Democratic lawmakers and environmental advocates are urging Gov. Gavin Newsom to support a bond measure to help pay for billions of dollars in climate programs endangered by the state’s record deficit and deepening budget cuts.

The lobbying comes as an array of key climate programs — including efforts to combat rising seas and help low-income Californians buy electric cars — face significant cuts and delays as California seeks to close a $56 billion deficit over the next two fiscal years.

The governor and the Legislature two years ago approved a $54.3 billion spending package for what he called his “California Climate Commitment.” After a round of trims last year, Newsom in January proposed an additional $2.8 billion in cuts, or 7%, this year. Then, earlier this month, he proposed more than doubling that amount by adding another $3.3 billion in funding cuts. In all, that is a 17% reduction, or $9.4 billion, from the 2022 peak.

The governor also has proposed delaying the funding of some of the state’s programs.

For instance, the Clean Cars for All program, which helps lower-income Californians replace their older gas-powered cars, was slated to get $45 million next year, but Newsom has suggested delaying that money until the 2027-28 fiscal year. He will be termed out of office by then. The program received $611 million in one-time funding in the 2021 through 2023 budgets but it has not all been allocated yet.

Climate and public health advocates say cutting or delaying spending on programs that reduce greenhouse gases or help California adapt to climate change will exacerbate natural disasters and weather emergencies and allow air pollution to continue for years to come.

California’s climate spending includes programs to enhance coastal resilience as sea levels rise, prepare for wildfires, ensure water security and develop solar and wind energy projects.

Advocates are raising the alarm about reductions in “resiliency” programs meant to help California adapt to climate change, particularly sea-level rise and extreme heat. The Coastal Conservancy, for instance, is facing $392 million in cuts for various coastal programs, according to a state Assembly committee summary.

“The climate crisis doesn’t take a break for tough budget years,” said David Weiskopf, senior policy advisor for NextGen California, which advocates for environmental and social issues. “Anything we put off for later will only cost us more and run up the bill we will have to pay as the climate crisis worsens.”

The Senate and the Assembly have passed competing measures that would seek voter approval in November for a bond to pay for climate programs. Newsom has not endorsed either of them.

The tough budget choices come after the state budget ballooned with record surpluses after the COVID-19 pandemic, buoyed by an influx of federal spending, a soaring stock market and higher earnings, particularly for high-income Californians.

Newsom saw that windfall as an opportunity to shore up a state reeling from calamitous wildfires, droughts and floods. In 2021 he began setting aside two consecutive years of surplus to combat climate change, but then began cutting back last year.

Now, facing the large deficit, Newsom said he would rather not eliminate or scale back climate programs that he supported. Earlier this month, Newsom said the 83% of the climate funding that he is proposing keeping intact is significant.

“There (are) no material cuts to the climate agenda,” Newsom said during a May 10 press conference. “There was a lot of creativity.”

But environmental advocates disagree, saying that the cuts will affect California’s efforts to fight  the effects of a warming planet.

California is already in danger of failing to meet its ambitious goals unless it almost triples its rate of reducing greenhouse gases through 2030, according to recent analysis. If the state has to scale back programs aimed at reducing emission, those goals may become harder to meet.

“It’s very fair to say we’re slowing down California’s transition to its climate goals and its clean energy goals,” said Barry Vesser, chief operating officer of The Climate Center, an advocacy group. “Unfortunately, as you and I know, physics and chemistry and climate change do not really care about the state’s fiscal condition.”

Facing a June 15 deadline to pass a revised budget, legislators are pressing for a bond measure that would fund some of those programs.

Assemblymember Eduardo Garcia, a Democrat from Coachella and author of the Assembly’s bond bill, AB 1567, said “advancing a climate bond offers a can’t-miss opportunity to alleviate funding disparities while making the investments we need to protect” Californians from climate change. Sen. Ben Allen, a Democrat from El Segundo, author of the Senate’s bond proposal, SB 867, said in a statement that California “urgently needs to invest in solutions to mitigate the worst impacts of climate change.”

At the press conference, Newsom would only say that “we’re maintaining a posture of engagement” on a climate bond.

He said he is wary of another bond measure after suffering a ballot box setback in March, when voters approved his $6.4 billion mental health bond by the slimmest of margins, 50.2% to 49.8%. That experience, Newsom said during his press conference, “sobered, I think, a lot of the conversation up here.”

“The public wants to see results,” the governor told reporters. “They are not interested in inputs, they are not interested to talk about how much money we’re spending.”

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said he was wary of bonds that might pay for climate programs, especially if those programs don’t pan out.

“Are they really going to create those kinds of projects with a long-term benefit?” he asked.

On Wednesday, the state budget committee overseeing climate programs delved into the governor’s proposal in detail. Assemblymember Steve Bennett, a Democrat from Oxford and chair of the committee, said he hopes to avoid some of the reductions. 

“I will continue to fight for maintaining and restoring funding for wildfire preservation, water resilience, sustainable agriculture and environmental justice within the bounds of the budget constraints that we have,” Bennett said. “Given this budget shortfall, and our current fiscal reality, for every dollar we try to restore, we have to cut somewhere else.”

Newsom is increasingly relying on the state’s cap-and-trade program — the market for companies buying and selling greenhouse gas credits — to make good on his previous spending commitments. He is proposing funding $5.2 billion of his climate agenda from cap and trade’s Greenhouse Gas Reduction Fund.

Environmental justice advocates oppose the cap and trade program because it allows pollution from some facilities to continue, largely in the state’s poorest communities. 

The Lung Association recently identified California as home to six of the 10 smoggiest cities in the country. Vehicles are the primary source of the state’s smog, and delays in the funding of low-emission programs such as the clean car rebates will undermine the state’s efforts to clean the air, said Will Barrett, a senior director with the American Lung Association.

“These are programs intended to reduce harmful pollution,” Barrett said. “To the extent that these resources are taken away from those purposes, that’s obviously concerning.”

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

California will fail to meet its ambitious mandates for combating climate change unless the state almost triples its rate of reducing greenhouse gases through 2030, according to a new analysis.

After dropping during the pandemic, California’s emissions of carbon dioxide, methane and other climate-warming gases increased 3.4% in 2021, when the economy rebounded. The increase puts California further away from reaching its target mandated under state law: emitting 40% less in 2030 than in 1990 — a feat that will become more expensive and more difficult as time passes, the report’s authors told CalMatters.

“The fact that they need to increase the speed of reduction at about three times faster than they’re actually doing — that does not bode well,” said Stafford Nichols, a researcher at Beacon Economics, a Los Angeles-based economics research firm, and a co-author of the annual California Green Innovation Index released Thursday.

“As we get closer to that 2030 goal, the fact that we’re further off just means that we have to decrease faster each year.”

