Enacted in 2018 over the vigorous objections of Silicon Valley tech giants, California’s first-in-the-nation online privacy law took effect Jan. 1, 2020. But with the staff of state Attorney General Xavier Becerra still far short of finalizing an enforcement framework, it’s unclear what effect the California Consumer Privacy Act will have in the short term.

The law’s most important provisions appear straightforward. Californians can ask companies which collect information online what information they have on them. Companies must delete this information upon request. Websites with third-party trackers must make it easy for consumers to opt out of having their information sold by having a visible button allowing them to quickly do so on their home pages.

But echoing the warnings of the California Chamber of Commerce, there’s confusion on how much information companies can retain on their customers – as opposed to information on those who have visited websites or use phone applications. There are also questions about what constitutes the sort of data that consumers should be able to control.

Facebook, Google have different view of law’s scope

“Companies have different interpretations, and depending on which lawyer they are using, they’re going to get different advice,” privacy software executive Kabir Barday told the New York Times.

This is plain in the contrasting plans of California’s two most high-profile tech firms.

Facebook told advertisers in early December that it had no plans to change data-collection policies because it doesn’t believe that “routine data transfers” about consumers fit the definition of selling data contained in the California law, according to a Wall Street Journal report.

Google, however, has put up a website that says the company welcomes the California law and will fully adhere to its intent of letting consumers control their personal data. The company is telling advertisers that consumer data can only be used for fraud detection or to measure online views of ads – and never to try to ascertain the buying habits or product searches of individuals.

Meanwhile, the Experian credit-reporting service told Becerra’s office that it strongly objected to having to provide consumers with “internally generated data” about them, arguing that such information is proprietary and isn’t akin to snooping on individuals’ online search habits and histories.

The Evite company that lets people send out personalized online invitations to parties or events has taken a different tack: using its privacy policy page to make the case to users that the information it collects is used in benign ways that benefit users and improves the services Evite offers.

The law does not apply to businesses with annual revenue of less than $25 million that do not buy or sell personal information on at least 50,000 people a year.

Becerra expects to have guidelines finished by summer

Becerra issued draft guidelines for how the law would be implemented in October. His office is now evaluating the complaints and comments it got from privacy activists, affected companies and others. The goal is to have the regulations in place by the middle of the year.

A key question going forward is how hard Becerra will come down on the 100-plus “data broker” firms in the U.S. which accumulate and sell the most personal of information yet have managed to escape much attention. An investigation posted by the Fast Company media website last March detailed how “if you use a smartphone or a credit card, it’s not difficult for a company to determine if you’ve just gone through a break-up, if you’re pregnant or trying to lose weight, whether you’re an extrovert [and] what medicine you take.” Jewelry sellers, for example, can get customized lists of which consumers have a history of buying expensive gifts on Valentine’s Day.

The firms’ ability to provide such detailed, specific information could be widely curtailed if enough consumers opt out of sharing their personal information – at least if they’re based in California or a state or nation with similar rules. But since such data mining can be done about Americans by companies based in nations with no such rules, it’s certain to continue. A likely future policy fight is over whether California companies should be banned from obtaining such personal information from firms that don’t honor online privacy laws like the Golden State’s.

The U.S. Supreme Court’s decision not to hear an appeal of a 9th U.S. Circuit Court of Appeal ruling limiting when homeless people can be arrested in California and eight other Western states has left lawmakers who want a crackdown over the homeless’ negative effects on quality of life not even sure what that might look like.

In 2018, the San Francisco-based appellate court threw out a broadly written Boise, Idaho, law allowing arrests for sleeping in public, holding that if there were no shelter beds available, this was a cruel and unusual punishment. But dozens of local governments submitted or co-signed amicus briefs to the Supreme Court arguing that the decision was murky at best. One oft-cited example: If a city has fewer shelter beds than its homeless population, is the city automatically blocked from arresting those sleeping in public? 

Some Los Angeles officials fear that’s a likely interpretation.

