Capitol Alert

FREMONT - Gov. Jerry Brown has little occasion to drive these days, chauffeured as he is by his security detail.

But at the Fremont plant of Tesla Motors this afternoon, a brand new Model S in red was waiting for him outside.

Brown slipped into the driver's seat - state Treasurer Bill Lockyer rode shotgun - turned his head for a photographer and took off.

Brown's press secretary, Gil Duran, crossed himself.

"Hey, great!" Brown said when he came back. "Very fast."

Brown was at Tesla to celebrate the delivery of the high-end electric car maker's new sedan. Brown talked cars, solar power and rockets for about 10 minutes with the company's Elon Musk.

Then, Brown said, he had to get back "to the mundane matters of the state."

FREMONT - Gov. Jerry Brown said this afternoon that he is not abandoning a proposal to insulate California's high-speed rail project from environmental lawsuits, suggesting he was only delaying the legislation until sometime after the Legislature considers funding for the project.

The Brown administration told environmentalists on Wednesday it was backing off a proposal to limit the circumstances in which a court could block construction of the project under the California Environmental Quality Act. Kathryn Phillips, director of Sierra Club California, said at the time that the administration suggested it could revisit the proposal later.

The Democratic governor is seeking legislative approval, likely next week, to start construction of the $68 billion project.

Asked about his proposal to protect the project from environmental lawsuits, Brown said, "I haven't abandoned that at this point ... I think it's a question of when we push and when we don't."

Brown, in Fremont for an event at car maker Tesla Motors, said his goal is to "do the right thing, but do it in a very efficient manner." He said, "We're going to do whatever it takes."

Brown's remarks were his first since announcing a budget deal with legislative Democrats on Thursday. He said staffers are still laboring on the deal's finer points.

"I spent a few hours on the telephone coming down," Brown said. "The nits and nats and details are being turned over as we speak, so staff is working in Sacramento, executive and legislative branch, so they're still struggling."

He said of the deal's prospects ahead of a vote in the Legislature next week, "I'm very optimistic."

Assembly Speaker John A. Pérez won't be going to Florida this weekend after all.

The Los Angeles Democrat canceled plans Friday to attend the annual conference of the National Association of Latino Elected and Appointed Officials after striking a tentative state budget deal.

"I didn't go because I still have work to do," Pérez said, adding that he is ready to return to the Capitol this weekend as needed to fine-tune budget details in preparation for an Assembly floor vote next week.

"I've been working," Pérez said. "I'm going to go home tonight. I'll be back over the weekend. There's some work I have to do in person, there's some work I don't have to do in person. If I've got to be here to do work, I'll be here."

As reported this morning on Capitol Alert, Pérez was scheduled to participate in a panel discussion at the NALEO annual conference at Disney World.

President Barack Obama and Republican presidential hopeful Mitt Romney were scheduled headliners of the three-day conference.

Pérez said he had made plans long ago to attend the NALEO event. It is not rare for him to make commitments only to cancel them later due to the press of Assembly business, he said.

Gov. Jerry Brown and Democratic leaders are crafting an exception for Kaiser Permanente as they prepare to move 880,000 Healthy Families patients to lower-cost Medi-Cal as part of their budget agreement.

The provision would enable Oakland-based Kaiser to keep its 200,000 Healthy Families patients as Medi-Cal clients through a direct contract with the state, according to Department of Health Care Services Director Toby Douglas. It would also give Kaiser the ability to avoid paying fees to county-based health plans for an additional 200,000 people it already serves through Medi-Cal.

As part of the budget deal, Democratic leaders agreed to dissolve Healthy Families, which provides low-cost health care to children whose families are at the federal poverty threshold ($23,050 for a family of four) up to 250 percent of that amount ($57,625). The state will shift all 880,000 Healthy Families children to Medi-Cal in waves next year, starting in January.

Folsom attorney Andy Pugno completed a come-from-behind win over Democrat Regy Bronner Friday to secure a ballot spot in the November election for a Placer County-based Assembly seat.

The election promises a rerun of a hard-fought primary campaign between Republicans Pugno and incumbent Beth Gaines, who will square off because the state's new "top-two" primary system pits the two highest vote-getters in November, regardless of party.

Gaines, of Rocklin, finished first by a comfortable margin on election night, but Pugno trailed Bronner for second place by 531 votes after precinct votes had been counted by the next morning.

The counting of thousands of provisional, write-in and mail ballots received on election day kept the final outcome in doubt until Friday, when Bronner started the day with a lead of about 95 votes over Pugno.

Pugno overtook Bronner by Friday afternoon, however, when Placer County's final tally of votes favored Pugno over his Democratic opponent by about 800 votes.

All three counties represented by the 6th Assembly District -- Placer, Sacramento and El Dorado -- have completed their ballot count, officials said. The newly drawn district tilts strongly toward the GOP in voter registration.

