Asm. Ling Ling Chang

Sacramento once again has its eye on the sharing economy.

This year, state lawmakers have targeted ride-sharing companies and short-term accommodation services for more regulations that, some fear, could kill the burgeoning industry. But, at least one state lawmaker has embraced the mantra: “sharing is caring.”

Republican Assemblywoman Ling Ling Chang of Diamond Bar has introduced legislation that would rewrite the state’s travel policy to guarantee state workers have the right to use sharing services while traveling on government business. That means on the next business trip to Los Angeles, a state worker could ditch the corporate hotel chain in favor of Airbnb, or upgrade the big yellow taxi for an Uber.

“The sharing economy is becoming a part of our everyday lives,” Chang told CalWatchdog.com. “I see it as a growing market in California that is creating jobs and making our lives better, which is a win-win.”

Chang added, “We should be embracing these new markets and one way to do that is to allow state workers to take advantage of their cost-saving benefits.”

Bill could saves taxpayers millions

Technically, there’s nothing in state law that prevents an agency or department from approving travel reimbursements for sharing services. Chang says that her measure is a pro-active effort to keep state policies current with new innovations in the marketplace.

“By allowing state employees to use the sharing economy, California is leading by example and embracing innovation,” Chang explained. “Too many times state bureaucracies punish these new entrepreneurs because they don’t understand them. If it doesn’t fit into the status-quo, 20th century regulatory scheme, there seems to be a desire to push them into that old system.”

Last year, the University of California initially banned reimbursements for travel expenses incurred with sharing services. That led to a public outcry with some Democratic politicians calling for the UC system to modernize its travel policies.

“Sharing economy companies offer consumers more choices at often less cost than comparable services offered by traditional vendors,” Lt. Governor Gavin Newsom, a member of the UC Board of Regents, wrote at the time. “Prohibiting U.C. employees from using services that cost less is simply bad for the university’s bottom line.”

Eventually, the UC system backed away from its ban. Chang’s bill encourages the UC system to follow the state’s lead in embracing sharing services.

Internet Association, Natural Resources Defense Council back bill

The $15 billion sharing industry is expected to grow to $335 billion over the next decade, in part, because it saves consumers money. Sharing services are commonly cheaper than traditional travel businesses. According a legislative analysis of the bill, home-sharing services can save consumers as much as 50 percent compared to conventional lodging options.

With more than 271,000 active state employees, a shift by state government to more sharing services could help save taxpayers money. Chang’s office says that state employees have been reimbursed approximately $110 million in travel-related expenses over the last three years.

The bill has picked up key support from the Internet Association & Natural Resources Defense Council, which believe it will help the environment and save taxpayers money.

“AB229 recognizes the value of the emerging sharing economy and how it could be used to reduce state costs relating to travel,” the Internet Association wrote in support of the bill. “Providing the ability for state employees to use sharing economy services and receive reimbursement would increase the number of safe and reliable options available to employees when they travel on state business.”

AB229 sailed passed the State Assembly on a 74-0 vote.

Sen. Ben Hueso attacks ride-sharing services

But not everyone in Sacramento is ready to embrace the idea. The bill has run headlong into opposition from one state lawmaker that has consistently opposed the new sharing economy.

“This industry, two years ago was operating illegally,” state Senator Ben Hueso, D-San Diego, said in reference to the ride-sharing industry during a committee hearing earlier this month. “This is a bill that is largely unnecessary, but it is setting a statement, saying, ‘The state of California is endorsing this mode of travel and encouraging this mode of travel over others.'”

Hueso, whose family is in the taxi cab business, has become the Legislature’s biggest critic of ride-sharing. Yet, even he could benefit from the new services. Last summer, Hueso was arrested for driving under the influence just hours after he voted for legislation that one ride-share executive feared “would literally spell the end of the ride-share industry.”

The bill’s author, Sen. Jim Beall, D-San Jose, has made SB16 an urgency measure, which would put it in effect immediately rather than taking effect in January. Urgency bills require two-thirds approval by the Legislature, which means SB16 will need a few Republican votes to pass each house. The bill has passed two Senate committees without any Republican support so far.

