if the split-second decision to pull the trigger is “reasonable.”

Introduced by Assemblywoman Shirley Weber from San Diego, the bill is a product of a long political tug-o’-war. On one side are criminal-justice advocates, including the American Civil Liberties Union, which has argued that current law allows police officers to justify all but the most flagrant misconduct. On the other are law-enforcement groups, which have said that a stricter use-of-force standard would allow prosecutors to second-guess difficult policing decisions in often-dangerous situations.

But most of the state’s major law enforcement groups are no longer actively opposing the bill, the result of an amendment last week. An earlier version of the bill defined “necessary” use of force as lacking any “reasonable alternative,” but that phrasing was stripped. Police groups argued that the “no reasonable alternative” would give prosecutors too much leeway to question every decision after the fact.

At a press conference after the vote, Weber insisted that the amendments had not substantially weakened the bill’s civil-liberty safeguards. But the change seems to have helped clear the way for Wednesday’s vote among officials ordinarily allied with law enforcement, with most moderate Democrats and 9 of the chamber’s 19 Republicans voting in favor.

“In my entire elected experience, never has a bill consumed my thinking as this has,” said Assemblyman Tom Lackey, a Republican and former California Highway Patrol officer who paused a number of times throughout his speech to collect himself.

He recalled a former colleague, “someone who was a very big part of my life,” who had killed someone while in the line of duty—and, struggling with the guilt, later took his own life. But Lackey said that he would support the bill, because, he argued, it offered a balanced approach.

Jim Gallagher, a Republican from Yuba City, also spoke in favor of the bill, saying that with the new amendments, it represents a “reasonable compromise.”

Devon Mathis, a Republican from Visalia, was initially the only Republican to vote “no” before switching his vote to an abstention. He argued that a lack of respect for police officers was the source of many civilian killings.

“We teach our youth ‘no means no,'” he said. “But when are we going to teach them, ‘stop means stop,’ ‘freeze means freeze’?”

That argument prompted a fierce response from Assemblyman Mike Gipson, a Democrat from Compton.

“I listen to all of you with your commentaries and words, but you don’t have to have my kind of experience,” said Gipson, who is African American, his voice reverberating around the chamber. “You don’t live where I live or grow up where I grew up.”

Weber, also an African American, said that the bill was part of a “400-year challenge” for racial justice in the United States. She closed by dedicating the bill to her two grandchildren. When the vote was called, criminal-justice advocates stood in the balcony and sang “This Land is Your Land.”

The bill now progresses to the Senate, where a similar version of the proposal died in committee last year. But this time around, the bill has the public support of the Democratic President Pro Tem Toni Atkins of San Diego, who stood beside Weber at Wednesday’s press conference.

Earlier this week, the state Senate passed a police-backed “companion” bill unanimously. The proposal by Democratic Sen. Anna Caballero from Salinas would provide more use-of-force training to police.

Learn more about these two bills and about the legal, political and human dimensions of this debate by subscribing to Laurel Rosenhall’s podcast, Force of Law. CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

They don’t call it the Golden State for nothing, at least not lately: California’s fiscal health is in extraordinary shape.

Income-tax receipts surpassed expectations for the pivotal month of April. Projections of a $21 billion-plus surplus are not out of the question. Nearly 3 million jobs have been added since the depths of the Great Recession, yielding record low unemployment. And having already met a 10 percent rainy-day fund requirement, the state is socking away billions in additional reserves to buffer against the next downturn. Impending Silicon Valley IPOs could provide an even bigger windfall.

Yet California isn’t as prepared as it may seem for the next recession—and, economists say, there will be a next one. Because voters have willingly taxed the rich, California’s $209 billion budget is more volatile than ever, overly reliant on top earners whose fortunes are tied to Wall Street.

And what’s different this time—and perhaps more worrisome—is that when the next pullback hits, California may have to fight off red ink without a historically crucial ally: Washington, D.C.

It’s not just that there’s no love lost between President Donald Trump and California leaders, or that Congress is gridlocked in its political divisions. Fiscal choices that have been made in the past couple of years may make it tough for the federal government to help states much in the next recession, even if Congress and the Trump administration want to.

Fiscal analysts warn, for example, that the federal deficit is soaring just as historically low interest rates are limiting the Federal Reserve’s monetary firepower.

“Whether it’s because of a worsening fiscal picture at the federal level or just the politics, I wouldn’t be counting on them coming to some agreement about helping out states,” said Gabriel Petek, the Legislature’s nonpartisan budget analyst.

“If you go from that premise, then the state has to be thinking about contingency planning for the next recession and getting through it on its own.”