Friday's outcome leaves Pugno with a decision to make: Months ago, he vowed to step aside and not split the Republican Party by fighting Gaines if she finished ahead of him in the primary. She made no such commitment.

While final votes were being counted in recent weeks, Pugno did not comment publicly about whether he has changed his mind about stepping aside in favor of Gaines if both qualified for the November general election.

Tobacco tax backers in California officially conceded defeat Friday in the tight Proposition 29 race after they determined the vote gap had simply grown too large to overcome.

The initiative is losing by 27,888 votes out of more than 5 million counted, a 49.7 percent to 50.3 percent divide, the Secretary of State's Office reported this morning.

As counties tallied their remaining ballots after the June 5 election, the gap had steadily shrunk from about 60,000 votes down to 13,000 votes as recently as Wednesday. But the tide turned late this week, and there remain only 111,472 ballots left to tally, the Secretary of State's Office showed.

Yes on 29 campaign manager Chris Lehman said the math showed it would almost certainly be too difficult to mount a comeback at this point because his side would need to win nearly 65 percent of the remaining ballots.

Proposition 29 would have raised tobacco taxes by $1 per pack of cigarettes and paid for cancer research, stop-smoking programs and related law enforcement efforts. Opponents said that the money could be better spent on solving California's immediate budget problems and that it would create a new state bureaucracy. Tobacco companies funded virtually all of the statewide campaign with nearly $47 million.

In a statement, the campaign called it a "sad day for California" and blamed tobacco companies for a "misinformation campaign." Proponents vowed to ask voters for another tobacco tax hike in the future.

"We're certainly not going away," said Jim Knox of the American Cancer Society. "It's not going to slow our efforts to battle tobacco companies and cancer. We will be looking for opportunities to do that wherever they may present themselves."

RELATED POSTS:
Associated Press: California cigarette tax proposition defeated

Spending by California's state government increased by 42 percent between 2000 and 2010 on a per-capita, inflation-adjusted basis, the nation's 16th highest rate of spending growth, according to a new data compilation by the Tax Foundation.

Oklahoma topped the states with a 74 percent increase in per-capita spending during the decade, the Washington-based Tax Foundation concluded, expressing its findings via a map on its website. Alaska was lowest at 17 percent.

California's 42 percent growth was identical to that of neighboring Nevada and lower than Arizona's 46 percent, but markedly higher than Oregon's 26 percent, one of the nation's lowest. It was also a bit higher than Texas' 37 percent and Florida's 36 percent but similar to New York's 41 percent.

A California ballot measure to increase the cigarette tax by $1 a pack has failed, the Associated Press projected today.

Proposition 29 has been trailing in the vote count since the June 5 election, though the narrow margin made it too close to call until today. Wednesday, the gap was only 13,327 votes out of nearly 4.9 million counted.The latest results posted by the Secretary of State show the measure losing by 27,888 votes, less than one percentage point.

Supporters said the measure would raise $735 million annually for cancer research and smoking cessation programs.

Tobacco companies spent tens of millions of dollars against the measure. Opponents argued that the measure was flawed and lacked accountability and oversight for how the revenues would be spent.

No on 29 spokeswoman Beth Miller said, ""We are obviously very encouraged with the way the vote count is going."

But, she said, they're waiting until all the votes are tallied: "We're not declaring a win yet. There are still 100,000 votes out there."

Democratic lawmakers portrayed a shift of 880,000 children from Healthy Families to Medi-Cal as a way to help bridge the state's $15.7 billion deficit, but opponents say there is good reason to think the change could actually cost the state more money.

Gov. Jerry Brown's administration is counting on $13 million in general fund savings in 2012-13 because only a partial shift will occur in the fiscal year - and only in the second half of the year. At full implementation, the state would save $73 million in 2014-15.

But shifting those children to Healthy Families risks the loss of $183 million in taxes on managed care plans. The tax is set to expire at the end of this month, and managed care providers previously supported the tax because it came back to them through Healthy Families patients.

Democrats need a two-thirds supermajority vote with Republican support to keep the tax going. If the industry is opposed, it is difficult to see how Republicans will sign on to the tax this summer.

Also, Republicans are far more favorable toward Healthy Families than Medi-Cal. In a statement Thursday, Senate Republican Leader Bob Huff, R-Diamond Bar, said, "This transfer of children from a popular and successful program like Healthy Families to the problem plagued Medi-Cal system is a reckless move that unnecessarily puts the health of California children at risk."

As California lawmakers consider extending a $100 million annual film tax credit for five more years to help a signature industry, the state's top fiscal analyst said in a new review that the credit results in an overall loss of tax dollars.

The finding by the nonpartisan Legislative Analyst's Office runs counter to two recent studies by the Los Angeles County Economic Development Corporation (LAEDC) and the UCLA Institute for Research on Labor and Employment (UCLA-IRLE).

In a letter publicly released Thursday, the LAO said that each dollar of tax credit results in less than a dollar in tax revenues returned to state and local governments through taxation on increased economic activity. The LAEDC study said that each tax credit dollar returns at least $1.13, while the UCLA-IRLE study said it was $1.04.

