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WECA Political Update May 11, 2023

Thursday, May 11, 2023

Legislative Calendar:

·        May 12 – Last day for policy committees to meet before June 5

·        May 19 – Last day for fiscal committees to hear and report to the floor bills introduced in their house

·        June 2 – Last day for each house to pass bills introduced in that house

·        June 15 – Budget must be passed by midnight

·        July 14 – August 14 – Summer recess

San Diego Decides to Elect a Fletcher Replacement Last week, the San Diego County Board of Supervisors decided to replace possibly soon-to-be-ex-Supervisor Nathan Fletcher by a special election, which will take place on Aug. 15. If no one captures more than 50 percent of the vote, then the contest will go to a runoff election on Nov. 7. However, Voice of San Diego points out “Fletcher’s position is not yet vacant, and we’ve heard no word from him since he resigned as Metropolitan Transit System chair following allegations of sexual harassment and assault and announced he would resign from the Board in May. His office says he’s been at a treatment center without outside contact. So, if Fletcher’s resignation comes to pass, this special election will be triggered. San Diego City Councilwoman Monica Montgomery Steppe and Janessa Goldbeck, a Marine veteran and LGBTQ+ advocate, have announced their candidacy.” The Democratic majority on the board is over, and the board is split on party lines. With Fletcher gone, there are two Democrats and two Republicans, and much work is needed, such as passing the county budget. It must be a bipartisan deal, with Fletcher’s seat presumably vacant for several months. The Politics Report confirmed that one name would not be on the ballot. San Diego Councilman Stephen Whitburn is not going anywhere. He plans to stay on the city council. For weeks, insiders saw Whitburn as the likeliest contender to fill Fletcher’s seat. He seemed to have a chance if there was an appointment or a special election. But he’s not going anywhere. “That work to significantly decrease street homelessness is at a critical juncture right now, and I intend to see it through,” he said.

Laborforce Housing Senator Anna Caballero has co-authored SB 584 (Limón - D), which would create the Laborforce Housing Financing Act of 2023. The bill would impose the first statewide Transient Occupancy Tax (TOT) of 15 percent on short-term rentals like Homeaway, VRBO, and Airbnb. What is unique about SB 584 is that it is sponsored by the State Building and Construction Trades Council, and because of that, the bill requires a PLA for all construction. The fact that the bill’s sponsorers would obtain the sole-source, no-bid contract for all construction labor did not trouble the author and the Democrat Senators on the committee, who all voted AYE. General trade and public sector unions have contributed over $700,000 to Limón – the top two donor categories.

On a related topic…Can California incentivize developers to build at a rate that would help solve our housing shortage and also require them to ensure jobs for unionized construction workers? As CalMatters housing reporter Ben Christopher explains, “That’s the question at the center of a nondescript housing project in Saratoga. Known as Quito Village, the project kicked off in 2020 when its original developer agreed to follow a strict labor standard that favors hiring “skilled and trained” union workers. The standard was included in a 2017 law and aimed to speed up construction of dense housing. Construction began in 2022 after an Atlanta-based real estate company, PulteGroup, took over the project. To date, it’s the only known project in California that has broken ground under the law’s union-hiring rule.

The law will expire in 2026 and is up for renewal. But Democrat lawmakers are debating whether to nix the “skilled and trained” requirement, arguing that it’s too heavy a burden for developers — and point to Quito Village as evidence. Assemblymember Buffy Wicks, Oakland Democrat and chairperson of the housing committee, says “So that’s one in five years. That to me kind of says it all.” To complicate matters, it’s not entirely clear that PulteGroup is even satisfying the union-hiring requirement. When it took over Quito Village, its legal team attested that law does not mandate the company to abide by the hiring standard imposed on mixed-income projects. The city of Saratoga disagrees and noted that PulteGroup has not been submitting monthly reports that would prove it’s complying with the rule.

