What does a Super Duper Democratic Majority Mean for California’s Economy
First ever BizFed “Sacramento Day” learns about legislative priorities facing LA & CV economies.
Nearly 100 business leaders from Los Angeles County and the Central Valley spent two days in Sacramento meeting with individual legislators, hearing from top media and engaging in in-depth Q&A panels with key policy makers.
From housing to water, air quality and taxes – legislators and Committees revealed insights to BizFed Leaders about the direction of the 89 Democrats that control CA’s State Government.
- Local land use control is up for grabs.
State lawmakers aren’t happy with how local government officials have used (or not) their land use authority in several realms including housing, air quality and even communications infrastructure rules. The state seems poised to change the rules on land use planning – particularly when it comes to housing. Cities are gearing up to protect their turf.
- There will be more aggressive climate change/air quality policies.
For too long, some officials said, environmental groups and others have stood outside closed doors as government regulators and businesses worked out plans for emissions reductions and permitting. Now, it’s environmentalists who have legislator’s ears and businesses will have to work to be heard.
- CEQA reform is coming.
One very likely reform is that exemptions given to sports stadiums will be afforded to other projects. Another is expedited judicial review of projects in designated opportunity zones.
- Opportunity zones are the new redevelopment craze but the state is poised to mess it up without reforming income tax reductions and other technical fixes. If the State doesn’t work with business to pave the way for OZ investment opportunities, the money will flow to other states and California will miss out on sorely needed housing and infrastructure – again.
BizFed met with CALmatters Columnist, Dan Walters and he explained that the combination of a “super duper majority” of democrats in Senate and Assembly seats with a decidedly more liberal Governor means businesses can expect to see a volley of both new and old bills from the Big 4 – trial lawyers, unions, environmentalists and consumer advocates.
Lt. Governor Eleni Kounalakis kicked off the day telling the delegation that: “The strength of BizFed is the best evidence that Los Angeles is a powerful economic industrial engine that drives the California Economy.” Her focus, she said, will be education, particularly the lack of infrastructure. “The voice of business will be crucial,” she said.
Assemblymember Chris Holden, Chair of Utilities & Energy, gave the welcome and confirmed that “there’s a new Sheriff in town,” in reference to Gov. Gavin Newsom. He and other Democrats would be “dusting off bills that were vetoed by Gov. Brown” in hopes of passage under the new administration.
Holden and several other legislators also talked about the need to regionalize California’s grid through partnerships with Washington, Oregon, Nevada and Arizona.
PANEL 1: Energy, Utilities & Communications, Assemblymembers Laura Friedman, Chair of Natural Resources and Miguel Santiago, Chair Communications & Conveyance
Asm. Friedman and Asm. Santiago both listed climate change as one of their top priorities and left no question they expect to pass some aggressive policy mandates on that topic under the new Governor.
One of those policies will be setting a date for zero emission transportation, which Friedman said is up to the market to create.
“It’s up to us to set the guidance,” she said. “It will be up to the companies that are here to figure out how to do it. They will be the ones that survive and set the standard for the rest of the world.”
Rather than complain about the cost of regulations to address climate change, she advised, businesses should consider the costs of living with climate change.
Asm. Friedman said “Livability, heat, drought, these are not abstract. What will it be like in 10 years when we have no snow pack? That’s not science fiction.”
Asm. Santiago agreed with Friedman’s overarching views, but said he will be focusing on how to achieve climate benefits on a smaller scale – planting trees, shielding schools from freeways, etc.
He’s hesitant to wait for technology to catch up with policy: “I want to do what we can do now, with available technology.”
PANEL 2: Air Quality, Katerina Robinson, Legislative Director for Senator Nancy Skinner and Katie Valenzuela, Capitol Director for Assemblymember Eduardo Garcia
They kicked off the session by making the point that housing – not transportation – is No. 1 on Californian’s cost of living checklist. That said, the staffers told BizFed members that both Garcia and Skinner would be focusing on ratcheting down emissions this year, whether through zero emission vehicles or cleaner burning fuels. “My boss is cognizant that we need to be as technology neutral as possible and allow the market to dictate solutions,” Robinson said of Sen. Skinner.
The response to several questions about how AB 617 (Community Air Monitoring Program) is being rolled out, Valenzuela insisted that things are moving about as expected – with much grumbling from both sides. Legislators will wait until they see the emission reduction plans before jumping in, if they jump in at all – and no, there is no feeling that CARB has too much power that needs to be checked by elected officials.
