SACRAMENTO – Gov. Jerry Brown’s annual budgets have become familiar affairs. During his last two terms in office, Brown routinely offered a budget plan that broke spending records, but also was designed to limit the creation of new programs while girding against the possibility of another recession. The governor’s budget release from last Thursday was true to form.

Brown’s 2018-2019 budget plan would spend a record $132 billion in the general fund – which is 4 percent higher than last year and 44 percent higher than the first budget he released in his modern gubernatorial terms (2011-2012). The total budget – including spending from bonds and special funds – tops $190 billion. As columnist Dan Walters points out, Brown’s first-ever budget from the 1970s spent only $11.5 billion in the general fund. 

But Brown touted his infamous chart showing that balanced budgets often have been followed by deficits.  “California has faced 10 recessions since World War II and we must prepare for the eleventh. Yes, we have had some very good years and program spending has steadily increased. Let’s not blow it now,” he said in his budget statement.

The governor also warned about the ramifications of the recent federal tax plan, signed by President Trump, which increases the tax bite on high-income Californians by limiting their ability to write off state and local taxes. Unless the state Legislature passes a workaround (such as a proposed plan that allows Californians to designate their state tax payments as a “charitable contribution”), the new rules are expected to reduce revenues in high-tax states.

There are other steps that followed in a more fiscally conservative manner. Following the recent increase in the gas tax and vehicle-license fees, the new budget showed a healthy surplus. Instead of spending it on new programs, Brown has earmarked $5 billion to the state’s rainy day fund. That’s $3.5 billion more this year than he is obligated to set aside in case of a coming downturn. It brings the total fund to $13.5 billion.

These efforts drew praise from across the political spectrum for their prudency. As the San Francisco Chronicle opined, Brown’s “proposed budget, drenched in a $7 billion surplus, spends money sparingly, dumps dollars into a record rainy-day fund, and dodges big-ticket programs favored by his would-be successors.” Democratic legislators and statewide elected officials likewise praised the governor for spending more without breaking the bank.

He even earned the faint praise of some Republicans legislators, who fear that the next Democratic governor will be far more eager to spend beyond Californians’ means. “As usual, the governor gave a good speech this morning,” said Sen. Jeff Stone, R-Temecula. “But as has been the case far too often, the initial budget is the floor and I’m sure the Democrat leadership in Sacramento will now begin the spending spree we all know is coming.” Other Republicans argued that the surplus proved that the gas-tax hike was unnecessary – and urged the governor to return the surplus to taxpayers.

There are a number of other noteworthy spending proposals. For instance, the governor plans to quickly start spending $4.6 billion in road improvements, which some observers believe could blunt the momentum of a proposed statewide initiative, which is now in the signature-gathering stage, that would repeal the unpopular tax. The governor also proposes spending nearly 3 percent more on California State University and the University of California systems – a proposal that drew criticism as being insufficient from some education officials. Total K-12 spending would be up by 2.5 percent.

Of particular note, the governor proposes the creation of a new fully online state community college to serve the “2.5 million Californians in the prime working ages between 25 and 34 who have only a high school diploma or some college but no degree.” Brown says these Californians – mostly Latino and women – are most vulnerable to recession and to automation in the workplace. The proposed cost to get started is approximately $100 million and then $20 million a year.

Social services spending remained stable. The budget boosts health care spending but contains some uncertainty, pending a coming decision from Congress regarding whether it will continue to split the costs of the Children’s Health Insurance Program with the states. The governor continues to boost funding for programs to combat climate change. He continues to pay down the so-called “Wall of Debt,” which hit $35 billion in 2011 and is down to $6 billion in this budget year.

One big fiscal issue, that doesn’t directly affect the current, proposed budget, involves the state’s growing payments to cover its unfunded pension liabilities. “When the next recession comes around, the governor will have the option of considering pension cutbacks for the first time in a long time,” the governor said at a press conference. They will, he said, be on the “chopping block.”

Brown was referring to a series of cases that the California Supreme Court has agreed to review this year involving something known as the “California Rule.” That refers to a series of decisions dating to 1955, which forbid government from cutting pension benefits for current employees even going forward (i.e., you accrue the promised benefit through today, but start earning a lower amount starting tomorrow).

Unions have challenged some changes in the governor’s 2013 pension-reform law. Brown’s legal team submitted a brief to the court that defends not only the reform law, but which seems to back broader changes to the rule. Clearly, the governor expects the court to side with him, which would not only give the state more latitude in reining in spending, but local governments, too.

That’s a longer-term picture, but in the short term the budget proposal is pure Jerry Brown. He wants to spend more on government programs, but wants to be certain that the state isn’t committing itself to huge new spending obligations if the economy goes soft.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

Under current law, the possession of small amounts of marijuana (less than one ounce) is punishable only by a fine, whereas those who grow or sell marijuana can face stiff criminal penalties, according to an analysis from the California Secretary of State. In 1996, California voters approved Proposition 215, which legalized medical uses of marijuana for people of all ages who receive a doctor’s recommendation.

Beginning in 2003, the state legalized nonprofit groups known as collectives that are allowed to grow and sell marijuana to their members. Under recently passed laws, those collectives will be phased out and replaced with state-licensed medical-marijuana businesses. Meanwhile, local governments often strictly regulate or ban medical-marijuana businesses. And the federal government still considers marijuana a “Section I” drug, which means that federal enforcement agencies still claim the right to crack down on any sales. Indeed, U.S. Attorney General Jeff Sessions has reportedly been eyeing a crackdown on states that allow recreational sales.

