Prop 1 – Taxpayer Rip-off?

WECA opposed Proposition 1 on the March ballot, noting that the $6.38 billion general obligation bond followed $9.2 billion in relief payments—known as the Middle Class Tax Refund (MCTR)—to qualifying recipients. The MCTR was timed to coincide with Governor Gavin Newsom’s 2022 re-election campaign – even though he was running against a token Republican opponent, State Senator Brian Dahle from Bieber. Dahle received 40.8% of the November vote, considerably higher than the 24% Republican registration, suggesting many DTS and possibly registered Democrats were tired of Newsom.

Prop. 1 promises to fund behavioral health treatment, residential facilities, and supportive housing for veterans and individuals at risk of or experiencing homelessness with behavioral health challenges. These are laudable goals but also proverbial “drop in the bucket.” In early 2023, over 181,000 Californians were counted as experiencing homelessness. These funds are estimated to create only 4,350 housing units, with 2,350 set aside for veterans and 6,800 mental health and substance use treatment places for approximately 11,150 new behavioral health and supportive housing units statewide.

Prop. 1 will also shift dollars from counties to the state (from about 5% of total Mental Health Services Act (MHSA) funding to about 10%). This would result in about $140 million annually redirected to the state budget. However, this amount could be higher depending on the total revenue collected from the tax.

The MHSA restructuring will result in significantly less funding for core services, which could lead to counties:

·      Canceling contracts with community-based organizations. 

·      Closing programs that are currently serving Californians.

·      Reducing county staffing.

But back to the MCTR. Rather than have the state’s own financial system issue checks to taxpayers to facilitate these payments, the state hired Money Network Financial, LLC. This out-of-state vendor provides financial services. Under the agreement, Money Network produced and distributed debit cards and provided cardholders with customer service and fraud prevention services. Although MCTR issued payments relatively quickly, according to a recent audit, the provisions of the state’s agreement with Money Network created “certain difficulties related to the administration of the payments.”

The audit noted several critical deficiencies.

·      FTB did not ensure that Money Network consistently provided the required level of customer service to cardholders. Although Money Network received more than 29 million calls—the vast majority of which were handled by its automated system—Money Network did not answer nearly 900,000 of the roughly two million phone calls from callers seeking to speak with an agent about the MCTR program or issues with their debit cards. Weaknesses in FTB’s agreement with Money Network made holding Money Network accountable for its lack of customer service difficult.

·      Although Money Network reported a fraud rate to FTB of less than 1% of the amount distributed through debit cards, the state cannot determine the precise level of fraud in the MCTR program because Money Network did not answer a substantial portion of cardholder calls and has not specifically tracked fraud in the program.

·      Because the agreement’s payment structure bundles most services into a single per-card rate, FTB paid to Money Network nearly 90% of the agreement’s total cost in the first 15 months of the 49-month agreement period. This front-loaded payment structure does not fully safeguard the best interests of the state. In addition, the agreement with Money Network does not include provisions that would allow FTB to assess agreed-upon liquidated damages if Money Network does not comply with agreement terms—provisions found in other state agreements for similar services.

Finally, many debit card recipients have yet to activate their cards. According to information that Money Network provided to FTB, more than one million debit cards worth approximately $611 million in payments had not yet been activated by their recipients as of January 2024.

Time will tell if Prop. 1 will improve homelessness or mental health services. Still, if the history of the MCTR or Governor Newsom’s secretive $1-billion mask deal with Chinese automaker BYD is any bellwether, I am not expecting great results. 

Close Races

In CD-16 (San Mateo), former mayor Sam Licardo won the top slot for the November run-off. Assembly Member Evan Low and Supervisor (and former Assembly Member, former State Senator) Joe Simitian tied for number 2 and 3.

But here’s where, as Politico put it, “In a race that just keeps getting weirder, a Silicon Valley voter who called for a recount in [this] tied House primary election once worked for [Licardo]. The filing says it was made on behalf of candidate Evan Low, who, until this week, was heading to a three-way race in November. But Low vehemently opposes the recount, and the request came from a former staffer for ex-San Jose Mayor Sam Licardo, who advanced to the November general election weeks ago after finishing in first place. Voter Jonathan Padilla agreed to pay more than $300,000 for the recount. He worked for Licardo’s 2014 mayoral campaign and as a policy director for the City of San Jose in 2015 and 2016 while Licardo was mayor. He also donated $1,000 to Licardo’s campaign in December. A spokesperson for Licardo’s campaign denies working with Padilla or funding the recount. Low’s campaign isn’t convinced. ‘There’s zero doubt that Sam Licardo orchestrated this recount and Padilla’s declaration that the recount is on our campaign's behalf is simply disingenuous. Clearly, Sam Licardo doesn’t think he can win a three-way race because he’s showing he will do anything to avoid one,’ spokesperson Whitney Larsen told Politico recently on behalf of Low, bemoaning the ‘expensive and time-consuming’ recount.

A poll funded by the Licardo campaign shows Licardo still has a modest lead: 26%, followed by Low, 2%, Simitian, 20%, and 24% undecided.

In CD-45 (Fountain Valley), Michelle Steel (R) is in first place and will face Derek Tran in this D+5.2 district. Steel defeated Democrat Jay Chen by under 5% in 2022, and the DCCC placed CD-45 on its 2024 target list.