The Macro View

During the economic downturn that followed the Sept. 11, 2001, terrorist attack and the financial crisis that struck in late 2008, the federal government poured billions of dollars into state coffers by enhancing support for anti-poverty programs, health care and infrastructure.

But Petek and other analysts warn that with U.S. government coffers drawn down by Trump’s tax cuts—and without an extraordinary and unifying cause like a terrorist attack or near-depression—California and other states may not be able to count on the federal government again to backfill fiscally.

Given political priorities, casualties could easily include services that impact millions of Californians: anti-poverty programs such as CalWORKS for working parents, in-home supportive services for low-income seniors, or the state’s Medicaid program known as Medi-Cal, which serves one in three residents.

“Gabe is not alone in having those thoughts,” said John Hicks, executive director of the National Association of State Budget Officers in Washington, D.C. “States did get assistance in the Great Recession and a smaller version of that in the early 2000s. That prevented them from having to make more significant cuts in education or other priority areas or have to raise revenues more.”

Petek, who was appointed in February after two decades at S&P Global Ratings, estimated the state will need $25 billion just to weather a moderate recession. That would wipe out everything the state has been able to save.

According to the Department of Finance, for instance, the state’s general-fund spending on Medi-Cal alone is $22 billion, and trimming that line item in a recession would threaten the $100 billion a year in matching federal money that underpins health care for the poor in California.

“It’s a huge part of how we fund our health-care system,” said Gov. Gavin Newsom’s finance director, Keely Bosler. And that’s just one need among many that would be competing for the state’s surplus should the economy turn.

In addition to the unpredictable economy, Bosler worries about the federal support that hinges on the fate of the Affordable Care Act, which is facing a legal challenge, and the next Census, which would be dramatically impacted if California residents are spooked by a proposed citizenship question.


Recalling the Recession

So as California strides toward the longest economic expansion in state history this July, Newsom and his fiscal advisers are keenly aware of what could happen. Many of them, longtime government staffers, were tasked with making cuts during the last recession and are steering the governor to limit his commitment to ongoing spending.

Bosler, who was a staff consultant in the Senate in 2010, recalls emotional, daylong committee hearings a decade ago when developmentally disabled children, working mothers and destitute patients suffering from chronic illnesses lined up, pleading with state lawmakers to spare them from cuts.

“I remember it so clearly, because it was really, really hard,” said Bosler, who later joined former Gov. Jerry Brown’s finance team.

On the brink of becoming a failed state, California drastically reduced spending on the poor then—with particularly long-lasting impacts on women. From cutting programs that provide child-care assistance to preschool subsidies for mothers holding low-income jobs, the pullback made the dream of self-sufficiency that much harder. For older women and women with disabilities, the state reduced safety-net programs intended to help them stay in their own homes by paying someone to help with housework, shopping and cooking.

In health, California slashed payments to doctors, dentists and clinics seeing patients covered by Medi-Cal, a move that discouraged providers from seeing them. The developmentally disabled were told to take generic drugs and prevented from participating in experimental treatments. And podiatry and optometry were no longer covered, because they were deemed optional.

Those cuts have lasting impacts. “No program was spared,” recalled Bosler. “Significant damage was done to core state services.” Welfare advocates are still fighting today to restore medical benefits slashed during the recession.

So the Democratic governor and the Democratic-controlled Legislature are making a conscious choice to build reserves now.


Building Resiliency

When Newsom updates his spending plan in mid-May, he is expected to maintain his three-pronged approach for savings, paying down debt and making targeted investments in affordable housing and early education.

One bucket of about $3 billion would be used to expand ongoing services for the poor, particularly in-home supportive services program and CalWORKs. A portion would be used to boost higher education to stave off a tuition hike in the University of California and California State University systems, as well as fund a second year of free community college.

The second bucket would be targeted for affordable housing and to confront California’s homeless epidemic; lay the ground groundwork for extending full-day kindergarten to all Californians; and provide an extra $3 billion toward districts’ teacher pension payments.

The last and largest bucket would be used to help the state weather a potential economic downturn for what Newsom has termed “budget resiliency.” He would finish paying off the state’s Wall of Debt that had accumulated from years of internal borrowing and undo a 9-year-old accounting trick that pushed the June state payroll into July so it looked like the state was spending less.


A Safety Net

Last year, the state put $200 million toward seeding a new account intended to protect anti-poverty programs in a downturn. Newsom has embraced the safety-net reserve by proposing to increase the fund to $900 million.

Senate President Pro Tem Toni Atkins, a Democrat from San Diego, told a crowd of policy advocates in Sacramento in March that even though Newsom’s style is much different from his predecessor Brown’s, their underlying strategy is similar.