So, the true number of projects that have resulted under the law might not be one, but zero.

One possible explanation for this: syntax. The text of the law gives certain exemptions for projects “Located within a jurisdiction located in a coastal or bay county with a population of 225,000 or more.” Saratoga is located in Santa Clara County, which has a population of nearly 2 million and is considered a bay county. Saratoga itself, on the other hand, has only 30,000 residents. Does the 225,000 threshold apply to the county or the city? If the threshold applies to Saratoga, PulteGroup would be exempt from the “skilled and trained” obligation. It would also mean that under this standard, only 12 cities out of California’s 482 would meet the law’s requirement.

NLRB Ruling Sets Higher Bar for Discipline A new ruling from the National Labor Relations Board raises the standards for termination of an employee engaging in workplace organization, reports Andy Medici of The Business Journals. The ruling reverses a previous decision in a case involving General Motors LLC that the agency says made it easier for employers to sanction misconduct that occurs as part of a protected activity. In the decision, the NLRB said that conduct occurring during the course of a protected activity must be evaluated as part of that protected activity — and that workers have a right under the law to organize and advocate for better working conditions. The latest decision comes not long after another NLRB ruling that gutted nondisclosure agreements and nondisparagement agreements.

Reps. Barbara Lee, Katie Porter, and Adam Schiff joined the California Labor Federation in Sacramento on Sunday night for their first-ever appearance together since each launched their campaigns to succeed Sen. Dianne Feinstein. It was a chance not only for the three to give voters a side-by-side-by-side comparison in real time, but also an opportunity to curry favor with one of the most critical sectors of the electorate — organized labor. Unions are frequently among the top donors to campaigns and top spenders when it comes to lobbying and can deploy an army of precinct marchers and door-knockers for whoever should be so lucky to win their favor. Notably, it was labor that rallied tens of thousands to help beat back the recall of Gov. Gavin NewsomAnd for what has historically been a formidable force, the labor movement in California has grown steadily louder since the pandemic, manifesting in high-profile actions in Sacramento and across the state — pushing hard on housing bills, retention rights, and a bill to unionize Legislative staff in addition to high-profile strikes by Los Angeles teachers and Hollywood writers.

The three senatorial hopefuls worked to capitalize on that momentum Sunday night, speaking forcefully about workers’ rights and doing their best to rile up the room with their pro-union talking points.

Schiff led the audience in chants to pass the labor-backed PRO Act. Lee got cheers for being arrested while marching with a union in Berkeley. And Porter got one of the biggest pops of the night when she called union-busting in the name of industry transformation “some real bullshit.”

A Senate race between three popular Democrats with powerful fundraising machines will be competitive, and labor’s blessing could be the difference between victory and failure. The California Labor Federation won’t make its endorsement until December. But as the audience swarmed the candidates afterwards to shake hands and take selfies, one worker --- Claudia Fletcher of the flight attendants union — said a decision will be tough. "There's too much good talent,” she said. “I think it's a good problem, quite frankly.” [CalMatters]

California Employers May Request a Deferral to File Labor Contractor Employee Report On May 10, 2023, private employers with 100 or more employees, with at least one employee based in California, must file their annual pay data reports with the California Civil Rights Department (CRD).  

Annual pay data reports consist of (1) a Payroll Employee Report, and/or (2) a Labor Contractor Employee Report.

  • A Payroll Employee Report covers pay and demographic data for employees on an employer’s payroll in the prior calendar year.
  • A Labor Contractor Employee Report separately covers pay and demographic data for labor contractor employees hired through labor contractors in the prior calendar year (for example, temporary employees).
  • The Labor Contractor Employee Report is new for 2023.
  • A labor contractor is an “individual or entity that supplies ... a client employer with workers to perform labor within the client employer’s usual course of business.”
  • A labor contractor employee is an “individual on a labor contractor’s payroll, including a part-time individual, and for whom the labor contractor is required to withhold federal social security taxes from that individual’s wages, and who performs labor for a client employer within the client employer’s usual course of business.”
  • A Labor Contractor Report is required only if a private employer has 100 or more labor contractor employees working for it.
  • To gather data for the Labor Contractor Report, employers must request the data from their labor contractors, who in turn are obligated by law to provide specified data to their customers.

