Redistricting kills tax hikes talk

Politico

17 hours ago

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BACK-BURNERED: Gov. Gavin Newsom's gerrymandering play has effectively ended any possibility, however slim, that lawmakers would seriously consider a push by progressives to raise taxes before the Legislature adjourns next month.
It was always a longshot. Assembly Speaker Robert Rivas and Senate President Pro Tem Mike McGuire had been more tepid on taxes since wrapping the budget in June. But Newsom's sudden redistricting effort has become all-encompassing at the Capitol, effectively sidelining anything else.
'I think the conversation about raising revenues, it's not something we're going to solve this week or this month,' said Assemblymember Nick Schultz, a Burbank Democrat and Progressive Caucus member. 'It's going to continue.'
While extensive cuts in President Donald Trump's megabill likely won't be felt until after the midterm elections, rollbacks of Medi-Cal and other safety net programs that Newsom and lawmakers made in response to a $12 billion budget shortfall are slated to begin in 2026. Progressives had been hoping to push some kind of new tax scheme through the Legislature this year to stave off the reductions, in particular cutbacks to health insurance for undocumented immigrants.
A group of more than two dozen mostly progressive lawmakers met regularly to explore options, including a proposal from labor groups like SEIU and members of the Latino Caucus to penalize big businesses that had large shares of employees who depended on Medi-Cal and other public benefits.
Assemblymember Damon Connolly was pushing another idea for a tax on business profits stashed in overseas accounts, called a 'water's edge' exemption. His office estimated it could bring in around $3 billion per year.
Even before redistricting sucked the air out of the Capitol, winning support for a new tax was going to be an uphill battle, as Newsom has consistently resisted proposals for new taxes.
And Democrats in the state's two chambers were decidedly split on the idea. When party leaders in the Assembly polled their caucus on pursuing new revenue streams now, later or not at all, a third of the 60 members said they wanted to move on revenue-raising options, 16 said they were open to it down the road and 15 rejected the idea. Nine members abstained from responding to the survey.
Also in favor of a new tax was Los Angeles state Sen. Sasha Renée Pérez, who said in an interview that constituents in her communities want state leaders to provide a safety net to counter the Trump administration's cuts to health care, education and other government-funded services.
'Overwhelmingly, what I hear from my constituents when I engage with them is that this is what they want to see,' Pérez said of revenue-raising. 'That we take care of the little guy, and we take care of working people who have been struggling to get by.'
But for now, lawmakers have other things on their minds, said Jim Mangia, director of St. John's Health Center, a network of health care clinics in and around Los Angeles that primarily serve the poor and immigrant communities.
'The redistricting conversation has changed a lot in Sacramento. The Legislature is no longer focused on revenue,' Mangia said. 'We are meeting with many legislators … and having some good conversations and more to come, but it has totally changed the focus of the Legislature right now.'
The idea of a new tax isn't totally sunk. Lawmakers have been preparing for the possibility of a special session in the fall to deal with the ongoing fallout of federal budget cuts. Generating a new revenue stream could be part of that agenda.
'It's something where I think we owe it to California to keep all options on the table and to entertain any and all possibilities,' Schultz said.
Dawn Addis, chair of the Assembly's health budget subcommittee, said that while the cuts to health care remain an urgent problem, lawmakers need more time to work out all possible solutions.
'We want to do something thoughtful that doesn't have a lot of unintended consequences,' Addis said. 'The timing is a little bit tough to discern at the moment. Part of that is because obviously we're dealing with redistricting and the egregious attacks from the Trump administration … We just have no way not to prioritize that. It's got to take front and center.'
IT'S TUESDAY AFTERNOON. This is California Playbook PM, a POLITICO newsletter that serves as an afternoon temperature check on California politics and a look at what our policy reporters are watching. Got tips or suggestions? Shoot an email to [e-mail].
WHAT YOU NEED TO KNOW TODAY
REDISTRICTING RUMBLE: Republicans' anger over their near-powerlessness in the face of Democrats' redistricting gambit boiled over today in the Assembly Elections Committee.
GOP Assemblymember David Tangipa got into a snipefest with Democratic Assemblymember Marc Berman, who was presenting a bill from the legislative package needed to put the gerrymandered map on the November ballot.
When Tangipa said lawmakers didn't have enough time to consider the legislation, Berman snapped back that he was surprised it took so long to read a five-page bill. The Democrat also accused the Republican of making veiled threats to his witness when Tangipa suggested they would become 'really good friends' over the course of his questioning.
