Gas prices, campaign $$ database shake up Capitol

What do California gas prices and the state’s unwieldy database for tracking donations to political campaigns have in common?

Both were the subject of intense hearings in Sacramento on Tuesday, six days before state lawmakers are set to return to the Capitol to get sworn into office and convene a special session called by Gov. Gavin Newsom to consider a new tax on oil companies. The governor in October accused the industry of “rank price-gouging,” citing a record-high, “inexplicable” gap between average gas prices in California and the nation. 

But testimony during the California Energy Commission hearing suggests that the reasons for that gap are more complicated, CalMatters economy reporter Grace Gedye writes:

Energy commission staff said that in September and October, four refineries dealt with maintenance issues, which reduced the amount of gas they could produce. (Because some refineries have closed in recent years, seemingly small maintenance issues can have outsized effects.) At the same time, California had a limited amount of gas stored to make up the difference, and it’s difficult to import gas into the state quickly. 

• Catherine Reheis-Boyd, president of the Western States Petroleum Association, a lobbying group that represents oil companies: Due to state policies that have resulted in an isolated gas market and limited refinery capacity, “I’m just amazed that we’re all surprised this has an impact on cost.”

Notably absent from the hearing, however, were oil and gas executives from five of the state’s largest refineries. All declined to participate, with some saying antitrust law limited their ability to share information. California Energy Commissioner Patty Monahan called their absence “profoundly disappointing,” and Newsom tweeted a video of their empty chairs.

• Newsom said in a statement: “The oil industry had their chance today to explain why they made record profits at our expense but they chose to stonewall us. That’s because they have no explanation — big polluters are lining their pockets while they cause financial pain for millions of California families and threaten the very future of our planet. With the Legislature’s support and engagement, we’re going to hold these companies accountable with a price gouging penalty that will deliver relief to Californians.”

But the state shouldn’t focus exclusively on refineries or one-off gas price spikes, said Severin Borenstein, an energy economist at UC Berkeley. He noted that much of the extra cost of gas in California that can’t be explained by the state’s higher taxes and environmental policies is added after gas is refined — often by the marketing, distribution and retail sectors, such as gas stations. 

Moving on to the campaign finance database hearing: After $30 million spent and six years since the Legislature passed a bill to overhaul Cal-Access — the data portal maintained by the Secretary of State that tracks campaign donations and lobbying expenditures — why has the state still not rolled out the long-anticipated replacement?

As CalMatters political reporter Sameea Kamal writes, that’s the question the state Senate elections committee sought to answer in a Tuesday hearing. The stakes are high: As members of several advocacy groups noted, transparency surrounding campaign disclosures is crucial to trust in elections. 

• State Sen. Steve Glazer, the Walnut Creek Democrat who leads the election committee, told Sameea: “Cal-Access is critical infrastructure for our democracy that is continuing to crumble. We have spent over $30 million and have nothing to show for it. And it’s not clear to me that there’s been full accountability for that.” 

Part of the challenge: The project started under former Secretary of State Alex Padilla, whom Newsom appointed to the U.S. Senate in 2020 to replace Kamala Harris when she was elected vice president. Shirley Weber, whom Newsom tapped to replace Padilla, said she inherited a myriad of issues following the transition, including data migration problems and negative user feedback that wasn’t incorporated. 

At the root of the problems: vendor contracts that didn’t properly guarantee deliverables and a lack of ownership of the project within Padilla’s office, Weber said. Brian Metzker, an analyst with California Legislative Analyst’s Office, also noted that the project involved an “off-the-shelf” software system that couldn’t handle the complexities of the data. 

• Glazer: “I don’t think we’ve gotten the full story on the millions of dollars that were spent on so-called experts to rebuild the system.” 
• Padilla spokesperson Tess Whittlesey said the senator was aware of the issues with the original contractor and the decision to transition to the second vendor was under his leadership. Despite those initial delays, “the program was moving forward when he transitioned to the Senate.”

Still, this isn’t the first time contracts approved by Padilla’s office have come under scrutiny. In 2020, it awarded a $35 million no-bid contract for a statewide voter education campaign to a public affairs firm tied to Joe Biden’s presidential campaign — over the objections of state Controller Betty Yee’s office, which repeatedly said Padilla’s office didn’t have the budgetary authority to do so. State lawmakers later found a way to retroactively OK money for the contract.

Where does the Cal-Access replacement project stand now? Weber said the prior vendor contracts were canceled and her office is now working with the California Department of Technology, using its project management system. She has also assigned some of her staff to oversee the project, as opposed to Padilla, who relied on an outside contractor. 

While Weber declined to give a cost estimate or timeline for the new project, an independent assessment for the current project roadmap found it would be completed between 2024 and 2026 and could cost an additional $43.2 million.

And while Glazer said he hopes there will be additional hearings to investigate the matter further, that will depend on the future leadership of the elections committee. 