The state is even further away from meeting a more aggressive goal set by the Air Resources Board in the state’s new climate blueprint. Under that plan, greenhouse gases must be cut 48% below 1990 levels by 2030. Gov. Gavin Newsom had urged the board to adopt the more difficult goal, calling the new scoping plan the “most ambitious set of climate goals of any jurisdiction in the world.”

David Clegern, an air board spokesman, said in an emailed statement to CalMatters that state officials are confident that California will hit its targets, including its goal of carbon neutrality by 2045.

Clegern said the state is in the midst of updating its climate programs and strengthening regulations, which, he said, “takes time” because they have to “translate into projects and action in the real world.” 

“It is more important than ever to transition existing facilities, and build clean energy infrastructure,” Clegern said. “This decade is critical for implementation of the state’s plans and policies. ” He added, “as we have stated for more than 10 years, California’s climate plans will continue to adjust to what remains a developing threat.”

Greenhouse gases are spewed by an array of sources, mostly from vehicles, industries and power plants that burn fossil fuels, but also from livestock, landfills and other sources.

The report, compiled by Beacon Economics and environmental nonprofit Next 10, analyzed state data and concluded that through 2030, California would have to cut all greenhouse gases by 4.4% every year, beginning back in 2022. (Only preliminary data is available for 2022.) 

To put that challenge in perspective, the state has only achieved annual cuts of more than 4% twice over the last two decades, both during major recessions, in 2009 and 2020, according to Stephanie Leonard, director of research for Next 10. And from 2016 through 2021, the annual average reduction has been just 1.6%, according to the report.

Massive amounts of emissions — more than 100 million metric tons a year — will have to be eliminated for California to meet the mandate. The state couldn’t spew more than about 258 million metric tons of carbon dioxide equivalent emissions in 2030, compared to 2021’s 381 million, according to the report.

Liane Randolph, chair of the California Air Resources Board, told the state Legislature’s joint committee on climate change policies on Monday that there is little room for error in the years ahead.

“The challenge is that we need all of our programs to be effective and reduce emissions as laid out in the scoping plan,” Randolph said. “We need each program to perform as well as or better than identified in the scoping plan in order to achieve our goals.”

Power Plants and Cement Are Major Emitters

California already has made substantial progress cleaning up cars and trucks. It has the world’s strictest emissions controls on vehicles, including a regulation that phases out new sales of gasoline-powered cars by 2035. Last year, electric vehicle sales were up 29%, though they slowed at year’s end.

But electricity generation was responsible for some of the biggest increases in emissions between 2020 and 2021, a 6.7% increase for imported electric power and 3.9% for in-state power, the report found.

That’s because California’s drought resulted in less hydroelectric power and more reliance on natural gas to avoid power shortages, according to Leonard. In 2020, the state faced its first non-wildfire rolling blackouts in nearly two decades after record-breaking heat. Last year, the state extended operations at three natural gas plants along the Southern California coast to shore up California’s straining power grid.

Natural gas plants are the largest source of greenhouse gases among California’s in-state producers of electricity. California has a law mandating zero-carbon, all-renewable electricity by 2045 but it has a long way to go: About 42% of power generated in the state came from natural gas in 2022.

The report also highlighted cement facilities, saying California has some of the planet’s most polluting cement plants. As more housing is built and more cement is produced, the authors recommended “urgent action” to cut those emissions.

California’s seven cement plants emit about 7.5 million metric tons of greenhouse gases per year, according to the air board, which has a working group aimed at decarbonizing the industry. Some factories are turning to low-carbon fuels, including the burning of tires.

Carbon capture and storage technology also may be used at cement plants because they are so difficult to decarbonize. These facilities capture emissions from industrial plants, then inject them underground.

“California’s cement plants are an example of the challenge. Our cement is more carbon-intensive because we have older plants,” said Clegern of the air board.

​​Wildfires were another large emitter of carbon dioxide, methane and other greenhouse gases in 2021.

On an optimistic note, the report acknowledged that California has some of the lowest per-capita emissions in the U.S., and is the third-most carbon-efficient state, following New York and Massachusetts. However, many of the easiest and least costly steps have already been implemented. So finding room for future reductions will be more challenging in coming years.

“The state has shown that it is possible to grow the economy, while lowering emissions,” the California Green Innovation Index says. “It will take more action, time and resources to further decarbonize the economy, but the last couple decades offer hope.”

The new analysis is the most recent example of an outside entity warning that California’s climate goals face major hurdles. The state’s Legislative Analyst’s Office said last year that California lacked a “clear strategy” for meeting its 2030 targets. 

Also, last month, the state’s advisory committee for its controversial cap and trade market noted that the state was not on track to meet 2030 targets. Cap and trade is the state’s market that allows companies to buy and trade credits for reducing greenhouse gases.

“Too often the fact of California’s historical accomplishments is cited as evidence that state policy is on track, when often the pace of change going forward falls well short of what is required to meet the state’s next climate targets,” Danny Cullenward, an economist and vice chair of the Independent Emissions Market Advisory Committee told CalMatters.

“Unfortunately,” he said, “the state is not on track for its 2030 climate target.”

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. 

In a step toward building the first massive wind farms off California’s coast, three Assemblymembers this week proposed a $1 billion bond act to help pay for the expansion of ports.

The bill, if approved, would place a bond before voters aimed at helping ports build capacity to assemble, construct and transport wind turbines and other large equipment. Long Beach and Humboldt County have plans to build such expansion projects. 

Port expansion is considered critical to the viability of offshore wind projects, which are a key component of the state’s ambitious goal to switch to 100% clean energy. The California Energy Commission projects that offshore wind farms will supply 25 gigawatts of electricity by 2045, powering 25 million homes and providing about 13% of the power supply.

The first step to building these giant floating platforms has already been taken: The federal government has leased 583 square miles of ocean waters about 20 miles off Humboldt Bay and the Central Coast’s Morro Bay to five energy companies. The proposed wind farms would hold hundreds of giant turbines, each as tall as a skyscraper, about 900 feet high. The technology for floating wind farms has never been used in such deep waters, far off the coast.

An extensive network of offshore and onshore development would be necessary. Costly upgrades to ports will be critical, along with undersea transmission lines, new electrical distribution networks and more. 

The Port of Long Beach, for instance, is planning Pier Wind, a $4.7 billion, 400-acre offshore wind turbine assembly terminal. One of the largest and busiest ports in the nation, it is the only location in California close to being able to assemble and deploy turbines, according to previous CalMatters reporting.

In Humboldt County, some federal grants have been awarded to develop its small port for wind farms. The federal Department of Transportation last month awarded the Humboldt Bay harbor district  $426.7 million to build a new marine terminal where turbines can be assembled and transported.

The proposed bond measure was announced today by Rick Chavez Zbur, a Democrat from Los Angeles, as well as other members of the Assembly. Jim Wood, a Democrat from Ukiah, and Josh Lowenthal, a Democrat from Long Beach, are coauthors.