After Tangipa's queries dragged on, chair Gail Pellerin attempted to cut him off at the behest of other Democrats on the committee. Assemblymember Catherine Stefani sternly told Tangipa not to interrupt her during her comments.
'You play stupid games, you get stupid prizes,' she said, alluding to Texas Republicans' redistricting efforts. 'And that's what you are doing.'
Pellerin eventually cut all the committee members' microphones, leaving Tangipa yelling at his colleagues, à la former GOP Assemblymember Bill Essayli during the final hours of session last year. Democrats ultimately approved the bill over his protests.
IN OTHER NEWS
DEFENSE DOLLARS: California Sen. Adam Schiff has launched a legal defense fund amid the Justice Department probe into his finances, our Hailey Fuchs and Gregory Svirnovskiy report.
Schiff, who led the first impeachment effort in the House against Trump and aided the congressional investigation into the Jan. 6 Capitol attack, has become a frequent target of the president in his second term. Earlier this summer, Trump alleged in a post on Truth Social that the California Democrat 'engaged in a sustained pattern of possible Mortgage Fraud' — an allegation Schiff vehemently denies.
'It's clear that Donald Trump and his MAGA allies will continue weaponizing the justice process to attack Senator Schiff for holding this corrupt administration accountable,' Marisol Samayoa, a spokesperson for Schiff, said in a statement. 'This fund will ensure he can fight back against these baseless smears while continuing to do his job.'
BITING BACK: California Republicans petitioned the state Supreme Court to block legislative Democrats from voting on their redrawn congressional map this week, raising process issues in a bid to stop redistricting from reaching the ballot in November, our Blake Jones reports for POLITICO Pro subscribers.
GOP state legislators announced the filing today. In it, they argue legislative language to carry out Democrats' gerrymander must be in print for 30 days before it can be voted upon — or else three quarters of lawmakers must approve suspending a state constitutional rule laying out that timeline. The bills at hand have technically been in print for months, but were gutted Monday and amended to include the redistricting play.
The Legislature frequently guts and amends bills in Sacramento and votes on them within a month without drawing legal challenges, but an attorney for the Republicans argued that does not justify the practice.
'If the Legislature has been flagrantly violating this provision of the Constitution in the past, so what? It should stop,' Dhillon Law Group partner Mike Columbo said at a news conference at the California Republican Party headquarters in Sacramento today.
CAP-AND-TRADE UNVEILED: The Assembly is proposing modest reforms to the state's signature cap-and-trade program for greenhouse gas emissions, according to draft legislative language circulating today, our Camille von Kaenel scooped for Pro subscribers.
Assemblymember Jacqui Irwin, who is leading the Assembly's negotiations on the program, is proposing significant amendments to her placeholder bill, AB 1207, that would direct the California Air Resources Board to extend the cap-and-trade program from 2030 through 2045, make changes to offsets and allowances and make several multi-year appropriations of its revenues for wildfire, water, air and energy programs. Her office confirmed the language this morning.
In addition to serving as the backstop regulation that ensures the state meets its emissions reduction obligations, the cap-and-trade program is also a major revenue generator. But proceeds in the state's quarterly auctions have fallen as traders reckon with the program's impending expiration in 2030 and uncertainty over whether regulators will adjust the market's rules.
WHAT WE'RE READING TODAY
— California State University is spending nearly $17 million to make OpenAI's ChatGPT available to all students and faculty even as it faces a $2.3 billion budget gap. (LAist)
— Hundreds of professors at UCLA, including a large swath of Jewish faculty, signed a letter condemning Trump's $1 billion settlement demand over alleged antisemitism on campus and the freezing of million in research grant funding. (The Los Angeles Times)
— California now has the largest and fastest growing early education program in the country as at least 200,000 kids are set to attend transitional kindergarten this fall. (CalMatters)
AROUND THE STATE
— A growing number of working- and middle-class families in the North County are enduring long commutes to work or school as they leave in search of affordability. (Voice of San Diego)
— Silicon Valley tech giants Cisco and Oracle are slashing hundreds of jobs across the Bay Area. (San Francisco Chronicle)
— The Alameda Health System is preparing for a backup plan after Trump's budget bill in July called for a $1 trillion cut to Medicaid that would likely disproportionately affect the hospital's revenue stream. (East Bay Times)
— compiled by Juliann Ventura