Daily Business Report-Oct. 16, 2017
The new gas tax is expected to allow Caltrans to make major repairs, but Republicans insist that they can lead a taxpayer rebellion. (Photo courtesy of CALmatters)
GOP Alliances Rip Over Gas Tax Repeal:
Anti-Taxers vs. Business Establishment
By Judy Lin | CALmatters
Business groups are threatening to wage a pricey campaign to stop California’s Republican officials from trying to repeal a new state gas tax —warning them not to “create new political adversaries.” But the politicians aren’t flinching.
Eleven GOP members of the state’s congressional delegation, including House Majority Leader Kevin McCarthy, responded that they aren’t as worried about “political threats” as they are about the financial burden the $5.2 billion-a-year gas would place on their constituents. And GOP Assemblyman Travis Allen, who’s running for governor and sponsoring one of the two repeal measures, struck a Trumpian tone, labeling the business groups “special interest thugs.”
Once political allies, Republican incumbents and activists are openly sparring with pro-business groups for backing the transportation package Democratic Gov. Jerry Brown signed earlier this year. Such infighting between traditional conservative interests seems counterproductive for a party with diminished clout — but the GOP has little to lose in California.
With Democrats holding every statewide office and two-thirds majorities of the Legislature, the party of limited government hopes to make gains at the ballot box by repealing key Democratic measures. That’s why Republicans aim to gather enough voter signatures to place one or more gas tax repeal initiatives on the November ballot next year.
The GOP’s goal: rally conservatives and cut across party lines by inciting a taxpayer revolt. Success would boost turnout and improve prospects for Republicans in other races.
“If things continue as is in California politics, I think this is how future elections will look,” said Bill Whalen, a Hoover Institution research fellow at Stanford University and former speechwriter for GOP Gov. Pete Wilson. Currently, just 26 percent of registered voters are Republican, compared to 45 percent Democrats and 25 percent no party preference.
Call it Trumpism or populism, the strategy to run against the political establishment isn’t new, said Thad Kousser, political science professor at University of California, San Diego.
“I think it has a real shot,” he said of the gas tax repeal. “Every so often a proposition galvanizes the attention of voters enough, and if we have $4-a-gallon gas next November, this could be the thing.”
Worried about losing the first gas tax increase in 23 years, business groups such as the Los Angeles County Business Federation and Orange County Business Council joined construction unions and the League of California Cities in sending House Republicans the warning last month.
“With so much at stake,” the letter said, “our organizations will have no option but to mount a robust and powerful effort in opposition to this initiative, using the voices of California’s business community to counter your efforts.”
Because business interests rely on transportation and infrastructure to stay competitive, they’ve collaborated on those issues with state Democrats while simultaneously opposing them to fend off so-called job killer bills that increase labor costs or overburden businesses with regulation. But business’s pragmatism is running afoul of the Republican Party’s increasingly staunch opposition to taxes.
“It’s a clear sign the business community has hitched their wagon to a different party,” Kousser said.
The new gas tax is expected to allow Caltrans to make major repairs, including 17,000 miles of pavement, 500 bridges and 55,000 culverts over the next 10 years. The package will also fund local street and road repairs, as well as dramatically increase public transit funding.
It will do this by raising the base excise gas tax 12 cents per gallon, bringing it to 30 cents, starting Nov. 1. The excise tax on diesel fuel will increase to 36 cents per gallon.
Starting next year, the measure adds an annual vehicle fee ranging from $25 for cars valued at under $5,000 to $175 for cars worth $60,000 or more. Electric car owners will begin paying a $100 annual fee in lieu of gas taxes starting in 2020.
But Republicans insist that they can lead a taxpayer rebellion, and that voters will become disillusioned when they find out none of the money will go toward building additional freeway lanes to reduce congestion.
California GOP Chairman Jim Brulte says the state party will embrace the cause because Democrats pushed through a tax that punishes rural and suburban residents. Assembly Republican Leader Brian Dahle of Bieber said he’s all for a repeal because voters believe their money is being squandered. All but one GOP lawmaker, Sen. Anthony Cannella of Ceres, voted against the bill.
