But what this news narrative overlooks is an untold story, the story of how one of California’s primary initiatives — Homekey, which quickly transitions unsheltered people into supportive or permanent housing — has been a remarkable success.

In the Bay Area, currently funded Homekey developments are projected to house 45,000 formerly unsheltered residents, many of whom will live in their Homekey unit permanently or for a temporary period before transitioning to permanent housing. To date, Homekey has financed nearly 60 housing developments in the nine-county Bay Area, creating 4,150 housing units for formerly unsheltered individuals and families. 

In fact, without Homekey, tens of thousands more Californians would be living on our streets. Instead, an estimated 167,000 Californians will benefit from one of the 250 housing projects funded by Homekey statewide. Those 250 developments have created or will soon create a total of 15,319 units of housing, which will in many cases be a permanent home for our previously unhoused neighbors.

To be sure, there is no denying that homelessness continues to be a top issue facing our state. There are many reasons for that, including the fact that we Californians have failed for decades to build enough housing. It’s also worth noting that pandemic-era state and local tenant protections, which kept people housed, have now expired, leading to a recent wave of evictions and newly homeless residents.

Project Homekey began as a main feature of California’s COVID response to utilize vacant motels and other residential properties to get people off the streets, both temporarily and permanently, to reduce the risk of COVID transmission. The program’s success spurred additional state investments and put the focus squarely on acquiring permanent housing units for those in our communities who otherwise would have no roof over their heads. 

Project Homekey works by awarding grants to local governments, community agencies and nonprofits who then purchase properties, such as hotels and motels, and quickly turn them into housing units for unsheltered Californians. Homekey also includes the purchase of single-family homes, multifamily apartments, adult residential facilities, manufactured housing and converted commercial properties and other existing buildings to then provide ongoing housing.

Oakland-based nonprofit Bay Area Community Services (BACS) has completed several Homekey projects, purchasing 22 single-family homes and three former motels, creating 272 units of housing in Berkeley, Oakland and Hayward as part of its Project Reclamation initiative.

Nonprofits such as BACS understand the importance of combining behavioral health supports with crisis residential care in Homekey projects and creating communities where each resident gets their own bedroom, lock and key. BACS’s Project Reclamation initiative provides services to their residents who would otherwise be unable to live independently due to physical or mental health issues or have other barriers like a history of incarceration or homelessness. Each resident is paired with a care coordinator who helps with needs, such as job support, benefits assistance, mental health support and money management.

It’s true that to fully address our homelessness crisis, California must build many new housing units, especially affordable ones. But while we continue to witness heartbreaking examples of Californians struggling to survive on our streets, it’s also true that Project Homekey and California’s investments to combat homelessness have been true game-changers, helping tens of thousands of formerly unsheltered Californians.

Nancy Skinner represents the 9th Senate District, including the cities of Oakland, Berkeley and Richmond, and chairs the Senate Housing Committee. Jamie Almanza is CEO of Bay Area Community Services.

But it turns out that Five Guys wasn’t the worst offender when it came to putting price gouging on the menu. That distinction went to Wendy’s, whose CEO, Kirk Tanner, floated an idea about raising prices during peak demand.

It’s like what would happen if Uber and the Big Mac had a baby.

Tanner, in an earnings call to investors, said that Wendy’s would begin testing features including “dynamic pricing” as early as next year.

“Dynamic pricing” is another way to say “surge pricing,” which raises the cost of goods and services based on demand, especially during peak hours of the day. It is most often associated with shifting airline ticket prices or how ride-hailing services like Uber and Lyft adjust fares at busy times.

But burger lovers weren’t having it.

Tanner’s comment sparked an online backlash, with some vowing to stack their freezer with the company’s signature “Frosty” milkshakes to hoard for summer months.

Among those outraged by the hamburger hustle was U.S. Sen. Elizabeth Warren, D-Mass., who once had a burger named after her in Harvard Square.

“That means you could pay more for your lunch, even if the cost to Wendy’s stays exactly the same,” Warren tweeted. ”It’s price gouging plain and simple, and American families have had enough.”

Quicker than you could say “New Coke,” Wendy’s execs backed down, but not without trying to convince consumers that the new pricing plan would have been for their own good.

“This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants,” the company said in a statement.

“Digital menu boards could allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day.”

Yeah, right. And a footlong sandwich at Subway is really 12 inches.

Fast-food restaurants have all kinds of ways to mislead us. The first is that they are fast.

