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Presented by Environmental Working Group: Jeremy B. White and Lara Korte’s must-read briefing on politics and government in the Golden State | | | | |  | | By Lara Korte , Jeremy B. White , Sakura Cannestra and Owen Tucker-Smith | Presented by Environmental Working Group | THE BUZZ: The state’s firehose of funding could slow to a trickle. The warning signs have been flashing for months, and yesterday the state’s Legislative Analyst’s Office made it clear: California is likely facing a significant budget deficit — an estimated $25 billion next year, with ongoing, albeit smaller, projected shortfalls in years to follow. Let’s be clear: this is not an absolute certainty. Lawmakers and Legislative staff on Wednesday downplayed the urgency of the LAO’s report. Assembly Budget Chair Phil Ting (D-San Francisco) noted the analyst’s office predicted a budget deficit at this time last year too, and the state ended up with a historic surplus. “Projections are just that — projections,” Ting said. But there’s no denying that the economy isn’t great right now. Inflation is up and stocks have been weak for much of the year. Not to mention layoffs at marquee tech companies like Lyft, Meta and Twitter, which have heightened economic pessimism throughout the state. All those factors have contributed to less-than-stellar revenue figures for the state over the last several months. As the LAO sees it, that means lawmakers are going to have far less wiggle room when they sit down to hash out spending next year. | 
California Gov. Gavin Newsom talking to reporter in Sacramento, Calif. on Friday, Oct. 7, 2022. | Rich Pedroncelli/AP Photo |
WHY THIS MATTERS: California over the past few years has enjoyed historic budget surpluses, which has helped lawmakers fund things like a nation-leading $54 billion climate change package and build up the state reserves. As Christopher Thornberg , a forecasting expert who has advised the state controller’s and treasurer’s offices, puts it, “Last year, it was really fun to be in Sacramento… everyone was trying to figure out how much money they could spend.”
The good news is that a lot of last year’s spending was one-time allocations, not on-going commitments that need to be funded every year. Gov. Gavin Newsom purposefully vetoed several spending bills this year for that reason, and lawmakers in their budget made sure to build up the state reserves. The deficit projections are “realistic,” said H.D. Palmer, a spokesperson for the administration’s Department of Finance, noting that “the state is in its best-ever position to manage a downturn.” But the LAO had some suggestions for how Newsom and legislators should balance the 2023-2024 budget and prepare for years of shortfalls — including avoiding using reserve funds and, if possible, in January, “question the administration about the implementation and distribution of recent augmentations.” Translation: if the state hasn’t sent out some of the money it allocated last year, lawmakers should see about getting it back. Read the LAO’s report here. BUENOS DÍAS, good Thursday morning. Rep. Mike Garcia’s victory over Democrat Christy Smith last night in CA-27 gave Republicans their 218th seat in the House — and majority control for the first time since 2018. More election updates below. Got a tip or story idea for California Playbook? Hit us up: jwhite@politico.com and lkorte@politico.com or follow us on Twitter @JeremyBWhite and @Lara_Korte . QUOTE OF THE DAY: “It’s not because we’re all smoking doobies and hanging at the beach.” PDI data wiz Paul Mitchell explaining to the New York Times why it takes so long to count ballots in California. TWEET OF THE DAY |  Today's Tweet of the Day | Twitter |
WHERE’S GAVIN? In Napa County to talk about this year’s fire season and investments in wildfire prevention.
| | A message from Environmental Working Group: The average price for a gallon of gas in California is nearly twice the national average while oil companies’ profits have risen up to 500%. All in the current setting of a struggling economy with record inflation. Let’s put an end to oil company price gouging and put money back in the pockets of hard-working Californians. Go to http://ewg.org to find out more. | | | |  | TOP TALKERS | | — “ Update: Sacramento councilwomen threatened by man with prior assault charges, police say ,” by the Sacramento Bee’s Theresa Clift and Michael McGough: “Alexander Francis Hoch, 37, is facing two felony charges of threatening the life of a government official, and one felony charge of threatening to commit a crime resulting in death or great bodily injury.” — “ Anaheim and its ex-mayor won’t disclose his emails and texts, so we took them to court ,” by the Los Angeles Times’ Gabriel San Román: “The paper is also seeking records of other city business, including any messages related to negotiations surrounding the aborted Angel Stadium sale, which collapsed after the probe became public.” THE REAL ESTATE EXODUS— “ Hollowed-out office spaces could hit S.F.’s city budget hard — here’s how bad it could get ,” by the San Francisco Chronicle’s J.D. Morris: “Under the most optimistic scenario, the city estimates that annual property tax losses from empty offices could reach about $100 million in 2028. A more measured scenario puts that figure at more than $125 million.” | | CAMPAIGN MODE | | HOUSE HANGERS-ON: Rep. Mike Levin (D) clinched a win in CA-49 over Republican Brian Maryott last night. We’re still waiting on calls in five more Congressional seats, including the two closely contested seats in the Central Valley — CA-13 (Democrat Adam Gray vs. Republican John Duarte) and CA-22 (Republican Rep. David Valadao vs. Democrat Rudy Salas) The Associated Press also has yet to call CA-03, where Republican Kevin Kiley is ahead of Democrat Kermit Jones by 4.6 points. In CA-47, Democratic Rep. Katie Porter is leading Republican Scott Baugh, 51.4 percent to 48.6 percent. A Dem-on-Dem contest in CA-34 has incumbent Rep. Jimmy Gomez leading David Kim, 51.8 percent to 48.2 percent. BASS WINS — Rep. Karen Bass will be the next mayor of Los Angeles after officially beating Rick Caruso last night. We won’t know the final margin for some time, but the last vote count had Bass six points ahead of the billionaire.
