Capitol Alert

The latest on California politics and government

May 8, 2014
Lawmakers to vote next week on rainy day fund deal

Brown_signing_bills.JPGThe Legislature is expected to vote next week on a rainy-day fund agreement between Gov. Jerry Brown and legislative leaders, the governor's office announced Thursday, hours after details of the agreement first emerged from the Capitol.

The deal resolves a major part of Brown's budget proposal far earlier than usual in the annual budget-making process. It includes a higher minimum set-aside of general fund revenue each year than the Democratic governor had initially proposed, a measure necessary to satisfy Republicans.

At least two Republican votes are needed in the Senate for a constitutional amendment because Democrats lost their supermajority in the upper house when three senators facing criminal charges were suspended.

"There's nothing complicated about the idea of saving money and exercising fiscal restraint, but it's not always easy to do," Brown said in a release issued jointly by the governor and legislative leaders. "Democrats and Republicans have come together to create a Rainy Day Fund that ensures we're not only saving for the next downturn, but also paying off our debt."

The agreement follows private negotiations held after Brown called last month for a special session of the Legislature to take up the proposal. The agreement Brown and lawmakers announced would fund a rainy-day account with capital gains revenue that exceeds 8 percent of total general fund revenue in any year, a higher threshold than the 6.5 percent Brown had originally proposed. But it would also require contributions of 1.5 percent of all general fund revenue.

Half of the money set aside would be used for the reserve account and half would be used to pay off long-term debts, including public pension liabilities, according to the agreement. That provision was included to satisfy Senate President Pro Tem Darrell Steinberg. He said dedicating some of the revenue for long-term debt will allow more flexibility to spend remaining general fund revenue on programs.

Assembly Speaker John A. Pérez, who is running for state controller and first proposed a restructured rainy-day fund almost exactly a year ago, called the agreement "a strong example of what is possible when we all work together."

The rainy day fund proposal would replace a budget reserve measure already on the November ballot. That measure had been criticized by public employee unions, allies of Brown and Democratic lawmakers.

The original measure, ACA 4, was part of a 2010 budget deal among Democrats, Republicans and then-Gov. Arnold Schwarzenegger and originally scheduled to go before voters in 2012, but lawmakers postponed it to 2014. The state's current rainy-day fund was established in 2004, but governors can waive its provisions and it has rarely been used.

Senate Republican leader Bob Huff, R-Diamond Bar, said in a prepared statement that Republicans "have long fought for this type of protection for Californians" and that Brown "set up a good framework" for the agreement.

PHOTO: Gov. Jerry Brown signs bills in Sacramento on March 24, 2011 as Senate President Pro Tem Darrell Steinberg, D-Sacramento, and Sen. Mark Leno, D-San Francisco look on. The Sacramento Bee/Hector Amezcua

May 8, 2014
California state tax revenues running $2.2 billion above estimates

jchiang.jpgTax revenues are running $2.2 billion above assumptions in the 2013-14 state budget, setting the stage for final negotiations on a 2014-15 budget in the next month.

The higher revenues, contained in a
report from the State Controller's Office, are expected to be reflected in Gov. Jerry Brown's revised budget which will be released in a few days.

Brown has said he wants extra money to be placed in a "rainy-day fund" and/or be used to retire state debts, but many of his fellow Democrats in the Legislature are seeking higher spending on health, welfare and education services, including universal pre-kindergarten.

Controller John Chiang said that through April - the first 10 months of the fiscal year - revenues were 102.8 percent of assumptions in the current budget. April is the state's most important revenue months because personal income taxes, by far the largest source of revenues, were due on April 15.

However, corporate income taxes, 11.3 percent above estimates, showed the largest increase over budget assumptions.

"California saw about $300 million more in its bank account at the end of April than expected after tax collections were tabulated for the pivotal month," Chiang's report said. "Total revenues (for April) reached $13.9 billion, beating estimates made in conjunction with the governor's budget released in January by 2.2 percent."

Meanwhile, Chiang said, state spending has tracked the budget's assumptions very closely, so virtually all of the extra money remains in the treasury.

PHOTO: State Controller John Chiang, in 2011. The Sacramento Bee/Hector Amezcua.