There is little worse than ordering ahead in the fast-food app, and going through the drive-through, only to have a cashier tell you to wait in one of the handicap spots for your order.

Then when you get home, your fries or nuggets are missing.

And, I know I should check the bag before I leave the parking lot, but getting the order right isn’t rocket science. It’s not even regular science. And, no, the burgers look nothing like they do in the Times Square billboards. We know that by now.

But there should at least be some expectation that the price won’t charge between the time we leave our homes and pull up to place our order at the kiosk.

Coca-Cola bombed with customers in the ’80s when the company tried to change its formula and fix something that wasn’t broken. The only thing that kept the backlash from being worse was that there was no social media back then.

No such luck for Wendy’s. Same thing for Five Guys, which was trending on X after a customer posted a receipt with a $12.49 charge for a bacon cheeseburger.

With fries, soda and tax, the meal, for one person, came out to $24.10.

“I just bought a Five Guys meal,” another customer posted on X. “Now I’m going to be a month late on my rent.”

Surge pricing is a bad idea for burgers. What’s next? Congestion pricing for the drive-through lane?

Leonard Greene writes for the New York Daily News. ©2024 New York Daily News. Distributed by Tribune Content Agency.

The cases — NetChoice v. Paxton and Moody v. NetChoice — involve laws in Texas and Florida that prohibit social media companies from removing content from their platforms, clearly violating the 1st Amendment rights of private companies. If these laws are upheld, they will make the internet and social media enormously worse.

The Texas law bars social media platforms with at least 50 million active users — such as Facebook, X (formerly Twitter) and YouTube — from removing content based on the views expressed. The Florida law prohibits them from removing speech by political candidates and “journalistic enterprises”; it also requires them to notify users of any content moderation decisions and provide an explanation.

Texas and Florida adopted these laws based on a widely promoted but unfounded perception that social media platforms are more likely to remove conservative expression. Researchers have found no evidence to support this belief.

But even if there were a basis for concern, social media platforms — like all other media — have a 1st Amendment right to decide what speech to convey.

Half a century ago, in Miami Herald Publishing Co. v. Tornillo, the Supreme Court unanimously invalidated a Florida law that required newspapers to provide space to political candidates who had been attacked in print. The court emphasized that freedom of the press allows a newspaper to decide what to include and exclude.

The government can’t regulate speech on privately owned social media platforms any more than it can edit a newspaper. Several justices, including conservatives Amy Coney Barrett and Brett M. Kavanaugh, made similar points during the oral arguments.

The U.S. 11th Circuit Court of Appeals declared the Florida law unconstitutional on this basis. It also found that requiring a justification to be provided for every decision to remove material would make content moderation impossible. In considering the Texas law, however, the 5th Circuit Court of Appeals ruled that social media companies are, like phone companies, “common carriers” and can therefore be prevented from removing content.

The problem with this argument is that social media platforms are not and never have been common carriers that simply transmit everything that is posted. Nor would anyone want them to be.

Social media platforms constantly remove awful content. Facebook removes 3 million pieces of hate speech a month, an average of more than 4,000 per hour. And yet no reasonable person would accuse Facebook of being too effective at removing such speech.

Fortunately, social media companies remove a wide array of awful expression, including violent and sexually explicit content, much of it protected by the 1st Amendment.

Underlying the two cases heard by the Supreme Court is the broader question of whether state governments should regulate the content of social media and other online platforms. Many states, including California, have in recent years adopted a plethora of laws trying to control these media. But the platforms are national and indeed international, making it undesirable to subject them to countless regulations by individual states.

The internet and social media have changed the very nature of speech by making it possible for anyone to speak immediately to a mass audience. The downside is that their speech can be hateful, harassing, false and harmful in other ways. One approach to this problem is extensive government regulation of what appears on social media. That would clearly violate the 1st Amendment, however, and we all should be concerned about giving government such power to regulate what we see and hear.

An alternative is to prohibit content moderation, requiring social media platforms to carry everything unless it falls into narrow categories of speech that is not protected by the Constitution. That is what Texas and to a lesser extent Florida are trying to do. But these laws also restrict the speech rights of private companies and promote even more hatred and violence on social media.

The best option is to leave content moderation to social media companies and encourage them to do a better job of it. This avoids the 1st Amendment problems of government regulation and the nightmare of unregulated social media. And that is the path the Supreme Court should take in the NetChoice cases by finding the laws in question unconstitutional.