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1 Victors emerge in close California races

With a series of Tuesday concessions in several closely watched, bitterly fought and highly expensive California races, the shape of the state Legislature is finally approaching its final form three weeks after Election Night. In the state’s most expensive legislative race, between two Democrats for a seat representing Sacramento in the state Senate, former state Insurance Commissioner Dave Jones conceded to Sacramento City Councilmember Angelique Ashby. In a sign of just how inflammatory the campaign was, Jones slammed the race’s massive amounts of outside spending and the attack ads they led to: “The unrestricted ability of special interests to buy elections with lies is the single biggest cause of dysfunction in politics, and it is chipping away at the foundation of our democratic government,” he said in a statement.

Meanwhile, Republican Josh Hoover flipped a Democratic Assembly seat representing the Sacramento suburbs after his opponent, incumbent Ken Cooley, conceded in another high-dollar hot race. Though Democrats are still poised to hold a supermajority in both chambers of the state Legislature — allowing them to pass budgets and bills without Republican support — the news marks a big win for Hoover, chief of staff to GOP Assemblymember Kevin Kiley, who recently won a seat in the U.S. House of Representatives. Democrat Pilar Schiavo returned the favor, winning a concession from GOP Assemblymember Suzette Valladares in a Southern California district.

With about 128,000 unprocessed ballots left to count as of Tuesday evening, one California U.S. House race, one state Senate race and three Assembly races have yet to be called or conceded.

2022 Election

Latest coverage of the 2022 general election in California

2 Not much of a ‘parent revolt’ in California

Just as the Republican “red wave” that some Democrats had feared largely failed to materialize in the Nov. 8 election, so too does it appear that few conservative California school board candidates endorsed as “parental rights” advocates won their races throughout much of the state, according to an analysis from CalMatters education reporter Joe Hong and political reporter Sameea Kamal. Of a sampling of 150 local school board candidates endorsed by either Lance Christensen — the Republican state schools superintendent candidate who failed to defeat Democratic incumbent Tony Thurmond — or the conservative “parents rights” group Moms For Liberty, only a third emerged victorious.

The results suggest a lack of statewide momentum for the “Parent Revolt” campaign spearheaded by the California Republican Party, which sought to capitalize on frustrations over COVID school closures and mask mandates and concerns about schools teaching critical race theory, gender ideology and LGBTQ+ issues. “I guess I don’t really understand the whole parental rights thing,” said elementary school principal Michele Tsutagawa Ward, who won a school board seat in San Diego County over activist Sharon McKeeman, founder of the anti-mask-mandate group Let Them Breathe. “Parents have always been active members of the school community.”

• However, conservative candidates seemed to make inroads in some red parts of the state, such as Placer County, where 15 of 17 “pro-parent” candidates endorsed by Christensen were in the lead as of Tuesday night.
• Shawn Steele, a former chairperson of the California Republican Party and a major proponent of the “Parent Revolt” campaign, told Sameea: “It starts the discussion, and now the coordination with the folks that won is going to be very important. And the coordination of working with people who lost and how they feel about it. … Right now the recruiting and training has to start. 2024 should be a larger group of people, and we have a lot of successful (candidates this year) that will be good instructors.”

3 State mismanaging tobacco tax revenue, audit finds

California will likely see a downturn in state tobacco tax revenue as a result of voters in November upholding a law banning the sale of certain flavored tobacco products — which tobacco companies on Tuesday asked the U.S. Supreme Court to prevent the state from enforcing after a federal appeals court declined to do so. Meanwhile, the state isn’t adequately monitoring a large share of the funds it currently receives from tobacco taxes, according to a Tuesday report from the state auditor. The report found that California collected more than $1.3 billion last fiscal year from a 2016 voter-approved measure that raised taxes on some tobacco products — and earmarked nearly $900 million for increased payments to providers who offer certain services under Medi-Cal, the state’s health care insurance program for the poor. But, according to the audit:

• The California Department of Health Care Services failed to ensure the money was distributed appropriately. Some providers didn’t receive the funds to which they were entitled, even as the department approved payments for 14 ineligible providers and possibly greenlighted other fraudulent payments.
• The California Department of Tax and Fee Administration isn’t providing adequate oversight of certain tobacco distributors, increasing the risk that some aren’t paying the correct tax.
• Five of six entities reviewed by the auditor posted inaccurate information online about the tobacco tax revenue they’d received and spent, reducing transparency. In official responses, they generally agreed to implement the auditor’s recommendations, though some disagreed with certain findings.

Speaking of transparency: Of the 1,895 California K-12 education employers asked to voluntarily share 2021 salary and benefits data with the state controller, just 422 filed compliant reports — while a whopping 78% either didn’t respond or filed incomplete or noncompliant reports, Controller Betty Yee announced Tuesday. The Los Angeles Times editorial board argued earlier this year that these figures “must be easily available for the public to see,” as a big chunk of California’s education budget winds up paying employee salaries and benefits.

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