Against that backdrop, California’s Prop. 64 legalizes the use of marijuana, for any reason, for adults only, creates a complex state system for regulating nonmedical marijuana businesses, imposes a wide array of taxes on marijuana and changes the penalties for marijuana crimes, notes that Secretary of State analysis. Specifically, adults may possess around an ounce of pot, smoke it in their own home or private business, give some of it away and may grow up to six plants in their own residence.

Six state agencies – including a relatively new Bureau of Medical Cannabis Regulation – will regulate different aspects of the marijuana pipeline (sales, testing, transportation, growing). The industry will be required to pay a state tax on growing marijuana and a state retail excise tax plus any local sales taxes. Localities are free to tax, regulate and even ban recreational marijuana sales. Because of federal restrictions, marijuana businesses may not have bank accounts – an unresolved issue as the state steps up its tax-collection requirements.

The arguments over the measure’s plusses and minuses are largely over, but it will take a while before everyone is clear on what’s allowed and what isn’t in any particular jurisdiction. There’s broad agreement on some basics: No smoking marijuana in public, adults only, and it’s OK to possess small amounts of weed. But it will take some time for Californians serving prison sentences for marijuana-related offenses to petition the court to have those convictions tossed out.

And it will take some time for cities and the state cannabis agency to approve the first round of stores that sell recreational products. Chalk it up to bureaucratic morass, perhaps. “Los Angeles and San Francisco are among many municipalities that won’t have their licenses ready by the time marijuana sales become legal on New Year’s Day,” according to Fortune. The magazine notes that the state has issued 69 licenses for medical marijuana clinics, which must receive new state approvals under the new law. But it only has issued 44 licenses for nonmedical stores. Per the article, Sacramento, San Diego and Berkeley have approved licenses for stores in their cities, but consumers in San Francisco and Los Angeles and other cities will have no place to legally shop for weed as of the new year.

And National Public Radio reports that the local pot scene will vary greatly. The League of California Cities told the news service that “communities are all over the map when it comes to dealing with recreational marijuana. Some allow cultivation but not retail. Others will allow delivery but no storefronts.” It will take time for all of that to play out.

There’s still a debate over the process of legally growing marijuana for recreational users. Small growers for the medical-marijuana market are worried that Proposition 64 will allow big, corporate farms to take over the emerging recreational market. In fact, many pro-pot activists had actually opposed the legalization initiative out of concern over what it would mean for small businesses and fears that the new regulatory system would be too heavy-handed.

There are other gray areas. A CNBC article explores what it will mean for Californians who attempt to catch a flight across the state. “That is a conundrum for the state’s airports, which are locally owned and operated but are subject to federal law, under which marijuana is an illegal substance. Areas beyond security checkpoints are under federal control,” it reported. A Los Angeles airline security official is quoted saying that this will be a gray area.

Furthermore, the state still is trying to figure out how to combat driving under the influence. As the “Pathways Report” from the state’s Blue Ribbon Commission on Marijuana Policy acknowledged, marijuana stays in a user’s system for several weeks. That’s long after the high has gone away. Police agencies need to determine if someone is driving stoned without slapping fines on a driver who may have smoked a joint a week ago. Of course, that’s an issue whether or not marijuana is legalized.

Of course, marijuana use has long been a gray area in California. Even many supporters of Prop. 215, the medical-marijuana law, admit that the ensuing medical marketplace has been fraught with gray areas and enforcement questions. It took nearly two decades after its passage before the Legislature passed a thorough set of medical-marijuana regulations. And they did so largely because of the coming recreational market. Officials viewed the new medical marijuana rules as the foundation for regulating recreational-marijuana sales.

Many observers fear that if state and local governments don’t quickly get pot shops licensed that the black market will continue to flourish, which would defeat the main reason for legalizing the drug in the first place. Supporters of the legalization initiative had argued that in the current black market there’s no one regulating the product’s safety, or overseeing environmental aspects of large-scale marijuana grows or assuring that weed isn’t sold to minors.

The bottom line is pot smokers shouldn’t expect marijuana to be available at many legal stores on January 1 – and it will take many months before the state government, police agencies and localities are working from the same page. The voters may have spoken clearly, but it’s not as easy for government bureaucracies to get their act together.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

The influential California Association of Realtors is launching a signature drive for a November 2018 ballot measure that would greatly expand the ability of Californians who are at least 55 years old and disabled people to maintain their low-tax assessments even if they move to other counties or purchase more expensive new homes.

Prop. 13 requires counties to tax properties at 1 percent of their value (plus bonds and other special assessments), which is established at the time of sale. The owners maintain that assessment even if values increase, as they typically do in California. The proposition limits tax hikes to no more than 2 percent a year. Prop. 13 passed overwhelmingly because many people – especially seniors – were being taxed out of their homes as assessments soared during a real-estate boom.

Under current rules, people 55 and older may keep their low assessments if they move within the same county or within one of 11 counties that accept these transfers. They may do so only once in a lifetime. It enables retired people, for instance, to downsize from a big family house to a condominium without paying a stiff tax penalty.

For example, if one purchased a home in 2008 for $350,000 and that home is now worth $750,000, they may continue paying taxes at the lower assessed value even after they sell the home and purchase a smaller one. The valuation goes with them. But the newly purchased property must have a market value the same or lower than the house that has been sold.

The Realtors’ proposal would, for seniors and the disabled, tie the assessed value of any newly purchased home to the assessed value of the old home. They would be free to take that assessment with them to any of the state’s 58 counties. They could carry it with them as many times as they choose. The reduced assessments would apply even for people who purchase home with market values above the ones that they sold.

As the nonpartisan Legislative Analyst’s Office explains, if the new and prior homes have the same market values (based on sales and purchase prices), the new tax valuation would be the same as the old one. A fairly complex formula would determine the tax rate for purchases that were either higher or lower than the sales price of the prior home.