Erwin Chemerinsky is a contributing writer and the dean of the UC Berkeley School of Law. ©2024 Los Angeles Times. Distributed by Tribune Content Agency.

The term means exactly what it sounds like: “Chinese youths have in recent years appropriated this word in its English meaning to express a desire to flee.” Initially, it could just mean escaping the expectations of parents or the big city grind. But after years of zero-COVID policy, with China’s economy disappointing and its political culture constricting, Wang writes that it’s increasingly “evolved to mean emigrating from China altogether.”

The lucky escapees are the ones who can move legally to Europe or America. The boldest are the ones traveling to Latin America and braving the Darien Gap to reach Mexico and then the United States; the migrant surge at our southern border, Wang notes, now includes thousands of Chinese nationals each month. But mostly, rùn means heading for Singapore, Japan or Thailand — the last of which Wang recently visited to hang out with a mixture of remote workers, spiritual seekers, crypto enthusiasts and drug users.

He came away from the experience feeling a bit more optimistic about China’s uncertain future. “The China of the future will not look like the China ruled by old men today,” he writes, and some of the creative Chinese kids hanging out in Thailand may “do good things for the China they’ll one day inherit.”

But the overall account in which this hopeful thought is embedded doesn’t seem all that positive. Here you have a would-be superpower facing demographic contraction with an existing youthful talent pool that’s trying to escape, with would-be artists and entrepreneurs preferring the highlands of Thailand to Shanghai or Beijing — while sometimes lying to their parents and pretending to be in America, even “drawing curtains to darken the room when they video chat with family” to fake a time-zone difference.

Our peculiar situation

Elsewhere, in the geopolitical portion of his letter, Wang writes that while “50% of China’s economy might be dysfunctional, the 5% that’s going spectacularly well is pretty dangerous to American interests” (meaning everything from its booming automobile exports to its expanding defense industrial base).

Combine that point with the longer-term Sino-pessimism implied by the mentality of rùn, and you have the peculiarity of America’s current situation. If you look at the world in 2024 or on a 10-year time horizon, we look like an empire in decline, tested on every front by revisionist powers, trying to juggle a worldwide array of commitments that we made when our powers seemed unchallenged.

Strange but optimistic

Put all of this together, and one can envision a world two generations hence in which the richer parts of Europe and the Pacific Rim are senescent walled cities; instability and authoritarian decay predominate across much of Eurasia; and real dynamism is sustained mostly in the parts of America that are growing and building at the moment — what the X (formerly Twitter) account Empty America calls the “neo-Faustian” civilization of the U.S. South and West, a new America sprawling out from cities in the “narrow band running from Houston to San Francisco.” (Hopefully, my grandchildren can also build an outpost in a depopulated wilderness of 2070s Maine.)

If you want a strange but ultimately optimistic vision for America, that’s the one I have for you today. But it depends on the United States getting through the current era in one piece — which is a good reason to prefer cautious realism to crusading in our foreign policy right now, and to look for ways to restabilize our politics rather than embracing the mutual existential panics of the right and left.

There is a plausible future where I die in my bed, at a ripe old age, in an America that’s still a beacon of dynamism on a decadent planet. Let’s not spend the rest of the 2020s throwing that scenario away.

Ross Douthat is a New York Times columnist.

The reforms were meant to allow the electorate to remove the officials responsible, pass laws over their objections, or undo their acts. People over business.

Yet next fall Californians will consider a referendum sponsored by big business to undo the act of the people’s elected leaders — a recurring theme in recent years. The specific matter at issue is Senate Bill 1137, a 2022 law that bans oil drilling within 3,200 feet of homes, schools, hospitals and the like. Oil companies responded by circulating petitions to challenge the legislation with a referendum, and voters will get the opportunity to decide its fate this year.

“It’s an egregious attack on democracy,” actress and activist Jane Fonda (yes, that Jane Fonda) told me recently. “It’s the most egregious attack on democracy and public health I’ve ever seen.”

Substantive issues

At its core, the referendum is one of “environmental justice,” said Fonda, who is helping organize the opposition. In a state where some 2.7 million people live within a few thousand feet of an oil well, public health advocates made their case that buffer zones were in the public interest, and their elected leaders responded.

That is how representative democracy is supposed to work. The referendum seeks to undo that, and it does so by marshaling a tool historically intended to curb the power of big business.

There are certainly substantive issues to consider. How bad are the health consequences of growing up in a home a few hundred feet from an oil well? Would creating the setbacks required by the bill damage the economy of California or raise the price of gasoline? Would that price be worth paying if it was spent to protect the state’s public health?