Two separate climate bond bills also aim to pay for climate-related projects, such as shoring up vulnerable communities and wildfire prevention efforts. Each house has passed its own version of a bond. Negotiations over whether they will appear on the November ballot remain open.

The debate over adding debt comes as California faces a projected $38 billion deficit, according to Gov. Gavin Newsom’s estimate last month.

Zbur, the lead author of AB 2208, the offshore wind bond bill, said at a press conference today that he is in talks with legislators who authored  the climate bonds about earmarking funds for offshore wind in lieu of moving ahead with his proposed bond measure.

“We are engaged with discussions with them on that, and that would be another alternative to moving forward,” Zbur said. “Our goal today is really to make sure that this $1 billion is included in the range of bonds.”

CalMatters has reported that offshore wind has raised many issues for California since it is experimental technology on a fast track off Humboldt County and Morro Bay. Humboldt officials hope the projects would boost their struggling economy, while some Central Coast residents are fighting the wind farms because they say it would industrialize their coastline.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. 

Three years ago, Gov. Gavin Newsom sensed an opportunity as California emerged from the pandemic with record budget surpluses after a series of calamitous wildfires and drought years.

The governor set aside a bigger chunk of the surplus billions for two consecutive years to combat climate change — an issue close to the heart of many Democratic voters — and then, facing deficits, had to cut it back last year, to $52.3 billion.

But last week, Newsom proposed scaling climate funding back by about 7% compared to last year’s budget, to $48.3 billion, while spreading that money out over seven years, up from six last year. The cuts, unveiled in the first draft of his new budget, follow last year’s 3% cut to climate programs, and triggered criticism from environmental groups.

California programs to tackle and adapt to the changing climate include a vast array of programs, including subsidies for electric cars, funds for making the coast more resilient, programs to prepare for wildfires and secure water supplies, and efforts to build solar and wind projects.

Newsom’s proposal offers a look at how viable the state’s commitments to tackling climate change will be as the state’s historic surpluses turn to deficits. Newsom, in a budget presentation in Sacramento, detailed a preliminary budget meant to fill what his administration said was a huge, $37.9 billion projected statewide budget hole.

Newsom said some of the climate cuts would be buttressed by more than $10 billion in federal money from the Biden administration. He said his budget still included “unprecedented commitments on climate that actually will grow because of the support of the federal government.”

The governor’s proposal delayed $600 million in spending on zero emission cars and trucks by three years, including to the electric car rebate program, the Clean Cars 4 All program aimed at getting more lower-income Californians to purchase zero emissions cars. Also delayed by three years is money to build charging stations. An ambitious transition to electric cars is considered critical to meeting the state’s zero-carbon mandate to slash climate-warming greenhouse gases.

“These delays suggest a bumpy road ahead for an equitable ZEV transition amid a deficit,” Jamie Pew, climate policy advisor with the nonprofit group NextGen, wrote in an email to CalMatters.

The governor’s proposal is the first step in a months-long negotiation with the Legislature that will include his revised plan in May and a June 15 legislative deadline. 

Lauren Sanchez, the governor’s senior climate advisor, called the state’s $48.3 billion climate budget “a world-leading figure that exceeds many nations’” investments.

“In the face of a $37.9 billion budget deficit, the governor’s budget protects 89% of our original $54 billion climate budget,” she said. “The year ahead will be crucial, and our climate commitment will continue to make the state resilient.”

But climate groups criticized Newsom’s proposal, saying cutting back on state spending now would cost the state more down the line.

“We can’t backslide or slow down while the climate crisis speeds up. We need our state leadership to do more, not less,” said Mary Creasman, chief executive of California Environmental Voters in a statement. “We look forward to working with the governor and Legislature to make 2024 a year of innovative and courageous climate leadership.”

Newsom’s proposal included $2.9 billion in climate program cuts, $1.9 billion in spending delays and $1.8 billion shifts in funding from spending general fund dollars to other sources of revenue.

Most of the shift will be made to the state’s Greenhouse Gas Reduction Fund, which is paid for by the controversial cap-and-trade carbon market, in which oil refineries, power plants and manufacturers pay for their excess carbon dioxide emissions. Last quarter’s auction brought in $1.4 billion.

The plan pauses spending on staff costs to implement two climate laws signed last year that required large corporations to disclose greenhouse gas emissions and financial risks from climate change. Newsom, when he signed the bills last year, said he might seek delays in their implementation.

Out of a $10 billion package to encourage adoption of zero emission cars and trucks, the governor proposed $38.1 million in cuts and replaced $475.3 million in general fund dollars with money from the greenhouse gas fund.

Yana Garcia, Newsom’s secretary for environmental protection, said in a press conference that “we’re moving swiftly to meet and surpass California’s ambitious climate goals,” pointing to the state achieving its clean car and truck goals two years ahead of schedule.

Last year, Newsom left funds for the transition to electric vehicles largely in place, though he made $910 million meant for zero emissions transit available to support public transit agencies.

Newsom’s transportation secretary, Toks Omishakin, said that “while the budget proposal for transportation contains significant funding shifts and delays, we’re able to maintain roughly 99% of funding in the governor’s historic clean transportation infrastructure package.”

Cuts to Coastal, Water Programs, Too

This year’s proposal also would make some cuts and delays in clean energy, as well as wildfire and forest resilience, water recycling and other programs. The 2021 and 2022 budgets included $2.8 billion for forest and wildfire resilience; the new proposal maintains $2.7 billion of that over five years.

Funding for coastal resilience programs was cut in half, from $1.3 billion to $660 million, reducing money set aside to protect communities and infrastructure against sea level rise, coastal protection work and the state’s Ocean Protection Council budget for safeguarding coastal waters.

While noting the cuts, Resource Secretary Wade Crowfoot told reporters that funds for assisting local communities in preparing sea level rise planning documents remained intact.

Mark Gold, formerly Newsom’s deputy secretary for oceans and coastal policy, said it was a bad day for climate programs.

“Coastal funding got devastated,” said Gold, who is now with the environmental group Natural Resources Defense Council. “We talk about how important it is for California to be a global climate leader, but the budget does not back up those statements at all, especially when it comes to the coast.”

Organizations that advocate for water safety and affordability applauded Newsom for preserving funding for drinking water programs, but raised concerns about his proposal to cut more than $100 million from a program aimed at addressing forever chemical contamination, which have been linked to serious health effects. 

Water recycling, too, would see cuts under Newsom’s proposal, despite his emphasis on water recycling in his August 2022 strategy to bolster the state’s water supply for a hotter, drier future. 

Though Newsom called for keeping $348 million previously set aside for water recycling and groundwater cleanup, he proposed returning about $174.4 million of unspent money to the general fund and delaying another $100 million until the budget year beginning July 2025.