The initiative addresses a problem faced by many empty-nesters. They are living in large homes where they raised their families and would like to downsize – but to do so would mean a huge tax hit given that their new tax rate would be tied to the purchase price of the new property. In the preponderance of situations, the new purchase price for even a smaller house would be far higher than the price that the seniors paid for the homes where they currently live.

The Orange County Register reports that, if passed, the initiative could spur an additional 40,000 home sales a year. Supporters say that could ease up tight housing markets, but foes argue that the Realtors have an interest in spurring more home sales. County governments – backed by LAO projections – say that it eventually will cost them as much as much as $1 billion a year.

“By further reducing the increase in property taxes that typically accompanies home purchases by older homeowners, the measure would reduce property tax revenues for local governments,” according to that LAO analysis. “Additional property taxes created by an increase in home sales would partially offset those losses, but on net property taxes would decrease.”

The Howard Jarvis Taxpayers Association, which defends the legacy of Prop. 13, disputes the idea of large tax losses, given that younger couples would move in to the homes that older people sell, and they would pay property taxes based on the new market value. In other words, an older couple will sell a house and keep their lower tax rate.

“We believe upward portability makes a lot of sense especially as property values across California continue to rebound,” said HJTA president Jon Coupal in a statement. The statement says he believes the measure would “help California alleviate its current housing crisis by removing a financial barrier that keeps many older homeowners from selling their homes, and many millennials from entering the housing market.”

The Realtors’ association had submitted three different potential measures, including one that would expand portability for people of all ages. But the final measure applies only to seniors and disabled persons. As the saying goes, the best defense is a good offense. Supporters of Prop. 13 have learned that the best way to protect it might be by trying to expand it.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

The latest comes in a special investigation report published last week by the State Personnel Board, an agency charged with enforcing California’s civil-service-related statutes. The report, prompted by anonymous complaints about the BOE’s hiring practices, found that the agency “has a large number of employees who have personal relationships with other BOE employees and work in the same department or division.”

The findings could lead to the dismissal of three state employees. It also poses deep challenges for the agency and its successors. Approximately 90 percent of the BOE’s 4,767 employees will continue doing their existing jobs under the auspices of a new Department of Tax and Fee Administration, which handles tax collections, and a new Office of Administrative Hearings, which will adjudicate tax disputes between businesses and the state.

The State Personnel Board’s survey found that 835 of these employees – comprising 17.5 percent of the former BOE’s work force – have “personal relationships” with other staff members. The board defined such relationships as “associations with individuals by blood, adoption, marriage, registered domestic partnerships or cohabitation.” The survey, the personnel board cautioned, did not capture the entire workforce, so that percentage could be higher or lower.

The numbers don’t tell the entire story, however. The report detailed several specific examples that were investigated as part of the audit, and which provide details about how such questionable hiring takes place.

In one investigated case, auditors looked at allegations that a tax consultant expert in BOE member George Runner’s office “used his position of influence to encourage the hiring of his son.” The son later voluntarily resigned the position. The report argued that “employees acted in bad faith by not intending to observe the spirit and intent of civil service laws” because the hire apparently “was the result of preselection.”

In another investigated case, the personnel audit found that the daughter of an assemblyman was allowed to submit an application for a public-information officer position even though her application was submitted after the deadline had passed. It stated that Board of Equalization Member Jerome Horton and his chief of staff had pushed for the daughter’s hiring even though “she received the lowest rating for the interview by both interview panel members.”

The Sacramento Bee identified the assemblyman as Jim Cooper, D-Elk Grove. The audit argued that the appointment was not made in good faith and called for “corrective action.” Horton told the newspaper that he was simply trying to assure that the assemblyman’s daughter was treated fairly – and didn’t learn of the hire until after the fact.

In a third case, the audit argued that the “voluntary demotion of an employee” from an information-officer position in the Sacramento office to an office technician in the New York office was improper. The report states that “the evidence overwhelmingly supports a finding” that the person’s transfer “violated civil service merit principles and the law.” That case involved BOE Member Diane Harkey and her office. The report called for the employee’s dismissal.

In yet another instance, the report found that a job applicant, whose spouse also worked for BOE, was hired for a position even though he had “not waited the requisite six months between exams.” The audit called for his appointment to be voided.

The report pointed to the significance of these specific incidents. Officials “observed that the culture of BOE was one in which board members and their staff and executives were perceived as having significant influence and power over civil service personal matters” and that “favoritism or perceived favoritism toward employees having personal relationships with other employees had a dispiriting and stressful impact on overall employee morale.”

The State Personnel Board report also found that the BOE engaged in a hiring rush right before the governor’s pension-reform law went into effect, as the Bee explained. The “findings identified deficiencies in 23 of the 27 recruitment packages reviewed” and deemed those 23 appointments to be “unlawful” for a variety of reasons, according to the report.

The new California Department of Tax and Fee Administration prohibits nepotism, which it describes as “favoritism by those with power or influence to appoint, employ, promote, advance or advocate for relatives or persons with whom they have personal relationship.” It states that this situation “is antithetical to merit-based personnel system.”

The rules are clear. And the report offers several specific correctives. The big question now is how the state will handle the broader matter – that such a large number of employees in its tax bureaus have “personal relationships” with other employees.

In his November 13 letter to the State Personnel Board, the tax agency’s director Nick Maduros largely concurred with the report’s findings, but said the agency is working on developing a “more complete and accurate picture of the extent of employee personal relationships moving forward.” He will work with the state human resources agency, CalHR, “to develop a corrective action plan” for relationships that run afoul of the new anti-nepotism policy.