Supporters of the bill (and therefore, the opponents of the referendum) say that the price is minimal and the benefit considerable. A report to the Los Angeles City Council noted that “activities related to oil and gas operations have been associated with many potential negative health and safety impacts, especially when they occur in close proximity to sensitive uses such as homes, schools, places of worship, recreation areas, and healthcare facilities.”

In 2022, the council voted to ban new wells and phase out old ones over the next two decades.

SB 1137 was a companion idea. But even as Gov. Gavin Newsom signed the bill, oil companies rushed to head it off, calling their effort “Stop the Energy Shutdown.”

They were successful. After spending some $20 million to collect signatures, the law was shelved. Next November’s vote will determine if it gets implemented.

The industry’s argument is that, as long as oil is being consumed, it is better for it to come from local sources. If SB 1137 is allowed, California would be forced to “increase its reliance on imported oil, which could come from other oil-rich countries,” Rock Zierman, CEO of the California Independent Petroleum Association, wrote in an op-ed for CalMatters.

Last week, Zierman elaborated on that point, asserting that the law does nothing to decrease the state’s demand for oil.

“Californians consume 1.8 million barrels of oil a day,” he noted.

Supporters of the law question the seriousness of that argument, pointing out that oil is an internationally traded commodity, and a few oil wells in California residential neighborhoods are a negligible piece of the global market. Darkly warning of increased gas prices in this context is scare politics.

Test of democracy

For whatever reason — concern for prices, resistance to regulation, fear of the precedent of government mandates — oil companies have chosen to fight this. But they start at an obvious disadvantage: Californians have fought Big Oil before — some chart the modern environmental movement from the 1969 Santa Barbara oil spill. Environmental justice, with its emphasis on the disparate effects on poor Californians, is a compelling political argument in this very blue state.

It would take a lot of money to persuade Californians to trust Big Oil with their health and safety. But if Big Oil is unpopular, it is also rich. The campaign over drilling setbacks could thus be both a threat to democracy and a test of it.

Which brings me back to Jane Fonda.

She is not an official campaign spokesperson, but Fonda brings near-iconic status to the effort. First introduced to the public decades ago as a beautiful and talented actress, Fonda has parlayed her fame into political action. She has placed her reputation — even her life — in defense of participatory democracy. It is natural, then, that this test of democratic institutions and environmental protection drew her interest.

Fonda’s activism has made her a polarizing figure at times, but the issues that may have once struck mainstream America as fringe thunderbolts have gradually become recognized as sensible, even moderate, positions. It hardly seems radical today to have advocated for ending the Vietnam war, desegregation and equal voting rights; empowering women; or protecting the environment.

Fonda championed those causes when they were hard. In 2023, they seem natural.

“We’ve made quite a lot of progress,” she told me. “But the problems haven’t gone away.”

The solution, she said, is to energetically plow ahead. In our interview, she quoted Greta Thunberg, the young climate change activist. Pursue action, Thunberg advised Fonda. “Hope will follow.”

It is typical Fonda that this veteran of so many struggles, now in her 80s but as clear-eyed, open-hearted and forceful as ever, would credit a teenager for inspiration.

Over the coming months, Californians will get the chance to decide who to believe: oil companies and their spending or Fonda, her allies and her principles. I would not bet against Fonda.

Jim Newton is a contributor to CalMatters. He worked at the Los Angeles Times for 25 years as a reporter, editor, bureau chief and columnist, covering government and politics.

Many years later, after the 40-hour work week became standard, California’s Industrial Welfare Commission decreed that farmworkers could work up to 10 hours a day or six days a week before overtime pay kicked in.

In 2016, however, years of lobbying by unions and other groups finally paid off when the Legislature decreed that the eight-hour day and 40-hour work week for agricultural labor would be phased in. Then-Gov. Jerry Brown signed the legislation, Assembly Bill 1066, despite warnings from farm groups that it would disrupt their industry.

Recently, the University of California’s Cooperative Extension branch, which researches agricultural issues, released a study indicating that having a 40-hour work week has not been as beneficial to farmworkers as its sponsors promised.

Alexandra Hill, an assistant professor at UC Berkeley, concluded that many workers who had hoped for a cornucopia of overtime pay saw their incomes reduced when employers limited them to 40 hours a week. Her study found that many workers experienced reductions in the $100-$200 range each week because farmers could not automatically pass on overtime costs to their customers.