Gas tax supporters say Republicans are simply using the gas tax to raise their own profiles and to drive up conservative turnout in vulnerable districts.
“The critics of the letter are not interested in having a dialogue of fixing California’s transportation problems,” said Michael Quigley, executive director of the California Alliance for Jobs, which represents heavy construction companies and their workers. “They are the ones who are the most opportunistic politically around this issue.”
Former San Diego city councilman turned conservative talk show host Carl DeMaio has been the frontman for one of two repeal efforts. DeMaio — who characterized Sacramento politicians as having Stockholm syndrome because they are easily bullied by the governor and lobbyists — says more than 250,000 people already have pledged online that they will be one of the 585,407 valid signatures needed to qualify the measure. This repeal option is a constitutional amendment that would also prevent any future increases of vehicle and gas taxes without voter approval.
“We’re not waiting for the politicians to provide leadership on this front, from either party,” said DeMaio. “The people don’t want this cost to be added to their family burden and as a result, people are really rising up.”
The irony, of course, is that campaigns to qualify a constitutional amendment require millions of dollars — money that political consultant Dave Gilliard has been working behind the scenes to gather. His clients include Reps. Darrell Issa of Vista, Mimi Walters of Irvine and Dana Rohrabacher of Costa Mesa, who are all being targeted by Democrats next year because they represent districts President Donald Trump lost.
Gilliard would not say who’s funding the initiative or if Issa, a car alarm mogul, would be contributing. He said he expects signature-gathering to begin in mid-November.
GOP consultant Rob Stutzman, who is working with the Fix Our Roads coalition to keep the gas tax in place, said it would be a “strategic mistake” for House Republicans to bankroll a repeal effort.
“There are other issues that can get Republicans to the polls without inciting tens of millions of dollars against you,” Stutzman said.
Gilliard, however, likened the gas tax repeal to Proposition 13, which caps property taxes at 1 percent of assessed value. Back in 1978, government and business groups campaigned against Proposition 13 but backers enjoyed a wave of anti-tax sentiment and spent hardly any money to pass it.
“They’re talking about spending $40 million to defend the tax but I don’t think it matters,” Gilliard said. “Once it’s on the ballot, the gas tax will go down to defeat because people will realize it’s overreaching and doesn’t add capacity to highways or roads.”
Besides DeMaio, another GOP underdog is championing the repeal.
Allen, the assemblyman from Huntington Beach, is leading his own initiative and will need 365,880 valid voter signatures to qualify (a lower threshold because it’s not a constitutional amendment.) He’s also come under scrutiny for soliciting donations for his gubernatorial campaign off his tax repeal website.
So far, the two campaigns show no indication of joining forces. Allen said he’s reached out to DeMaio, but DeMaio said, “I like my initiatives to be airtight and legally defensible.”
Allen scored a legal victory when a judge ruled that Democratic Attorney General Xavier Becerra wrote a flawed and misleading title and summary of the initiative — never once using the words “gas or tax” in the title.
The judge rewrote it to say: “Repeals recently enacted gas and diesel taxes and vehicle registration fees. Eliminates road repair and transportation programs funded by these taxes and fees.”
But in a twist, a poll by Probolsky Research using the judge’s re-write found 54 percent of voters actually supported the gas tax, compared to 35 percent opposed. Slightly more than half of Republicans supported the idea of a tax repeal.
Contrast that with a June poll by the University of California, Berkeley’s Institute of Governmental Studies that described exactly how much more drivers would be paying at the pump. It found 58 percent of voters against the tax.
The GOP hopes to do a “patch test” of its tax repeal strategy via a different kind of recall, this one involving a Southern California lawmaker.
Earlier this year, DeMaio launched a recall drive against newly elected state Sen. Josh Newman of Fullerton, a freshman Democrat who had unexpectedly defeated GOP Assemblywoman Ling Ling Chang last year. DeMaio has said he targeted Newman in a “gazelle strategy,” to take down the most vulnerable Democrat for his support of the gas tax increase. Recalling Newman would likely also deprive Democrats of their supermajority in the Senate.