This follows a $278 million cut for water recycling and groundwater cleanup in the 2023–2024 spending plan, as well.

Rachel Ehlers, a deputy legislative analyst covering environment and transportation, said one critical question will be how quickly programs are using the money they have received.

“How are we doing on getting that money out the door? On getting it in the hands of consumers looking to buy vehicles? To entities who are building the charging infrastructure?” she said. “And how quickly are we spending that money? … That’s going to be a key question.”

Many activists were bracing for what Newsom’s announcement might mean for the state’s ability to finance California’s clean energy transition.

“We’re disappointed in the proposed cuts to the state’s clean car, truck and bus programs and to rooftop solar power and storage incentives, especially as rooftop solar installations stall,” Environment California State Director Laura Deehan said in a statement. “Clean energy and climate programs are investments we make for our kids and grandkids. If we cut now, they pay more later in health, and in their environment as well as money.

CalMatters reporters Julie Cart and Rachel Becker contributed to this story.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. 

California’s funding from gas taxes will drop by nearly $6 billion in the next decade due to the state’s electric car rules and other climate programs, “likely resulting in a decline in highway conditions for drivers,” according to a new state analysis.

As California phases in major policies aimed at reducing greenhouse gas emissions — such as the mandates for zero-emission cars and trucks — consumers buy less gasoline and diesel, and consequently pay less taxes.

Those declines in tax dollars will be partially offset by the state’s road improvement fee, which drivers pay when they register their electric cars. But the Legislative Analyst’s Office stressed that overall the state will still see a $4.4 billion drop in funding, a 31% decline, over a decade, so the Legislature and governor must come up with substantial new funding sources.

Unless the drop is accounted for with new fees or other funding, there would be substantially less money for highway programs as well as local road maintenance, the analysts wrote. Work supporting buses, trains and other public transit options across the state also would face drops in funding.

“As the state tries to meet its ambitious climate goals through the adoption of zero emission vehicles, and greater fuel efficiency within conventional vehicles, the report finds that we’ll see a decline in fuel tax revenues,” said Frank Jimenez, a senior fiscal and policy analyst with the office. 

Fuel taxes and vehicle fees fund about a third of state spending on transportation. This year’s budget, passed in June, includes about $14.2 billion in state funding for transportation. 

The report projects declines of $5 billion, or 64%, in the state’s gasoline excise tax, $290 million, or 20%, in the diesel excise tax and $420 million, or 20%, in the diesel sales tax, over the next decade.

Highway maintenance is funded primarily by the fuel taxes “and therefore will face significant funding declines,” the report says. “…We project funding for these programs will drop by roughly $1.5 billion (26 percent) over the next decade, from $5.7 billion to $4.2 billion.”

The state’s transportation agency, Caltrans, declined to comment. “Caltrans is reviewing the report but does not comment on potential legislative proposals,” a spokesperson said.

Lawmakers could make up for the shortfalls in many of these programs by spending less on transportation, but that would likely mean worsening roads and highways, and also some public mass transit cuts. They might also consider further increasing gas taxes or vehicle fees. But that might have an outsized impact on the state’s lower-income communities, who are expected to adopt zero-emission vehicles more slowly as middle- or higher-income Californians.

Lawmakers also could consider using other state funds for transportation or implementing a road charge, which would tax people based on the number of miles they drive. 

The report comes as California is bracing for a projected $68 billion budget deficit next year. Gov. Gavin Newsom’s Finance Department on Tuesday ordered departments and agencies across government to reign in spending on everything from travel to office supplies.

California aims to reduce its greenhouse gas emissions by 85% below 1990 levels by 2045, when the state is expected to reach a statewide goal of net zero emissions. One of the most prominent ways the state is doing that is by banning the sale of all new gas-powered cars by 2035.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. 

Gov. Gavin Newsom said Sunday he will sign a closely-watched, first-in-the-nation bill that would force large companies to disclose their annual emissions of greenhouse gases that contribute to climate change.

Senate Bill 253 was passed by the legislature on Tuesday, and Newsom announced his decision to sign it at the opening ceremony of Climate Week NYC.

In the final weeks of California’s legislative session, business groups, growers and oil companies intensely lobbied lawmakers to reject the legislation, calling it unworkable and likely to lead to inaccurate reports of emissions. Environmental groups, big tech companies Apple, Google, Microsoft and Salesforce, and some global corporations that emphasize sustainability, including IKEA, support it.

If the bill becomes law, about 5,300 U.S. corporations earning more than $1 billion and doing business in California would be required to annually report their global emissions of carbon dioxide and other planet-warming gases.

Any company that meets the revenue threshold and sells or produces goods or services in California would have to comply, including such large, global corporations as varied as Amazon, Chevron, McDonalds, Kroger and Walmart.

Businesses would have to report not only the tons of gases they emit globally from all of their own global operations and energy use, but also from less-direct sources, such as their supply chains, contractors and even consumers’ use of their products.

These indirect sources, called “Scope 3” emissions, have raised the concerns of business groups. Business groups said the estimates could be inaccurate, resulting in misguided public policy, while putting an onerous burden on companies.

In response last week, Sen. Scott Wiener, a Democrat from San Francisco, amended his bill to give the companies until 2030 before fines for inaccurately reporting emissions from those less-direct sources would kick in. The companies will still have to report emissions from their operations and their energy use beginning in 2026. But the reports of emissions from suppliers and consumers wouldn’t begin until 2027 — and the companies won’t be penalized for inaccurate reports for the first few years. 

Under the bill, the emissions disclosures would have to be independently verified by an outside consultant, “an independent third-party assurance provider.”

The aim of the legislation is to hold large companies accountable for the role they play in climate change. For years, many businesses have marketed themselves as environmental stewards while failing to fully disclose their emissions.

Increased corporate transparency on emissions could lead to highly publicized “top polluters” lists that make major corporations more accountable — and uncomfortable — since their full role in causing climate change would be exposed. 

The bill passed off the Assembly floor on Monday with an initial vote of 41-20, then cleared the Senate in a final, 27-8 vote Tuesday. Last year, a similar bill failed in the state Assembly on the last night of the legislative session.

“These disclosures are simple but transformational, which is why companies like Apple are already reporting their emissions and calling them essential to their corporate climate goals,” state Wiener. “We need strong transparency to create a level playing field among private and public companies. Once again, California is leading the nation on essential climate action.”

Economic activity has long been the principal driver of the world’s changing climate, and for the last two decades, organizations have sought uniform standards for reporting corporations’ greenhouse gas emissions. 

The United Kingdom already requires companies to report emissions, and the European Union will begin requiring the reports in 2025.

Meanwhile the Biden administration’s U.S. Securities and Exchange Commission has proposed a rule that would require publicly traded companies to report verified greenhouse gas emissions and climate-related financial risks.