“It’s really important to think carefully about how we can best implement policies that really benefit the people that we’re trying to (help),” Hill told The Sacramento Bee.

Hill’s research exemplifies the phenomenon of unanticipated consequences that often afflicts political actions. Legislators may have thought they could help farmworkers by giving them a 40-hour workweek but failed to consider the potential downsides when applied in the real world.

In recent years, the Legislature has been particularly prone to passing laws affecting workplace conditions — not surprisingly, given the close relationship between the Capitol’s dominant Democrats and labor unions, which seek benefits they are unable to achieve in unionization drives or negotiations with employers.

The most spectacular example was 2019 legislation that severely limited employers’ ability to use contractors, in effect converting several million workers to payroll employees.

Hill’s study was released just months after the Legislature had set new minimum wages for the fast food and medical care industries, $20 per hour for the former and $25 for the latter, to dampen threats of ballot-box wars.

As with the 2016 law on farm labor, unions and other advocates of the new minimum wages said they would lift workers in the affected industries out of poverty.

“Today California is putting a stop to the hemorrhaging of our care workforce by ensuring health care workers can do the work they love and pay their bills — a huge win for workers and patients seeking care,” Tia Orr, executive director of SEIU California, told CalMatters.

However, there will be real world impacts.

Fast food franchisees will adjust by hiring fewer workers, raising prices or adopting more technology, such as the self-serve kiosks now common at McDonald’s.

One effect of the health care wage bill has already surfaced. When it was passed, legislators were not given any estimates of the financial impact, but after Gov. Gavin Newsom signed the measure, his administration said it would cost the state budget, which has a $68 billion projected deficit, about $4 billion a year split 50-50 between state and federal taxpayers. And that doesn’t include the multibillion-dollar impact on private health care providers and insurers.

On one level, it’s perfectly understandable why politicians would like to raise wages for some of the state lowest paid workers. But they shouldn’t ignore the potentially negative effects of their actions.

Dan Walters is a CalMatters columnist.

Her TikTok post went viral because of what happened next.

The gate agent hands Garris an extra boarding pass, she walks onto the plane, asks for a seat-belt extender, takes a window seat and places the extra boarding pass in the middle seat.

“If anyone tries to sit in it,” she wrote, “I kindly let them know I have two seats booked. To be honest, I almost never get approached because no one wants to sit in the middle seat next to a fat person on a plane.”

You were expecting some kind of made-for-social-media airplane meltdown, right? The video went viral, I think, because people have been shocked and delighted that an airline can be so accommodating and empathetic.

“Southwest is the only airline that allows you a second seat at no extra cost even if the flight is FULLY booked,” wrote Garris, who was traveling from her home in Nashville to Los Angeles.

Garris has invoked the policy a dozen times, she noted, and has “never had an issue or been denied.”

Southwest policy

Crazily enough, Southwest says its “customer of size” policy has been in effect for three decades. Large people can purchase a second seat in advance, and Southwest will refund the cost of the extra seat after the flight. No matter the demand for seats on that flight, the free extra seat is guaranteed. Or, if there is room on the flight, passengers can simply ask at the gate, as Garris did, for an extra seat. They also get pre-board privileges.

“The armrest,” says the official Southwest policy, “is the definitive gauge for a Customer of size. It serves as the boundary between seats. If you’re unable to lower both armrests and/or encroach upon any portion of a seat next to you, you need a second seat.”

I don’t know which gods are smiling on Southwest, but Garris’ TikTok post could not have come at a better moment for the beleaguered Dallas-based airline.

Last week, Southwest was slammed with the highest fine ever imposed on an airline by the Department of Transportation — $140 million — for its spectacular holiday 2022 operational meltdown that led to the cancellation of nearly 17,000 flights and stranded more than 2 million passengers. (Garris told me she hadn’t heard the news.)

Of course, not everyone is happy that Southwest gives fat people a free extra seat.

“I have gotten a lot of backlash,” Garris said. “People are upset that I am stealing a seat from a skinny person. It’s a Catch-22: ‘You are disgusting and I don’t want to sit next to you, but you are stealing a seat.’ You can’t have it both ways.”

Traveling while fat can be a miserable experience.

“A few years ago, I was in coach in a middle seat. I was so uncomfortable, and the guy next to me was texting about me: ‘I have this fat girl sitting next to me.’ I was mortified,” said Katie Sturino, 43, a popular content creator and influencer who founded Megababe, a cosmetics company that sells products that help with chafing thighs, boob sweat and body odor.