In the meantime, the personnel board’s executive officer, Suzanne Ambrose, told the Bee that she expects more anonymous tips from other state agencies. This could be just the tip of a broad state-governmental scandal that goes much deeper than the dealings of a now-gutted tax agency.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

Senate President Pro Tempore Kevin de Leon, D-Los Angeles, announced this week that all harassment investigations in his chamber will be handled by an outside legal firm. De Leon also announced that he was moving out of a house he shared with Sen. Tony Mendoza, the Artesia Democrat who is the latest legislator accused of inappropriate behavior.

California’s state government has been dealing with a sexual harassment scandal after 140 influential women who have worked in and around the Capitol published an open letter in mid-October stating that they have “endured, or witnessed or worked with women who have experienced some form of dehumanizing behavior by men with power in our workplaces.”

Signed by six sitting legislators, the letter decried such behavior “in a state that postures itself as a leader in justice and equality.” The California Legislative Women’s Caucus was even more pointed, as its statement alleged “a lack of accountability and remorse” and a “pervasive culture of sexual harassment within California politics.” The statement claimed that “the Legislature’s own zero-tolerance policies are not enforced.”

A couple of prominent legislators have been caught up in the scandal. First, longtime Capitol staffer Elise Flynn Gyore said that she was treated like “prey” and then groped by Assemblyman Raul Bocanegra, D-Pacoima, in 2009, when he was a staffer. The Assembly Rules Committee investigated and disciplined Bocanegra, but didn’t release the details to a group of 11 women who sought such information when he was running for office with widespread party backing.

Bocanegra recently has apologized for the incident, but the details raise questions about an institution that some people say values secrecy over accountability. It’s also led to criticism of Sen. Nancy Skinner, a Berkeley Democrat known for her strong stance for women’s rights, who chaired the Assembly Rules Committee at the time of the incident. KPIX-TV in the Bay Area contacted one of the women who signed the letter asking for the file on the harassment complaint, but she said that “Nancy Skinner never responded to their request.”

Now Mendoza is in the spotlight. Southern California Public Radio reported that Mendoza “fired three employees after they reported his alleged inappropriate behavior toward a young female colleague, according to an attorney representing one of the staffers.”

Mendoza denies the allegations and apologized if he “ever communicated or miscommunicated anything that made an employee feel uncomfortable.” He also says the firings were based on work performance. The Sacramento Bee broke the news this week about allegations from a second intern. She claims that Mendoza took her to his hotel suite at the California Democratic Party convention and acted inappropriately toward her. Mendoza’s spokesperson told the Bee that that the woman’s recounting of what took place was “completely false.”

And the Senate president has received criticism, with some “wondering how de Leon – who chairs the Senate committee that investigates allegations of sexual harassment – could have been unaware of the reports and investigation into his roommate,” reported the San Jose Mercury News. De Leon denies knowing anything about the reports.

The scandal comes against the backdrop of Alabama’s Republican Senate candidate Roy Moore, who is facing sexual misconduct allegations – a nationally publicized story that’s being depicted by Moore and some of his supporters as a “witch hunt.” And, of course, sexual harassment allegations have been roiling the entertainment industry.

For California political observers, the big questions are whether the Capitol has fostered an insular environment that promotes, or at least tolerates, sexual misbehavior – and whether de Leon’s new rules have a chance of fixing that situation.

Specifically, the new approach will remove the Senate Rules Committee from dealing with harassment allegations. “Instead, an independent outside legal team will investigate any and all allegations and make findings and recommendations to resolve and, where appropriate, discipline,” according to the committee’s statement this week. “The Senate’s Rules Committee and Senate Democratic Women’s Caucus will work jointly and expeditiously to retain a highly qualified team of counsel and investigators to fulfill this obligation.”

The committee stated that the process “will be designed to protect the privacy of victims and whistleblowers, transparency for the public, and adequate due process for all parties involved.” The “general findings will be made public” even if some names and details will be withheld based on the discretion of “victims and whistleblowers.” This will apply to all current complaints. The committee has also asked the women’s caucus to make recommendations for reform and has retained a human-resources consulting firm to review its policies.

Yet some critics believe that by bringing in an outside legal firm that this could establish attorney-client privilege and shield key facts from the public. But others believe the rules will help Capitol staffers, who are at-will hires who can be fired for any reason, to feel more comfortable lodging a complaint. “The short-range plan is to pull this out of the current system where people really don’t feel their complaints will be handled appropriately,” Sen. Toni Atkins, D-San Diego, told Capital Public Radio. She is on the rules committee.

Even if the new process succeeds in dealing more forthrightly with particular harassment claims, it might just be the first step in dealing with broader problems within the Capitol.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This often comes in the form of divestment, by which the funds are encouraged – or even required – to sell their assets in industries that are viewed negatively by the people who push these efforts. These efforts tend to work against the goals of the funds’ professional investment staff, which are charged with getting high investment returns to fund pensions for the systems’ retirees. Both funds have a fiduciary responsibility to maximize their return on taxpayer dollars.

Yet estimates from a consulting firm suggest that CalPERS has lost approximately $8 billion in returns because of previous efforts to divest from coal-related and tobacco industries. That’s become a particularly contentious issue as funding levels have fallen to 68 percent for CalPERS and 64 percent for CalSTRS. That means they have only around two-thirds of the assets needed to make good on all the current and future pension promises made to government retirees.

Despite the troubling numbers, there’s a new push for divestment from some politicians. Following the October massacre in Las Vegas, by which a gunman murdered 59 people at a country music concert, state Treasurer John Chiang has called for the teachers’ fund to sell its assets in weapons firms and sporting-goods companies that sell any guns that are illegal in California.