“If you look at what Gov. Newsom has done in terms of the rainy-day fund, paying down debt, and those kinds of issues, and if you extrapolate that, then what you see is a fairly conservative approach to resources to make sure that we are trying to keep a sustainable, resilient foundation of a budget going forward,” Atkins said.

Atkins credits that extra safety-net reserve to the Senate’s budget committee chair, Sen. Holly Mitchell. Both lawmakers indicated they would like to go beyond $900 million, because the money would protect just a fraction of those in need.

If the state were to set aside $900 million, it would protect roughly 435,000 Medi-Cal recipients or 132,000 CalWORKS families for a year based on the state’s average spending on those programs. Currently, about 13 million people are on Medi-Cal, and nearly 400,000 families rely on CalWORKS—with demand growing when people fall on hard times.

Lawmakers haven’t said how much they will try to set aside. “It’s a technical term: A whole lot of money,” Atkins quipped.


The Course Ahead

Petek, the Legislature’s budget analyst, suggests lawmakers could do even more. He notes, for example, that while paying off California’s so-called Wall of Debt sounds nice, lawmakers may not want to undo that payroll accounting trick, because it’s administratively burdensome to do it again if the state needs to free up cash.

All this prevention is ironic, says Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific in Stockton. If the state is overly reactive to economic cycles, Californians have no one to blame but themselves.

It’s voters, he notes, who have decided again and again to tax the rich, a choice that has made the system more reliant on the investment income of high earners and therefore more volatile.

And for the record, he doubts that California will have any more or less to worry about than any state should a recession hit during the Trump administration.

“While California is acting to oppose or counteract the president’s policies in many areas, I don’t believe the federal fiscal response to a downturn is an area where California needs to take special precautions against the actions of Congress or the president,” he said.

But polls show the state is generally in sync with Newsom’s mix of priorities for the current surplus. A recent survey by the Public Policy Institute of California found majorities support additional funding for working poor tax credits, wildfire preparedness and developing more housing. Only 47 percent approved of one-time spending to pay down unfunded pension liabilities.

And, like the governor, a lot of taxpayers remember the last two recessions, and remain cautious.

“If they’re not going to give (the surplus) back in a refund,” said Charles McLaughlin, a board member of the Ventura County Taxpayers' Association, “then they should save it for a rainy day.”

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

Published in Politics

In a little-noticed side impact of California’s 2018 law granting drivers the option of listing their gender as nonbinary, California’s Department of Insurance has decreed that auto insurance companies can no longer grant breaks in insurance rates to teen drivers who are female or charge young men more.

Outgoing Insurance Commissioner Dave Jones, in one of his final acts in office, issued a regulation last month prohibiting the use of gender in automobile-insurance ratings, similar to regulations in six other states.

Jones’ replacement, Insurance Commissioner Ricardo Lara, supports that policy, saying in a statement: “Gender, race, ethnicity or sexual orientation are beyond your control, and it is not a fair or even an effective way to predict risk.”

Jones’ regulatory action received coverage in The New York Times and elsewhere. But the genesis of Jones’ decision received far less attention—and had nothing to do with car insurance.

It was, at least in part, legislation by Senate President Pro Tem Toni Atkins granting motorists the option of listing their gender as male, female or nonbinary. As the bill wended its way through the Legislature, Atkins and other backers said it would be a blow for equality.

“Mindful of all the people I know who are gender-nonconforming, and the families I know with transgender children, I wanted to make sure that California continued to be a leader in gender-identity equality,” Atkins said after Gov. Jerry Brown signed it into law in October.

Lobbyists for insurance companies had been neutral on the bill, having received assurances that it would have no impact on auto insurance rates.

Rex Frazier, president of the Personal Insurance Federation of California, which represents several major auto insurance companies, said insurers were blindsided by Jones’ justification for the regulation, pointing out that none of the 10 legislative analyses of the Atkins bill made any mention of the bill’s impact on insurance rates.

“It is commonly understood that teenage male drivers are generally a higher risk than teenage female drivers,” Frazier said in a letter to the Department of Insurance. “Eliminating gender rating would require female teenage drivers to subsidize teenage male drivers.”

Frazier said the gender of teen drivers can result in an additional cost for boys or discount for girls of about 6 percent on their premiums. Drivers who list their gender as nonbinary probably would have been given a lower cost than boys, he said, though under the new rule, gender cannot be taken into account.

In a separate letter to the Insurance Department, the American Insurance Association, an insurance trade group, wrote: “Senate Bill 179 was designed to reduce barriers to existing name and gender-change procedures. The bill was never intended, nor was it drafted, to affect established and demonstrated insurance rating factors such as gender.”

