CBPA Weekly Update

January 20, 2023

GOVERNOR’S BUDGET – HOW TIMES HAVE CHANGED

Just a few days after Governor Gavin Newsom officially started his second term in office at a well-attended inauguration ceremony on the West Steps of California’s Capitol, kicked-off by a walk across Sacramento’s Tower Bridge, his office released a budget plan that will set the priorities for his oncoming term and deal with a downturn in the economy.

After years of historic surpluses, for the first time during his Governorship the state is projecting a deficit - $22.5 billion - in 2023 that will continue to grow in coming years.

Despite the in-the-red-projections we applaud the Governor for trying to deliver on a budget – and some recent promises - without raising taxes and focusing on one-time expenditures. Although the state’s revenues remain too vulnerable to the whims of the economy and a progressive tax system, this budget makes some sober choices to deal with that.

On the positive side the Governor’s budget continues to deliver on the “Real Public Safety Plan,” which includes more than a half-billion dollars over three years to fund the Organized Retail Crime Task Forces and help local law enforcement combat retail theft and other related crimes.

The Governor continues to fund critical infrastructure projects that are needed to strengthen the state’s supply chain, though we continue to call for more investment to enable the use of alternative fuels for the heavy transportation sector to help meet the Governor’s aggressive GHG targets. However, some key port and infrastructure projects will be delayed by spreading the funds over multiple years.

The California Competes Tax Credit meant to keep businesses in the state gets a one-time allocation of $120 million expanding the program again.

The budget provides funding of $250 million for Small Business and Nonprofits COVID-19 Supplemental Sick Leave, which will help many of our tenants stay in place.

Finally, the budget includes ongoing funding to address the out-of-control homeless issue in the state and a related crisis, funding to address the fentanyl crisis which is killing so many people across the state.

Although there are no new major taxes, there are several areas of concern in the proposal which will increase the cost of living and cost of doing business in the state, which includes an oil “windfall profits tax proposal” which will increase the cost of fuel for drivers and consumer goods and reduce jobs in the state.

The Governor is also suggesting a reduction in debt payments to state’s Unemployment Insurance Fund, which will shift the cost burden to employers.

Finally, the Governor is suggesting that monies from special funds be used to support the General Fund – this tactic has been utilized in the past and the funds have not been backfilled which ultimately shifts the burden onto businesses and consumers to back fill these “loans.”

More detailed summaries and links to the full spending plan can be found here.

2023-2024 LEGISLATIVE SESSION OFFICIALLY STARTS

Last week both houses of the legislature kicked-off the 2023-2024 Legislative Session with quick Floor meetings. Very little legislative activity will occur over the next few weeks aside from a steady stream of bill introductions that will peak in February. CBPA reads every bill and will alert and engage members on those issues impacting the industry.

On December 14, 2022, the Office of the State Fire Marshal released its updated Fire Hazard Severity Zone Map for all of California with an unreasonably short 45-day comment period.

The agency has spent the better part of a decade developing an updated wildfire map impacting approximately 31 million acres of California territory.

CalFire did not release its methodology nor underlying data used to build the updated map, frustrating the public's ability to comment meaningfully.

Due to the truncated comment period noticed over the holidays, coupled with the fact that analysis is constrained without the agency methodology, a large coalition of business groups have asked for a 60-day extension to the process, and asked CalFire to release methodology in order to allow stakeholders sufficient time and data to analyze and provide comment back to the agency.

There is far more harm rushing to approve inaccurate maps impacting development, building codes, and fire insurance for millions of Californians than there is harm in leaving the 2007 map in place until meaningful public feedback is received.

Click here to read the letter and click here to learn more from CalFire about the Fire Hazard Severity Zones and engage in the process, and here for more resources on how to engage:

This is a huge issue that could have negative impacts on your community for many years to come. We are active in the coalition that is trying to address the overreach on the maps and hope that you will become more informed and engaged at the local level.