“Neither taxpayer funds nor the pension contributions of any of the teachers we represent, including the three California teachers slain in Las Vegas should be invested in the purveyors of military-style assault weapons,” said Chiang, a 2018 candidate for governor and member of both pension boards. Chiang also told the Sacramento Bee that he plans on making a similar request to the CalPERS board.

The newspaper also noted that both funds “this year have faced calls to divest from companies that do business with the controversial Dakota Access Pipeline,” which would transport oil underground from North Dakota oilfields to Illinois. It has prompted protests from a variety of environmental and Native American activists.

Critics of these proposals say they are largely symbolic and would do little to influence gun sales or the pipelines. Divestment from these relatively small industries wouldn’t have much impact on the massive funds’ financial returns, either.

On Oct. 30, 12 members of California’s Democratic congressional delegation sent a letter to CalPERS chief executive officer Marcie Frost urging the pension fund to divest from a fund that has acquired a hotel owned by Donald Trump’s organization. This move is more directly political than many divestment efforts, which tend to focus on the social implications of investing in the pipeline, weapons manufacturers, coal-related industries and tobacco companies.

Divestment advocates sometimes argue that these controversial products may be poor long-term investments. For instance, the Public Divestiture of Thermal Coal Companies Act of 2015 and similar efforts by the state insurance commissioner were based in part on the notion that these coal-related companies may face diminishing values as the world shifts away from carbon-based fuels – a point rebutted by those who note that the current price of the stocks already reflects that risk.

But the Trump-related divestment call, led by U.S. Rep. Ted Lieu of Torrance, is designed to target the president. The members of Congress expressed their disappointment that CalPERS “has not divested its interest” in that fund “nor has taken any actions to ensure that its fees are not being transferred to President Trump,” according to their letter. They criticized CalPERS for taking a “wait-and-see” approach toward the matter.

These members of Congress claim that this CalPERS investment could be in violation of the Domestic Emoluments Clause of the U.S. Constitution, which states that “no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” This would be an unusual interpretation of an arcane clause.

Meanwhile, the pension funds have been expanding other divestment and socially motivated investment efforts. Last December, the CalPERS investment staff “recommended that the board remove its 16-year ban on tobacco investments in light of an increasing demand to improve investment returns and pay benefits,” according to a Reuters report. But instead of removing the ban, the board “voted to remain divested and to expand the ban to externally managed portfolios and affiliated funds.”

And last year CalPERS adopted a five year Environmental, Social and Governance plan that focuses on socially responsible investing. The fund has long used its financial clout to push companies it invests in to promote, for instance, board diversity and other social goals.

Whatever their chances for approval, the latest efforts are not out of the ordinary. But they will rekindle the long-running debate between political and financial goals, and whether the former imperils the latter given both funds’ large unfunded liabilities.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

That’s an interesting turn of events given that Brown signed into law most of the main Democratic priorities from the session. He approved a bill that turns California into a “sanctuary state” that limits the ability of local law enforcement to cooperate with federal immigration priorities. He approved a transportation tax and new spending on affordable housing programs. He agreed to a gender-neutral category for California driver’s licenses.

In addition, Brown signed a law that places more limits on the open carry of firearms and mandated that small businesses now provide 12 weeks of unpaid family leave to their workers. There’s much commentary about this having been one of the most liberal sessions in memory, which isn’t a surprise given the diminished power of the California GOP.

So what would conservatives – including ones outside of California – be happy about?

The main cause for celebration on the right came from Brown’s veto of Senate Bill 169. That legislation was passed in response to federal Education Secretary Betsy DeVos’ decision to roll back Obama administration sexual-assault guidelines for campuses. Sen. Hannah-Beth Jackson, D-Santa Barbara, pointed specifically to the Trump administration in authoring the bill:

“The Trump administration continues to perpetuate a war on women,” Jackson wrote in a statement. “It is now more important than ever that Governor Brown sign SB169 into law and that other states follow. All students deserve an education in an environment that is safe and free from sexual harassment and sexual violence.”

The issue involves the Title IX federal amendments from 1972 that require schools and universities that receive federal aid to assure an environment that’s free of sexual discrimination and harassment. The Obama administration in 2011 sent a letter to schools, colleges and universities urging stepped up efforts to battle sexual assaults on campus.

But conservatives, such as David French of National Review, argued that the Obama-era guidelines were “mandating that (schools) satisfy the lowest burden of proof in sexual-harassment and sexual-assault adjudications, defining sexual harassment far too broadly, and failing to adequately protect fundamental due-process rights.” The new administration rolled back the rules and – to the surprise of many – Brown agreed with Trump and DeVos.

Brown issued an unusually long veto statement, in which he noted that “sexual harassment and sexual violence are serious and complicated matters for colleges to resolve. On the one side are complainants who come forward to seek justice and protection; on the other side stand accused students, who, guilty or not, must be treated fairly and with the presumption of innocence until the facts speak otherwise.”

The governor added that “thoughtful legal minds have increasingly questioned whether federal and state actions to prevent and redress sexual harassment and assault – well-intentioned as they are – have also unintentionally resulted in some colleges’ failure to uphold due process for accused students.” Brown also argued that the state should avoid new rules until it has “ascertained the full impact of what we recently enacted.”

In another veto that received praise on the right, Brown rejected Assembly Bill 1513, a union-backed measure that would have required private-sector workers in the privately funded home-care industry to provide private information to unions.

Workers who provide help in the homes of sick, elderly and disabled people already pass background checks. But this legislation would require the placement of “a copy of a registered home care aide’s name, mailing address, cellular telephone number and email address on file with the department to be made available, upon request, to a labor organization.”

