Web Version [link removed] | Update Preferences [link removed] Business Climate and Job Creation Fed Officials Cut Rates Amid Worries On Trade, Global Growth

Federal Reserve officials worried that weakness in manufacturing, trade and business investment could threaten the economic expansion by triggering cutbacks in hiring and consumer spending when they cut interest rates last month.

“Risks to the outlook associated with global economic growth and international trade were still seen as significant despite some encouraging geopolitical and trade-related developments,” said minutes of the Oct. 29-30 policy meeting, which were released on Wednesday.

At the same time, most officials thought that after making their third rate cut last month since July, they could shift to a wait-and-see stance to determine whether the economy would need more stimulus in the months ahead.

Read More [[link removed]] California Is On Track For A $7 Billion Budget Surplus

California’s long economic expansion is projected to continue into next year, giving Gov. Gavin Newsom and lawmakers another surplus as they map out a new state budget.

Legislative Analyst Gabriel Petek released a report Wednesday projecting the state will bring in a $7 billion surplus in the 2020-21 budget year.

That’s far less than the $21.5 billion surplus California is collecting this year, but it still reflects a positive outlook for the state’s economy.

“The budget picture is strong and favorable. Full stop,” Petek told reporters Wednesday.

Read More [[link removed]] Stalled U.S.-China Trade Talks Raise Threat Of Another Impasse

Trade talks between the U.S. and China are in danger of hitting an impasse, threatening to derail the Trump administration’s plan for a limited “phase-one” pact this year, according to former administration officials and others following the talks.

Both sides remain divided over core issues—including Beijing’s demand for removing tariffs and the U.S.’s insistence on China buying farm products—nearly six weeks after an “agreement in principle” was announced by the White House on Oct. 11.

“China is going to have to make a deal that I like,” President Trump said Tuesday at a cabinet meeting. “If we don’t make a deal with China, I’ll just raise the tariffs even higher.”

Mr. Trump is facing pressure from people within and close to the administration who blame the lack of progress on what they describe as Beijing’s refusal to follow through on commitments at the bargaining table.

Read More [[link removed]] The Economic Debate Over The Minimum Wage, Explained

For at least the last 25 years, labor economists have been compiling reams of evidence trying to answer one big question: Do minimum wage laws cost us jobs?

In introductory economics courses, students are typically taught that setting price floors — on milk, oil, or labor — causes supply to exceed demand. In the case of labor, what that means is that if there’s a minimum wage, employers’ demand for workers falls (because they cost more), and the supply of workers increases (because they’re promised more money) — meaning there’s unemployment, with all the costs and suffering that entails.

For a long time, that’s how the theory went. But in 1993, economists Alan Krueger and David Card brought hard data to bear on the question and published a groundbreaking paper that forced economists to reconsider the issue.

Read More [[link removed]] California Unemployment Falls To Its Lowest Rate In More Than Four Decades

California’s job market powered ahead in October as the unemployment rate dropped to a new low and payrolls continued to grow in the state’s longest expansion on record.

At 3.9%, the jobless rate was the lowest since 1976, when the state changed its statistical methodology, adding new data to its calculations, state officials reported Friday. That was down from 4% in September, and 4.1% a year earlier.

“Each month we think we can’t get any lower in the unemployment rate, but we do,” said Michael Bernick, a former director of the California Employment Development Department. “This is comparable to the rates we had in the 1950s.”

Nationwide, the jobless rate stood at 3.6% in October, also near a half-century low.

Read More [[link removed]] Inland Empire Business Activity Outpacing U.S. GDP Growth

For the second quarter in a row business activity in the Inland Empire has outperformed the nation as a whole. The new Inland Empire Business Activity Index released today by the UCR School of Business Center for Economic Forecasting and Development shows a jump of 2.3% in the region’s business activity in the third quarter compared to 1.9% growth for U.S. GDP. On an annual basis, from the third quarter of 2018 to the third quarter of 2019, the region’s business activity growth has been roughly on par with the national growth rate at 1.8% and 2.0%, respectively.