But the federal efforts — which do not include private companies — have met fierce opposition from business groups. Of the 5,300 U.S. corporations that would have to report their emissions under California’s bill, about 73% are privately held companies, according to sustainability group Ceres.

“In California, we would be leading the way with a gold standard that in a lot of ways would do the work that can’t happen for all kinds of reasons in D.C. right now,” said Catherine Atkin, a climate attorney who formed the group Carbon Accountable to advocate for the bill.

Opposition came from the California Chamber of Commerce and consortiums of large and powerful industry groups: the Western States Petroleum Association, which represents oil companies, the Western Growers Association and and the Securities Industry and Financial Markets Association, which represents stockbrokers and investment bankers. 

CalChamber lobbyist Brady Van Engelen declined to comment on the lawmakers’ vote today.

“Companies are going to have to start communicating not on the fact that they are carbon neutral — which usually didn’t mean anything — but that they are on the path to reduction,” said Alexis Normand, chief executive of Greenly, a carbon accounting start-up.

“You’re going to start being judged on the pathway,” he said, “so that’s a big change.” 

Another corporate responsibility bill was approved by the Legislature Wednesday night and sent to Newsom’s desk. It would require more than 10,000 companies with revenues exceeding $500 million to detail how climate change poses financial risks to their operations, not just in California, but around the world.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

Wildfires and climate change are locked in a vicious circle: Fires worsen climate change, and climate change worsens fires.

Scientists, including those at the World Resources Institute, have been increasingly sounding the alarm about this feedback loop, warning that fires don’t burn in isolation — they produce greenhouse gases that, in turn, create warmer and drier conditions that ignite more frequent and intense fires. 

Last week, wildfire smoke prompted another round of unhealthy air quality in California. Fires in Oregon and Northern California sent smoke into Sacramento and the San Francisco Bay Area.

And it’s a global nightmare: This summer, world temperatures hit an all-time high, the worst U.S. wildfire in more than a century devastated Maui, a deadly fire in Greece was declared Europe’s largest ever, and swaths of the Midwest and Northeast have been blanketed by smoke from Canada’s forest fires. 

As California’s most intense wildfire months approach, the volume of greenhouse gases they emit is expected to grow.

A bill by Assemblymember Bill Essayli, a Republican from Riverside, introduced this year would have required the state to count wildfire emissions in its efforts to reduce statewide greenhouse gases. But the bill didn’t get far: It was defeated in committee.

Here are answers to some of the key questions raised by the symbiotic relationship between wildfires and climate change:

What’s Happening to Carbon Emissions? 

Scientists around the world are trying to quantify just how much wildfires contribute to climate change.

Last year, California wildfires sent an estimated 9 million metric tons of carbon dioxide into the atmosphere, according to California Air Resources Board estimates. That’s equivalent to the emissions of about 1.9 million cars in a year.

In 2020, California’s wildfires were its second-largest source of greenhouse gases, after transportation, according to a study published last year. The researchers from UCLA and the University of Chicago concluded that the 2020 wildfires increased overall emissions by about 30%.

When forests burn, carbon dioxide and other greenhouse gases are released into the air. It’s considered part of a natural cycle, with plants absorbing and then releasing the chemicals into the air over time. But experts say the increasing frequency of fires might be throwing this cycle out of balance.

Emissions this year from Canada’s forests have shattered records, according to the European Union’s Copernicus Atmosphere Monitoring Service. Last year, carbon dioxide from boreal forests — the world’s northernmost forests, which span vast swaths of Canada and Alaska — hit a record high, UC Irvine researchers reported in the journal Science.

Fires in these northern latitudes are of deep concern to researchers, as those forests historically were too cold to experience significant burns. They are incredibly dense, and emit methane from the permafrost that lies beneath them.

“These are forests that haven’t burned, not just in decades but probably centuries,” said Char Miller, an environmental professor at Pomona College in Claremont. “Where does that carbon go? It goes up into the atmosphere, it circles all around the globe, it’s affecting all of us. It’s both symbolic and I think really significant. The coldest part of the planet is also exploding in fire.”

In addition, wildfires emit methane, which is a much more potent greenhouse gas than carbon dioxide, according to a study published earlier this summer.

Will Wildfires Disrupt California’s Climate Goals?

Researchers are increasingly calling attention to how forest fires might be eroding the state’s climate goals, with UCLA scientists describing the state’s efforts as “up in smoke.”

Michael Jerrett, a professor at the UCLA Fielding School of Public Health, said nearly two decades worth of emission reductions from power plants were threatened by the 2020 fires, which included some of California’s largest and most destructive fires.

“Essentially, the positive impact of all that hard work over almost two decades is at risk of being swept aside by the smoke produced in a single year of record-breaking wildfires,” Jerrett said in a statement.

Some experts say carbon emissions from wildfires are not much of a concern — that the carbon captured by trees, brush and grasses already existed in the atmosphere so its release during fires is part of a natural cycle. As a result, they say, those emissions shouldn’t be considered net contributors to climate change.

“These are distractions from the real issue which is that we need to generate a lot more renewable energy to displace our use of fossil fuels,” Anthony Wexler, director of the Air Quality Research Center at UC Davis, wrote to CalMatters in an email.

On the other hand, some experts say carbon is carbon — and that it all contributes to climate change. Jerrett and the other authors of the UCLA report said wildfire emissions should be a bigger part of California’s climate policy.

For its part, the California Air Resources Board estimates emissions from wildfires, but it doesn’t count them against greenhouse gas targets for 2030. The targets are based only on gases produced by industries, energy, transportation and other human sources. 

Last year, Gov. Gavin Newsom signed into law a requirement that the state achieve net-zero emissions as quickly as possible, no later than 2045. That mandate means the state will have to ultimately consider the roles of natural and working lands, said David Clegern, an air board spokesman. However, some wildfires are “part of the natural cycle and should not count against targets,” Clegern wrote in an email.

Clegern said “it’s difficult to know” how much carbon from wildfires “might reduce the effectiveness of the state’s climate programs.”

“That’s because to a certain extent wildfire smoke is part of a natural carbon cycle…We cannot yet draw a bright line to accurately measure that impact,” he said.

Instead, he said scaling back fossil fuels has to be California’s priority. 

“California is working on reducing wildfire in an all-hands-on-deck manner, but we won’t really fix the problem until we quit pumping more fossil fuel emissions into the atmosphere,” Clegern said.

How Is California Dealing with Carbon from Fires? 

State officials say restoring the health of forests and taking steps to make sure they are more resilient to fires will result in fewer wildfires and fewer climate-changing emissions. 

Air board models project that natural and working lands — forests, rangelands, urban green spaces, wetlands and farms — will be a net source of emissions through 2045, while at the same time these lands will experience a decrease in the trees, shrubbery, soil and other natural features that naturally sequester carbon.