May 8, 2014
Darrell Issa: 'No place' in GOP, governor's race for Tim Donnelly


Rep. Darrell Issa, R-Vista, forcefully rebuked a controversial social media post by the gubernatorial campaign of Republican Tim Donnelly linking rival Neel Kashkari to fundamentalist Islamic law.

Issa, a supporter of Kashkari's bid to unseat Democratic Gov. Jerry Brown, said there is no place in public discussion "for this type of hateful and ignorant garbage."

"As far as I'm concerned, this type of stupidity disqualifies Tim Donnelly from being fit to hold any office, anywhere," Issa said in a prepared statement Thursday. "Donnelly is no longer a viable option for California voters."

Donnelly apologized for the post Wednesday after being confronted by Kashkari adviser Aaron McLear on KSCO AM 1080 in Santa Cruz. His Facebook page had carried a link to a 2008 U.S. Treasury Department program in which Kashkari was listed as a speaker. The event was meant to help "inform the policy community about Islamic financial services, which are an increasingly important part of the global financial industry."

After acknowledging the incorrect connection, Donnelly brushed aside the criticism.

"If the Washington political establishment would focus their energy of combatting the policies of the Marxist Progressives parading as Democrats rather than attacking other Republicans, then perhaps we would have a different president and jobs and prosperity instead of Obamacare. The ignorance and stupidity of Mr. Issa's comment is only surpassed by it's lack of any factual content," he said in a prepared statement.

"Fortunately the voters will be picking the next Governor of California, not Washington insiders like Mr. Issa, who in the interest of full disclosure, has endorsed my opponent, the architect of the big Gov't bailout of banks and billionaires known as TARP, a program vehemently opposed by Mr. Issa at the time."

The dustup comes as an increasing number of establishment Republicans coalesce around the moderate Kashkari and distance themselves from Donnelly, a tea party favorite and former minuteman. With his high profile as chairman of the powerful House Oversight and Government Reform Committee, Issa stands to put the story on the national radar.

In his statement, Issa said he faced similar unfounded charges from an opponent when he ran for Congress — after having gubernatorial aspirations of his own. Issa, an Arab American of Lebanese Christian decent, said he was deeply resentful of the remarks.

"I was offended and outraged that someone who would run for the highest office in our state would resort to such hateful and disgusting rhetoric," he said. "It is crap like this that gives Republicans a bad name and there is no place in the Republican Party or in this race for someone like Tim Donnelly."

Editor's note: This post was updated at 3:15 p.m. to add a comment from Donnelly.

PHOTO: Rep. Darrell Issa, R-Calif. speaks on Capitol Hill in Washington. (AP Photo/ Carolyn Kaster, File)

May 8, 2014
California Assembly calls for Nagorno-Karabakh Republic


In another foray into international politics, the California Assembly passed a resolution calling for the independence of an Armenian-dominated enclave in Azerbaijan.

Calling the Azerbaijani borders that encompass the disputed Nagorno-Karabakh region an example of a country "improperly drawn by Stalin," Assemblyman Mike Gatto, D-Los Angeles, urged the Assembly to take a stand despite its lack of authority to set or enforce foreign policy. He drew a parallel to resolutions condemning apartheid in South Africa or the treatment of gays and lesbians in Russia.

"California can on issues of relevance to our constituents and, on issues of moral clarity, continue to be a thought leader that seeks to motivate change," Gatto said.

Many lawmakers invoked lofty ideals of freedom and self-determination. Others delved into their personal relationship to the issue.

"This is one of those issues, probably one of the hallmark issues, that's led me to want to serve in public service and to be here," said Assemblyman Adrin Nazarian, D-Burbank, describing how his grandparents were forced to flee the region Armenians call Artsakh. "This has been the tormented history," Nazarian added, "of a group of people who have been very determined to pursue their freedom."

Assembly Joint Resolution 32 passed on a 70-1 vote, with only Assemblyman Rocky Chávez, R-Oceanside, dissenting. Armenian visitors in the gallery applauded loudly after that measure advanced. Gatto then introduced the Armenian deputy counsel general on the Assembly floor, also prompting an ovation.

