Walters: Governor-elect Becerra must quickly confront state budget mess Newsom left behind

November 5, 2026 By Dan Walters 3 Comments

The most fundamental — and arguably most important — duty of a California governor is managing the state budget.

Xavier Becerra, the former attorney general who won the governorship Tuesday, must submit a new budget to the Legislature just days after his inauguration in January. Outgoing Gov. Gavin Newsom is leaving him with a fiscal mess.

Newsom, who will likely launch a presidential campaign, insisted in June that the 2026-27 budget he signed was not only balanced but would remain so during his predecessor’s first year.

Not by a long shot.

During Newsom’s second term, he and the Legislature routinely enacted general fund budgets that spent billions of dollars more than the state’s tax system was producing, covering the gaps with accounting gimmicks, by draining emergency reserves and incurring on- and off-the-books loans.

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A chart in the back pages of the 2026-27 budget reveals that during Newsom’s eight years of managing the budget, the state took in $1.4 trillion in general fund revenue but spent $1.7 trillion, averaging $37 billion in overspending each year. Among other things, the spending spree increased the state’s payroll by 100,000 positions.

Newsom leaves the state with what Gabe Petek, the Legislature’s budget analyst, describes as a $29 billion “wall of debt” that must eventually be repaid, echoing a term that former Gov. Jerry Brown coined in 2010.

Becerra faces a stark choice.

He could continue the deficit spending, running up even more debt — the governmental equivalent of a family maxing out its credit cards to finance its lifestyle. Or he could do what Brown did when he began his second governorship and faced a $35 billion “a wall of debt” from the effects of the Great Recession.

After his 2010 election, Brown engaged in a very public discussion about what it would take to balance the budget and whittle down its debts. He settled on a mixture of spending reductions and temporary sales and income tax increases, plus creating “rainy day” reserves to cushion future revenue drops.

During Brown’s governorship, general fund income and outgo closely matched, the aforementioned chart confirms. He bequeathed a healthy budget to Newsom.

It would take political courage for Becerra to adopt the face-the-music attitude that Brown displayed in 2011. Politically, the easier path would be to emulate Newsom, who was content to overspend revenues while shunning any major tax increases to cover the gaps.

Becerra has been very reluctant to reveal any policy intentions, but in an interview late last month, he indicated that he may be willing to increase taxes — unlike Newsom.

Becerra told Ashley Zavala, of Sacramento’s KCRA-TV, that he’s interested in raising taxes on high-income Californians, taxing employers whose low-paid workers qualify for Medi-Cal health benefits, closing corporate tax loopholes and adopting a mileage-based tax on electric cars.

Click here to read the full article at CalMatters

 

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California’s biggest state worker union authorizes strike in Newsom’s last months

October 10, 2026 By Lynn La Leave a Comment

California’s largest state worker union says it’s ready to strike in the final months of Gov. Gavin Newsom’s administration.

SEIU Local 1000, which represents about 100,000 public employees, announced Thursday morning that its members overwhelmingly authorized a strike with 96% of people who voted in favor of walking out. The union set a date for one-day walkout on Oct. 21. It wants better pay, more affordable healthcare coverage and more flexibility to work from home.

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“It is an important step that state employees are taking,” said Anica Walls, the union’s president.  “They’re exercising their right to hold the line and say, we deserve to be respected, paid and protected for the work that we do.”

The union’s contract expired June 30. It’s pushing Newsom to provide a larger raise and boost to benefits than the administration offered. The union says the state has room to offer more, pointing to a $20 billion increase in general fund spending over the past two years.

The union also filed a complaint with the state’s Public Employment Relations Board, accusing CalHR, the state agency that handles labor negotiations on behalf of the administration, of bad faith bargaining, delaying negotiations and rejecting proposals outright. In late September the board sided with the union, and concluded that CalHR “refused to meet and confer in good faith.”

In response to the board’s findings, Angela Musallam, CalHR’s deputy director of communications, said in an email to CalMatters that “the state has been, and remains open to negotiation, and is prepared to move into mediation to assist the parties in reaching an agreement.”

Musallam added that its focus “continues to be on achieving a fair and responsible agreement, and we remain available at the bargaining table.”

A strike would be unprecedented for the union. It has never held a statewide walkout in the 44-year history of the labor groups that over time coalesced to become Local 1000. It came close to striking in 2016, but an eleventh-hour deal with then-Gov. Jerry Brown averted it.

The union represents almost half of the state government workforce, and includes a wide range of professionals including nurses, clerks, program analysts, information technology staff and custodians.

Its last three-year contract gave workers represented by Local 1000 three successive 3% raises and many received additional special salary adjustments. The total contract was expected to increase state spending cumulatively by $1.5 billion, according to estimates from the time.

A state budget crisis disrupted those plans. The deal was supposed to provide an additional 1% raise in 2025 if certain economic conditions were met, but the Newsom administration withheld that increase. Instead, unions in June 2025 agreed to temporary pay reductions that Newsom sought to balance the budget.

The reductions basically negated the contract’s promised salary increase. Local 1000 also delayed a raise that was supposed to take effect July 1 until next summer.

Civil servants received additional days off of work in those deals, which they can cash out in the future.

If a strike occurs, some of the immediate effects on Californians could include delayed services at the DMV and the state’s unemployment and disability insurance offices, said Walls.

“Realistically we are less than 3% of the budget,” said Walls. “We do all the work that keeps all the necessary benefits for the Californians that deserve them. And in order for us to continue doing the jobs that we do, we simply want the administration to bargain with us in good faith.”