But the recall election hasn’t been certified because it’s bogged down in a legal fight.
A spokesman for Newman also accused paid signature collectors of deceiving voters into thinking they were supporting a gas tax repeal when they were in fact signing a petition just to recall Newman. “What the Republicans did will not only hurt their credibility with voters, but it will also make it harder for voters to trust what anyone is saying to them,” said Derek Humphrey.
“This is what people hate about politics.”
CALmatters is a nonpartisan, nonprofit journalism venture committed to explaining how California’s state Capitol works and why it matters.
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Sommerset La Costa Sold
Sommerset La Costa, a boutique luxury multifamily development in Carlsbad, has been sold for an undisclosed price to a private investor.
“There is a sparsity of luxury apartment homes in Carlsbad, resulting in a supply-demand imbalance for high-wage earners seeking rental housing in the submarket,” says Christopher Zorbas, senior managing director of Institutional Property Advisros, a division of Marcus & Millichap, which represented the seller.
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Green Homes Tour Set by
San Diego Green Building Council
The San Diego Green Building Council announced that 10 homes will be featured on the Green Homes Tour on Sunday, Oct. 22. This year’s home sites are located in the communities of Golden Hill, South Park, Pacific Beach, Ocean Beach, Encinitas, Solana Beach, Lakeside and Valley Center.
Now in its eighth year, the San Diego Green Homes Tour brings together hundreds of members of the local community to celebrate best practices in green building and design while showcasing the innovative work of some of the industry’s top professionals.
The diverse projects include sustainably constructed or remodeled single-family residences, urban multifamily developments and many projects that are GreenPoint Rated or LEED (Leadership in Energy and Environmental Design) Certified, the top third-party verification system for sustainable structures around the world.
On the self-guided tour (which runs from 10 a.m. to 4 p.m.), attendees may visit as many of the homes as they like, meet with industry professionals and homeowners, and learn more about the latest green home design, construction and upgrade options.
San Diego Green Building Council members are $10 and nonmembers are $15. Students are $5 (with I.D.) and children under 18 are free. Tickets are available now. Click here.
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Scripps Florida Scientists Unveil ‘Roadmap’
to Aid Osteoporosis Treatment Development
Using advanced mass spectrometry technology, scientists from the Florida campus of The Scripps Research Institute have developed a molecular model that may provide a new framework for improving the design of osteoporosis treatments. “Because of our aging population, these kinds of therapeutics are in great demand,” said study leader Patrick R. Griffin, co-chair of the TSRI Department of Molecular Medicine. The research was published in the journal Nature Communications.
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Researcer Awarded $2.5 Million for
Pancreatic Cancer Clinical Trial
Salk Professor and HHMI Investigator Ronald Evans has been awarded $2.5 million by Stand Up To Cancer as part of a multi-institution team to conduct clinical studies to open up a new avenue for immunotherapy in the treatment of pancreatic cancer. While the cancer normally excludes immune T-cells, the Evans lab discovered that modified vitamin D reprograms the cancer environment in a way that may allow the Merck drug Keytruda to invade and destroy the tumor.
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A Robotic Gripper Can Screw in Your Light Bulbs
How many robots does it take to screw in a light bulb? The answer: just one, assuming you’re talking about a new robotic gripper developed by engineers at the University of California San Diego. The engineering team has designed and built a gripper that can pick up and manipulate objects without needing to see them and needing to be trained. The gripper is unique because it brings together three different capabilities. It can twist objects; it can sense objects; and it can build models of the objects it’s manipulating. This allows the gripper to operate in low light and low visibility conditions, for example.
The engineering team, led by Michael T. Tolley, a roboticist at the Jacobs School of Engineering at UC San Diego, presented the gripper at the International Conference on Intelligent Robots and Systems (or IROS) Sept. 24 to 28 in Vancouver, Canada.