“The [Boise case] language, rather than citing clear principles where constitutional questions are at stake, makes local jurisdictions vulnerable to lawsuits as they struggle to achieve a balance between the legitimate rights and interests of homeless people and the legitimate rights and interests of other residents and businesses,” City Attorney Mike Feuer told The New York Times.

Los Angeles County Supervisor Mark Ridley-Thomas called the ruling “ambiguous and confusing” and said in a statement released by his office that the Supreme Court’s refusal to hear the appeal “handicaps cities and counties from acting nimbly to aid those perishing on the streets, exacerbating unsafe and unhealthy conditions that negatively affect our most vulnerable residents.”

Large homeless camps called ‘untenable’

It was Ridley-Thomas in September who signaled the arrival of a backlash on homelessness by breaking dramatically with Los Angeles Mayor Eric Garcetti, who has called for a compassion-first approach to what he calls “the moral and humanitarian crisis of our time.”

After persuading L.A. County supervisors to vote 3-2 to support filing an amicus brief backing Boise’s appeal, Ridley-Thomas issued a statement saying the status quo in which the city and county accept massive homeless encampments is “untenable. … We need to call this what it is — a state of emergency — and refuse to resign ourselves to a reality where people are allowed to live in places not fit for human habitation.”

Until then, Ridley-Thomas had been seen as a supporter of the view touted by Democrats like Garcetti and Gov. Gavin Newsom, who argue that homelessness can be sharply reduced with the patient, smart use of public resources. Earlier this year, Newsom had named Ridley-Thomas to be part of his state commission on homelessness.

The fear that the Boise ruling would destroy the quality of life in cities with substantial homeless populations was a focus of Boise’s appeal, which was prepared by the Los Angeles-based Gibson Dunn law firm. “Nothing in the Constitution … requires cities to surrender their streets, sidewalks, parks, riverbeds and other public areas to vast encampments,” the appeal asserted.

San Francisco official downplays impact of ruling

While they were outnumbered by lawmakers who feared the worst, some local officials in San Francisco and Oakland were less alarmed with the implications of the U.S. Supreme Court’s decision to pass on the Boise case.

In interpreting the appellate court’s 2018 ruling, these officials concluded they had the open-ended right to clear encampments that posed clear health and safety risks — so long as they notified those in encampments ahead of time that the camps are going to be cleared and offered the homeless storage for their belongings.

Jeff Kositsky, chief of San Francisco’s Department of Homelessness and Supportive Housing, told the San Francisco Chronicle that he considered the Supreme Court’s action to be a “nonissue.”

Seventy-five miles to the east, Sacramento officials were far more concerned. They fear the upholding of the Boise ruling will interfere with local governments’ efforts to remove the homeless camps that have frequently sprung up in flood-prone areas, especially by the American River in Sacramento.

The June 30, 2020, deadline for Pacific Gas & Electric to emerge from bankruptcy if the giant utility wants to be eligible for a $21 billion wildfire relief fund set up by Gov. Gavin Newsom and the Legislature earlier this year may end up an unofficial deadline of another sort: for the parties interested in taking over all or part of PG&E to put forward their best plans to win over Newsom, the Legislature, Wall Street and the public.

That’s because Newsom’s announcement of his opposition to PG&E’s plan to come out of bankruptcy contains such fundamental objections that it is hard to see a possible compromise. While the governor cannot single-handedly prevent the plan from being approved by regulators and a U.S. bankruptcy judge, his opinion is sure to carry weight. Without his support, PG&E’s path out of bankruptcy is sharply complicated.

Newsom described PG&E’s proposal as being “woefully short” of the commitments needs to ensure the scandal-plagued utility is able “to provide safe, reliable and affordable service to its customers.” His critique included what seemed akin to one of the “poison pills” that the corporate world uses to make sure deals are rejected: a demand that the utility replace every member of its board of directors.