‘People over profit’

Last week, Sturino, who describes herself as a “body acceptance advocate” lauded Southwest for its policy. “Bravo Southwest,” she said on Instagram. “It’s a kind and generous policy.”

Over Zoom from New York, she told me, “I think it’s acknowledging a reality, which is that in America, the majority of our country is larger. There are some people whose bodies absolutely don’t fit into an airplane seat. It’s a people-over-profit move that’s getting Southwest a lot of love. Other airlines should take notice.”

Other airlines do allow large passengers to purchase a second seat, but none offers to refund the cost afterward.

There is a lot we don’t know about obesity, but one thing is certain: It is certainly not a choice.

Recent scientific consensus says that obesity is a disease with many contributing factors. Regardless of the cause, a large percentage of Americans are considered obese. The Trust for America’s Health, a nonpartisan public health policy and advocacy organization, estimates that nearly 42% of adults are obese and that nearly 20% of children between 2 and 19 are obese. People of color experience the highest rates of obesity, “often due to structural barriers to healthy eating and a lack of opportunities and places to be physically active.”

Last spring, the plus-size travel blogger and self-described “fat activist” Jae’lynn Chaney, who says she is a size 6X, started a Change.org petition demanding that the Federal Aviation Administration require airlines to give larger passengers as many free extra seats as they need to fly comfortably.

“The industry needs to realize that the average woman is no longer a size 14,” Chaney told BuzzFeed last year. “They are now a size 18 and beyond. Yet, as we’ve gotten bigger, things like airplane seats, clothing and everything else has gotten small or stayed the exact same.”

No FAA mandate

Garris, 31, who loves traveling, told me that during her 20s, she wouldn’t fly because of her size. “I would think, ‘I am too big, let me lose weight first, I’m not going to fit.’ I got tired of waiting, and I decided to travel and share my experiences.”

Now, said Garris, who recently began taking aerialist classes, “I’m finding joyful ways to live in the world.”

Just as all people deserve joy, all people deserve to fly in comfort, whether they take up one seat or two.

Or, hell, even three.

Robin Abcarian is a Los Angeles Times columnist. ©2023 Los Angeles Times. Distributed by Tribune Content Agency. 

How could that possibly happen?

Three reasons:

• Sacramento politicians haven’t had the guts to fix a very flawed roller-coaster tax system that generates barrels of revenue in good times but goes bust when the economy sours.

• They spend too much money. That’s self-evident. At any rate, they’re spending more than the state is taking in. A lot more.

• All that aside, rising interest rates cooled the economy by increasing borrowing costs. That stifled home buying and business expansions, according to independent Legislative Analyst Gabriel Petek, who projected the $68 billion deficit last week.

Tax deadline chaos

The analyst says the state stumbled into the red ink hole partly because the federal government extended the normal tax filing deadline this year from April until November. It wanted to ease life for Californians harmed by last winter’s drenching storms. California followed the feds’ lead and did the same.

So what? It meant Gov. Gavin Newsom and legislators didn’t know how much revenue they had to spend before the deadline for passing a budget. They needed to enact a spending plan by the start of the fiscal year July 1. But the revenue data weren’t available until tax returns were filed in the fall.

Their solution was to blindly overestimate the taxes the state would collect.

If they’d known the revenue flow was slowing, mitigating steps could have been taken: spending cuts, tapping reserves, internal borrowing.

“The [tax filing] delay really messed us up,” says H.D. Palmer, Newsom’s budget spokesman. “If we’d had that cash data on hand in spring like normal, it would have required solutions to close the gap and we’d have a much smaller problem today.”

OK, but they could have had the foresight to act long before spring. On Newsom’s watch starting in 2019, annual state spending has jumped by 53% — more than $100 billion from the $203 billion budget he inherited from Gov. Jerry Brown to $311 billion currently.

Yo-yo tax system

But overspending is only part of the problem. There’s another part that neither Republicans nor most Democrats want to talk about: a volatile tax system that overreacts to economic changes.

Less money came in than expected because of California’s warped tax system. It relies mostly on wealthy-income taxpayers — regardless of whether they’re having a good or bad year. The system functions like a yo-yo, performing erratically depending on whether the economy is booming or busting.

Specifically, the state feeds off taxes on rich people’s capital gains, especially their stock earnings. Sometimes stocks tumble. And capital gains become investment losses.

The top 1% of earners pay nearly 50% of the state income tax. And the top one-tenth of 1% pay 28%.