Labor unions pitched the measure as a way to improve the licensure and regulation of these aides, but opponents saw it as a means to help unions contract these workers as part of their organizing efforts. Brown agreed with the opponents, and expressed concern about “releasing the personal information of these home care aides, who joined the registry without knowing that their information would be disclosed as prescribed by this bill.”

“Conservatives find themselves in the unexpected position of cheering some of California Governor Jerry Brown’s recent vetoes,” wrote Jim Geraghty in National Review. Geraghty also pointed to Brown’s veto of a bill that would require presidential candidates to release their tax returns to qualify for the California ballot and another one that would have required large companies to provide detailed data about male and female salary disparities.

Brown, by the way, vetoed a bill that would have imposed a late-night driving curfew on those under 21. Currently, the curfew applies only to those under 18. The governor made the fundamentally conservative argument that 18-year-olds “are eligible to enlist in the military, vote in national, state and local elections, enter into contracts and buy their own car.” So it would be unfair to limit their driving privileges.

As the 79-year-old Democratic governor finishes his final gubernatorial term, he still has a way of defying critics and keeping people on the left and right guessing.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

One of the more far-reaching bills, Senate Bill 63, mandates that companies with at least 20 employees provide 12 weeks of unpaid leave to workers to care for a newborn or adopted child. Before the signing, state law required such leave for companies with 50 or more workers. The bill’s backers said it is about simple “fairness,” but the California Chamber of Commerce labeled it a “job killer” that “unduly burdens” small companies and “exposes them to the threat of costly litigation.”

Brown also signed Assembly Bill 168, which bans all employers – including state and local governments, and even the Legislature – from asking for the salary history of any applicant. Instead, the employer must provide a salary scale. It was pitched mainly as a gender-equality measure.

“The practice of seeking or requiring the salary history of job applicants helps perpetuate wage inequality that has spanned generations of women in the workforce,” said Assembly member Susan Eggman, the Stockton Democrat who sponsored the bill. Opponents argue that there are many legitimate reasons for employers to seek out an applicant’s salary history and that the law will cause employers mainly to enlarge the pay range, thus making it much harder for applicants and employers to find the appropriate level of pay.

These bills were part of a package backed by the California Legislative Women’s Caucus. Not all of them were workplace-related. For instance, the governor signed AB10 by Assembly member Cristina Garcia, D-Bell Gardens, which “requires public schools serving low-income students in grades 6 to 12 to provide feminine hygiene products in half of the school’s bathrooms at no charge.”

And he signed AB273 by Assembly member Cecilia Aguiar-Curry, D-Winters, which “expands the eligibility criteria for subsidized child care services to parents who are taking English as a second language or high school equivalency courses.” Brown also gave the OK to a bill that will subsidize diapers for poor women.

In other topic areas, the governor signed 11 bills on Wednesday designed “to improve California’s criminal and juvenile justice systems, restore the power of judges to impose criminal sentences and reduce recidivism through increased rehabilitation.” These include measures that would seal the records of people who were arrested but never convicted of a crime; allow a parole hearing for juveniles who were sentenced to life without parole; and a bill that gives judges additional discretion regarding the “firearms enhancement” for sentencing decisions.

Furthermore, the governor signed AB1448, by Assembly member Shirley Weber, D-San Diego, which allows the Board of Parole to continue its parole hearings for elderly prisoners who have served at least 25 years in prison after federal oversight of the prison system ends. The state had been under federal court decrees dealing with overcrowding, but has since passed a realignment law and other programs that have reduced the size of the inmate population. In his signing message, the governor said that this elderly-prisoner program has successfully reduced costs involving geriatric prisoners who no longer pose a risk to society.

The governor previously had signed SB384, by Sen. Scott Wiener, D-San Francisco, which creates a tiered sex-offender registry rather than the current system of lifetime registration. The bill received significant law-enforcement support. Supporters argued that “local law enforcement agencies spend between 60 to 66 percent of their resources dedicated for sex offender supervision on monthly or annual registration paperwork because of the large numbers of registered sex offenders on our registry,” according to the Senate bill analysis.

“If we can remove low-risk offenders from the registry it will free up law enforcement officers to monitor the high risk offenders living in our communities,” supporters argued. There was no official, recorded opposition to the bill, but Republican opponents expressed fear in the floor debate that these changes would put the public at risk.

The governor signed a controversial drug-pricing transparency bill, SB17, that forces “drug manufacturers to notify specified purchasers, in writing at least 90 days prior to the planned effective date, if it is increasing the wholesale acquisition cost … of a prescription drug by specified amounts.” The pharmaceutical industry fought vociferously against the measure, which it believes is a first step in a national campaign to impose government price controls.

The governor used some of his strongest – and most ideological – rhetoric in touting this measure. “The rich are getting richer. The powerful are getting more powerful. So this is just another example where the powerful get more power and take more,” he said, according to a National Public Radio report of the signing ceremony. “We’ve got to point to the evils, and there’s a real evil when so many people are suffering so much from rising drug profits.”

This was part of a package of recently signed medical-related consumer-oriented legislation. Other legislation puts limits on the gifts and benefits doctors can receive from drug manufacturers, prevents drug makers from steering consumers to higher-priced medications, creates a licensing system for pharmacy benefit managers, and creates a California Pharmaceutical Collaborative to help government agencies negotiate better deals for pharmaceuticals.

Signings have been far more plentiful than vetoes.

But the governor vetoed a bill that would require people who work for many web-based meal-delivery services that deliver pre-packaged uncooked meals to consumers to obtain a food-handler’s card. In his veto message, the governor wrote that he is “not convinced … that the existing regulatory scheme for food facilities is suitable for this new industry.” Brown vetoed a bill that would have created a new state task force that would examine opioid prescriptions in light of the state’s opioid crisis.