The governor’s position appears encouraging to the coalition of Northern California cities that announced in early November that they were working together to craft a plan take over PG&E operations. Those cities: San Jose, Oakland, Berkeley, Sacramento, Hayward, Sunnyvale, Richmond, Redwood City, Petaluma, Sonoma, Windsor, Cotati, Elk Grove, Clovis, Chico, Redding, Davis, Santa Cruz, Scotts Valley and San Luis Obispo. Supervisors from San Mateo, Santa Cruz, Marin, Yolo and San Benito counties also endorsed the effort. The coalition includes local governments with about one-third of PG&E’s 16 million customers in the utility’s 70,000-square-mile service area.

Cities push for power provider run like credit union

San Jose Mayor Sam Liccardo – de facto leader of the coalition – told the San Francisco Chronicle that he envisioned a electricity supplier run more like a nonprofit credit union than a government-run utility. Backers cited the Georgia Electric Membership Corp., a 501(c)(6) nonprofit that distributes energy from three power providers to 41 not-for-profit local utilities with a total of 4.4 million customers.

But another approach has the strong backing of one of the richest cities in America: San Francisco. Mayor London Breed has long been on record as saying local power infrastructure should be under local control and in September joined with City Attorney Dennis Herrera to offer PG&E $2.5 billion to buy local power lines. 

The measure was quickly rejected by PG&E and appears to have little support beyond city limits. In October, the editorial page of the San Francisco Chronicle called the plan unlikely to be approved by state regulators for a basic reason: Utilities use big-city profits to keep power affordable in rural communities, and any break-up of PG&E means “the state would almost certainly have to help provide power to rural areas — likely at taxpayer expense.”

Newsom has not explained his view of what a PG&E takeover might look like, but he appears to agree with the Chronicle about the need to keep intact the basic framework of a large utility. 

Gov. Newsom wants Warren Buffett to buy utility

In October, he made headlines when he said he hoped that Warren Buffett’s Berkshire Hathaway holding group considered buying the utility.

“We would love to see that interest materialize, in a more proactive, public effort,” Newsom told Bloomberg News.

While Buffett has shown no public interest in the idea of acquiring a controlling interest in California’s largest power utility, several hedge funds have been plain with their interest in taking over PG&E for nearly a year. They have drawn little support from lawmakers because of the perception they would be as indifferent to safety as the owners they hope to replace.

PG&E entered into bankruptcy in January, citing potential liabilities of $30 billion because of massive recent wildfires in recent years that have often been blamed on the utility’s poorly maintained infrastructure. 

The utility believed it had crossed a huge hurdle to emerging from bankruptcy on Dec. 6 when it announced a $13.5 billion settlement of damage claims from four of the largest blazes, sending its stock price higher. Seven days later, Newsom announced his opposition to the utility’s overall plan to emerge from bankruptcy, sending the stock price down to near 52-week lows.

Allegations that Santa Clara County Sheriff Laurie Smith and some of her top brass traded concealed weapons permits to a private company protecting top Facebook officials in return for a large campaign donation have dogged Smith since July and August, when the Santa Clara District Attorney’s Office began serving search warrants on homes of top department officials and searched the sheriff’s headquarters.

The primary focus of DA investigators – at least publicly – has been a $45,000 donation from Martin Nielsen, the leader of the AS Solution private protection firm, to the Santa Clara County Public Safety Alliance, a political action committee that backed Sheriff Smith in the 2018 election cycle and helped her win a sixth term. AS Solution operatives subsequently got several permits.

In September, San Jose Inside – the online website that broke the story of the probe in August – and other outlets reported that in 2018, there had been a deposit of $70,000 into Nielsen’s Citibank account just before he made the donation to the pro-Smith PAC. That raises the prospect of someone or some organization trying to launder campaign contributions, which is a violation of state law. San Jose Inside also reported last month that Santa Clara County Undersheriff Rick Sung had his home raided and some electronics confiscated by the DA’s office.