“These lucky folks get a lot of their income from capital gains and stock options,” Palmer says. “It turns out that 2022 was not a great year for the financial market. The Nasdaq dropped 33%, the biggest drop since the Great Recession in ’08. The Nasdaq is relevant because of California’s high-tech economy.”

The top 10% of earners — with taxable incomes above $200,000 — kick in roughly 80% of the tax. California has a very progressive tax system, with the lower 60% of earners paying only around 2%.

The legislative analyst says the state took in $26 billion less than expected in the last fiscal year — “a severe revenue decline.” And he forecasts a “serious” $68 billion deficit through the next fiscal year.

Personal income tax receipts were 22% — $19 billion — less than forecast just from April through November, Palmer says.

Service economy

Putting this in perspective, the personal income tax supplies two-thirds of the state general fund. Back in 1950, when our tax system was stable, the income tax accounted for only 10%. Then, the sales tax was the main revenue source, feeding 60% of the general fund. Today it’s just 16%.

A big reason the sales tax has diminished in importance is that we’ve become less of a retail economy and more of a service economy. But we’re one of the few states that don’t tax services. Our tax system is stuck in the mid-20th century and should be modernized.

What’s needed is to reduce income tax rates at all levels and extend the sales tax to services.

That doesn’t mean taxing haircuts, lawn mowing and baby sitting. But we could tax labor on car repairs, as parts already are. Tax Lakers tickets and concerts. More important, tax attorney, accountant and interior designer fees — services used mostly by big business and the wealthy.

But that thought scares politicians. Most would love to vote for an income tax cut. And it would require only a simple majority vote of the Legislature. But extending the sales tax to services would necessitate a two-thirds vote. That would take strong gubernatorial and legislative leadership. And it has never materialized. Too politically risky.

Former state Controller Betty Yee, a Democrat who’s running for governor, advocated such tax reform for years but backed off.

“People focus on one aspect without looking at the entire system and then just beat me up for wanting to tax services,” Yee told me. “It’s very hard for people to put their arms around the entire system.”

So Newsom and the Legislature will probably cut school funding, trim some other spending, tap into savings, borrow internally and shamefully deploy fiscal gimmickry to “balance” the next budget.

And our tax system will continue to perform erratically.

George Skelton is a Los Angeles Times columnist. ©2023 Los Angeles Times.  Distributed by Tribune Content Agency.

“California has no peers,” Newsom declared. “California dominates.”

About 18 hours later, reality reared its ugly head. The Legislative Analyst’s Office revealed that state tax revenues are running tens of billions of dollars behind expectations due to a slowing economy, creating a monumental budget headache.

The dilemma became apparent when the November income tax filing deadline — seven months later than the original date — passed, and tax receipts for 2022 could finally be counted.

“With the recent receipt of various postponed tax payments, the impact of recent economic weakness and last year’s financial market distress on state revenues has become clearer,” the LAO authors said in a preliminary report on the state’s fiscal situation. “The postponed payments came in much weaker than anticipated.”

LAO analysts Brian Uhler, Chas Alamo and economist Seth Kerstein estimated that 2022-23 revenues are $26 billion under projections and “our updated revenue outlook anticipates collections to come in $58 billion below Budget Act projections across 2022-23 to 2024-25.”

California, they said, started seeing an economic downturn in 2022 as the Federal Reserve System raised interest rates to tame inflation.

“The number of unemployed workers in California has risen nearly 200,000 since the summer of 2022,” they added. “This has resulted in a jump in the state’s unemployment rate from 3.8 percent to 4.8 percent. Similarly, inflation-adjusted incomes posted five straight quarters of year-over-year declines from the first quarter of 2022 to the first quarter 2023.”

When Newsom and legislators finalized a 2023-24 budget in June, they knew that revenue estimates were shaky due to the postponed filing deadline, but assumed that they had a $30 billion-plus gap to bridge. They now know that the hole was much larger. As Newsom finalizes his proposed 2024-25 budget to be unveiled in January, it must account for the current shortfall plus one of similar proportions for the next fiscal year.

Automatic spending reductions triggered by a slowing economy, such as lower mandatory levels of K-12 education support, would — on paper at least — cover some of the gap. But they do little to solve the political dilemma confronting Newsom and legislators as they face pressure to maintain school spending and billions of dollars in other commitments made when the state treasury seemed to be overflowing.