He also vetoed AB63, which would have imposed the same curfew (between 11 p.m. and 5 a.m.) on drivers under the age of 21 that now applies only to those under 18. “Eighteen-year-olds are eligible to enlist in the military, vote in national, state and local elections, enter into contracts and buy their own car. I believe adults should not be subject to the same driving restrictions presently applied to minors,” Brown explained in his veto message.

Stay tuned. The governor has until Sunday night to sign or veto the remaining bills passed this session.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

The state’s voter-turnout rates hit the skids in the 2014 election cycles, with only 25 percent of registered voters casting a ballot in the June primary and only 42 percent voting in the November general election. State officials viewed the situation as something of a crisis and proposed a variety of reforms to encourage greater participation.

But voter turnout rebounded in the 2016 general election, with 14.6 million people voting during the Donald Trump v. Hillary Clinton race. The raw numbers were record-setting, although the percentage of voters (75 percent of those registered, and 59 percent of those eligible) was lower than in the 2008 presidential election, during Barack Obama’s race against John McCain.

There’s little question that a high-profile national election drives far more interest and participation than midterm contests, but state election officials still wonder about ways to encourage more Californians to head to the polls – or drop a ballot in the mail – during lower-profile elections and especially for local races.

There’s much debate over whether a new elections-related law will have a significant effect on the number of Californians who turn out to vote. Gov. Jerry Brown recently signed the “Prime Time Primary Act,” which moves all of California’s primary elections from June to March.

Supporters were concerned that the June date rendered the state’s massive 55 electoral votes largely meaningless because the parties typically know the likely presidential candidate by then. Moving the primary to March – provided other states don’t play leapfrog and move up their dates, also – will make California more of a national player. But it’s uncertain what it might do to voting rates.

“The only other time that a midterm California primary was earlier than June was 2002, when it was in early March,” wrote elections expert Richard Winger in Ballot Access News. “The 2002 California primary had the lowest turnout of any California primary in history, up until that point. Only 34.6 percent of the registered voters cast a ballot.”

The 2014 midterm voting rates were even lower, as noted above. Winger noted that was the first time a midterm primary election was held after California voters approved the “Top Two” primary system in which the primary includes candidates from all parties on one ballot – and then the top-two vote-getters head to the general regardless of their party affiliation.

Supporters of the new system argue that it encourages voter participation because it encourages candidates to reach out beyond their respective parties’ base voters and make an appeal to all voters from all affiliations. But critics of “top two,” including Winger, argue that it suppresses turnout because it keeps smaller parties off the general-election ballot. “Because top-two doesn’t affect presidential primaries or presidential elections, the best evidence that top-two has hurt turnout is the midterm year of 2014,” Winger told me. “Whereas in November 2010, California voters had six parties to choose from for all the statewide offices, in Nov. 2014 all California voters had to vote for a Rep or a Dem or they couldn’t vote at all. That really hurt turnout.”

California lawmakers have passed a variety of other changes affecting voting and registration including laws that “include pre-registration for 16-year-olds, conditional same day voter registration at certain locations, a new Motor Voter program to automate voter registration for individuals when obtaining or renewing identification cards or driver’s licenses with the DMV and a new option for counties to conduct all-mailed ballot elections and use vote centers and ballot drop-off locations prior to election day rather than operate polling places only on election day,” according to the Little Hoover Commission.

Little Hoover, the state’s independent watchdog agency, held a hearing Sept. 28 as part of its ongoing study of statewide voter participation trends and the effect of these recently enacted election reforms. That hearing focused specifically on Los Angeles County, which has more registered voters (5.2 million) than any other jurisdiction in the country. Most testimony centered on the need for “process” changes that make it easier for eligible voters to register and cast a ballot.

“Unfortunately, the lowest voter turnout that we often experience comes during local and municipal elections, which are typically conducted during the odd years,” explained Dean Logan, Los Angeles County’s registrar-recorder and county clerk. “While the importance of local elections is beyond debate, voter participation in these elections has not followed suit.”

He argued that the 2015 passage of Senate Bill 415, the California Voter Participation Act, would eventually help boost these numbers. The measure “prohibits cities, school districts and other special districts from holding elections in odd years if those elections showed worse voter turnout than statewide elections in the past,” according to the San Gabriel Valley Tribune. The goal is to keep these districts from holding elections when few people are paying attention.

Kathay Feng, executive director of California Common Cause, argued in her testimony that problems at polling places – e.g., poorly accessible locations with insufficient parking, poorly functioning ballot readers, an inadequate number of bilingual poll workers, etc. – contributes to the problem. She pointed to a Common Cause study concluding that “California’s declining voter turnout is cause for concern, warranting significant and immediate action.”

The report touted election reforms in Colorado, which include same-day registration along with a vote-by-mail system (every registered voter automatically is mailed a ballot) with plenty of drop boxes and vote centers. Brown last year signed SB450, which beginning in 2018 will require that all registered voters be sent a ballot 28 days before an election, so Californians will soon see whether such an approach does much to boost voter participation.

Some election observers, however, argue the problem is more fundamental than the process by which ballots are distributed and collected. For instance, some election experts blame the state’s poor level of representation for low turnout rates. California has, by far, the largest number of voters for each elected politician, meaning they have far less ability to influence an election or a policy decision.

Others blame the state’s dominance by one party, which means that fewer statewide elections have any significant policy ramifications. Most legislative districts have been carved up to so heavily favor one party or the other that there’s little question which party will hold the seat. Still others note that political races and initiatives are dominated by special interests, which breeds cynicism. A 2015 public-opinion survey from the nonpartisan Public Policy Institute of California concluded that “Low trust in government is the top reason for not registering.”