“The near term outlook is also positive with growth continuing into 2020, driven by key local industries such as logistics,” said Christopher Thornberg, Director of the Center for Economic Forecasting and one of the Index authors. “The challenge lies in the longer term, where economic and industry growth will be held back by labor shortages caused by California’s lack of home supply and the unaffordability that creates.”

The latest Index reports that business activity in the Inland Empire is forecast to rise between 1.9% and 2.4% over the next year.

Read More [[link removed]] Vacant Storefronts Are All Over SF. Would Taxing Them Help Fix The Problem?

Vacant storefronts mar nearly every shopping district in San Francisco — from North Beach to Union Street. More than just eyesores in the city’s beloved shopping districts, empty retail spaces are lost opportunities for tax revenue, jobs and foot traffic that help support neighboring businesses.

Now the Board of Supervisors has a plan to help: a tax on landlords who leave their storefronts empty for more than six months. The point? Encourage building owners to quickly rent out spaces, by either settling for a lower rent or finding a pop-up or short-term tenant.

But critics worry how the tax will hobble landlords whose storefronts are vacant for reasons out of their control — like the city’s arduous permitting processes and the high cost of doing business in San Francisco.

Read More [[link removed]] New Jersey Truckers Alarmed By California-Like Gig Economy Measure

Following in California’s footsteps, New Jersey is considering legislation that would create a presumption-of-employment status for independent contractors, which experts warn could upend the business model for the Garden State's transportation industry.

Known as Senate Bill 4204, the legislation largely mirrors California's Assembly Bill 5, which requires companies to use a three-part test in order to establish whether a worker should be classified as an independent contractor or employee.

In order for companies to treat a worker as a contractor, they must prove that the worker is independent and able to perform services free of company control, that the services the worker provides are not part of the company's typical course of business, which means the service provider's business is different than the company's business, and that the person handles work in the industry beyond the contracted labor.

Read More [[link removed]] SEIU Spends Big On Split Roll, Cash Bail Ban

Labor money is flowing into two costly ballot initiative contests where business interests have a lot at stake.

SEIU California dropped $250,000 into an effort to preserve California’s ban on cash bail, according to filings posted today by the California Secretary of State. The outlay marks the first significant financial counteroffensive against the bail industry’s referendum, which will be in front of voters next year.

Separately, SEIU joined labor allies who are ramping up for an epic fight over taxes. The new filings also show the union group put $1 million toward an effort to raise Proposition 13 caps on commercial property taxes, an effort know as split roll.

Read More [[link removed]] Energy and Climate Change California To Stop Buying GM, Fiat Chrysler Vehicles Over Miles Per Gallon Fight

The state of California will stop buying cars made by General Motors Co., Fiat Chrysler Automobiles NV and other automakers that have sided with U.S. President Donald Trump in a fight over fuel economy rules that has sharply divided the nation’s automakers.

GM, Fiat Chrysler, Toyota and the Association of Global Automakers, which lobbies in Washington for foreign-owned automakers, have lined up with the president in a fight over gas-mileage rules with California, while Ford Motor Co., Honda Motor Co., Volkswagen AG and BMW AG have sided with the Golden State.

“Carmakers that have chosen to be on the wrong side of history will be on the losing end of CA’s buying power,” California Gov. Gavin Newsom tweeted Saturday. “CA will stop purchasing vehicles from carmakers that have refused to protect our air & chosen to follow the regressive ways of@realDonaldTrump.”

Read More [[link removed]] California Restaurant Association Sues Berkeley Over Natural Gas Ban

The California Restaurant Association sued Berkeley over the city’s natural gas ban on Thursday, arguing it violates existing law and would hurt businesses. The association, which said it represents around a quarter of restaurants in the city, wants to halt the ban before it goes into effect in January.

In July, Berkeley became the first city in the U.S. to ban natural gas in all new single-family homes, townhomes and small apartment buildings; it plans to include commercial buildings. City and state officials hailed it as a win for reducing greenhouse gas emissions and combating climate change. A wave of other municipalities — the largest among them San Jose — have enacted or contemplated similar bans.