Mix of taxes and fees

The bill would spread out how the revenue is collected by:

• Raising the 30-cent-per-gallon gasoline excise tax by 10 cents and raising the 13-cent tax on diesel by 12 cents per gallon. Those taxes are in addition to the federal 18.4-cent-per-gallon gas tax (24.4 cents for diesel).
• An increase in the vehicle license fee of 0.65 percent of the vehicle’s value to 1 percent of the value.
• A vehicle registration fee increase of $43 per vehicle to $78 per vehicle and adding a new $100 fee for zero-emission vehicles.

The taxes and fees are projected to raise $3.5 billion in the first year, gradually increasing to $3.9 billion in the fifth year. Five percent of the revenue would be set aside for counties that pass local transportation sales and use taxes, but which have not previously passed such taxes.

Justification for the increases

Beall told the Senate Governance and Finance Committee on May 6 that there’s an urgent need for more road funding because the longer repairs are put off, the greater the cost to fix them:

“The state transportation system is critical to California’s economic well being and enables us to move goods, people and ideas around the state. All of us who drive share the responsibility to maintain our roads. We use the roads, we wear them down.

“We must properly maintain them, because it’s cheaper than rebuilding a ruined freeway or a ruined street. California now faces a $59 billion backlog in state highways that will grow in absence of a solution. There is a sense of urgency and this is necessary.

“My bill, SB16, creates a much-needed, temporary funding plan to address the maintenance backlog of our aging system. My bill is based on four principles. First it establishes an equitable financing strategy. Everyone contributes their fair share for using our roads. This includes returning the [truck] weight fees from the general fund to road maintenance.

“Second, my bill includes protections to ensure that funding goes only to road maintenance. Third, it establishes efficiencies to Caltrans to ensure projects are completed on time and on budget. Finally, my bill provides funding at the state, county and city level to address road maintenance needs at all levels.

“SB16 will save the state money in the future and alleviate the need to raise even higher tax revenues in future years. We have a long way to go. But I think most everyone can agree on the needs. Let’s come together and address the issue now, instead of letting the problem grow and expecting someone else to resolve the issue later.”

Jennifer Whiting, representing the League of California Cities and the California State Association of Counties, echoed Beall’s comments.

“SB16’s combination of ensuring that existing transportation revenues fund transportation projects, and its targeted tax and fee increases, strike the right policy and fiscal balance needed to address this momentous challenge.

“In addition to the $59 billion shortfall for the state system, the local streets and road system is facing a $79 billion shortfall over the next 10 years. We don’t know that there’s a single solution to the entire problem. However, it’s very clear that we have to act now.

“A five-year delay in additional investment in the system will cost California taxpayers $11 billion. That’s just the act of inaction will cost us $11 billion over the next five years. The local system is critical to goods movement, farm-to-market needs and regional travel. SB16 is a critical component of fixing the system.”

Jose Mejio, representing the California State Council of Laborers, said increased road repair funding “would boost this economy with job creation in a domino effect for all of the various components that have to fit to be able to build infrastructure in California.” Beall said his bill will create 171,000 jobs.

Argument against the bill

Only one person testified against the bill: David Wolfe, representing the Howard Jarvis Taxpayers Association. He acknowledged that gas tax revenue has not been increasing at the rate it has in the past due to an increase in more fuel-efficient vehicles:

“And that problem is going to continue to get worse in the years to come, and it needs to be addressed. But it’s not addressed by doubling down on a tax and increasing a tax that’s very inequitable. It’s just not the way to do it. California has the second highest gas tax in the nation behind Pennsylvania. A discussion needs to be had with how our roads are funded.

“We have a $110 billion general fund budget. We have a $2 billion surplus right now. And we need to think about … spending more dedicated revenue on transportation projects. It worked 50 years ago with [Gov.] Pat Brown. And there’s no reason why, especially with more general fund revenue, it can’t work in that same way today.”

Only one committee member, Sen. John Moorlach, R-Orange, voted against the bill. He noted that California has many funding needs:

“We have a transportation problem. We have an unfunded pension plan problem. We have an unfunded retiree medical problem. We’ve got an unrestricted net deficit in this state of a $117 billion problem. So we’re just looking at one-quarter of our big problems.

“It seems to me it’s got to come all the way from the top in how we deal with all four of these segments. We can’t just say we’re going to raise taxes for all four of them.”