Report faults lack of standards on permits

Meanwhile, the San Jose Mercury-News reported last week that four Apple security executives had obtained concealed weapon permits. Last month, the newspaper reported that a review of permit records it obtained from the Santa Clara Sheriff’s Department showed apparent favoritism toward well-connected applicants and a lack of guidelines on when the permits should be issued. The report quoted a law enforcement official as saying permit decisions were based solely on the views of Smith – the first woman county sheriff in California history – and her top aides. 

But as a 2017 report by state Auditor Elaine Howle suggested, controversies like the current one in Santa Clara are close to inevitable because a century-old state law gives extraordinary discretion to county sheriffs and police chiefs in deciding which civilians get to carry a gun as they got about their lives.

The law says those applying for permits must demonstrate a “good cause” for a concealed weapon, must have “good moral character” and must complete a weapons-safety training course.

According to the San Francisco Chronicle, this flexibility has led to the issuing of zero concealed weapons permits in San Francisco, with a population of nearly 900,000, and to 2,300 winning approval in Solano County, with half the number of residents.

The state auditor wrote in 2017 that there was nothing inherently wrong with local governments having different standards and that she found no evidence of wrongdoing in the awarding of permits in Los Angeles, Sacramento and San Diego counties, which were the focus of her review.

CCW records often kept private for a year or more

But that hasn’t stopped years of headlines and letters to the editor questioning sheriffs and police chiefs for their decisions on permits and their lack of transparency on the topic. Many agencies take a year or more in responding to requests for related public documents.

Meanwhile, prosecutors face roadblocks in proving that campaign donations are the equivalent of bribes, especially in cases that are years old. The case of former Orange County Sheriff Mike Carona illustrates this. In 2005, the Los Angeles Times reported that Carona – first elected in 1998 – had issued 86 badges to his early political supporters that allowed them to carry concealed weapons. In 2007, former Assistant Sheriff John Haidl testified in Carona’s criminal trial that the badge program was explicitly created to boost Carona’s political war chest. The case presented by prosecutors included recordings of three conversations between Carona and Haidl in which Haidl wore a wire. The men talked about how to coordinate their stories to obstruct the federal probe of the badge program. 

But in 2009, a jury found Carona guilty of only one felony count of witness tampering. Carona’s lawyers targeted the credibility of Haidl – a Newport Beach businessman with no law enforcement experience – and argued that the statute of limitations had expired on most of the charges against the former sheriff.

Carona was sentenced to five and a half years in a federal prison.

One of Gavin Newsom’s first acts after taking office as governor in January was to create a “DMV Reinvention Strike Team” to improve the performance of the state Department of Motor Vehicles.

This came after one of the worst years a state agency has had in recent history. In August 2018, CalWatchdog and many other news outlets reported that wait times were nearly 50 percent longer at DMV offices than the previous summer. The problem was blamed on a heavy increase in visits caused by the federal 2005 Real ID Act. It requires Californians to have either passports or new federal ID cards before they can take commercial flights starting in October 2020. The DMV is the agency that issues the Real IDs.

A month later, another scandal emerged, with thousands of thousands of voters reporting errors in their political party affiliation due to mistakes made in the DMV’s new “motor voter” automatic registration program, which began in April 2018. An audit released in August of this year found the problem was far worse than initially believed, with more than a quarter-million errors in registration in the first five months of the program – 83,684 duplicate voter registrations and 171,145 DMV records with inconsistencies on party membership.

Newsom’s “strike team” issued its report in July on what it had done to fix the agency and said internal data showed a reduction in wait teams of 58 minutes over the previous summer. Two weeks ago, the DMV issued a statement saying that wait times had continued to decline and averaged 38 minutes in September. 

But now the DMV’s other 2018 problem has re-emerged with reports in Northern California of pervasive errors in motor voter registrations, prompting Republican lawmakers to renew their call to put the program on hold until its flaws are comprehensively fixed.

At least 600 complaints so far; number could soar

“At least 600 Californians, including lifelong Republicans and Democrats, have had their voter registration unexpectedly changed, and several county elections officials are pinning much of the blame on the state’s Department of Motor Vehicles,” the Sacramento Bee reported. The daughter of California Senate Republican Leader Shannon Grove of Bakersfield, who had recently used a Sacramento County DMV office, was among those affected. Grove is a leading critic of motor voter.

