June Legislative Update
Monday, July 1, 2024
by: Craig Benedetto and Marshall Anderson, California Strategies

Section: Government Affairs




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Legislative Update 

June 2024

By Craig Benedetto & Marshall Anderson, Legislative Advocates 

 

STATE UPDATE

 

CA Supreme Court Pulls BOMA CAL Supported Taxpayer Protection Act from Ballot

Following attempts by Governor Newsom and the state legislature to scuttle the Taxpayer Protection and Government Accountability Initiative (TPA), the California Supreme Court removed it from the November ballot. The measure, supported by over a million petition signatures, would have required voter approval for any tax increases passed by the state Legislature and mandate a two-thirds majority for local tax hikes. It would have also retroactively reversed tax increases since January 1, 2022. Business groups widely criticized the decision as a blow to direct democracy. The Supreme Court argued in its conclusions that the initiative was a “revision” to the State Constitution, rather than an addition to it, thus requiring this kind of change to go through the constitutional revision process.  TPA proponents are regrouping and determining next steps, including another more limited measure to address the Supreme Court decision.  You can read more media HERE about the decision, the decision HERE and HERE for the TPA campaign.

 

ACA 1 Gutted; Impacts Vote Threshold for Local Fee Proposal Like the City’s Proposed Stormwater Parcel Tax

The State Legislature, in response to poor polling, has gutted ACA 1 and included portions of it in ACA 10. ACA 1 was approved last year by the state legislature to reduce the vote threshold for local fees, as well as some local bond measures.  Local fees, like the proposed City of San Diego Stormwater Parcel Tax, would have benefited from the passage by voters of ACA 1, retroactively reducing the vote threshold from 2/3rds to 55%.  The initiative has purportedly not polled well, and there was concern by the Governor and state legislators that including it on the ballot in its current form would have aided the passage of the BOMA CAL supported Taxpayers Protection Act, which they oppose.  So, the legislature acted yesterday to gut ACA 1, eliminating the provision that would reduce the vote threshold for local fees, like parcel taxes, and instead focus on reducing the vote threshold for locally proposed bond measures. It’s unclear what the City of San Diego will do in response, since the City Council’s Rules Committee was drafting the proposed stormwater parcel tax to comply with the provisions of ACA 1.  With its provisions to help passage of these kinds of taxes now eliminated, it would seem to mean the proposed parcel tax will absolutely need a 2/3rds majority vote to pass.  

 

Back to ACA 10, after the legislature’s action to amend some of the ACA 1 provisions into ACA 10, the California Business Properties Association, of which BOMA CAL is a member, along the the California Taxpayers Association and the California Business Roundtable issued a statement opposing ACA 10, given the bond vote threshold reduction.  Eyes now turn to the pending California Supreme Court decision on whether to remove the Taxpayers Protection Act from the November ballot.  Governor Newsom had sued to have it removed.  To learn more about the Taxpayer Protection Act, please click HERE.

 

Proposition 47 Reform Measure Qualifies for State Ballot

An initiative aimed at reforming the 2014 law that reduced penalties for certain drug and theft offenses formally qualified for the November 2024 ballot. Proposition 47 has been largely blamed for an uptick in retail theft and substance use since its passage in 2014, which made shoplifting, grand theft, and receiving stolen property a misdemeanor instead of felony if the value of stolen goods is under $950. Prop. 47 also lowered the penalty for personal drug consumption. While voters may now determine the fate of Prop. 47 this November, a bipartisan public safety bill package is also making its way through the state legislature. Proponents of the initiative are pressing legislators to strengthen the bills being considered to help assure a reduction in crime.  Some Democrats are pushing to include language that would repeal the bills if voters approve the reform measure later this year. Critics have argued that this move undermines the democratic process, forcing supporters to choose between backing the legislative package or investing in the costly ballot measure campaign. The approach highlights the ongoing debate over the best path to effective criminal justice reform in California. To learn more about the ongoing political dynamic, click HERE.

 

PAGA REFORM AGREEMENT REACHED

A ballot measure aimed at repealing California's Private Attorneys General Act (PAGA) will not appear on the ballot following an agreement between CA labor and business groups, which received Governor Newsom’s sign off. The deal reforms PAGA by capping penalties for employers who promptly rectify issues, increases the penalty share for workers, allows courts to mandate corrective actions, and requires workers to directly experience the violations they report. This compromise was praised by both labor unions and business groups, including CBPA. 

 

  • Employee Share of Penalty

    • Increases share employees receive from any penalty from 25% to 35%.

  • Standing

    • Requires the employee (plaintiff) to personally experience the alleged violations brought in a claim.

    • Alleged violations must have occurred within the last year (presently, there is no time limitation).

  • Penalty

    • Caps Penalties: For employers who proactively take steps to comply with the Labor Code before receiving a notice, the maximum penalty that can be awarded is 15% of the applicable penalty amount.

    • Caps Penalties: For employers who take steps to fix policies and practices after receiving a PAGA notice, the maximum penalty that can be awarded is 30% of the applicable penalty amount.