LUNCH SPEAKER: Lenny Mendonca, Chief Economic Advisor to Gov. Newsom
Mendonca engaged in a robust give and take with BizFed members.
Lenny Mendoca spoke at length about the need to revitalize forgotten areas of California. Silicon Valley will do just fine, he said. But we need to invest in other areas, hence the administration’s focus on federally designated Opportunity Zones (OZ), distressed areas where some investments may be eligible for preferential tax treatment, in order to attract private investment.
Mendonca agreed with BizFed members that the Legislature needs to ensure that California’s income tax structure is attractive for investors. Our high tax rate discourages investment here, as opposed to other states. BizFed members suggested a tiered rate might help.
Other BizFed members pointed out that California’s astronomical electric rates are counterintuitive to its goal of electrification. High electricity costs discourage businesses from change fleets from diesel to electric engines, he explained. Mendonca said he’d like to learn more about that.
When asked directly if there would be any tax cuts forthcoming considering the state’s $21 billion surplus, Mendonca was unequivocal: “No,” he said. “There will be no tax cuts.”
BizFed Los Angeles Chair, Steve Bullock, CFO at Cerrell Associates, said that “listening to Lenny Mendonca share his approach about how this new administration for California will keep the economy strong and use the state budget is an effective way, another example of BizFed’s access to key decision makers.” Larry Kosmont, Chairman and CEO of Kosmont Companies said, “BizFed also discussed our support of SB 25 (Caballero) that provides for controlled 270 day judicial appeal periods for OZ projects, similar to the favorable CEQA challenge procedures currently available to large stadium projects in California.”
PANEL 3: Revenue & Taxation, Senator Holly Mitchell, Chair Budget & Fiscal Review; Senator Robert Hertzberg, Senate Majority Leader; Sen. Anthony Portantino, Chair Appropriations Committee, Assemblymember Autumn Burke, Chair Revenue & Taxation Committee
“The fear that Democrats are going to take the check book and run amok are unfair,” Sen. Mitchell said, emphasizing that legislators worked alongside Gov. Brown every step to bring the state back into solvency after the 2008 crash. She also told BizFed members that if they wanted to know what this Legislature’s priorities would be, to study up on the Women’s Caucus issues from the recent past.
Asm. Burke agreed and emphasized that oversight hearings would be held on all new taxation measures to look at the cumulative impact on all taxpayers including businesses. She also acknowledged that the business community would have an uphill battle this legislative cycle.
All agreed that the state needs to incentivize investment and compliance through innovative methods.
PANEL 4: Housing, Senator Scott Weiner, Chair Housing, Assemblymember Rob Bonta, Assistant Majority Leader, Assemblymembe
BizFed members should keep an eye out for proposals to change land use planning rules.
“Local control is only good if it delivers good results,” Sen. Wiener said. “That hasn’t happened. Local control needs to be balanced with state guidance.”
Though Sen. Wiener said flat out that CEQA exemptions given to sports stadiums would be afforded to other projects, he warned BizFed members against laying the housing crisis entirely at CEQA’s doorstep. “CEQA is an easy bogeyman,” he said.
But cities have done a terrible job of planning for and executing affordable housing strategies. The media has focused on the handful of cities being sued by the state for not implementing their RHNA (regional housing needs assessment) plans. In fact, he said, 330 cities hadn’t even written a plan.
PANEL 5: Leadership, Senator Steven Glazer, Chair Business, Professions & Economic Development, Assemblymember Heath Flora, Minority Floor Leader, Assemblymember Mike Gipson, Chair Democratic Caucus
The day ended with a California Legislative Leadership panel where Sen. Steven Glazer, Chair Sen. Business, Professions & Economic Development, Asm. Heath Flora, Minority Floor Leader, Asm. Mike Gipson Chair, Democratic Caucus, all agree that legislators need to work across the aisle to make sure that the California economy works for all.
BizFed members noted at the end of the day that “this legislature is unapologetically liberal and does not see the business community as a threat.”
“Understanding what our legislators are working toward is vital to business leaders as they plan for the future,” said Tracy Hernandez, Founding CEO, BizFed. “Legislators need to know how their proposals will affect the ability of businesses to provide services, products and jobs to our regions; BizFed decided to bring the two together for a day of intel sharing and succeeded.”
“Valley businesses and associations have been doing a great job speaking up for our economy,” said Lois Henry, Advocacy Director,
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BizFed Sacramento Day ended with a reception for friends of BizFed hosted by KP Public Affairs.