PHOTO: Assemblyman Katcho Achadjian, R-San Luis Obipso speaks with Assemblyman Adrin Nazarian, D-Burbank during session in the Assembly chambers on Monday, March 11, 2013. Both of Armenian heritage, Nazarian and Achadjian spoke in favor of the Nagorno-Karabakh resolution. The Sacramento Bee/Hector Amezcua.

May 8, 2014
Californians' walking and bicycling lag, except in San Francisco

bikes.JPGWith the exception of those in San Francisco, workers in California's largest cities are mostly laggards in walking or bicycling to their jobs, a new Census Bureau report shows.

Nationally, the bureau's American Community Survey found, 5 percent of workers walk to their jobsites and 1 percent use bicycles.

Among the nation's 50 largest cities, Boston is the walking champ with 15.1 percent of its workers using shank's mare, followed by Washington at 12.1 percent, New York City at 10.3 percent and San Francisco at 9.9 percent. No other major California city reaches the national average.

When it comes to using bicycles, Portland's workers, at 6.1 percent, are the champs, followed by those in Minneapolis at 4.1 percent and San Franciscans at 3.4 percent, tied with Seattle's workers. Among other major California cities, only workers in Sacramento (2.5 percent) and Oakland (2.4 percent) rise above the national bicycle commuting average.

A recent study by the League of American Bicyclists found California is now the ninth "friendliest" biking state in the country, jumping up from 19th place last year.

PHOTO: Don Knutson prepares to park his bicycle in a temporary on street bike corral provided by Park a Bike in front of the Insight Coffee Roasters in Sacramento on May 30, 2012. The Sacramento Bee/Paul Kitagaki, Jr..

May 8, 2014
California Senate switches, supports cell phone 'kill switch'

cellphones.JPGThe California Senate reversed course Thursday, approving a bill it had rejected last week that requires cell phones be equipped with remote "kill switches" allowing owners to disable them when stolen.

Senate Bill 962 pit two influential lobbies against each other -- law enforcement groups who said the measure would reduce crime against technology companies that argued the bill wasn't necessary because they are voluntarily giving customers the option to activate remote disabling.

But some industry objection softened over the last week as the two sides continued negotiations, said the bill's author, Sen. Mark Leno, D-San Francisco. He said he had made a number of amendments that led Apple to remove its opposition. Among them: the bill now only applies to cell phones, not tablets, and its implementation date was pushed out six months to July 2015.

"We're trying to keep our constituents safe on their streets and in their neighborhoods that's why we're here today," Leno said.

SB 962 is sponsored by the San Francisco District Attorney's Office, which reports that more than half of all robberies in the city involve mobile device theft, as do 75 percent of robberies in Oakland.

Republicans in the Senate voiced reservations about the bill, saying they still have concerns about the penalties it includes and potential liability issues for manufacturers that sell phones that do not meet the new requirements.

The bill now heads to the Assembly.


PHOTO: A Facebook employee looks at a selfie of Argentine President Cristina Fernandez on a cell phone, at the Facebook office in Buenos Aires, Argentina, Tuesday, May 6, 2014. Associated Press/Victor R. Caivano.

May 8, 2014
Jerry Brown, lawmakers near deal on reserve fund

brownbudget.JPGGov. Jerry Brown and legislative leaders are poised to announce a deal on his rainy day fund proposal, including additional general fund contributions to satisfy Republicans, sources said.

The agreement follows private negotiations held after Brown called last month for a special session of the Legislature to take up the proposal. The negotiation is significant because, with three Democratic lawmakers suspended in separate criminal cases, Democrats have dropped below their supermajority status in the Senate, forcing Brown to negotiate with Republicans.

The agreement Brown and lawmakers are negotiating would fund a rainy-day account in years that capital gains revenue exceeds 8 percent of total general fund revenue, a higher threshold than Brown had proposed. But it would also require contributions of 1.5 percent of all general fund revenue, a concession to Republicans, sources said.

The proposal would replace a budget reserve measure already on the November ballot. That measure had been criticized by public employee unions, allies of Brown and Democratic lawmakers.