The association also cited a 2016 Insurance Institute report saying: “Men typically drive more miles than women and more often engage in risky driving practices, including not using safety belts, driving while impaired by alcohol, and speeding.”

In the rule-making process, Jones responded to the insurance groups by stating that “the Legislature may not have specifically intended to eliminate gender-based insurance rating” but that Atkins’ legislation had “relevance as a statement of California’s values around the role of gender in society.”

In an interview Tuesday, Jones said the “the real driver for the change was that there was really no consistency with regard to how insurers were using gender as a rating factor.” Additionally, he said, gender is “not a characteristic that is within your control.”

Atkins said in a statement Tuesday that her bill did not address the insurance, but she supports “efforts to ensure that all genders are treated equally.”

“However, it’s imperative that these changes be made thoughtfully and with strong input from Californians,” Atkins’ statement said.

The advocacy group Consumer Watchdog long had advocated for the change, saying in a statement after Jones acted: “Gender and sex have no more place in what we pay for auto insurance than race or ethnicity do. These new rules will finally end gender-based discrimination in auto insurance pricing in California.”

Insurance companies must submit gender-neutral pricing policies to the Insurance Department by July 1. The new pricing would take effect after that.

Frazier has called on the Department of Insurance to at least permit insurance companies to take into account drivers’ age, and certain safety features of newer cars in setting rates. Decisions on those requests are pending.

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

Published in Politics

California is moving toward becoming the first state to require publicly traded companies to have women on their boards—assuming the idea could survive a likely court challenge.

Sparked by debates around fair pay, sexual harassment and workplace culture, two female state senators are spearheading a bill to promote greater gender representation in corporate decision-making. Of the 445 publicly traded companies in California, a quarter of them lack a single woman in their boardrooms.

SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine.

“Gender diversity brings a variety of perspectives to the table that can help foster new and innovative ideas,” said Democratic Sen. Hannah-Beth Jackson of Santa Barbara, who is sponsoring the bill with Senate President Pro Tem Toni Atkins of San Diego. “It’s not only the right thing to do; it’s good for a company’s bottom line.”

Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, and conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California.

Jennifer Barrera, senior vice president of policy at the California Chamber of Commerce, argued against the bill and said it only focuses “on one aspect of diversity” by singling out gender.

“This bill basically mandates that we hire the woman above anybody else who we may be fulfilling for purposes of diversity,” she said at a hearing.

Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal-protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.

Five years ago, California was the first state to pass a resolution, authored by Jackson, calling on public companies to increase gender diversity. In response, about 20 percent of the companies headquartered in the state followed through with putting women on their boards, according to the research firm Board Governance Research. But the resolution was non-binding and expired in December 2016.

Other countries have been more proactive. Norway in 2007 was the first country to pass a law requiring that 40 percent of corporate board seats be held by women, and Germany set a 30 percent requirement in 2015. Spain, France and Italy have also set quotas for public firms.

In California, smaller companies have fewer female directors. Out of 50 companies with the lowest revenues, 48 percent have no female directors, according to Board Governance Research. Only 8 percent of their board seats are held by women.

The 2017 study said larger companies did a better job of appointing women, with all 50 of the highest-revenue companies having at least one female director, and 23 percent of board seats held by women.

“The main issue is still that a lot of companies headquartered here don’t have women on their boards,” said Annalisa Barrett, clinical professor of finance at the University of San Diego’s School of Business. “We quite often like to think of California as progressive and a leader on social issues, so that’s kind of disappointing.”

Barrett publishes an annual report of women on boards in California. Public companies are major employers in the state, and their financial performance has a big impact on public pension funds, mutual funds and investment portfolios. “Financial performance does really impact the broader community,” she said.

The National Association of Women Business Owners, a sponsor of the bill, says an economy as big as California’s ought to “set an example globally for enlightened business practice.” In a letter of support, the association cites studies that suggest corporations with female directors perform better than those with no women on their boards.

One University of California, Davis, study did find that companies with more women serving on their boards saw a higher return on assets and equity, but the author acknowledges this may not suggest a cause-and-effect.

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

Published in Local Issues

By many measures, the rambunctious campaign for a single-payer health-care system in California appears to be struggling.

A bill that would replace the existing health-care system with a new one run by a single payer—specifically, the state government—paid for with taxpayer money remains parked in the Assembly, with no sign of moving ahead. An effort by activists to recall Assembly Speaker Anthony Rendon for shelving the bill has gone dormant. And an initiative that would lay the financial groundwork for a future single-payer system has little funding, undercutting its chances to qualify for the ballot. 