That’s why the proper management of these undeveloped lands will be important in the coming two decades. More than half of California’s forestland is managed by the federal government, and the Newsom administration announced in 2021 that it was working with the Biden administration to better manage forests and build fire resilience.

“These lands can be part of the climate solution, but we need to increase our efforts to reduce their emissions and improve their ability to store carbon into the future,” Clegern said. 

Burning forests might be complicating the state’s climate goals in other ways, too. California’s carbon offset market has been threatened by out-of-state wildfires, the online publication Grist reported, because the state awards credits to companies that maintain forests elsewhere to store carbon.

What About the Health Impact of Smog and Soot?

Wildfire smoke is toxic, containing substances such as carbon monoxide and benzene, a carcinogen. Smoke’s tiny particles of soot are considered its most hazardous ingredient, since they can enter airways, lodge in lungs and trigger asthma or heart attacks. Local air quality districts regularly send out warnings in California when wildfires spread smoke, sometimes hundreds of miles from the fires.

Smoke may be negating some of California’s hard-fought clean-air gains. A report last year by the Energy Policy Institute of Chicago found that some California counties were more polluted than they were in 1970. In 2020, more than half of California counties experienced their worst air pollution since 1998, according to the report.

California’s air quality agencies do not have to consider wildfire smoke when they outline plans to attain health standards for air pollutants, such as fine particles and ozone. That’s because fires are considered “exceptional events” under the federal Clean Air Act.

“Even though the frequency of wildfires is increasing, we have no reason to believe that (U.S.) EPA will change how wildfire emissions are treated under the exceptional events process,” Clegern said.

Meanwhile, concern about the impact of smoke on communities is growing. Nitrogen oxides, which form smog, appear to be increasing in rural areas — largely due to wildfires, according to a recent UC Davis study.

“If you go to these remote forests — which are predominantly in the north and the Sierras in the south — what you find is that there’s this large increase,” said study co-author Ian Faloona, a UC Davis bio-micro-meteorologist.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

A new study of Silicon Valley’s wealth, income and other economic measures shows vast disparities in one of the country’s wealthiest regions, with the top 10% of households holding 66% of the investable assets in the region last year.

In Santa Clara and San Mateo counties, just eight households held more wealth than the bottom 50% (nearly half a million households), according to the Silicon Valley Index, an annual report by the Silicon Valley Institute for Regional Studies, the research arm of Joint Venture Silicon Valley.

“We live in a capitalist system that is based on markets,” said Russell Hancock, chief executive of the San Jose-based think tank. “There’s rules to the game; the rules are fair. In Silicon Valley, we have some of the world’s biggest winners.”

Hancock added that the report highlights the need for more investments in education and “equipping people for success.”

The institute defines Silicon Valley as Santa Clara and San Mateo counties, as well as parts of Santa Cruz and southern Alameda counties. The think tank also includes San Francisco in some of its metrics. The report focused solely on data from Santa Clara and San Mateo counties for its wealth analyses.

Wealth inequality in Silicon Valley is more pronounced than in the U.S. overall, or globally, with the top 1% of households holding 48 times more of the total wealth than the bottom 50%, according to the report. That compares to 23 times nationally and globally, the report said.

Ultra Rich

The report estimates Silicon Valley’s aggregate household wealth is nearly $1.1 trillion, when it counts ultra high net worth individuals.

The report marks the first time the think tank published wealth estimates that include data on these ultra high net worth individuals, who the institute defined as those with net investable assets of $30 million or more.  

Such assets are those that are held in cash, or can easily and quickly be converted into cash, including checking accounts, certificates of deposits and retirement accounts. The group did not count houses, cars or other non-liquid financial holdings as investable assets.

Santa Clara and San Mateo counties had 163,000 millionaire households in 2022, which the report defined as households that had more than $1 million in investable assets. That translates to less than 1% of the region’s population holding about 36% of its wealth.

And an estimated 8,300 households held more than $10 million in investable assets, according to the report.

Conversely there were about 220,000 Silicon Valley households with fewer than $5,000 in total assets. 

About 23% of Silicon Valley residents lived below the poverty threshold in 2021, a 3 percentage point increase from 2019. Two percent of Silicon Valley households, or about 22,000 households, did not hold bank accounts.

The report also noted that while income inequality was lessening statewide, down 1%, as well as nationally, down 3%, income inequality rose in Silicon Valley by 5% in 2021. Generally, the pace of income inequality growth since the 2009 recession has been twice that of the nation, the report said.

The disparities in Silicon Valley began in earnest in the 1990s, when the internet economy first took off, and grew more pronounced after 2010, following the Great Recession. The first two years of the pandemic exacerbated the inequality, the report said.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

Back in 2021, when mortgage interest rates were plumbing all time-lows, Caitlyn O’Connell and her fiance nearly closed on a home in San Luis Obispo.

They backed out of the deal after discovering major issues with mold, she said. Over the course of the next year, the cost of a typical mortgage payment in California increased by as much as 56% in some markets, according to housing data firm Zillow. 

O’Connell feared she and her now-husband were locked out of homeownership forever. This year they abandoned their search.

“If we stay in California, we will have to be renters,” said O’Connell, who lives in Los Angeles’ Venice Beach neighborhood. “I don’t know, it really just feels like we’re stuck.”

Tens of thousands of California first-time home buyers saw their homeownership ambitions fail last year as mortgage interest rates doubled after the Federal Reserve began its inflation-fighting campaign last summer.

While the frenzied bidding wars that have defined parts of the state’s housing markets for more than a decade may have subsided, the monthly costs of a mortgage have left the state’s market more unaffordable than at any point in the last decade, particularly for lower- and middle-class families.

In December, the state’s median home price dropped to $774,580, according to the California Association of Realtors, a 2.8% annual decline likely not significant enough to make a meaningful contribution to housing affordability.

The prospect of higher monthly mortgage payments means many sellers can’t afford to trade-up, agents and economists said, resulting in too few economically priced homes. The situation is a considerable change from the last housing downturn, which began in 2007, when home foreclosures and other distressed sellers triggered big price declines and opened a rare affordability window that has long since slammed shut.

These days California’s housing market is characterized by both high prices and much higher mortgage interest rates than buyers and sellers are accustomed to.

“There’s this crisis of confidence,” said Selma Hepp, chief economist at housing data firm CoreLogic. “Sellers don’t want to give up the price that they thought they were going to get, or had in mind, and they also have locked in mortgage rates that are incredibly cheap.”

Nine months into 2022, only 18% of households could afford the state’s median priced home, the California Association of Realtors reported. And the estimated minimum annual household income needed to buy a median priced home increased from $148,400 to $192,800 over that time period.

