California’s tight pocketbook

From: POLITICO California Playbook - Tuesday Jan 10,2023 02:12 pm

Jan 10, 2023

THE BUZZ:It’s Budget Day in California, and soon we’ll know if and where Gov. Gavin Newsom wants to make cuts.

That’s not a fun prospect for any governor, much less one fresh off a year of record surpluses. But after a historic $300 billion budget last year, the state is now staring down the possibility of a $24 billion deficit this year, which means lawmakers could face some tough choices — or at very least, be forced to put off certain spending.

The governor, who often reminds us of his business background, has been signaling fiscal prudence over the last few months — striking down several ongoing spending bills last year and calling for the federal government to step it up on expensive border operations.

Today in Sacramento, he’ll get into the nitty gritty of how he plans to navigate the economic downturn, which some analysts warn could last for several years. Save for the coronavirus pandemic, it could be one of the biggest challenges Newsom faces in his tenure.

One obvious solution is dipping into the state’s reserves, which, after last year’s record revenues, are fuller than ever. But that comes with some tricky caveats — and the Legislative Analyst’s Office has cautioned against it, recommending the state save those funds in case of a recession

Newsom’s administration hasn’t given any indication of what programs or policies might be on the chopping block. But the governor in November noted his commitment to addressing wildfires, drought, climate, housing and homelessness in light of the deficit, saying, “our priorities are our priorities.”

A key reminder: Everything we hear today is subject to change. The January budget is preliminary and reflects the administration’s best prediction about what revenue will look like over the next several months. In May, Newsom will return to the podium for a revision, after which it’s up to the Legislature to negotiate and hammer out the final details over the summer.

To that end: Legislative leaders have been cautioning against panic in light of the forecasted deficit. Those like Assembly Budget Chair Phil Ting (D-San Francisco) are quick to point out that similar warnings haven’t always come true in the past and that the state is well-positioned to weather a downturn if it does materialize.

BUENOS DÍAS, good Tuesday morning. Following a request from the governor, President Joe Biden declared a state of emergency in California Monday as storms continued to ravage the state. As of Monday night, the severe weather had claimed the lives of 14 Californians.

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: “You are wrongfully exploiting this work through the various social media outlets to promote your divisive and hateful political agenda." An attorney for California Hall of Fame rapper Dr. Dre in a letter to Rep. Marjorie Taylor Greene (R-Ga.) warning her to stop using his song “Still D.R.E.” in her promotional media.

TWEET OF THE DAY:

Twitter.com

WHERE’S GAVIN? In Sacramento delivering his 2023 budget blueprint. Watch live starting at 9:15 a.m.

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.

TOP TALKERS

— “California storm: Bay Area power outages hit thousands of PG&E customers,” by the San Francisco Chronicle’s Claire Hao, Gerry Díaz, Jessica Flores, Kurtis Alexander, Jordan Parker, Aidin Vaziri, Rachel Swan and Hannah Hagemann: “The combination of runoff from the New Year’s Eve storm and Wednesday’s bomb cyclone has saturated soils across the region, as burn scars in the Santa Cruz Mountains, North Bay highlands and coastal region south of Big Sur struggle to absorb the excess moisture.”

— “Search called off for boy swept away by California flooding,” by The Associated Press’ Christopher Weber and Stefanie Dazio. “Rescuers ended the search for a 5-year-old boy who was swept away by floodwaters in central coastal California while the entire community of Montecito was ordered evacuated Monday as residents grappled with flooding and mudslides as the latest in a series of powerful storms walloped the state.”

‘MADE-FOR-TELEVISION SPECIAL’ — “Column: Newsom’s inauguration was picture perfect, and that’s a shame,” opines Anita Chabria for the Los Angeles Times: “The guy with the divorced parents is more interesting, and more powerful, than the guy with the perfect hair.”