The legal challenge by the restaurant industry filed in federal court Thursday says the ordinance “imposes irreparable harm.” The suit argues restaurants rely on natural gas and chefs are trained in using it to prepare particular types of food like flame-seared meats, charred vegetables, or using intense heat from a flame under a wok. Losing it will slow down service, reduce chefs’ control, and affect the food — plus cost businesses more, the suit said.

Read More [[link removed]] California Wants Independent Reviews Of All Pending Fracking Permits

California intensified its battle against fossil fuels by seeking independent reviews of all pending hydraulic fracturing permits and halting approvals of a key production technique in an area that has pumped crude for more than a century.

Governor Gavin Newsom ordered regulators to assess the safety of high-pressure steamflooding, a production process that has been linked to recent oil leaks in Kern County, the state’s department of conservation said in a statement on Tuesday.

The state is also requesting third-party scientific reviews of any pending applications for fracking, as well as looking for ways to toughen regulations to protect residents near oil and natural gas well sites.

It’s the latest in a series of actions or threats against unconventional oil and gas production. Democratic presidential contenders Elizabeth Warren and Bernie Sanders have promised to ban fracking if elected. The UK government halted new fracking wells in England earlier this month on concerns about earthquakes.

Newsom, a San Francisco Democrat in his first term as governor, has been stepping up pressure on oil and natural gas producers through a series of initiatives such as denying permits and drilling leases on land that is or once was protected by federal authorities.

Read More [[link removed]] Climate Change Could Shave Off 3% Of The World Economy, Study Finds

Climate change could shave off 3% of world growth over the next 30 years, according to a study from the Economist Intelligence Unit.

Africa, South America and the Middle East are likely to be impacted the hardest by climate change, the report states. This is because they have higher average temperatures and smaller economies in size, making them more vulnerable to the impact of climate change.

The International Monetary Fund expects global growth to reach 3% this year, its lowest level since the global financial crisis.

However, the United States – the world’s largest economy, would not escape to the effects of climate change.

Read More [[link removed]] Climate Change Activists Urge Los Angeles Not To Build A Gas Plant In Utah

Dozens of environmental groups and neighborhood councils are urging Los Angeles Mayor Eric Garcetti not to move forward with plans to build an $865-million gas-fired power plant in Utah, saying the investment is inconsistent with calls to stem the global climate crisis by phasing out fossil fuels as quickly as possible, and conflicts with Garcetti’s own climate agenda.

At Tuesday’s meeting of the Los Angeles Department of Water and Power board of commissioners, activists pressed city officials to replace Intermountain Power Plant — a coal plant the utility operates just outside Delta, Utah — with climate-friendly power sources such as wind, solar and battery storage, as well as energy efficiency measures back home.

LADWP is working to shut down the facility by 2025. It’s the last coal plant serving customers in California, and L.A.'s largest source of power.

Read More [[link removed]] California Is Done With The Gasoline Engine

California has announced two big changes in the way the state government buys its vehicles. First, the California Department of General Services (DGS) says that state agencies can no longer buy "sedans solely powered by an internal-combustion engine," with an exception made for some public safety vehicles. Second, state agencies cannot purchase vehicles from an automaker that does not "recognize the California Air Resources Board (CARB)'s authority to set greenhouse gas and zero-emission-vehicle standards." The first rule goes into effect now, and the second will take effect on January 1, 2020.

The automakers that recognize CARB's authority are those who have signed a deal with the state that they will follow CARB's stricter fuel-economy rules and not the relaxed national standards that the Trump administration is pushing for. Only four automakers have signed such a deal: Honda, Ford, Volkswagen, and BMW. Other automakers have voiced support for Trump's "one national policy" on fuel economy, which leads to lower average national MPG standards than were agreed to under the Obama administration. The public has noticed, with Toyota generating a backlash on Twitter for siding with Trump instead of California.

Read More [[link removed]] Should Cities Phase Out Gas Appliances And Require New Buildings To Be All Electric?

Local governments seeking to combat climate change have set their sights on a new target: homes and businesses that burn natural gas for things like heating and cooking.