“In 2023, it’s gonna be tough for first-time buyers, because of higher interest rates, because of tighter supply, and also because of the fact that there might be some uncertainty in the economy,” said Oscar Wei, deputy chief economist at the Realtors group.

Wei estimated the increase in annual mortgage interest rates from 2021 to 2022 meant that more than 30,000 likely homebuyers in the state were cut out of the market, or needed to find a bigger down payment in order to afford a home. Orphe Divounguy, a senior economist with Zillow, estimated as many as 400,000 Californian renters who may have made enough income to qualify for a mortgage in 2021 were potentially locked out because of the increase in mortgage interest rates.

Mortgage payments increased year-over-year by 43% in San Francisco and 56.5% in Bakersfield, Divounguy said. Dianna Silva, a Concord-based real estate agent, has witnessed the change first hand with many of the first-time buyers she works with.

“Every time that there’s been that jump, there have been some people that have been taken out,” Silva said. “It has been devastating for some of them.” 

California’s increasingly impenetrable housing market is a top concern among voters and residents. A January poll from the Public Policy Institute of California found that nearly 90% of adults and likely voters in the state were concerned the state’s costly housing would prevent younger generations from buying a home in the state.

The economic woes of the pandemic have added another layer of uncertainty. Fewer than 56% of Californians live in homes they or their families own, the second lowest rate of any state and just slightly higher than New York. On Tuesday, state officials said they were expanding who was eligible for the pandemic-era California Mortgage Relief Program, a $1 billion program designed to help people who already own a home. The program was created in 2021 using federal dollars from the American Rescue Act.

Helping California’s first-time home buyers was a top priority for state lawmakers last year, when Senate President Pro Tem Toni Atkins, a San Diego Democrat, backed creation of a $1-billion-a-year down payment program for people looking to buy their first house. The California Dream For All program received $500 million in initial funding last year, spread out over two years. But faced with a projected budget shortfall, Gov. Gavin Newsom proposed scaling back the yet-to-be-launched program by $200 million in his January budget proposal.

The program is expected to launch by the end of March, Ellen Martin, an official with the California Housing Finance Agency said last month. Martin told the agency board that the $300 million could help an estimated 2,300 initial qualifying first-time buyers, by providing them either all of the money they need for a down payment, or very close to it, in exchange for an agreement to share in some of the homes’ price appreciation.

As for O’Connell, the 37-year-old Los Angeles native said she has grappled with the state’s high housing costs her entire adult life. She said she and her husband looked into various first-time homebuyer programs when she began her house hunt, but was discouraged by their limitations and also did not think she qualified for those she did find. O’Connell studied poetry at Sarah Lawrence College and worked a variety of jobs, including as a teacher and in farmers markets, before landing a gig in the tech industry.

She began seriously home shopping with her husband in early 2021, when they were still engaged to be married. They looked for a home in San Luis Obispo, her husband’s hometown, a city in the heart of California’s storied Central Coast. It offered  beauty, access to nature, temperate weather and, by California standards at the time, relative affordability. She and her husband eyed many homes priced under $950,000, she said.

A seller accepted their offer on a three-bedroom, two-bathroom home in San Luis Obispo, but they walked away from the potential purchase after an initial inspection revealed water damage and mold.

Instead they moved to an affordable apartment in Venice that was below market due to unusual circumstances — a nearby home had burned down in an arson fire, scaring away other renters. The couple married last summer. She and her husband are trying to stay in the state they were born in because both hope to care for their parents as they age, she added.

Their below-market Venice rent works for now, O’Connell said, but added that she and her husband feel they can never leave.

“I don’t know how we can stay in our neighborhood even as renters,” she said, noting that they hope to start soon on a family of their own. “We will need another bedroom, so we will need to move, but I don’t know how we’re going to.”

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

Gov. Gavin Newsom is an unlikely champion of California’s down and out. Yet the wine entrepreneur, who built his political career and fortune with help from the state’s wealthy elite, campaigned on a promise to address California’s disparities — and do so boldly.

From his first day in office in January 2019, Newsom called the manifestations of California’s inequality — homelessness, poverty and rising costs — “moral imperatives,” not just policy priorities. “So long as they persist, each and every one of us is diminished,” he declared.

Those inequalities persisted and were laid bare by two years of the COVID-19 pandemic, a tumultuous time that saw the governor overcome a Republican-led effort to recall him from office last September.

Now with the pandemic receding, the economy rebounding and no major political opposition standing in his way to reelection this year, Newsom has the opportunity to return to his original priority of reducing the stain of poverty on the state.

Newsom had been expected to address the issue in the final State of the State speech of his first term. An aide, who spoke only if not named, because they had not been authorized to give a preview of the speech, had said the governor had planned on an “explicit call out on inequality” and how “unchecked inequality undermines democracy.” But the governor pared back the text by about half before delivering the speech, the aide said.

The final version, less than 18 minutes long, discussed democracy, but largely avoided the topics of poverty and inequality. Newsom referenced the “stresses” and the “dramatic social and economic change” Californians are facing, and discussed his efforts to house the homeless. But the address introduced only one major policy change: a proposal to provide relief for residents faced with high gas prices. 

Some experts and advocates say Newsom’s efforts to close the economic divide may determine his legacy – and help set him apart from his predecessor and fellow Democrat, Jerry Brown, who insisted state government could only go so far in closing the divide between rich and poor. 

“If the comparison is past governors in California, he’s trying to do a lot,” said Chris Hoene, director of the California Budget & Policy Center, a nonprofit that researches policy affecting low-income Californians. “If the comparison is where we were when he took over as governor, and where we are today, he’s facing a ton of headwinds. And the urgency and the need drives expectations about him doing more.”

Nationally, the jobs recovery is in full swing, and though California has lagged other states, it could at last see improvements as mask mandates loosen and the economy returns more to normal. The pandemic – and record state budget surpluses – have given Newsom the opportunity to address the state’s inequalities. The Democratic leaders of the state Assembly and Senate leaders also say they want to use the budget to create a more inclusive recovery and more equitable economy. 

But Assembly GOP leader James Gallagher of Yuba City said it’s the policies of Democrats that are driving inequality.

“We have a huge surplus because the wealthiest are doing so well,” he said. “That doesn’t tell the story of the middle- and low- income earners in this state.”

For instance, he said working families are getting hammered by the state’s high cost of gasoline, which according to AAA has now topped an average of $5 a gallon — an increase accelerated by the Ukraine war. Gallagher and other Republicans also blame the state’s gas tax, which Democrats raised in 2017 under Brown to repair roads and bridges and expand mass transit. Newsom has proposed putting off a scheduled July increase, but the governor has met resistance from his own party in the Legislature. The climate change agenda of California Democrats has also driven up the cost of utilities, further deepening inequality, Gallagher said.