| | | | POLITICO APP USERS: UPGRADE YOUR APP BY DECEMBER 19! We recently upgraded the POLITICO app with a fresh look and improved features for easier access to POLITICO's scoops and groundbreaking reporting. Starting December 19, users will no longer have access to the previous version of the app. Update your app today to stay on top of essential political news, insights, and analysis from the best journalists in the business. UPDATE iOS APP – UPDATE ANDROID APP . | | | | | | | CALIFORNIA AND THE CAPITOL CORRIDOR | | — “ A California police chief said his wife killed herself. Her family asks: Was it murder? ” by the Sacramento Bee’s Ariane Lange and Jason Pohl: “Everyone was crying when Johnny Matthews rushed into the hospital waiting room. He was too late: Sara was already dead. His father, Joseph Matthews, tried to convince him to view his sister’s body, but Johnny said no.” — “ What we know about the victims and driver in the crash that hurt 25 sheriff’s recruits ” by the Los Angeles Times’Alexandra E. Petri, Richard Winton, Brittny Mejia, Nathan Solis and Noah Goldberg: “Shortly after dawn Wednesday, a 22-year-old driver plowed a Honda CRV into a large group of recruits with the Los Angeles County Sheriff’s Department who were on a training run in South Whittier. Dozens were injured, at least five of them critically, authorities said.” STREET SAFETY — “ Someone is severely injured in S.F. traffic every 14 hours. This time, it was a famous local artist ,” by the San Francisco Chronicle’s Heather Knight: “Every 14 hours, on average, a crash on San Francisco’s dangerous streets sends somebody severely injured to San Francisco General Hospital, upturning their lives and the lives of the people who love them. The talented surgeons there usually save them, and their horrific stories don’t make headlines.” ZAPPING ALONG — “ Caltrain’s shiny new trains are finally here. Can the agency keep them running? ” by the Mercury News’ Eliyahu Kamisher: “Eventually, passengers will glide up the Peninsula, with a power outlet at every seat, LCD screen maps, and a coveted baby changing station. It’s part of a green vision of Bay Area train travel akin to the sleek rail systems in Europe.” — “ Newsom asked cities to set targets for reducing homelessness. Sacramento’s goal? A 71% spike ,” by the Sacramento Bee’s Maggie Angst: “It was one of the data points that prompted Newsom to call local government performance “unacceptable” and to pause billions in state funding for homelessness. He’s convening a meeting on Friday with local officials to discuss how to address the issue.” — “ How did Gascón end up launching a criminal probe sparked by far-right election conspiracy theories? ” by the Los Angeles Times’ James Queally and Sarah D. Wire: “The presence of a detective from one of the country’s most liberal prosecutor’s offices at an event promoting MAGA conspiracy theories was mystifying. But it was just one of a series of questionable actions that has won Los Angeles County Dist. Atty. George Gascón unwanted and unexpected praise from Trump and his allies in recent weeks, and shoved a little-known Michigan software developer into the crosshairs of fringe true believers.” FAST FOOD BRAWL CONTINUES — “ A Calif. law that takes wage-setting power from fast-food bosses sparks fight ,” by the Washington Post’s Erica Werner: “The developments come as the pandemic, coupled with inflation, has forced workers, employers and policymakers to rethink the employment landscape around the nation in multiple ways.” FACING THE FTX FALLOUT — “ FTX lawsuit targets Steph Curry, Warriors and other crypto ‘ambassadors’ ,” by the San Francisco Chronicle’s Bob Egelko: “The suit said FTX has used “some of the biggest names in sports and entertainment — like these Defendants — to raise funds and drive American consumers to invest” in a ‘fraudulent scheme... designed to take advantage of unsophisticated investors from across the country.’” — “ Clock Ticking on Nancy Pelosi Now That Dems Lost the House ,” by the San Francisco Standard’s Josh Koehn: “Pelosi cruised to reelection and a 19th term last week, but many political insiders believe she will hang it up after seeing the gavel go to the GOP.” | | | | A message from Environmental Working Group:   | | | | | BIDEN, HARRIS AND THE HILL | | — Schiff passes on Dem leadership bid as Pelosi’s future stays murky , by POLITICO’s Sarah Ferris and Nicholas Wu: Schiff had mulled a bid for the caucus’ No. 1 role — likely to be minority leader, as Republicans are just one seat away from flipping the House after last Tuesday’s election — though he had not officially jumped into the race. — McCarthy's next step on the GOP tightrope: Navigating concessions to conservatives , by POLITICO’s Olivia Beavers and Jordain Carney: While most of the conference’s anti-McCarthy votes went to Freedom Caucus challenger Rep. Andy Biggs (R-Ariz.), five House