A comprehensive look at California’s voter-turnout situation might also address this question: Are many Californians skipping the vote not because of impediments to receiving and casting a ballot – but because they don’t think their vote really matters?

Steven Greenhut is Western region director at the R Street Institute. Write to him at sgreenhut@rstreet.org.

SACRAMENTO – California’s leaders often point to the burgeoning high-tech industry as evidence of the state’s strong, future-oriented economy. The industry’s ongoing success helps Democrats rebut arguments from conservatives who say that California isn’t particularly business friendly. But despite its status as a key driver of the economy, the tech industry had only mixed success during the recently concluded legislative session.

For instance, of the seven “priority bills” backed by the California Legislative Technology and Innovation Caucus, only two now are on Gov. Jerry Brown’s desk, where they currently await the governor’s decision. One of those bills is fairly significant, while the other is not. Four others were held in the appropriations committees, suggesting that the problems mostly had more to do with cost issues than policy matters. One was vetoed.

The tech industry did win a significant battle, however, regarding a far-reaching internet privacy measure. As I reported this month for CalWatchdog, the Legislature was moving ahead Assembly Bill 375, which was designed to “protect California consumers since Congress and the Trump administration effectively halted a set of federal consumer privacy protection rules on internet service providers that were scheduled to take effect,” according to a Senate analysis.

The bill, which mirrored the now-gutted federal rules, would “have given consumers additional control regarding internet service providers’ use of consumer data they collect” and “would have required that the internet service provider receive explicit consent from consumers before ‘sensitive data’ … would be shared or sold.”

But it was shelved at the end of the session after an alliance of tech companies and internet providers helped quash it. It was a somewhat unusual alliance. There’s typically a divide between proposed limits on broadband providers and proposals – including a California initiative proposal that’s now collecting signatures for the November 2018 ballot – that would give consumers the right to control the use of their information on sites such as Facebook or Google.

The thinking is that internet providers charge a significant price for their service, so they should be more limited on what they do with searching data, whereas tech firms that offer free search engines, for instance, are more dependent on revenue from targeted online ads. But AB375 was “widely opposed by large, established internet providers” and by tech companies, which are concerned “that the expanded privacy regulations could indirectly affect the websites’ own ability to gather and monetize user data,” reported the Los Angeles Times.

Regarding the successful bills on the technology and innovation caucus list, Senate Bill 145 is widely viewed as the most important. “This bill repeals a provision that requires the Department of Motor Vehicles to notify the Legislature upon receipt of an application to operate an autonomous vehicle capable of operating without the presence of a driver and it repeals a 180-day delay of an approved application,” according to the Senate bill analysis.

The measure was backed by various technology trade groups as well as by the California Chamber of Commerce. Supporters argued that the current situation delays the deployment of driverless vehicles, and therefore puts California at a competitive disadvantage with other states that are aggressively luring this up-and-coming industry. There was no recorded opposition to the proposal, which overturns one portion of the rules set in place by a 2012 law.

The 180-day delay is particularly significant because regulations pending with the California Department of Motor Vehicles would require a new filing every time an undefined “material change” is made to a vehicle. Any software update could be deemed “material” and would therefore sideline vehicles for months, which is why advocates for driverless vehicles were so supportive of this change.

SB225, the other bill that’s on the governor’s desk, simply requires the California Department of Justice to include a “texting” option on its human-trafficking hotline. The four bills that were held in the Legislature include a mandate for “media literacy” programs in the K-12 curriculum; authorization of a digital driver’s license pilot program; call for a “cybersecurity” industry study to evaluate workforce development needs; and creation of new crowdfunding conditions under state securities law.

In July, Brown vetoed the final measure on the caucus’ list, AB639, which would have allowed the state Department of General Services to use electronic contract signatures. In his veto message, Brown said the bill was unnecessary because the department is developing an electronic-signature system that will be in force before the bill would take effect.

Some other tech-related bills are worth noting. SB182 is designed to help transportation network companies such as Uber and Lyft overcome a barrier that has been impeding drivers at the local level. In some areas, drivers are required to get licensed and pay fees in every city where they do business – a burden in metropolitan areas with myriad cities. This measure would forbid localities “from requiring the driver to obtain more than a single business license … regardless of the number of local jurisdictions in which the driver operates.”

SB21, held in appropriations committee, would have required “each law enforcement agency … to submit to its governing body at a regularly scheduled hearing, open to the public, a proposed Surveillance Use Policy for the use of each type of surveillance technology and the information collected … .” The bill was supported by several civil-liberties groups and opposed by many police unions and law-enforcement organizations, which have enormous clout in the Legislature.

SB649, which passed on close bipartisan votes, evolved into a local-control issue. The bill allows telecommunications companies to put new wireless technologies on public street poles “subject only to a specified permitting process adopted by a city or county, if the small cell meets specified requirements.” It eases the approval process at the local level, but limits the locals’ input.

The measure, now on the governor’s desk, was opposed by many local officials, who are concerned about losing their influence. The bill’s “intent is not about 5G wireless deployment, but rather local deregulation of the entire telecommunications industry,” according to the League of California Cities. But author Sen. Ben Hueso, D-San Diego, argued that, “For California to remain technologically competitive and to ensure the benefits of innovation are reaching every community, we must do all we can – as fast as we can – to make next-generation 5G wireless networks a reality.”

It wasn’t a terrible showing, overall, for the industry, but it wasn’t impressive, either. It’s a reminder that the economically powerful California tech sector has a long way to go to match the political muscle of the state’s unions or more established corporate players.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.