Sacramento CBS 13’s news team reported at least 300 apparent complaints in Santa Clara County, nearly 200 in Sacramento County and at least 100 in Shasta County.

Reports noted that it’s possible that some of the mistakes were made by voters themselves not used to election services at DMV and that some voters may have misremembered what party status they had chosen previously. But as CBS 13 reported, problems appeared to be turning up in every county as soon as registrars began sending out voter notifications related to the March primary. With El Dorado County sending out notifications last Friday and dozens of counties doing so in coming weeks, the dimensions of the problem could be far bigger than initially assumed – just like last year.

Oregon, which introduced its version of motor voter in January 2016, has had far fewer problems.

Californians can check how they are presently registered at https://voterstatus.sos.ca.gov/ and they can change their status if needed at https://registertovote.ca.gov/.

Leaders of the University of California system appear strongly inclined to drop the requirement that applicants to UC campuses take the SAT or ACT test, heeding the argument that it hurts the chances of Latino and African-American students to be admitted.

A faculty task force is expected to deliver a report on whether the mandate should be retained in February. But UC Regent Eloy Ortiz Oakley, who is also the chancellor of the California Community College system, has already called for scrapping the standardized test requirement. So has UC Berkeley Chancellor Carol Christ and Michael Brown, the provost and executive vice president for academic affairs for the UC system and its 10 campuses. No one who works for UC appears to be standing up, at least publicly, for the testing mandate.

The SAT/ACT test has for decades been criticized for alleged cultural bias against minorities. But that claim is strongly disputed by the College Board, which administers the test and says it has long since fine-tuned the language of questions in the test so that they don’t presume knowledge of white cultural norms. Some academic studies back up this claim of neutrality and find that SATs are a better indicator of college success than grades.

But one of the SAT critiques offered by Ortiz, the regent, is mostly undisputed. It’s that low-income Latino and African-American families are unable to pay for the vast variety of test-preparation classes used by middle-income and wealthy families to help their children. “Perhaps the tests were well-intended, but they are perpetuating a wealth advantage and undervaluing low-income students,” he wrote earlier this year.

The Princeton Review test-prep company, for example, “guarantees” that its 30-hour, $1,599 class will lead to at least a 1400 score on the basic SAT. A 1400 is at the 95th percentile of the approximately 2 million SATs taken each year.

Meanwhile, upper-income families have long been willing to spend whatever it takes to help their children on standardized tests, in particular by hiring specialized English and math tutors who charge up to $450 an hour.

But the College Board pushes back on this front as well, saying it provides free test prep online that helps tens of thousands of students each year.

Nonprofit behind SAT defends UC admission practices

The New Jersey-based nonprofit is so worried that a UC decision to drop the SAT would be copied by many other U.S. universities – as a recent USA Today analysis predicts – that it is offering increasingly thorough defenses of how UC makes its admission decisions.

According to an EdSource report, Jessica Howell, vice president of research at the College Board, appeared at a symposium on the SAT two weeks ago in Berkeley in which she suggested that critics of the test exaggerated its importance to UC admission officers, who consider 14 factors in evaluating prospective students.

“Any effective standardized measure that is one of those factors is going to reveal underlying inequities in our society,” she said. “As researchers, we shouldn’t stop using them, or measuring them because we don’t like what they say. … [Instead,] we should continue to have a discussion about solutions to close the gaps that we see.”

The comment reflects the College Board’s argument that if SAT critics think it’s unfair that students from wealthy families with more resources do better than students from poor families, it’s not the test that’s unfair. It’s American life – the rich can help their kids more than other families.

To address this issue, the College Board proposed also giving SAT test takers an “adversity score” in May so colleges could quickly determine if a student came from difficult circumstances. But the plan was dropped in August after if faced harsh criticism that it was a facile attempt to label students from wildly different backgrounds with a simple number.