The original measure, ACA 4, was part of a 2010 budget deal among Democrats, Republicans and then-Gov. Arnold Schwarzenegger and originally scheduled to go before voters in 2012, but lawmakers postponed it to 2014.

The agreement was coming together ahead of the release of Brown's revised budget proposal this month.

Senate Republican leader Bob Huff said Thursday morning, "We're close."

Laurel Rosenhall of The Bee Capitol Bureau contributed to this report.

PHOTO: Senate President Pro Tem Darrell Steinberg, left, Gov. Jerry Brown, center, and Assembly Speaker John A. Pérez, right, celebrate a budget deal with a formal announcement at the Capitol on Tuesday, June 11, 2013. The Sacramento Bee/Randy Pench

May 8, 2014
Lobbyist home fundraiser ban passes Assembly


Responding to a campaign finance transgression that produced an unprecedented fine, the California Assembly voted on Thursday to ban fundraisers at the homes of lobbyists.

Lawmakers demonstrated their eagerness to publicly address a drumbeat of fundraising-related scandals that have hit the Legislature, passing Assembly Bill 1673 without a single no vote or a moment of debate. The final vote was 68-0.

The California Fair Political Practices Commission slapped a record-setting six figure penalty on lobbyist Kevin Sloat in February, saying Sloat had violated the law by directing gifts to lawmakers and throwing expensive fundraising events at his house.

In response, Assemblywoman Cristina Garcia, D-Bell Gardens, introduced legislation prohibiting lobbyists from hosting fundraisers at their homes or offices. That would be far more stringent than current law, which allows such events if lobbyists contribute less than $500 toward the event.

The Senate has also introduced a campaign finance reform package that includes a home fundraiser ban bill by Sen. Ricardo Lara, D-Bell Gardens. Senate Bill 1441 has passed the Senate Appropriations Committee and awaits a floor vote.

PHOTO: A wine wall holds bottles of wine on an LED illuminated wine rack in a private home on July 9, 2013 in Carmichael, Calif. The Sacramento Bee/Paul Kitagaki Jr.

May 8, 2014
Report: Rate-regulation measure would shake up Covered California


A California ballot initiative allowing the state insurance commissioner to reject health insurance rate increases would disrupt the new health care overhaul, destabilizing negotiations between the exchange and insurance companies and inviting costly legal challenges by outside organizations, according to an analysis released Thursday.

The report, commissioned by Californians Against Higher Healthcare Costs - a group of doctors, hospitals and health plans opposing the measure - concludes it would undercut new authority afforded to Covered California. It was performed by Wakely Consulting Group's Dr. Jon Kingsdale, an expert on health care funding and the former head of the Commonwealth Health Insurance Connector Authority in Massachusetts.

Kingsdale said the state exchange should be given time to work.

"One could decide three, four years into health reform that competition is not working, so let's take a different approach," said Kingsdale, an adviser to the Obama administration on the health care law. "This would be asking the voters to decide less than one year into a whole new approach. We don't even know until the end of this year what kind of rate increases we are going to see for next year. It feels like it's absolutely the wrong time."

The initiative on the Nov. 4 ballot is being advanced by Santa Monica-based Consumer Watchdog and Insurance Commissioner Dave Jones. It seeks to provide the commissioner's office similar regulatory authority that it wields over property, casualty and automobile insurance.

Jamie Court, president of Consumer Watchdog, took issue with the figures analyzed in the report (the authors say they got them from the Department of Insurance). He said the study dramatically overstates the delays resulting from outside rate challenges.

Since 2002, the group successfully intervened in 71 non health insurance cases for a savings of $2.9 billion. But he said most the savings resulted from an "informal deterrent effect."

"We have saved huge amounts of money for (consumers) because insurers know better than to raise rates," Court said.

What's more, challenged rates remain in effect until there's a resolution - so there's reason for the insurers not intervenes, to draw out the process, he said.

He said health insurance companies that helped fund the study don't want public scrutiny of the process. The real purpose of the study is to scare the public by influencing the nonpartisan Legislative Analyst's Office's fiscal analysis of the measure, Court said.