Republicans wrote in a different name for speaker and one abstained for a total of 37 in opposition — drawing a map for the Californian’s rocky path ahead to 218 votes. — “ Why the third in line to presidency post won’t go to Sen. Dianne Feinstein ,” by the San Francisco Chronicle’s Shira Stein: “[Sen. Patty] Murray’s office said that Senate Majority Leader Chuck Schumer, D-New York, plans to nominate Murray — who recently was re-elected after a tough race — to be Senate president pro tempore, a role that typically goes to the most senior member of the majority party.” | | SILICON VALLEYLAND | | HARDCORE HINDRANCE — “ Musk issues ultimatum to staff: Commit to ‘hardcore’ Twitter or take severance ,” by the Washington Post’s Faiz Siddiqui and Jeremy B. Merrill: “By mid-Wednesday, members of Twitter’s Trust and Safety team — who are responsible for keeping hate speech and misinformation off the site — were discussing a mass resignation, according to three current employees who spoke on the condition of anonymity for fear of retribution.” — “ Elon Musk says he doesn’t want to be CEO of Twitter, or any company ,” by the Verge’s Andrew J. Hawkins: “Or so he claimed in testimony at a trial Wednesday challenging his giant compensation package at Tesla. Musk, who is the CEO of multiple companies, including most recently, Twitter, was answering questions from lawyers representing Tesla when he made the offhand comment.” | | | | GO INSIDE THE MILKEN INSTITUTE FUTURE OF HEALTH SUMMIT: POLITICO is featuring a special edition of our “Future Pulse” newsletter at the 2022 Milken Institute Future of Health Summit from Dec. 6 to 8. The newsletter takes readers inside one of the most influential gatherings of health industry leaders and innovators solving the biggest global health issues to ensure a healthier, more resilient future for all. SUBSCRIBE TODAY TO RECEIVE EXCLUSIVE COVERAGE . | | | | | | | HOLLYWOODLAND | | — “ Sunglasses for $27,000? A desk for $60,000? Joan Didion’s estate sale made big bucks ,” by the Los Angeles Times’ Jonah Valdez: “The auction, which began Wednesday morning after accruing pre-bids, wrapped up late in the afternoon with its final sale: six silver candlesticks for a mere $8,000.” | | MIXTAPE | | FOLLOW THE THREAD — “ Is the world’s richest person the world’s worst boss? What it’s like working for Elon Musk ,” by the Los Angeles Times’ Russ Mitchell. — ‘The weirdest election I’ve ever been a part of’: How the GOP almost blew the House , by POLITICO’s Ally Mutnick, Sarah Ferris and Elena Schneider. — “ Man who led authorities on wild chase from O.C. to L.A. County charged with 18 felonies ,” by the Los Angeles Times’ Gregory Yee. CURB-SIDE MAIL — “ Nearly all Santa Clara County ballots recovered near a highway will count toward official results ,” by the San Francisco Chronicle’s Jessica Flores. — “ The most fragrant native plants are just heavenly. Here’s what to plant now ,” by the Los Angeles Times’ Jeanette Marantos. FLYING THE DISTANCE — “ Frontier Airlines fined $2 million by Department of Transportation for trickery ,” by SFGate’s Silas Valentino. | | BIRTHDAYS | | Michele Tasoff | | A message from Environmental Working Group: While Big Oil enjoys record profits from California consumers, working-and middle-class families are being forced to make difficult pocketbook decisions between the need to commute and the rising costs of living.
The average price for a gallon of gas in California is nearly twice the national average, reaching as high as $7 in some areas in recent weeks, with oil companies pocketing up to 5x their normal profit per gallon.
This rampant price gouging needs to stop and the outrageous profits taken from the pockets of hard-working Californians needs to be returned.
Gov. Gavin Newsom has called a special session of the state legislature in early December to vote on a price-gouging penalty tax on these companies that will be sent directly back to California consumers in the form of rebates and refunds.
Go to http://ewg.org to find out more. | | | CALIFORNIA POLICY IS ALWAYS CHANGING: Know your next move. From Sacramento to Silicon Valley, POLITICO California Pro provides policy professionals with the in-depth reporting and tools they need to get ahead of policy trends and political developments shaping the Golden State. To learn more about the exclusive insight and analysis this -only service offers, click here . Want to make an impact? POLITICO California has a variety of solutions available for partners looking to reach and activate the most influential people in the Golden State. Have a petition you want signed? A cause you’re promoting? Seeking to increase brand awareness amongst this key audience? Share your message with our influential readers to foster engagement and drive action. Contact Jesse Shapiro to find out how: jshapiro@politico.com.
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