They could tap the state’s reserves, currently more than $30 billion. That’s what the so-called “rainy day fund” is supposed to do when revenues flatten. However, the two-year problem is likely in the $40 billion-$50 billion range, which would quickly absorb reserves and still leave a big problem.

They could do what the state has done in decades past when periodic recessions have hammered revenues, particularly income taxes: run deficits and cover them with on- and off-the-books loans, such as temporarily cutting school aid or draining special funds.

Finally, they could do what those in the Democratic Party’s left wing have wanted to do for years: jack up personal and corporate income tax rates or impose new taxes on personal wealth.

Newsom is the political figure caught in the middle. By word and deed, he wants to concentrate on becoming a major figure in national politics, starting with being an effective surrogate for President Joe Biden’s re-election campaign.

“I’m here to tell the truth about the Biden-Harris record,” Newsom declared early in the debate.

Now, however, Newsom faces what could be a budget deficit of historic proportions because the economy he touted as “booming” is faltering. How he performs could define his political future.

Dan Walters is a CalMatters columnist.

Then the stiff leaves for a while, maybe to answer a call of nature. When he leaves, the average income of the guys still in the bar shoots up, because he’s no longer dragging that average down; when he comes back, the average drops again. But these fluctuations in the average don’t reflect changes in anyone’s income.

Why am I telling you this story? Because it’s most of the story of wages in the U.S. economy since COVID-19 struck. In 2020 the average wage of workers who still had a job shot up, because those who were laid off were disproportionately low-wage service workers. Then, as people resumed in-person shopping, started going to restaurants and so on, growth in average wages was held down because those low-wage workers were being rehired. You need to look through these “compositional effects” to figure out what was really happening to earnings as that played out.

Until recently, I thought everyone — well, everyone following economic issues — knew this. (Assuming that people know more about the numbers than they actually do is an occupational hazard for nerds who become pundits.)

But lately I’ve been seeing even mainstream news organizations publish charts accompanied by commentary to the effect that real wages generally rose under Donald Trump but have generally fallen under Joe Biden, which in turn is supposed to explain why Americans are feeling so negative about the economy.

But that’s not what the charts actually tell us. Mostly they reflect the working stiff temporarily leaving the bar, then coming back.

The spurious wage surge of 2020 is gone, as is the wage stagnation of early 2021. It’s still true that wages lagged behind inflation in 2021 and 2022, but they have run well ahead of inflation this year.

Even this view of economic performance, however, misses some of the temporary distortions caused by the pandemic. Prices of many commodities were very low in 2020 — the price of oil briefly went negative! — not because policy was good but because the world economy was flat on its back, depressing demand. These prices surged as the economy recovered, and there were also large but temporary disruptions to supply chains — remember all those ships waiting for someplace to unload their cargoes?

Oh, and Russia’s invasion of Ukraine brought war to one of the world’s major food-producing areas.

In the end, it’s basically a fool’s errand to try and compare economic performance before and after the White House changed hands; there was just too much crazy stuff going on. What we can say, with considerable certainty, is that while prices have gone up a lot since the pandemic began, most workers’ wages have risen significantly more than the consumer price index.

OK, at this point one runs into a buzz saw of criticism. I am regularly assured by correspondents that economists’ measures of inflation are meaningless, because they exclude food and energy. No, they don’t; economists often use measures of “core” inflation for analytical purposes, but the consumer price index — which is what I’m referring to here — includes everything.

Or I’m told that real people know that inflation is still running hot, whatever the government numbers may say. Actually, the American Farm Bureau Association, a private group, tells us that Thanksgiving dinner cost 4.5% less this year than last. Gasbuddy.com, another private group, tells us that prices at the pump are down more than 30% since their peak last year. Neither turkeys nor gas prices are good measures of underlying inflation, but both show that the narrative of inflation still running wild is just not true.

Sorry, folks, but “immaculate disinflation” — rapidly falling inflation without a recession or a big rise in unemployment — is actually happening. The 2021-22 inflation surge definitely rattled Americans after decades of relative price stability, and I’m not here to lecture people about their feelings. But I guess I am here to lecture journalists about using statistics. Presenting misleading numbers that seem to justify public opinion is actually an act of disrespect: Voters have a right to their feelings, but journalists have a duty to present the facts, as best we can understand them.

And while the public’s negative view of the economy is a major puzzle, acknowledging that puzzle is no reason to soft-pedal the evidence that the U.S. economy is currently doing very well — indeed, much better than even optimists expected a year ago.

Paul Krugman is a New York Times columnist.