This year, Berkeley, Calif., became the first city in the U.S. to ban natural-gas hookups in most new construction, meaning anyone building a home there after Jan. 1 will have to forgo the gas stove.

At least a dozen other cities in California quickly followed suit, and similar bans on new natural-gas hookups are being considered by local governments in other states, including Massachusetts, Vermont and Washington.

About one in four homes in the U.S. is all electric now, according to a U.S. Energy Information Administration survey. That number has been growing over the past decade, driven in part by changes to the types of equipment used in homes and faster population growth in warmer climates, the EIA says.

Read More [[link removed]] California Groups Challenge Sempra Rate Decision Allowing Recovery Of 'Charitable Contributions'

The actual dollar amounts, while significant, are modest in terms of utility expenses and revenues. But according to TURN attorneys, the case has First Amendment implications for ratepayers who may be forced to support lobbying efforts counter to their own best interests.

"This sets a really dangerous precedent for utilities," Sara Gersen, staff attorney for Earthjustice, told Utility Dive. The group is representing the Sierra Club and Union of Concerned Scientists in the proceeding.

According to the three groups, the commission's decision means ratepayers are being forced to pay for what amounts to political campaigning against climate change efforts. TURN pointed to previous reporting by the Los Angeles Times that it says shows how SoCalGas "has leveraged its charitable giving to pressure community groups to participate in their anti-climate agenda, including fighting building electrification."

Read More [[link removed]] California Governor Calls For Possibly Closing Aliso Canyon Natural Gas Facility

California Gov. Gavin Newsom this week tasked state regulators with identifying ways to permanently close the 86 Bcf, 3,200-acre Aliso Canyon natural gas storage facility north of Los Angeles.

Newsom late Monday called on the California Public Utilities Commission (CPUC) to hire an independent third-party expert to identify "viable alternatives" to the state’s largest gas storage facility, which is run by Southern California Gas Co. (SoCalGas) and has served the region since 1972. He also wants "scenarios" developed to close the facility, which over a four-month period in 2015-2016 suffered the biggest methane leak ever from a dysfunctional storage well.

Newsom expressed concerns about public health and safety, as well as projections for reduced reliance on gas as an energy source over the next 25 years. Reducing reliance on fossil fuels is one of the "shared goals" in California, he said, and closing Aliso would recognize "declining natural gas demand pursuant to state climate change targets."

Read More [[link removed]] Workforce Development Support For School Construction Bond Falls Below 50 Percent In New Poll

Supporters of a $15 billion school and college construction bond on the March 2020 state ballot will have their work cut out for them. So will community activists and public employee unions gathering signatures to put an estimated $11 billion tax increase on commercial and business properties to voters next November.

Less than half of likely voters say they’d vote for either proposal, according to a poll released Monday by the Public Policy Institute of California, a nonpartisan research nonprofit.

A potentially competing tax on corporations and wealthy Californians to raise $15 billion for K-12 schools and community colleges fared better; 56 percent of likely voters said they’d vote for it, although the California School Boards Association, its chief promoter, still has to find the $5 million or so needed to gather enough names to put it on the ballot.

Read More [[link removed]] Students Talk Through Math In This California School. Now Test Scores Are Rising

California school districts have long struggled with a persistent gap in math test scores between racial and ethnic groups. But at one small rural school district, the gap between Latino and white students has narrowed more than it has at most districts in the state.

At Winship-Robbins Elementary School District, a single-school district in south Sutter County, the percentage of Latino students meeting or exceeding standards on the Smarter Balanced math test more than doubled over the last five years. And although their scores still slightly trail those of their white peers, the gap between them has narrowed by nearly 16 percentage points during that time.

One of the main reasons for the improved scores is a change in the way teachers talk to their students about math, said officials at Robbins Elementary, the district’s one school. Starting last school year, teachers focused on creating more opportunities for students to talk through word problems with each other and build their ability to recognize and apply math terms, rather than relying on rote memorization.

Read More [[link removed]] California Remains The Top U.S. Destination For Foreign Students, Yet Enrollment Is Slipping

California remains the top U.S. destination for foreign students, who primarily come from China and India, with enrollment dipping slightly in the 2018-19 school year for the first time in at least a decade, according to a survey released Monday.