CALIFORNIA AND THE CAPITOL CORRIDOR

NEW ERA — “California Assembly Speaker Rendon out, Rivas becomes leader,” by The Sacramento Bee’s Mathew Miranda and Lindsey Holden: “Assembly Speaker Anthony Rendon is finally facing his lame duck era. Rendon, 53, has served more than six years as speaker — the longest tenure since the legendary Willie Brown held the gavel from 1980 to 1995. He is preparing to end his tenure following a bitter, six-month fight with Assemblyman Robert Rivas, D-Salinas, who will assume office on June 30.”

— “Judge says no need for DA's recusal in Napoleon Brown case,” by The San Francisco Standard’s Jonah Owen Lamb: “Existing firewalls are enough to ensure a fair resentencing review for Mayor London Breed’s brother, Napoleon Brown, despite her appointing Brooke Jenkins as district attorney, San Francisco Superior Court Judge Brendan Conroy ruled Monday.”

— “Gavin Newsom expects a deficit this year. What does that mean for state worker contracts?,” by The Sacramento Bee’s Maya Miller: “State employers face a tough decision. Some public employees are paid under the market rate for their roles and could leave for the private sector if raises are withheld.”

— “Column: California’s carbon neutrality plan lacks vital detail,” opines Dan Walters for CalMatters: “The 297-page plan is loaded with data and verbiage about the perils of climate change and various goals that it seeks to achieve. However, there is precious little detail about the specific steps that would be needed in the next 22 years, nor about the downsides and tradeoffs that the economic transformation it advocates would inevitably pose.”

SHAKEY GROUND — “Why hospitals are struggling to meet earthquake safety deadline,” by CalMatters’ Ana B. Ibarra: “Although it’s been decades since California implemented its strict seismic safety requirements, paying for those upgrades continues to be a tough task, especially for smaller facilities with limited resources and funding, according to hospital officials across the state.”

KDL CHRONICLES — “Column: Councilmembers caused this rift. Other councilmembers can minimize the damage,” opines Jean Guerrero for the Los Angeles Times: “ As the City Council meets for the first time in 2023 on Tuesday, it’s imperative that [Kevin] De León’s three Latino colleagues prevent him from being the center of the City Council’s story any longer.”

BIDEN, HARRIS AND THE HILL

BORDER DISPATCH — Migration issues cast long shadow over Biden’s visit to ‘3 Amigos’ summit, by POLITICO’s Myah Ward and Jonathan Lemire: The Biden administration rolled out several new policies to curb illegal migration last week, some of which rely on Mexico’s cooperation.

PRIME TIME — Opinion: Can Kevin McCarthy Still Outlast the Lettuce? opines Oliver Wiseman in POLITICO Magazine: Although McCarthy finally secured the gavel on the 15th attempt in the early hours of Saturday, there are plenty of obstacles he needs to clear before he has eliminated the possibility of becoming the American Truss — a short-lived victim of today’s frenetic politics and a fractured political right that struggles to govern.

JOIN NEXT TUESDAY TO HEAR FROM MAYORS AROUND AMERICA: 2022 brought in a new class of mayors leading “majority minority” cities, reshaping who is at the nation’s power tables and what their priorities are. Join POLITICO to hear from local leaders on how they’re responding to being tested by unequal Covid-19 outcomes, upticks in hate crimes, homelessness, lack of affordable housing, inflation and a potential recession. REGISTER HERE.

MIXTAPE

— “Challenges loom for gondola to Dodger Stadium planned for the 2028 Olympics,” by the Los Angles Times’ Rachel Uranga.

— “Death penalty in California is a puzzle for Newsom,” by The New York Times’ Blake Hounshell.

— “California snowpack soars to nearly 200 percent of normal,” by KTLA’s Marc Sternfield.

TRANSITIONS

— Henry Connelly is joining Precision as an SVP in the comms practice. He had been comms director for then-Speaker Nancy Pelosi, for whom he worked for nine years.

BIRTHDAYS

— Former Rep. Lois Capps (D-Calif.) … Ajit Pai … Michelle Fields … Sasha Schell

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.

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