    • Reduces the maximum penalty where the alleged violation was brief or where it is a wage statement violation that did not cause confusion or economic harm to the employee (i.e. misspelling of company name or forgetting to add “Inc.” on the pay statement).

    • Levels the playing field for employers who pay weekly by ensuring a penalty is adjusted. Presently, such employers are penalized at twice the amount because penalties accrue on a per pay period basis.

    • Addresses derivative claims.

    • Creates a new penalty ($200 per pay period) if an employer acted maliciously, fraudulently, or oppressively.

  • Employer Right to Cure

    • Expands which Labor Code sections can be cured, so employees are made whole quickly.

    • Protects small employers by providing a more robust right to cure process through the state labor department (Labor and Workforce Development Agency) to reduce litigation and costs.

    • Provides an opportunity for early resolution in court for larger employers.

  • Strengthening Enforcement Agency

    • The Administration will pursue a trailer bill to give the California Department of Industrial Relations (DIR) the ability to expedite hiring and filling vacancies to improve and expedite enforcement of employee labor claims.

  • Judicial Discretion (Manageability)

    • Codifies that a court may limit both the scope of claims and evidence presented at trial.

  • Allows for injunctive relief.

 

To read the Governor’s statement, please click HERE.  The Legislature has to approve the implementing laws prior to the end of June, which is the deadline to place or remove initiatives from the statewide ballot.

 

CITY OF SAN DIEGO

 

TWO TAX PROPOSALS ADVANCE OUT OF RULES COMMITTEE, CITY COUNCIL TO VOTE IN THE COMING DAYS TO PLACE MEASURES ON THE BALLOT

The San Diego City Council’s Rules Committee unanimously voted to advance both proposed tax measures to the full city council. If approved at city council, the measures would be placed on the November 2024 ballot. One measure is City Council President Sean Elo-Rivera’s and Council President Pro Tem LaCava’s proposed parcel tax to pay for stormwater and water quality-related improvements. The proposed parcel tax would place a 7 cent per square foot levy on a property’s impermeable area (i.e. a roof, asphalt driveway, or other surface that does not allow for water drainage). This does not include the square footage within a building. It could include some undefined credit system to offset the tax based upon investments in stormwater infrastructure.  BOMA was present to express concerns about the impacts of this size tax and requested more specificity on a number of elements.  The Council President acknowledged that he’s continuing to work with stakeholders, but wants “no half measures.” To read the proposed language, click HERE. The other measure is a one-cent, city-wide sales tax increase being proposed by Mayor Todd Gloria and Councilmember Raul Campillo, which seeks to raise about $400 million annually for general expenses, including infrastructure investments. This is a doubling of the current city sales tax. To see what was presented at the Rules Committee, please click HERE.  Both measures will be considered by the full City Council in July.

 

CITY COUNCIL ADOPTS FY25 BUDGET

The San Diego City Council unanimously approved Mayor Gloria’s $5.8 billion dollar budget for the 2025 fiscal year. The Mayor’s proposed budget originally proposed cuts to several equity programs and funding for libraries and parks; however, the city council reversed those cuts, including the addition of $3 million to the city’s community equity fund, which will be used to assist flood victims, and $1 million for the office of youth care and development. The approved budget also includes funding for the city’s eviction protection program and an infrastructure study to look at the 15 most deadly intersections for pedestrians. Perhaps the most controversial line item was a $6 million price tag for a 1,000 bed homeless shelter located at Kettner and Vine. City Council ultimately elected to keep this in the budget, likely a compromise to avoid a Mayoral veto. Councilmember Moreno was the lone opponent of the shelter due to a lack of public meetings on the proposed lease agreement. To make up for the adds, “non-essential” spending across most city departments, including cuts to vacant positions, were suspended. Public safety funding, specifically for the San Diego Police Department, was sustained. The Independent Budget Analyst warned that without new revenue streams, severe cuts may be needed next year. To read the proposed budget, please click HERE.

 

‘BLUEPRINT SD’ ADVANCES OUT OF LAND USE AND HOUSING COMMITTEE, COUNCIL TO VOTE IN JULY

The City of San Diego’s Land Use and Housing Committee voted unanimously to advance Blueprint SD, a citywide planning tool aimed at identifying the City’s housing, climate, and mobility goals to better implement them at the community planning level. Blueprint SD is expected to expedite the community plan update process and more than double annual housing production with a select emphasis on building homes near transit priority areas. The framework could play a critical role in addressing San Diego’s housing shortage and the development of more housing types near job centers and transit lines, while preserving industrial and commercial land. Some community members spoke in opposition, arguing that there was too much density potentially allowed that would harm community character and livability.  The Committee members discarded those complaints, noting the importance of updating the plan to help address the city’s housing crisis.  Blueprint SD will now go before the full City Council for action. To read the staff report, please click HERE

 

LAND USE AND HOUSING COMMITTEE SUPPORTS COMMUNITY PLAN UPDATES

The City of San Diego’s Land Use and Housing Committee also voted unanimously to advance both the University City Community Plan Update, as well as the Plan Hillcrest update to the full City Council. The plans in question will essentially double the density for housing in both communities, as well as increase the amount of jobs space to help ensure balanced communities.  Several road segments will also be adjusted to make them more walkable and bicycle friendly.  Several community members, including representatives from the planning group in University City, as well as the former planning group that was divested in Hillcrest, objected to the new densities.  Several business groups including BIOCOM, the BIA, and the San Diego Regional Chamber spoke in support of moving these plan updates along. BOMA monitors these plan updates regularly.  To learn more about the University Community Plan Update, please click LINK.  To learn more about the Plan Hillcrest, please click LINK.