Moorlach also challenged the bill’s job creation claim. “That [increased funding] comes out of taxpayer pockets,” he said. “It seems like zero sum game. You’re spending a billion dollars here, but you’re taking it from somewhere else. At the end of the day there might be jobs lost as well.”

Only one committee member voted against the bill when it was considered by the Senate Transportation and Housing Committee on April 28: Sen. Ted Gaines, R-Eldorado Hills.

“I really feel with an improving economy, and even a recent report of $4 billion in additional revenue coming into our state treasury, why aren’t we spending tax revenue that’s already coming into the treasury and prioritize that infrastructure in California?” he said. “We’ve been able to do it historically. We’ve obviously fallen behind.”

If SB16 passes the Legislature it will likely be signed by Brown. In his 2015 inaugural address the governor discussed the need to have “the roads, highways and bridges in good enough shape to get people and commerce to where they need to go. … Each year, we fall further and further behind, and we must do something about it.”

The bill will next be considered by the Senate Appropriations Committee.

Routinely critical of state regulators for failing to protect consumers, the consumer advocacy group has been criticized by an independent oversight panel for presenting “incorrect” and “misleading” information to the public.

A 2013 Consumer Watchdog expose was titled, “Golden Wasteland: Regulating Toxics, or Toxic Regulations?” It slammed the state Department of Toxic Substances Control for jeopardizing public safety by “allowing serial polluters to cut deals with the department” and “levying wrist-slap penalties instead of applying maximum fines.”

“We have some of the toughest environmental laws in the nation, and some of the weakest enforcement,” Consumer Watchdog concluded, based on its 2013 Golden Wasteland report.

A new report by the California State Senate’s Office of Oversight and Outcomes, “Fact Check: Despite Failures By State’s Toxics Regulator, Many Recent Criticisms are Unfounded,” analyzed claims made by Consumer Watchdog.

State Senate report: Golden Wasteland claims “incorrect, misleading or lacking in context”

Consumer Watchdog’s claims, which generated headlines across the state, concerned state Sens. Kevin de León, Ellen Corbett and Ricardo Lara. De Leon is the Senate’s president pro tem. In July 2013, the Democratic lawmakers tasked the state Senate’s independent research arm with investigating Consumer Watchdog’s allegations.

Led by former Sacramento Bee reporter John Hill, the Senate investigative unit conducted a line-by-line review of Golden Wasteland. They “found that the report was incorrect, misleading or lacking in context.”

“Golden Wasteland includes opinions and proposals in addition to factual assertions,” the Senate’s investigative unit found. “In some cases, we were able to confirm its assertions. In many others, we found that the report was incorrect, misleading or lacking in context.”

One example of a misleading claim cited by Senate investigators involved whether the Department of Toxic Substances Control had jeopardized the public by failing to shut down an oil-recycling facility in Newark, California.

“One private environmental attorney says that the California Legislature never intended for the DTSC to allow serial violators like Evergreen Oil to stay in business,” Consumer Watchdog argued in its report. “In fact, the law does not require a specific level of harm to be determined before revoking or denying permits. … Thus, DTSC has every right – indeed a duty – to shut down this serial environmental polluter.”

Senate investigators found that Consumer Watchdog’s account of the Evergreen Oil case omitted key information.

“It’s true that DTSC had the legal authority to become more involved in the Evergreen case,” the Senate report states. “But Golden Wasteland fails to mention that California’s regulatory scheme calls for a local entity, a Consolidated Unified Program Agency, to take the lead in the section of the Evergreen plant where accidents occurred. … And the report misleads by omitting any mention of the Alameda CUPA’s lead role in overseeing the re-refining part of the facility, making it seem to an uninitiated reader that DTSC was the obvious candidate to respond to problems at the facility.”

Consumer Watchdog defends report

Consumer Watchdog responded with a rebuttal to the state Senate’s investigation: Criticizing the Legislature’s past performance in oversight, while defending the report for verifying some of its claims.

“The Legislature has historically done a terrible job of overseeing an agency that has gotten so much wrong, ending up hurting the very people that it is supposed to protect,” said Consumer Watchdog’s Liza Tucker, the author of the original Golden Wasteland report. “The report by this Senate office underlines that lack of oversight.”

She added, “Its report verified a dozen allegations in Golden Wasteland, which made the case the agency is dominated by the companies it regulates.”

Coming to Consumer Watchdog’s defense is a group of housing advocates organized by a project of the Center on Race, Poverty & the Environment.