Gov. Gavin Newsom has announced an immediate suspension of permits allowing new hydraulic fracturing and steam-injected oil drilling – the latest in a series of moves in the past week underscoring California’s determination to be seen as a leader in climate change efforts.

“These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources,” Newsom said in a statement released by his office.

While Newsom’s predecessor, Jerry Brown, also used his job to promote the Golden State as a leader in the effort to reduce the greenhouse gas emissions believed to be a primary cause of global warming, he opposed a fracking moratorium. Brown’s aides noted the economic benefits of being the third-largest oil-producing state – home to 72,000 wells and 350,000-plus good-paying oil-related jobs. Brown may also have been intrigued by disputed reports in 2013 that the Golden State was sitting on massive oil reserves larger than those of Saudi Arabia.

Catherine Reheis-Boyd, president of the Western States Petroleum Association, pushed back hard at Newsom’s assertion that California had no choice but to crack down on unsafe drilling practices.

“Multiple state agencies already validate our protection of health, safety and the environment during production,” she said in a statement. Reheis-Boyd joined several Republican officials in warning of severe economic consequences of what they depicted as an end to new oil drilling.

State may require buffer zones around many oil wells

But the obstacles Newsom plans to add to gas and oil exploration don’t stop with a ban on the two extraction techniques. The Los Angeles Times reported that he “plans to study the possible adoption of buffer zones around oil wells in or near residential neighborhoods, schools, hospitals and other facilities that could be exposed to hazardous fumes” – a move with the potential to sharply add to regulatory burdens of owners of the wells.

Other moves that Newsom has announced in the last week include:

• The state will no longer purchase gas-powered sedans. Law-enforcement agencies are exempted.

• The state will only buy vehicles from automakers that agreed to follow California’s vehicle-emission rules rather than the weaker rules backed by the Trump administration. So far, Ford, Honda, Volkswagen and BMW have sided with California. General Motors, Toyota, Nissan, Mazda, Subaru, Hyundai, Kia and Fiat Chrysler last month said they would follow the weaker federal standards.

• The Newsom administration has formally asked the California Public Utilities Commission to permanently close the Aliso Canyon natural gas storage facility in Porter Ranch as soon as feasible. The facility has been the target of intense protests by its neighbors and environmentalists since a 2015 disaster resulted in among the largest releases of methane gas in world history – an immense leak that took nearly four months to stop and forced the evacuation of nearly 3,000 households.

Environmental groups hailed Newsom’s series of moves – especially what they depicted as the beginning of the end of fracking in the state.

Livermore lab experts must OK new fracking permits

But the governor’s announcement left open the possibility that new fracking permits could be – if independent experts from the Lawrence Livermore National Laboratory attested to their safety.

That’s not necessarily a long shot. Even as greens spent years depicting hydraulic fracturing as dangerous and destructive, several Cabinet members in the Obama administration said it was akin to other heavy industries – mostly safe if properly regulated.

In 2015, U.S. Interior Secretary Sally Jewell told KQED, the Northern California PBS channel, that local moratoriums on fracking approved by several cities in the state were the “wrong way to go.”

“There is a lot of misinformation about fracking,” she said. “I think that localized efforts or statewide efforts in many cases don’t understand the science behind it and I think there needs to be more science.”

But Newsom said he didn’t agree with this benign view of fracking while campaigning for governor in 2018 and promised a crackdown if elected.

A scathing audit on school funding that found the state did not meet promises made six years ago to help English language learners, foster children and students from poor families sets up a 2020 test of the clout of the California Teachers Association and the California Federation of Teachers – and of the willingness of Gov. Gavin Newsom to take on the unions who were early backers of his successful 2018 candidacy. 

State Auditor Elaine Howle’s review focused on how school districts in San Diego, Oakland and Clovis had implemented the Local Control Funding Formula, which was adopted by the Legislature in 2013 at the behest of then-Gov. Jerry Brown. The governor and then-Senate President Darrell Steinberg, D-Sacramento, were among several leaders who said the LCFF would be a game changer by getting additional assets to struggling students.