“I think he genuinely cares about this issue, but I think that his policies — the policies of either he, or Democrats in the Legislature — have made the problem worse,” Gallagher said. “The other problem is that the governor has a lack of follow-through. He’s big on pronouncements and announcing new programs, but pretty short on implementation and results.”

What’s Newsom’s record?

In his State of the State speech last year, Newsom returned to the theme of inequality, indicating his belief the pandemic was “widening gaps between the haves and the have-nots.” “California’s most acute preexisting condition remains income inequality,” he said. 

In his three years in office, he has pushed through several significant initiatives: 

• Newsom has steadily expanded Medi-Cal coverage to include undocumented people until they turn 26 and once they turn 50, and in his January budget proposed covering those previously excluded. But the expansion would still leave several hundred thousand undocumented immigrants unable to qualify because they earn above the program’s annual income thresholds.
• In 2019, Newsom expanded the state’s Earned Income Tax Credit and the Young Child Tax Credit to help boost the wages of low-paid workers and families. In 2020, he signed a law allowing anyone with an Individual Taxpayer Identification Number to qualify for the expanded earned income tax credit. That made undocumented workers eligible to receive hundreds, or thousands of, dollars each year. Last year, he signed a measure giving $600 one-time payments to those who receive the state’s earned income tax credit, along with an extra $600 for certain undocumented taxpayers not eligible for some federal aid.
• During the pandemic, California expanded eligibility for several safety net programs, including food assistance, allowing for more people to participate. In particular, the state paused the recertification process in the state’s CalFresh program, which provides food benefits to some 2.6 million low-income households. And the state last year created a universal free school meals program, doing away with a previous income requirement.
• When taking office, Newsom announced plans to assist working parents with a six-month, paid family leave program. He has so far extended the program to eight weeks per parent. In 2020, he signed a bill expanding unpaid family leave to include smaller employers, but in 2021 vetoed a bill intended to extend the program to low-income workers. The governor has also made progress on his goals to expand preschool, with a plan to provide universal transitional kindergarten for four-year-olds by 2025. 
• Experts and activists say making higher education more affordable is important to reducing inequality in the state. Last year, the administration eliminated age and time-out-of-high-school requirements for Cal Grant scholarships to community colleges. But the governor vetoed a bill that would have made Cal Grants more broadly available. Lawmakers last year also signaled the intent to expand a scholarship for middle-class students in the state, as well as more slots in public universities for California students, though lawmakers must agree this year to fund those promises. 
• The governor’s efforts with economic recovery, trying to target funds regionally could help the Central Valley and other parts of the state that are struggling. Such work might not be easy; a legislative effort to retrain oil workers has already sparked a political fight among some of the state’s labor unions.

Still, advocates say the state could be doing more to shrink the economic divide.

What Do the Numbers Show? 

While recessions tend to widen income disparities between rich and poor, earnings have increased for low-income workers while unprecedented government relief kept millions from falling into poverty. That’s despite the sharp downturn in 2020, and the disproportionate number of pandemic-related job losses hitting low-wage sectors. During the recovery, some of the biggest gains are in the leisure and hospitality sectors, according to Sarah Bohn, a vice president and policy research chairperson with the Public Policy Institute of California.

“Wages are picking up the most at the low-end of the spectrum, even though we’re still in a recovery period with elevated unemployment,” Bohn said. “It might be that inequality is actually decreasing during the pandemic – which is kind of crazy, and we’ll know more soon – but when you just look at the wage statistics, the sectors that are lowest paid have the highest increase in wages.”

Nationally, data from the Atlanta Federal Reserve Bank shows typical wages for the bottom 25% of earners growing faster than other income groups. Meanwhile the Biden administration has highlighted research from two influential U.C. Berkeley economists underscoring that economic growth has been broadly shared since he took office in January 2021. 

In California, income inequality statistics for 2020 are not yet available, but the trend has been one of dramatic widening over the long run, with the modern economy placing a premium on highly educated workers. Analyzing pretax income and including cash from some safety net programs, the PPIC found income growth for the bottom 10% of families in California lagging significantly behind the top 10% from 1980 to 2019.

David Grusky, director of the Stanford Center on Poverty and Inequality, said that while incomes may be increasing on the bottom end, those with higher incomes were less interrupted by job losses and many saw a significant rise in the value of their assets. 

“Those people who had money in the stock market fared well, and those are the people who are well off,” he said.

With its highest earners doing well, and a major boost in federal aid, California’s budget has been flush with surpluses during the pandemic. And Congress last year passed President Biden’s American Rescue Plan, which California has used to address some of its longstanding inequities. Newsom and legislators have invested billions in homelessness programs, affordable housing, aid to undocumented immigrants and its youth mental health system.

The youth mental health system reforms are “transformational and are expected to be permanent,” said Ed Lazere, a researcher who tracks state fiscal policy at the Center on Budget and Policy Priorities in Washington, D.C. 

Focus on Homelessness

In many ways, much of Newsom’s political career has been defined by one of the most visible manifestations of the state’s extremes — homelessness. He garnered political attention and notoriety from activists with his “care not cash” initiative as a San Francisco supervisor, a measure intended to cut general assistance programs for the homeless in exchange for housing and other services. He often walked through the city’s Tenderloin, where he saw homelessness for himself. 

In 2020, just before COVID, Newsom dedicated his State of the State address solely to the subject. During the pandemic, his administration converted dozens of run-down motels into shelters and housing for homeless people. Last year, he and the Legislature allocated $12 billion to homelessness programs. He’s proposing another $2 billion in the 2022-23 budget. He’s also moving ahead with an ambitious plan to clear homeless encampments and offer services to people living in them. And last week, Newsom outlined a plan to allow courts to force some homeless individuals with serious mental illness and substance use disorders into treatment, while also providing some services.   

After all that, homelessness remains one of the biggest problems facing his administration. Two-thirds of voters in a February poll from UC Berkeley’s Institute of Governmental Studies said he’s doing a poor or very poor job on the issue, contributing to a lower approval rating than before the recall election last September. And along with public perception of rising crime, it may be what gets in the way of a smooth path to a second term in this year’s election.      

At the same time, Californians care about inequality: In a November survey by the Public Policy Institute of California, 69% said the gap between rich and poor is growing in their region, and 76% supported increasing government funding so child care is available to more low-income working parents. And how Newsom decides to lead on inequality will matter politically in Sacramento given the number of moderate Democrats and legislators finding themselves in new districts untested by voters, many of whom could be unlikely to support riskier policies without a push from the governor. 

Those who advocate for those policies will be watching: “It does seem like Newsom is treating a commitment to reducing poverty as one of his key legacy commitments, and so that’s wonderful,” said Grusky, of Stanford. But “we can do, and should do, even more.”

This article is part of the California Divide project, a collaboration among newsrooms examining income inequality and economic survival in California. CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.