“For residents of Autumnwood, who reached out to DTSC for relief and received none, this report is a disappointment,” Xonia Villanueva, a member of the People’s Senate, said in a recent press release. “It’s as if the Senate investigator was tasked with discrediting communities in California that are crying out for help.”

Senate report adds to past criticism

Steve Maviglio, a Democratic strategist and frequent critic of Consumer Watchdog, pointed to the state Senate’s findings as validation of his extensive research into the nonprofit.

“The critique isn’t coming from an ideological foe of Consumer Watchdog,” said Maviglio, who has published his research at the cleverly named, ConsumerWatchdogWatch.com. “It’s coming from the research arm of perhaps the most progressive state Senate in the nation.”

In Maviglio’s view, Consumer Watchdog’s research has been biased by funding sources, most of which it refuses to disclose.

One funding source that has been well-documented is revenue that the group receives from policing the government regulations it helps write. Founded by consumer advocate Harvey Rosenfield, the author of Proposition 103, which increased state insurance regulation, Consumer Watchdog has benefited from provisions in state law that allow it to act as an “intervenor.”

“‘Intervenors’ can get paid hundreds of dollars an hour (paid by insurance companies) in fees to monitor the rate process, supposedly on behalf of the public,” wrote UT San Diego columnist Steven Greenhut. “No surprise, Consumer Watchdog is the most proficient intervenor and has received millions of dollars in its challenges under Proposition 103.”

That leaves some critics deeply suspicious of any claims made by the organization.

“Consumer Watchdog’s name should be Trial Lawyers’ Helper,” CalWatchdog.com contributor Chris Reed wrote in a blog, late last year. “The organization aggressively works on many fronts to increase the ease with which trial lawyers can take money from people.”

Don’t expect Consumer Watchdog to be slowed down by the recent criticism. Last month, it published a new report, “Inside Job,” which, in the group’s words, looks into how “Boeing and its influential fixers derailed the cleanup of a partial nuclear meltdown site in greater Los Angeles.”

(You can read the report by the state Senate Office of Oversight and Outcomes here: “Fact Check: Despite Failures by State’s Toxics Regulator, Many Recent Criticisms are Unfounded”.)

In 2012, the Senate Democratic Caucus ran the tables, winning every contested race. With Fran Pavley, Richard Roth and Cathleen Galgiani added to his caucus, Senate President President Pro Tem Darrell Steinberg, D-Sacramento, had a veto-proof, two-thirds majority.

They could do what they wanted, even pass tax increases, with any Republican objections  ignored.

But before that supermajority could be put to use, Senate Republicans were given a victory they hadn’t earned at the ballot box. In February 2013, Senator Michael Rubio, D-Bakersfield, abruptly resigned to take a job with Chevron. In the ensuing special election, Republican Andy Vidak of Hanford upset Leticia Perez.

Rubio resignation began Democrats’ downward spiral

Rubio’s resignation was the beginning of a downward spiral for Senate Democrats. In quick succession earlier this year, three members of the Senate Democratic Caucus, Ron Calderon of Montebello, Rod Wright of Inglewood  and Leland Yee of San Francisco, faced high-profile scandals that brought about their suspensions and ended Senate Democrats’ super-majority in the 2013-14 session.

This November, Democrats have no room for error, as favorable demographics and incumbent advantages have Senate Republicans poised to reclaim one-third control of the State Senate. In order to reach their expected 14-seat minority, Senate Republicans need to defend two Central Valley incumbents and win an open seat in Orange County, which is rated a toss-up by most political analysts.

Cannella appeals to immigrants

Despite declining statewide voter registration, Republicans have done well in recent elections appealing to moderate Democrats and decline-to-state voters in the conservative Central Valley. Four years ago, Senator Anthony Cannella, R-Ceres, beat then-Assemblywoman Anna Caballero by three points in an open seat being vacated by Rep. Jeff Denham, R-Turlock.

This year, Cannella faces a much weaker opponent in Democrat Shawn Bagley, a produce-broker and businessman from Salinas. Although Democrats hold a 14-point advantage in voter registration, Cannella will likely use his more than $900,000 warchest to tell voters about his moderate record in Sacramento.

