California economy: Is state headed for a downturn? - CalMatters

2022-08-26 20:22:34 By : Ms. Vivian Jin

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Some cautionary economic signals are gaining strength in California just a month after Gov. Gavin Newsom and state lawmakers adopted a record-breaking $308 billion budget.

The Golden State is more likely than not to collect less from personal income, sales and corporation taxes than the $210 billion assumed in the 2022-23 budget, according to a Monday report from the nonpartisan Legislative Analyst’s Office, which advises lawmakers on fiscal issues.

The report notes, however, that “significant uncertainty” remains, and the state could ultimately end up collecting anywhere from $25 billion less than anticipated to as much as $15 billion more — likely ending up about $5 billion below projections.

A recent report from the state Department of Finance offers a similarly mixed outlook: For the first time since the pandemic struck in early 2020, California’s tax revenues in June fell short of projections rather than exceeding them. Cash receipts came in about $2.4 billion less than expected, largely due to lower proceeds from the personal income tax.

Indeed, Newsom cited California’s progressive tax structure in announcing his opposition to Proposition 30, a November ballot measure that would raise taxes on residents earning more than $2 million to fund a variety of climate programs.

In other state economic news: The California State Teachers’ Retirement System, which provides pensions for hundreds of thousands of public school teachers, reported a 1.3% loss on investments for the fiscal year ending June 30 — its first annual loss since the Great Recession in 2009. The news came not long after its fellow pension fund, the California Public Employees’ Retirement System, posted a preliminary 6.1% loss on investments, also its first negative return since 2009.

The coronavirus bottom line: As of Thursday, California had 9,922,718 confirmed cases (+0.5% from previous day) and 92,763 deaths (+0.2% from previous day), according to state data now updated just twice a week on Tuesdays and Fridays. CalMatters is also tracking coronavirus hospitalizations by county.

California has administered 78,762,612 vaccine doses, and 71.7% of eligible Californians are fully vaccinated.

Monday was a busy day at the state Capitol, with Newsom declaring a monkeypox state of emergency just days after his administration’s top public health officers said they weren’t quite ready to take that step. Newsom’s office said the emergency declaration will help “coordinate a whole-of-government response to monkeypox, seek additional vaccines and lead outreach and education efforts on accessing vaccines and treatment.” California had 786 reported probable and confirmed monkeypox cases as of July 28, most of which have occurred in gay or bisexual men, according to state data. Newsom’s office said the California Department of Public Health is scheduling listening sessions with the LGBTQ community and is running paid ad campaigns to help educate residents about the virus and grow awareness.

Also Monday, state lawmakers returned to Sacramento after a month-long summer recess — and promptly submitted a $38.5 million emergency budget request to help counties respond to the monkeypox outbreak, noting that “additional funds may be needed if the outbreak is prolonged.”

One of the lead requesters was state Sen. Scott Wiener, a San Francisco Democrat whose controversial bill to permit San Francisco, Oakland and the city and county of Los Angeles to launch supervised drug injection pilot programs squeaked out of the Senate on Monday with the bare minimum number of votes. It now heads to Newsom’s desk.

Two of the areas in which California often prides itself on being a leader: equity and the environment. But can the state really enact one of its loftiest environmental goals — banning the sale of all new gas-powered cars by 2035 — when a large portion of the population can’t afford zero-emissions vehicles?

That’s the question underlying this deep dive from CalMatters’ Nadia Lopez into the state’s hodgepodge of electric vehicle rebate programs, which have long suffered from inconsistent and inadequate funding. Some programs have already shut down this year due to a lack of funds, and one has a backlog so long that it’s closed to new applicants. Others are still accepting applications, but months-long waits for the money have forced some Californians to give up their rebates because they can longer afford cars whose prices have shot up amid skyrocketing inflation rates and strained supply chains.

Yet another concern was raised in a recent letter to Newsom and state air regulators from Fix Our Roads, a coalition of labor unions, transportation advocates, local governments and business groups. The coalition warned that before the state formally adopts its proposed regulations for banning gas-powered cars, it needs to come up with a plan to replace lost gas tax revenue — the primary funding source for transportation infrastructure projects. Otherwise, the loss of funding “will decimate the quality of our roads and bridges, jeopardize safety, decrease mobility, cripple public transit, and result in more traffic congestion,” the coalition wrote. “Furthermore, reductions in funding of that magnitude will destroy hundreds of thousands of middle-class construction careers.”

Let’s dive into the rest of California’s Monday environmental news:

CalMatters columnist Dan Walters: Newsom is trying to succeed where his predecessors have failed by building a project to replumb the Sacramento-San Joaquin Delta.

Harmful products don’t deserve shielding by the courts: The premise of my proposal, Senate Bill 1149, is simple: If a lawsuit uncovers factual information about a defective product or environmental hazard, that information will no longer be secret, writes state Sen. Connie Leyva, a Chino Democrat.

A California Democrat running for Congress failed to disclose investments in Moderna and Pfizer stocks. // Business Insider

In a key swing district, Katie Porter clashes with GOP opponent over inflation and ‘Orange County values.’ // NBC News

How some California parents changed their politics in the pandemic. // New York Times

Why San Francisco is behind Austin, Seattle in building housing. // San Francisco Chronicle

S.F. could get sued over housing gridlock, says state legislator. // San Francisco Standard

Residents fight church’s plan to host safe-parking program for homeless. // Palo Alto Online

Who’s to blame for a factory shutdown: A company, or California? // New York Times

Why a Sacramento-area restaurant owner brought in a priest to talk to his workers. // Sacramento Bee

GEICO restricts California policy sales to online, lays off hundreds. // Sacramento Bee

California judge rules Visa must face claim it profited from Pornhub video of child. // Bloomberg

Following historic $21 million verdict, Fremont asks for new trial in police killing of pregnant teen. // Mercury News

S.F.’s new drug sobering center is a ‘lifeline’ for this mother and son. But how big of an impact is it making? // San Francisco Chronicle

County to provide naloxone vending machines in attempt to prevent opioid overdose deaths. // San Diego Union-Tribune

Why Sacramento courts have caged cells, and why that will change. // Sacramento Bee

California could paint a clearer picture of English learner achievement if new bill passes. // EdSource

August was ideal for California’s High Sierra, until climate change. // San Francisco Chronicle

California is trying to make world’s tallest tree invisible. // Los Angeles Times

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