But Howle found instead that billions in extra funds the formula directed to districts with high percentages of English learners, foster kids and poor families had been used for general needs – including raises for teachers. She concluded there was little or no evidence that the LCFF had boosted these students’ performance.

“In general, we determined that the state’s approach [to Local Control] has not ensured that funding is benefiting students as intended,” Howle wrote.

Howle’s finding confirmed all the major criticisms of the formula that have been raised by education reformers and by civil rights lawyers who have repeatedly sued Los Angeles Unified over its treatment of poor minority students. 

Bill to track school funding couldn’t even get a hearing

But these groups have never gotten far with Local Control changes. Last spring, Assemblywoman Shirley Weber, the San Diego Democrat who pushed for the audit, couldn’t even get Assembly Education Committee Chairman Patrick O’Donnell, D-Long Beach, to hold a hearing on her bill to require disclosure of how LCFF dollars are being used.

Howle’s audit gives Weber new evidence to push for tracking such spending, and she has said fixing Local Control is her top priority in 2020. But O’Donnell, a former teacher who is close to the CTA and CFT, is unlikely to drop his opposition to tracking the funding.

A key question is likely to be what the governor does. While Newsom won the early endorsements of the two teacher unions, he spent the 2018 campaign telling editorial boards and the Los Angeles and Silicon Valley billionaires who back education reform that he too wanted to fix Local Control to ensure it helped struggling students and had proper accountability protections.

But any attempt to get school districts to stop spending LCFF dollars on teacher compensation – and on rapidly growing teacher pension costs – will go directly against the CTA and the CFT. They already see available school funding as inadequate and are both pushing for billions of dollars in tax hikes in two measures expected to be on the ballot in November 2020. They also won changes that will make it more difficult for charter schools to be approved or renewed using the argument that charters were diverting funding from regular public schools at a time when those schools are desperately underfunded. They are unlikely to accept the notion that the audit must be acted on.

Meanwhile, Newsom has so far used his political capital to advance an education reform that teachers unions also may question. But the reform – using metrics to track the performance of students throughout their K-12 journey – isn’t nearly as contentious as the state forcing many school districts to reorient their Local Control spending and stop using it for raises and pension bills.

Less than a year after losing by far its biggest-grossing company to Texas – the pharmaceutical giant McKesson Corp. – San Francisco is losing another high-profile firm. Stripe, a financial software company that is the second-highest valued start-up in the U.S., is moving to South San Francisco.

Both McKesson and Stripe were unhappy with Measure C, the “homeless tax” approved by San Francisco voters last November that requires companies based in the city, which have more than $50 million in annual revenue, to pay a levy based on their gross receipts. McKesson moved to Irving, a suburb of Dallas, which has no such tax and much lower overall corporate taxes. While South San Francisco is not as cheap as Irving, it doesn’t have anything akin to San Francisco’s tax, which has helped the city attract many tech firms, in particular biotech giant Genentech.

“Unfortunately, Stripe choosing to leave town is not an anomaly,” Alex Tourk, spokesman for the sf.citi tech trade group, told the San Francisco Chronicle. He said the business community needed to “work together [to] … establish a fair and equitable tax system that we can all rely on.”

But as the fight over Measure C reflected, there is a huge split among San Francisco tech firms. Marc Benioff – the billionaire chief executive of Salesforce, the city’s largest employer – and company employees provided millions in funding to the pro-C campaign. Benioff has disparaged tech firms which balked at the measure and appears open to even more tax measures to deal with San Francisco’s homeless crisis.

“This is a humanitarian emergency and it demands an emergency response,” Benioff wrote last year in an op-ed in The New York Times.