Cannella co-sponsored legislation to allow undocumented immigrants to apply for driver’s licenses. He’s pushed Congress to adopt comprehensive immigration reform and voted in favor of the Dream Act, to allow undocumented immigrants to obtain conditional permanent residency and in-state tuition benefits.

Vidak: State’s leading high-speed rail critic

While Cannella has worked to broaden the GOP’s base, Vidak has appealed to moderate Democrats and independents on the issue of high-speed rail. The Legislature’s leading high-speed rail critic, Vidak has questioned pay-to-play politics in the contracting process and called for a re-vote of the public, which in 2008 green-lighted the project by passing $9.9 billion in bonds in Proposition 1A.

This November, Vidak must again overcome a 17 percentage point Democratic registration advantage, as he faces Fresno School Board Trustee Luis Chavez.  If the primary is any indication, Vidak is well-positioned to defeat Chavez, who managed just 38 percent of the vote in the heavily Democratic district to Vidak’s 62 percent.

Nguyen: GOP’s opportunity to gain seat

With the effects of redistricting finally taking effect for even numbered State Senate seats, Republicans are guaranteed to pick up one seat, the 28th Senate district, in the Coachella Valley. The race remains too close to call, but the top three candidates, Riverside County Supervisor Jeff Stone, former Assemblywoman Bonnie Garcia and Indio Councilman Glenn Miller, are all Republicans.

The best pick-up opportunity for Senate Republicans lies in Orange County, where County Supervisor Janet Nguyen takes on former Assemblyman Jose Solorio, now a trustee on the Rancho Santiago Community College District Board. On Tuesday, despite having a second Republican candidate in the race, Nguyen earned 51.8 percent of the vote in the 34th Senate District. The district has an even split between Asian and Latino voters.

GOP long-shots, but on the table

Two more seats are long-shots for Republicans, but will likely remain on the table in November. In Alameda and Santa Clara county, GOP candidate Peter Kuo will face Democratic Assemblyman Bob Wieckowski, who escaped a bitter primary with former Assemblywoman and convicted shoplifter Mary Hayashi. Also impressing political analysts, former Downey Mayor Mario Guerra pulled in 44 percent of the vote in a heavily Democratic district.

“Comparing June vote totals to November is like comparing preseason to the playoffs,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, told the Los Angeles Times. “It’s a completely different election with a completely different turnout universe.”

In the 32nd Senate District, Guerra needs to overcome a nearly 2-to-1 voter registration disadvantage. Even without a long-shot victory in the Whittier-based district, Senate Democrats will lose a seat in November, when Sen. Mark DeSaulnier, D-Concord, is expected to win a seat in the U.S. House of Representatives. That would produce a new race next year for a replacement.

District 12

Candidate		Votes	Percent
	Luis Chavez (Party Preference: DEM)	17,296	37.6%
*	Andy Vidak (Party Preference: REP)	28,718	62.4%

District 28

100.0% ( 422 of 422 ) precincts partially reporting as of June 6, 2014, 10:29 a.m.

Candidate		Votes	Percent
	Philip Drucker (Party Preference: DEM)	16,177	18.8%
	Anna Nevenic (Party Preference: DEM)	13,084	15.2%
	William “Bill” Carns (Party Preference: REP)	4,379	5.1%
	Bonnie Garcia (Party Preference: REP)	16,894	19.6%
	Glenn A. Miller (Party Preference: REP)	16,792	19.5%
	Jeff Stone (Party Preference: REP)	18,737	21.8%

District 34

100.0% ( 482 of 482 ) precincts partially reporting as of June 5, 2014, 6:20 p.m.

Candidate		Votes	Percent
	Jose Solorio (Party Preference: DEM)	23,851	33.7%
	Janet Nguyen (Party Preference: REP)	36,577	51.8%
	Long Pham (Party Preference: REP)	10,244	14.5%

District 32

100.0% ( 494 of 494 ) precincts partially reporting as of June 5, 2014, 6:20 p.m. 

Candidate		Votes	Percent
	Carlos R. Arvizu (Party Preference: DEM)	1,046	2.0%
	Sally Morales Havice (Party Preference: DEM)	5,917	11.3%
	Tony Mendoza (Party Preference: DEM)	16,706	31.9%
	Irella Perez (Party Preference: DEM)	5,545	10.6%
	Mario A. Guerra (Party Preference: REP)	23,135	44.2%