Nationally, new enrollments of international students declined for the third year in a row although overall numbers are at a record high of nearly 1.1 million, according to a survey of 2,800 U.S. colleges and universities released by the Institute of International Education and the U.S. State Department.

The number of students from China, who account for one-third of all international students in the United States, increased by 1.7% while those from India grew by 2.9%.

Some university officials have questioned whether the Trump administration’s harder line on immigration and China is driving international students toward more welcoming environments in other countries.

Read More [[link removed]] Infrastructure and Housing It Takes A Village To Solve Bay Area's Housing Crisis

In the past few months, Apple, Google and Facebook announced multibillion-dollar investments in housing. Gov. Gavin Newsom has made housing a top priority of his administration, committing an unprecedented $1.75 billion to spur housing development. The state legislature has passed a record-breaking number of housing bills in the past two years. And last week, Newsom called a meeting of the state’s top business leaders and asked them to do even more.

The urgency public and private sector leaders are bringing to housing reflects an increasingly dire reality statewide. In the Bay Area alone, tens of thousands of individuals are cycling into homelessness annually, and there are 175,000 more on the brink of homelessness. Addressing this need would require construction of 188,000 new units of affordable housing by 2023 at a cost of $94 billion.

If we are to upend the status quo, we must do more than simply sustain our current momentum. We must engage on this issue in a fundamentally new and collaborative way. We see four primary levers.

Read More [[link removed]] 'The California Price': Why It Costs So Much To Build A Home In The Golden State

The sound of electric saws slicing through plywood pierces the air in the Twelve Bridges neighborhood in Lincoln, a suburb outside Sacramento where new single-family homes are rising. Despite the progress, Mike Wyatt, like many housing developers in this state, is frustrated.

Building these two-story tract homes will take a few months, but getting to that point, he says, is an exercise in extreme persistence.

"It just takes too long in California to get projects approved," Wyatt, regional president for K. Hovnanian Homes, adds.

Before any nails are hammered or concrete poured, developers must navigate a painstakingly slow and complex approval process. In California, this can take years, or even decades, and cost millions of dollars in fees, far more than in other states.

As those costs pile up, they’re passed on to the homebuyer, driving prices further out of reach in a state already wracked by an affordable housing crisis, say builders and housing researchers.

Read More [[link removed]] Don’t Count On Big Tech To Fix The Bay Area’s Housing Crisis

Recently, Apple joined Facebook, Google, and a number of other tech companies pledging to make investments in increasing housing affordability in the Bay Area. Tech giant Amazon is also funding construction of a shelter for people experiencing homelessness in Seattle, with a number of bathrooms that may rival those in Jeff Bezos’ 27,000 square foot D.C. residence.

These moves, in communities in which tech companies have extracted special tax treatment and other benefits for decades, are supposedly meant to increase “affordable” housing stock. But for many area workers, including those at tech companies, the new housing will remain out of reach.

Apple’s plan calls for $2.5 billion in spending, including $1 billion in an affordable housing investment fund and $1 billion in first-time buyer mortgage assistance. It is the most generous of recent rollouts. Facebook committed $1 billion to the construction of 20,000 units, use of land owned by the company, and construction of housing for “essential workers” like teachers and firefighters. Google similarly offered $1 billion, primarily in the form of land. Meanwhile, philanthropic ventures such as The Bay’s Future, driven by tech company executives, are also pledging to wade in to the fight for affordable housing in the Golden State.

Read More [[link removed]] Is Gavin Newsom's Housing Policy 'Rudderless'? Advocates Want More Done To Lower California Costs

In his first 10 months in office, Gov. Gavin Newsom approved $1.75 billion in new spending on housing programs and helped pass new laws to prevent evictions and rent spikes.

Despite those actions, permitting of new homes has slowed since Newsom became governor.

Many housing advocates say that’s not his fault, that he hasn’t been governor long enough for current permitting rates to be the result of his policies and actions.