The Analyst's Office stated that "we believe it is likely that the state local tax revenue return would be under $1.00 for every tax credit dollar -- perhaps well under $1.00 for every tax credit dollar in many years. In any event, even if the combined state and local tax revenue return is right around $1.00 for every tax credit dollar, the state government's tax revenue return would by definition be less than $1.00 for every tax credit dollar. The credit program, therefore, appears to result in a net decline in state revenues."

The LAO did not dispute that the tax credit generates additional economic activity in California, but it believes the LAEDC estimate of economic output is "likely overstated, as is its estimate of job gains resulting from the credit program." It cited other factors that played into its determination, such as benefits from other governmental uses of the tax credit dollars and underestimating how much film production would occur in California without such incentives.

The Analyst's Office weighed in at the request of the Senate Governance and Finance Committee, which is considering Senate Bill 1167 by Sen. Ron Calderon, D-Montebello, to continue the program that former Gov. Arnold Schwarzenegger helped initiate in 2009. At the time, Los Angeles-area lawmakers and the movie-star governor expressed concerns about the aggressive tax credit offerings by other states to lure film production away from California.

Where does an Assembly leader go after a budget deal is reached?

To Disney World, of course.

Assembly Speaker John A. Pérez is flying to Florida's world-famous resort to participate in a panel discussion Saturday at the annual conference of the National Association of Latino Elected and Appointed Officials.

President Barack Obama and Republican presidential hopeful Mitt Romney are headliners of the three-day event, which began Thursday in Orlando and ends Saturday evening. Pérez will participate in a panel discussion during the event's congressional leadership luncheon.

Perez's spokesman, John Vigna, squashed a rumor Thursday that the speaker's Florida commitment would keep lawmakers from voting on a final package of budget bills this weekend.

Crafting and fine-tuning of the bills would have consumed the weekend anyhow, Vigna said.

Vigna said that Pérez had committed himself to the conference a long time ago and that the speaker plans to return in plenty of time to vote on the budget package early next week.

Whistling a Disney tune, perhaps.

Dan Walters says the November ballot battle over rival tax measures from Gov. Jerry Brown and civil rights attorney Molly Munger may show whether voters are interested in helping California schools.

Have a question you'd like Dan to answer? Post it on our Facebook page.

See other Dan Walters Daily clips here.

VIDEO: Dan Walters, in today's report, looks at the upcoming ballot battle in California over Gov. Jerry Brown's and civil rights attorney Molly Munger's rival tax measures.

Gov. Jerry Brown will be in Alameda County this afternoon for a ceremony at the Tesla Motors factory in Fremont, where its CEO will give keys to the Model S sedan's earliest customers. The event is scheduled for 3 p.m.

Tesla says it has more than 10,000 reservations for its premium all-electric car, The Bee's Mark Glover reported in this story. It has a base price, after a federal tax credit, of $49,999.

"The Model S is going to be the first true mass market product experiment for Tesla, one they cannot afford to fail," Jesse Toprak, vice president of market intelligence at car buying site TrueCar.com, told the Associated Press. Here's more from the AP:

Tesla, the brainchild of PayPal billionaire and SpaceX founder Elon Musk, has always been a moon shot. Analysts and auto industry insiders scoffed at the idea that a new car company could be created from scratch and built in a high-cost state like California. Boardroom turmoil and a string of technical problems repeatedly delayed the launch of the company's only car, the $109,000 two-seat Tesla Roadster.

Tesla survived by creating something so unique that the price tag was almost irrelevant: A beautiful car that could tear up a race track without burning a single drop of gasoline. Celebrities flocked to it, giving Tesla a cache that an established brand like Cadillac could only dream of.

Now Tesla must do something much more difficult. It has to convince more traditional car customers to buy an expensive vehicle with limited range from a small, untested company.

... But if you're a believer, all you have to do is point out Musk's latest accomplishment: Last month, his SpaceX venture became the first private company to send a cargo rocket to the International Space station.

Back in Sacramento, Girl Scouts fans can celebrate the organization's 100th anniversary at a gala held at the California Museum, 1020 O St., from 5:30 to 7:30 p.m.

The event features appetizers and desserts from Mulvaney's B&L (no Girl Scout cookies mentioned), plus a fashion show of Girl Scout uniform styles over the years. Tickets are $50 and include admission to the museum's exhibit marking the centennial.

Later on this weekend, California Democrats who'll be heading to Charlotte as delegates for the national convention will gather in Sacramento for an orientation of sorts.

California Democratic Party spokesman Tenoch Flores told The Bee's Torey Van Oot that in addition to finalizing the delegation, the selected Democrats will be privvy to logistical information on applying for housing and other matters. He's expecting many of the 547 delegates and 46 alternates to be in attendance Sunday.

CAKE AND CANDLES: Democratic Assemblywoman Susan Bonilla turns 52 today.