In AD-2, Republican Michael Greer came out on top with 27% of the vote. But in this D+28 district consisting of the counties of Trinity, Del Norte, Humboldt, and Mendocino and portions of Sonoma, he will have a tough election against second-place finisher Santa Rosa Council Member Chris Rogers.

In AD-6 (Sacramento), Democrat Maggy Krell will face Republican Nikki Ellis in this D+30 Assembly seat.

In AD-58 (San Bernardino and Riverside Counties), Democrat Clarissa Cervantes came in second to Republican Leticia Castillo in this D+18 district, meaning this race was decided in March.

In AD-75, former Republican San Diego Council Member Carl DeMaio received 42.9% of the vote and will face another Republican, Andrew Hayes. The result caused a bit of turmoil in San Diego. Story

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ABC Chapter Sues over Biden’s PLA Rule

ABC and its Florida First Coast chapter filed suit to stop the Biden administration’s scheme to mandate PLAs on construction contracts procured by federal agencies. ABC’s complaint asserts that President Joe Biden lacks the legal and constitutional authority to impose a new federal regulation, injuring the economy and efficiency in federal contracting and illegally steering construction contracts to certain unionized contractors, which employ roughly 10% of the U.S. construction workforce. Story

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California Supreme Court Clarifies the Scope of “Hours Worked” Under California Law

On March 25, 2024, the California Supreme Court issued a highly anticipated decision in Huerta v. CSI Electrical Contractors, Inc. The court responded to the request from the Ninth Circuit to answer three questions about Wage Order No. 16 and clarify the scope of the term “hours worked.” Although the case discusses the “hours worked” standard in the context of the construction industry, the decision is likely to impact every industry, especially businesses that require employees to go through security checks at the beginning and end of the workday and businesses that confine employees to specific areas of company property during meal breaks. More

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California Isn’t Coming for Your AC (Yet)

The California Energy Commission stopped short recently of pushing homeowners to install heat pumps to replace worn-out central air conditioners. The reason? Cost. “It was a difficult case to make, in terms of both the additional costs up front and then also potentially causing real energy costs overall to increase for some customers,” Commissioner Andrew McAllister told reporters. It was a blow for heat pumps, which are supposed to proliferate to 6 million in California by 2030 with support from federal tax incentives of up to $2,000 and additional state incentives.

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New Sacramento Parking Garage at SMF

Sacramento-based Otto Construction was awarded the $229 million Design/Build contract. This will be the firm’s second parking garage project at SMF as they also constructed the Terminal A garage in 2004. Otto said at the award they were comfortable with building under a PLA—which was mandated by a 3-2 vote by the Board of Supervisors earlier this year.

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California Legislature Sends Gavin Newsom Budget Deal to Slash Deficit 

Legislation that will reduce California’s budget deficit by $17.3 billion through spending cuts, deferrals, and other measures is headed for Gov. Gavin Newsom’s desk. The state Assembly and Senate approved Assembly Bill 106 along party lines today, advancing part of a deal negotiated by Newsom and Democratic legislative leaders over the past few weeks. The governor is expected to sign the legislation. Assembly Budget Chair Jesse Gabriel said the package was a first step and that the Legislature has the right to revisit the cuts and delays depending on future revenue figures.

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Celebrating 13 Years of Serving Military-Connected Job Seekers 

March officially marked 13 years of Hiring Our Heroes! They have been dedicated to driving positive change for transitioning service members, veterans, military spouses, and caregivers for over a decade. Here's to another 13 years of empowering the nation’s heroes and making a lasting difference together! Information

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Solar to Supreme Court

Politico writes the dispute over the value of rooftop solar is going to the California Supreme Court, which agreed Wednesday to hear a challenge from environmental groups to a 2022 California Public Utilities Commission decision.

The court agreed to hear the Center for Biological Diversity and two other groups' appeal of a lower appellate court's December ruling that upheld the CPUC's decision to slash rooftop solar reimbursements in its net energy metering program by about 75%. The development is a victory for the solar industry, and some environmental groups are pushing on multiple fronts for California to make small-scale solar power a central part of its transition to clean energy and utility-scale renewables. CBD senior attorney Roger Lin called it a "ray of hope" for the rooftop solar industry, which layoffs and bankruptcies have buffeted.

When the CPUC reduced the reimbursements, commissioners said the higher payments of the past had served their purpose of growing a mature rooftop market in the state. Since the programs are subsidized by people without panels (to the tune of $6.5 billion per year, according to a recent analysis), it was time to reduce them, commissioners said.

In their lawsuit, the CBD, Environmental Working Group, and the Protect Our Communities Foundation said that the CPUC had failed to fully account for rooftop solar’s social benefits, hadn't sufficiently promoted renewable energy, and had overlooked disadvantaged communities.

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Biden: ‘Union labor and American steel’ will rebuild Key Bridge

Standing in front of the crumbled wreckage of the Francis Scott Key Bridge, President Joe Biden re-upped his commitment to the federal government funding the span’s replacement, saying he would “move heaven and earth” to rebuild it quickly. During a windswept afternoon on the banks of the Patapsco River, the president said the top priority remains opening the channel for port traffic and emphasized the U.S. Army Corps of Engineers’ goal to clear a path for commercial vessels by the end of May. Biden said the new bridge would be built “with union labor and American steel,” as he stood on the grounds of the Maryland Transportation Authority Police headquarters, about a half mile east of the span. Story