They’ve praised the work Newsom has done so far, but some advocates say he needs more homebuilding expertise in his cabinet and a top adviser who can spearhead the his housing agenda.

Read More [[link removed]] White House readies California Homelessness Plan After Ousting Top Official

White House officials will soon present President Trump with a plan to crack down on homelessness in California, days after ousting a top federal official appointed during the Obama administration, according to two senior administration officials.

The plan is expected to be shown to Trump in coming weeks, officials said, perhaps as soon as next week. Trump will be able to select ideas for how to address the growing homeless problem in several major cities.

One person involved in deliberations said the administration’s plans are likely to target homelessness in Los Angeles and could include repurposing existing federal property, but the exact set of policy options to be presented to the president could not be learned. As part of the talks, officials have also discussed moving homeless people from specific areas and condemning certain properties, though it’s unclear whether those options will make it into the final plan.

Read More [[link removed]] Editorial and Opinion Cuomo’s Carbon Casualties

New York Gov. Andrew Cuomo is a proud opponent of fossil fuels. But now that the consequences of his policies are harming people in the real world—those who can’t afford to escape to Florida—the Governor is blaming others.

Mr. Cuomo has blocked shale fracking upstate and several pipelines delivering natural gas from Pennsylvania in the name of protecting waterways. But this is an excuse. Natural-gas production in Pennsylvania has increased 60% since Mr. Cuomo banned fracking five years ago, adding $6 billion to Keystone State GDP and its waterways are fine.

Mr. Cuomo’s real purpose is to eliminate natural gas as part of his political commitment to “carbon neutrality” by 2050, and this isn’t a cost-free promise. Upstate New Yorkers struggle economically and pay among the highest energy costs in the U.S. A quarter still rely on heating oil, which costs about $1,000 a year more than natural gas and emits nearly 40% more CO2. New Yorkers pay about 40% more for electricity than Pennsylvanians and 15% more than in New Jersey.

Read More [[link removed]] California’s Budget Surplus Should Be Used For Massive Pension Liabilities, Not New Spending

The Legislative Analyst Office’s report predicting the state will have a $7 billion surplus next fiscal year is sure to lead to pushes for costly new programs or expansions of existing ones. Progressive Californians have a pent-up demand for expanded state health and welfare benefits, only starting with a Golden State version of “Medicare for All.”

But Gov. Gavin Newsom and the Legislature should resist the urge for new spending — and not just because the LAO warns that $3 billion of the surplus could go away if the Trump administration sticks with new federal rules that would block state taxation of managed-care organizations. They should exercise caution because California’s fiscal situation is shakier than the word surplus suggests.

It’s not just that an overdue recession can make revenue plunge nearly 20% in a single year, as happened a decade ago. It’s that state pension and retirement health care benefits are massively underfunded. Earlier this year, the California Public Employees’ Retirement System’s unfunded liability was estimated to be $139 billion and the California State Teachers’ Retirement System’s unfunded liability was put at $107 billion. Unfunded state retiree health care benefits are nearly $86 billion.

Read More [[link removed]] California Drilling Ban Is Fueled By Indifference

It would be understandable if your first reaction to news that California’s governor has slapped restrictions on fracking was: They frack in California?

California actually ranks seventh in terms of state oil output, just behind Alaska.(1) Yet California is usually noted more for its thirst for the stuff, with its legions of drivers consuming more gasoline than in any other state. In terms of production, you’re more likely to associate California with barrels of Cabernet than crude.

Which goes a long way to explaining why Governor Gavin Newsom made his move.

Newsom hasn’t banned fracking in California — indeed, he says he isn’t empowered to do that unilaterally. Rather, in response to oil spills in Kern County, he has ordered regulators to assess the safety of a different technique for stimulating wells, called cyclic steam-flooding, use of which has surged in California. However, he has also taken the opportunity to order that new permits for fracking be subject to scientific review and that the whole permitting process undergo an audit by the state’s Department of Finance.

Read More [[link removed]] California Business Roundtable 1301 I Street, Sacramento, CA 95814 916.553.4093 | [[link removed]] Web Version [link removed] | Update Preferences [link removed] | Unsubscribe [link removed]