But even if single-payer is a lost cause in the short term, advocates are playing a long game. For now, it may well be less a realistic policy blueprint than an organizing tool.

And by that metric, advocates are making gains.

Riding a wave of enthusiasm from progressive Democrats, supporters of single-payer have effectively made it a front-and-center issue in California’s 2018 elections. It’s been discussed in virtually every forum with the candidates running for governor, emerged as a point of contention in some legislative races, and will likely be a rallying cry at the upcoming California Democratic Party convention.

“This issue is not going away,” said Garry South, a Democratic political consultant who has worked with the California Nurses Association, which sponsored the stalled single-payer bill. “The progressive elements who are supportive of the single-payer concept know that it’s not going to happen now; it’s not going to happen tomorrow. It’s a long-term process, and Jerry Brown is gone as of January 2019.”

The governor has not needed to stake a position on the bill, because it skidded to a stop in the Assembly last summer without reaching his desk. But state Sen. Toni Atkins, a San Diego Democrat who co-authored Senate Bill 562, said Brown was not receptive. Analyses peg the cost of a statewide single-payer system at between $330 billion and $400 billion—far exceeding the state’s entire budget. That made it an anathema to Brown’s record of prioritizing fiscal stability for state government.

“When the governor saw that we introduced that bill… all he could look at me and do is shake his head and say, ‘$400 billion dollars.’ And I kept trying to say, ‘Can we back up and talk about what you've got to do to get (there)?’" Atkins said in an interview.

“He wasn’t letting it go.”

Atkins, who will take over as Senate leader next month, said she’s not giving up on the goal of single-payer, but does not expect it to happen this year. “People are polarized on this issue in a way that’s not good for coming together to get it done,” she said.

Led by the nurses association—a labor union that embraces firebrand activism—supporters of single-payer have targeted Rendon after he shelved the bill last summer, saying it lacked critical information on how to pay for a massive overhaul of the healthcare system. They peppered social media with images that not only portrayed the bill fight as a boxing match between Rendon and the nurses, but also depicted a knife labeled “Rendon” back-stabbing the bear symbol of California.

The nurses were not involved in the campaign to recall Rendon, said recall organizer Stephen Elzie, who has since dropped the effort and is now helping Democrat Maria Estrada challenge Rendon’s re-election bid. But the nurses union leapt into the governor’s race as one of the first labor unions to endorse Lt. Gov. Gavin Newsom. Single-payer has emerged as one of few issues on which the Democratic candidates disagree.

Newsom and Delaine Eastin, the former state superintendent of schools, have both said they support the nurses’ single-payer bill. Fellow Democrats Antonio Villaraigosa, former mayor of Los Angeles, and John Chiang, the state treasurer, say they want to expand health care so that everyone is covered, but not necessarily with the single-payer model that would abolish private health insurers and replace them with a government-run system.

A coalition of medical groups is lobbying against the single-payer bill, arguing that it makes more sense to protect and expand the federal Affordable Care Act, which has increased the number of Californians who have health insurance. Some members of the coalition have a history of spending big money to sway California elections. One of them, the doctors’ association, donated to Newsom before he voiced support for single-payer; it’s not yet clear if they will shift support to another candidate. 

Almost two-thirds of Californians like the idea of a statewide single-payer health-care system, although enthusiasm drops significantly if it would require raising taxes, according to polling last year by the Public Policy Institute of California. Still, Californians didn’t cite health care as a top priority when asked last month what the Legislature and governor should focus on in 2018.

The Assembly just wrapped up a series of hearings on what it would take to create a health-care system that covers all Californians. It exposed many obstacles—in both federal and state law—to swiftly enacting single-payer. For one, the state would need permission from the federal government—and perhaps an act of Congress—to shift billions of dollars from Medi-Cal and Medicare into a state-run single-payer plan. For another, if lawmakers raised taxes to fund single-payer, voters would likely need to approve changes to the California Constitution to allow the money to go to health care instead of schools. (That’s the only single-payer initiative that someone is trying to get qualified for the ballot; while a Silicon Valley tech consultant is gathering signatures for it, he doesn’t have support from the nurses’ union or any other well-financed group.)

Assemblyman Jim Wood, a Healdsburg Democrat who chaired the panel, called the single-payer bill “aspirational” and said he’s instead considering legislation that could help more Californians get health care without requiring permission from the federal government. One idea: extending subsidized health plans to adults who are undocumented immigrants.

“I believe we can actually get to single-payer, once we go through a lot of study and a lot of work,” Wood said. “But this feels, at times, more like a litmus test.”

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

Published in Politics