May 8, 2014
Donnelly apologizes for tweet, tangles with Kashkari adviser on air

donnellyscrum.jpgRepublican Tim Donnelly, defending his campaign's social media posts linking rival Neel Kashkari to Islamic law, was on a conservative talk radio show Wednesday when a Kashkari adviser called into the station to protest, resulting in more than 10 minutes of unusual, head-to-head bickering and an apology by Donnelly for a tweet he acknowledged was inaccurate.

The exchange came after Donnelly's gubernatorial campaign this week included on its Facebook page a link to a program for an "Islamic Finance 101" seminar at the U.S. Treasury Department in 2008, when Kashkari was a senior Treasury official. Kashkari was listed as providing opening remarks for the seminar, the purpose of which was described as helping 'inform the policy community about Islamic financial services, which are an increasingly important part of the global financial industry."

Accompanying the link was the comment, "Given the recent stories and protests around the outrage of the discriminatory nature of Sharia law, we're horrified that Kashkari would support Sharia anything."

Donnelly, an assemblyman from Twin Peaks, said on KSCO AM 1080 in Santa Cruz that he "just allowed a post to go up" on Facebook referring to a 2008 commentary in The Washington Times. He said, "I didn't say that Mr. Kashkari is somehow, you know, a supporter of Sharia law, but he certainly was the host of this seminar, and on it was Sharia compliance."

Donnelly was confronted on air by Aaron McLear, a political adviser to Kashkari.

"It sounds like the assemblyman is once again a bit confused about the truth, and so I thought it'd be helpful to educate him on exactly what's going on," McLear said. "Neel Kashkari, first of all, is a Hindu, not a Muslim, as Mr. Donnelly is trying to insinuate."

Donnelly said he "never insinuated anything," and he shot back at the Kashkari campaign for posting a website attacking Donnelly on a variety of issues.

"Hey, Aaron, you guys put up a website trying to educate people about me, and it's completely fabricated and full of nonsense," Donnelly said.

The two men argued over each other briefly, after which the host said, "OK, one at a time, guys."

McLear said of Donnelly, "He tweeted, he tweeted, he directly accused Neel Kashkari of submitting to Sharia law. That's a big accusation. What actually happened was Neel was teaching Islamic bankers how to promote free market principles in Islamic societies under Sharia law, so it was actually the exact opposite."

McLear asked Donnelly if someone had hijacked his Twitter account, and he said, "These are big accusations. You need to back it up, Tim. If you can't prove it, you shouldn't say it."

McLear and Donnelly tangled until the radio station went to a break. When the show came back on, with McLear off the air, Donnelly said he had reviewed the tweet McLear complained about and agreed it was inaccurate.

"You know what? Aaron's right. We did re-tweet something that wasn't 100 percent accurate," Donnelly said. "We owe Mr. Kashkari an apology for that."

However, Donnelly said, "What is disappointing is that (Kashkari) sent his hired hand to call in, instead of calling in himself."

Donnelly said the purpose of the Treasury conference was to educate people in government about Islamic finance, "So what exactly was the Sharia compliance portion of it? It doesn't sound like promoting free market principles."

PHOTO: Republican gubernatorial candidate Tim Donnelly speaks with reporters at the California Republican Party's biannual convention in Burlingame on March 15, 2014. The Sacramento Bee/David Siders

May 8, 2014
AM Alert: Latino groups gather in Sacramento

Brownlicenses.JPGLatinos' public-policy priorities will be the focus in Sacramento this morning, with groups from around the state converging on the convention center for a Latino Community Foundation summit.

The event will involve leading advocacy organizations like the National Council of La Raza alongside smaller community-based organizing and services groups. Attendees will hear about the budget process from Sen. Mark Leno, D-San Francisco, and about the implementation of some prized laws from senators Kevin de León and Ricardo Lara, along with Assemblywoman Cristina Garcia.

Laws of interest include the new healthcare overhaul and two landmark immigration laws passed last year: one offering driver's licenses to undocumented immigrants (which hit a bit of a snag yesterday) and one protecting non-criminals from deportation. Attendees will also hear about Lara's bill seeking to insure the undocumented.

VIDEO: Despite a disturbing new report on the size of California's debt, Dan Walters sees little hope for a fix any time soon.