Since April 18, 2023, CRD has been accepting “enforcement deferral requests” to allow employers more time to file the Labor Contractor Employee Reports. To make such a request, an employer must first register itself in the CRD’s pay data reporting portal and then submit the request through the portal. If the request is granted, it is not considered an extension. The CRD will simply defer – through July 10, 2023 – seeking an order of compliance for the employer to file its Labor Contractor Employee Report. More

Su nomination on hold as Feinstein questions linger; Julie Su’s nomination to be the next Labor secretary remains stalled. The HELP Committee cleared Su on April 26. However, with unified GOP opposition and several Democratic moderates still refusing to say how they’ll vote, this nomination isn’t going anywhere. The continued absence of Sen. Dianne Feinstein (D-Calif.) also plays into the Su fight. With Feinstein out, there’s almost no chance Su can get confirmed (she may not be anyway, to be honest). There’s been enormous speculation about Feinstein’s potential return, but we have no indication right now that Feinstein will return this week. Senate Majority Whip Dick Durbin, who also chairs the Judiciary Committee, was pressed by CNN’s Jake Tapper on Sunday. Durbin, who can’t move several controversial nominees in his panel nor issue a subpoena over the Supreme Court ethics scandal, urged Feinstein to announce her plans as soon as possible. “I hope she does what is best for her and her family and the state of California and makes a decision soon as to whether she is coming back,” Durbin said of the 89-year-old Feinstein. Note the inclusion of “soon” there. In a statement from her office last week, Feinstein pointed out that the Judiciary Committee has continued to move judicial nominees despite her absence. [Punchbowl]

April PIT Revenue $3.8 Billion Below Budget Projection The state collected $7.49 billion in personal income tax (PIT) revenue during the month of April – approximately $3.8 billion less than anticipated in Governor Gavin Newsom’s January budget proposal – according to the PIT revenue tracker maintained by the State Controller’s Office. The revenue figures are not good news for a state facing an operating deficit estimated to be at least $22.5 billion – a January projection that is expected to grow significantly when Newsom unveils his updated budget plan and fiscal projections this week. From the beginning of the 2022-23 fiscal year through the end of April, the state collected $79.68 billion in PIT revenue, or roughly $45 billion less than during the same period last year.

However, the figures are not an apples-to-apples comparison, as the filing deadline was extended this year (from April 18 to October 16 for most California taxpayers), making it likely that much of the state’s PIT revenue will arrive far later in the year than usual. Newsom’s 2023-24 budget proposal, released in January, estimated that April PIT collections would total $11.29 billion, representing 5.44 percent of total general fund revenue of $207.34 billion projected for the 2022-23 fiscal year, which ends June 30. The January projection was based on the filing deadline being extended to May 15, as the estimate was made before the second extension of the deadline. Newsom's deadline is May 14 – Mother’s Day this year – to release a revised budget proposal with new revenue and spending projections.

The Legislature’s deadline for sending a budget bill to the governor is June 15. The courts have ruled that this bill does not have to comprise a complete budget, so budget “trailer bills” often are approved after the deadline. Given the uncertainty of the PIT collections, which typically account for roughly half of the state’s total revenue, observers expect the Legislature to delay many budget decisions until late in the year, after an expected rush of payments near the October deadline. [CalTAX]

Tickets Going Fast Seats at WECA’s 2023 Lincoln-Reagan dinner table are almost goneIf you’d like to join WECA members on June 3 from 5:00 PM – 8:00 PM at the Marriott Marquis, Downtown San Diego, email WECA at communications@goweca.com and request a seat or two.