 

MAYOR TAPS ROBERT LOGAN AS NEXT FIRE-RESCUE CHIEF

Mayor Gloria has selected Deputy Fire-Rescue Chief Robert Logan as the city's next fire chief. Logan, chosen over two external candidates, is a native San Diegan and brings years of experience to the position. Logan’s selection, which requires City Council approval, follows a petition by San Diego firefighters advocating for his appointment. Logan's priorities include solidifying a new ambulance service model and addressing future financial constraints due to the current budget deficit. He also plans to enhance public engagement and make San Diego a hub for fire marshal training. Logan, who has held various roles since starting as an EMT in 1999, emphasizes maintaining high morale, focusing on wellness, and using technology to improve emergency response times. To learn more about Chief Logan, please click HERE.

 

NEW POLICE CHIEF TO RE-ORGANIZE DEPARTMENT

Newly-appointed San Diego Police Chief, Scott Wahl, announced a significant reorganization of the police department citing an ‘outdated structure’. The proposed model would reduce the number of assistant chiefs from nine to five, incorporate more civilian leadership roles, and create eleven new lieutenant and four new captain positions. Civilian roles would include a finance assistant director and two advisory positions for community policing.  To read more, click HERE.

 

SIGNATURE GATHERING BEGINS FOR LA JOLLA INDEPENDENCE MOVEMENT

Proponents behind an effort to make La Jolla an independent city are gathering signatures required by the Local Agency Formation Commission (LAFCO) in order to move forward. The attempted secession stems from La Jolla resident and business owner concerns over a perceived lack of investment in infrastructure and overall dissatisfaction with City of San Diego operations. Previous independence attempts were made in 1995 and 2004; however, both attempts, which required a citywide vote, failed to achieve a majority. Proponents have until December to gather the necessary 6,000 signatures. The signature gathering is a preliminary step in a long line of requirements to secure incorporation as a new city. Additionally, a draft fiscal impact report would need to be completed. LAFCO would also need to vote on the matter as would a general vote of the public, which would include all City of San Diego voters.

 

COUNTY OF SAN DIEGO AND OTHER REGIONAL AGENCIES

 

WATER AUTHORITY TO CONSIDER RATE INCREASE 27

The San Diego County Water Authority (CWA) Board is expected to take action on a wholesale rate increase on June 27.  The CWA provides water to many of the region’s water distributors, including the City of San Diego’s Public Utilities Department, so the rate increase for wholesale water will ultimately drive water rates through member agencies to their business and residential customers.  The proposed increase is dramatic.  In the first year alone, it would be a 19% increase starting in 2025.  It would go a total of 38% over three years.  CWA staff is justifying the increase at the saying that the cost to them has gone up significantly, and water purchases by member agencies has been down after higher than anticipated rain, which has resulted in significant revenue shortfalls.  Those shortfalls have impacted CWA’s ability to pay for bonds for water storage infrastructure that has been approved and built over the years.  BOMA has expressed concern noting the significance of the rate increase and the impacts to tenants and their operations.  For more information, please click HERE and go to page 17 for background materials.

 

COUNTY APPROVES BUDGET

The San Diego County Board of Supervisors approved a $8.53 revised budget, which includes a 4.5% increase from last year. An increase of $22.8 million is expected to be allocated to the District Attorney's Office and Family Justice Center. The Health and Human Services Agency would see an increase of $13.7 million, mainly for a new migrant transition center, partly funded by federal aid. The revised budget can be found HERE.

 

EBONY SHELTON SELECTED AS NEW CAO

San Diego County's top finance official, Ebony Shelton, has been announced as the next Chief Administrative Officer, following weeks of contentious public sentiment after the San Diego Labor Council’s preferred candidate was bounced from consideration. Shelton has been with the county for nearly 20 years and currently serves as Deputy CAO and CFO. As CAO, Shelton will oversee the county’s $8 billion budget and 20,000-strong workforce, labor agreements, and departmental operations. To learn more, please click HERE.

 

UNGAB APPOINTED TO PORT COMMISSION

GilAnthony Ungab, a retired cardiologist and business owner, was unanimously appointed by the National City city council to the Board of Port of Commissioners. Ungab replaces former commissioner, Sandy Naranjo, who was ousted following an internal investigation and Port Board vote. Ungab, a National City native, was immediately seated with the possibility of reappointment for a full term in December. To learn more about GilAnthony, click HERE.