STUDENTS SPEAK: Latino Community Foundation attendees will also hear about California's new school funding plan, and they're not the only ones paying attention. The California Teachers Association will be holding a press conference outside of a State Board of Education meeting today to press policymakers to let students weigh in on the Local Control Funding Formula's phase-in.

CALIFORNIA RAISIN': In a recurring ritual of mining California's deep reservoir of Democratic wealth, President Barack Obama will be in the state today for a pair of party fundraisers. Air Force One will carry the chief executive to Beverly Hills and La Jolla this morning for a pair of Democratic National Committee fundraisers, and then Obama will head north for two more events on behalf of the DNC: a Los Altos confab and an event at the home of Yahoo executive Marissa Meyer.

LEAVE US: Continuing the fight for a cherished Democratic idea, Assemblywoman Lorena Gonzalez will describe a new push for her paid sick leave bill alongside labor and working moms today. The San Diego Democrat will be joined by California Labor Federation president — and 20th Senate District candidate — Connie Leyva — and hourly wage industry workers at a press conference announcing a statewide campaign for Assembly Bill 1522. At 11:30 a.m. in room 317.

CELEBRATIONS: Happy birthday to longtime California politico and State Treasurer Bill Lockyer, who turns 73 today.

PHOTO: Gov. Jerry Brown signs a driver's license bill for undocumented immigrants in Fresno City College in Fresno, Calif on Oct. 3, 2013. The Sacramento Bee/Hector Amezcua.

May 8, 2014
Dan Walters Daily: Debt-dodging continues for California government

Nine thousand dollars per Californian: That's the scale of the sprawling financial shortfall the Legislature and the governor continue to ignore, Dan says.

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

See other Dan Walters Daily clips here.

May 8, 2014
California a heavy user of opiods for injured workers

Prescription Drugs_resized.JPG

California's system of compensating workers for job-related illnesses and injuries has one of the nation's highest rates of prescribing powerful pain-reducing drugs called opiods, a massive study by the Workers Compensation Research Institute found.

The findings suggest that injured workers may be overprescribed with narcotics, leading to addiction and other problems.

"Opiod misuse resulting in overdose deaths, addiction and diversion constitutes a top priority public health problem in the United States," the report says, adding that "an increasing number of states" have adopted policies to reduce use of opiods such as oxycodone and hydrocodone.

The institute examined serious work-related injuries in 25 states, encompassing more than 70 percent of the workers compensation benefits in the nation, and 1.5 million pain prescriptions to develop its profiles of each state's opiod use.

Louisiana stood out as the state with the heaviest long-term use of opiods to treat pain, but California was clustered with several other states in the second tier. The report recommends that states with high levels of opiod use adopt policies to monitor prescriptions and reduce use where possible.

The full report can be obtained from the Massachusetts-based organization here.

PHOTO: Amy Schutt deposits unwanted prescription drugs at a special receptacle at the state Capitol in Bismarck, N.D. on April 25, 2014. Attorney General Wayne Stenehjem says a state program that collects unused medication to help fight prescription drug abuse has destroyed 3.3 tons of OxyContin and other drugs in the past five years. Associated Press Photo/James MacPherson


Capitol Alert Staff

Amy Chance Amy Chance is political editor for The Sacramento Bee. Twitter: @Amy_Chance

Dan Smith Dan Smith is Capitol bureau chief for The Sacramento Bee. Twitter: @DanielSnowSmith

Jim Miller Jim Miller covers California policy and politics and edits Capitol Alert. Twitter: @jimmiller2

David Siders David Siders covers the Brown administration. Twitter: @davidsiders

Christopher Cadelago Christopher Cadelago covers California politics and health care. Twitter: @ccadelago

Laurel Rosenhall Laurel Rosenhall covers the Legislature, the lobbying community and higher education. Twitter: @LaurelRosenhall

Jeremy White Jeremy B. White covers the Legislature. Twitter: @capitolalert

Koseff Alexei Koseff edits Capitol Alert's mobile Insider Edition. Twitter: @akoseff

Dan Walters Dan Walters is a columnist for The Sacramento Bee. Twitter: @WaltersBee

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