Uber moving entire departments to Dallas

But will more tax hikes be accepted by Uber, one of the city’s most prominent and famous start-ups? Uber was neutral on Measure C. And in a move with parallels to the actions of McKesson before it moved out, Uber announced in August that it was setting up a “second headquarters” with 3,000 employees in Dallas after being wooed for years by city leaders, who provided $36 million in incentives and tax credits.

“Dallas became the first city in Texas where the Uber app was available in 2012, and since then Texas has been a hub of innovation for our platform,” Dara Khosrowshahi, CEO of Uber, said in the company’s announcement. “Uber is excited to bring this major investment to Texas and to increase our commitment to the city of Dallas.”

Yet Uber officials said that too much should not be read into its decision and that San Francisco would remain its headquarters. Uber said there was no change in its plan to move into 500,000 square feet of new office space at the huge, high-tech new Chase Center next year.

Nevertheless, the Dallas Business Times reported that Uber was moving entire departments to Dallas, including the Uber Eats team, and its legal, human resources, recruiting, finance and business development units.

That’s similar to what McKesson did before it confirmed it was leaving San Francisco permanently.

Uber has an even stronger motive to leave than McKesson or Stripe, which are considered healthy companies. Uber lost $5.2 billion in the second quarter of 2019, the company announced in August. Its stock price is down about one-third since then, and analysts are mixed about its future.

According to a new website run by California State Auditor Elaine Howle and her staff, the dozen most populated cities in California all have significant fiscal problems and will be forced into major adjustments in coming years.

Eleven of the cities – Los Angeles, San Diego, San Jose, San Francisco, Fresno, Sacramento, Long Beach, Bakersfield, Anaheim, Santa Ana and Riverside – face what Howle classified as moderate risk. One – Oakland – was seen as a high risk.

All 12 of the cities face considerable stress from the rising cost of pensions. Several – especially Los Angeles – also have vast unfunded health care obligations for their retirees. 

Howle’s findings were depicted as surprising in a Sacramento Bee analysis, which focused on the health of the state economy and the low unemployment rate. But government finance experts have long warned that California’s cities – which have seen the cost of post-employment benefits roughly triple over the last 30 years – are in a far worse position to deal with pension bills that the state and counties. That’s because total employee compensation takes up a much bigger chunk of city budgets.

Howle warns cities to prepare for recession

At a news conference introducing the website, Howle said a primary goal was making sure that both local officials and residents of each city would use her office’s analysis to prepare for a possible economic downturn. Even a mild recession is likely to reduce revenue that cities get from sales and hotel taxes and from development permitting.

“If some of these [cities’] costs continue to go up and these cities aren’t prepared for them, they will have to cut services in order to pay pensions, to pay for benefits, to pay for the debts that some of the cities have taken on,” Howle said, according to the Sacramento Bee. She specifically said nearly half the cities will struggle to meet their steadily increasing payments to CalPERS.

Rankings on the website are based on the 2016-17 fiscal year, with a focus on each city’s pension obligations, pension funding, pension costs, anticipated future pension costs, retiree health care expenses, debt burden, liquidity, general fund reserves and revenue trends.

Overall, 18 cities were said to be at high risk overall, 236 at moderate risk and 217 cities at low risk. Compton – which has not produced an audited overview of its finances in five years – was judged to be in the worst shape, followed by Atwater and Blythe. 

The other cities listed at being high-risk: Lindsay, Calexico, San Fernando, El Cerrito, San Gabriel, Maywood, Monrovia, Vernon, Richmond, Ione, Del Ray Oaks, Maryville, West Covina and La Habra.

Among the cities found to be in the best shape: Rancho Cucamonga, Chino Hills, Poway, Indian Wells, Rancho Mirage, La Quinta and Mountain View.

The fact that 2-year-old information was being presented by the auditor as a snapshot of cities’ current fiscal health prompted criticism from the League of California Cities.

“It doesn’t tell the story of now, and so we’re not really clear on how helpful this dashboard is to the public, to the cities or basically anybody,” Jill Oviatt, director of communications and marketing for the league, told the Bee. She likened Howle’s rankings to “a data dump that’s void of context and analysis.”