Click here to read the full article in CalMatters

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Newsom signs 4 new California DUI laws. Advocates want more next session

September 27, 2026 By Robert Lewis and Lauren Hepler Leave a Comment

Gov. Gavin Newsom on Friday signed into law four bills aimed at curbing a startling rise in DUI fatalities in recent years, including measures that make it easier to charge repeat drunk drivers with a felony and, if they kill someone, with murder.

The legislation follows a CalMatters series that revealed the state was unable — or unwilling — to get dangerous drivers off the road before it was too late. Many kept driving recklessly even after killing someone, and some even killed again.

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The bills were the last ones standing from an initial package of 17 aimed at addressing traffic deaths. Most failed in the face of fierce opposition from progressive groups that argued increasing enforcement and penalties will disproportionately harm low-income and historically marginalized residents, and are not the best way to address traffic safety.

While some of the bills that passed were pared back during the legislative process, the new laws still notably increase potential penalties for repeat DUI offenders in a state that’s historically had some of the weakest DUI laws in the country.

“The fact that four bills got through to the finish line leaves me very hopeful that California is ready for change and sees the need to make the state safer,” said Jennifer Levi, whose 18-year-old son Braun was killed in May 2025 by a suspected drunk driver with a prior DUI arrest. “I have mixed emotions. My victory is the result of losing a child and I’d do anything in the world to have my son back alive with our family. But I cannot let this happen to other people.”

Levi became a fierce road safety advocate after her son’s death, working with Mothers Against Drunk Driving and pushing state leaders to act. She partnered with state Sen. Bob Archuleta, a Democrat from Norwalk on a bill to significantly increase criminal penalties for repeat drunk drivers. Archuleta’s own granddaughter was killed by a drunk driver. Levi said Newsom and his wife came to her home recently to mark the signing of the bill.

A photo, showing the smiling first couple along with Archuleta and Levi in her dining room, was included with the bill signing announcement.

The resulting law will make it easier to charge drunk drivers with murder if they have a prior DUI arrest – which had been difficult if the previous DUI charge had been pled down to a lesser crime. The law will also increase the criminal penalties for drivers who kill someone in a hit and run if they had a prior DUI at the time of the fatal crash.

“Having lost my granddaughter to a repeat drunk driver, this is personal. No family should have to endure what mine has, or what has happened to the Levi family,” said Archuleta, according to the statement announcing the bill signing. “Thank you to Governor Newsom for taking bold action to support families that have been devastated by drunk drivers. These are preventable tragedies. Nothing will ever bring my Samantha back or bring Braun back to the Levi family, but in signing SB 907 California is finally stepping up for victims.”

Other bills the governor signed included one from Assemblymember Nick Schultz, a Democrat from Burbank. That new law will allow prosecutors to charge a third DUI within 10 years as a felony. Previously, it wasn’t until a fourth DUI that law enforcement could seek the stiffer charges.

Newsom also signed into law two bills from Assemblymember Tom Lackey, a Republican from Palmdale who spent years working as a California Highway Patrol officer before joining the Legislature. One increases the points that most drivers convicted of killing someone while driving drunk get on their license from two to three. The bill initially would have increased the points for all vehicular manslaughter convictions and not just those involving intoxication, but it was watered down during the session. Lackey’s other successful bill requires the DMV to revoke a driver’s license for six years if they drive drunk and hurt someone after having four prior DUIs.

Click here to read the full article in CalMatters

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California lawmakers just chose a billion-dollar corporate subsidy over affordable housing and transit

September 19, 2026 By Barry Vesser 1 Comment

OPINION — When California families start thinking about their budgets for next year, they’ll need to set aside even more for their utility bills. And more for their commute. And yet more for rent.

Those are some of the immediate consequences of the California Air Resources Board’s (CARB) recent decision to undermine California’s Cap-and-Invest program, the state’s signature climate program. Last year, California households received anywhere from $70 to $519 back on their utility bill via the Climate Credit, which is funded out of Cap-and-Invest proceeds. Thanks to new regulations approved by the legislature in August, funding for the Climate Credit could be cut by $1.7 billion between now and 2030.

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That translates to a 17% decrease for the average household and yet another financial burden for California families already struggling to make ends meet.

But the damage doesn’t stop there.

The idea behind Cap-and-Invest is that it limits emissions from major polluters by charging them, generating billions of dollars annually for community investments through the Greenhouse Gas Reduction Fund (GGRF). Just last year, state lawmakers reached a deal to invest in affordable housing, public transit, clean water, and air quality projects through the GGRF.

New rules mean there’s not enough money in the GGRF, and those public investments are going away. Transit investments were cut by hundreds of millions of dollars, which has some local officials already talking about service cuts and layoffs. Affordable housing investments were all but zeroed out, which could impact 177 different projects statewide that were counting on GGRF funding. And while legislators reached a last-minute deal to preserve clean air and water investments for this year, they still don’t have a long-term plan to fund programs that replace lead pipes and monitor air quality in disadvantaged communities.

Instead, the money will go toward a new handout to the same corporations that are already underpaying for the pollution they spew.

This year, CARB created a new industry subsidy called the Manufacturing Decarbonization Incentive (MDI) and minted 118 million new “allowances” (akin to a credit to emit a certain amount of climate pollution) to fund it. These allowances sit outside the cap structure and have no clear verification standards or guardrails. They’re worth roughly $4 billion and amount to a massive giveaway to fossil fuel refiners and manufacturers.

Click here to read the full article in the Capitol Weekly

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Deficiency Determinations

September 7, 2026 By Chris Micheli Leave a Comment

Deals with deficiency determinations under the California Sales and Use Tax Laws

Article 2 of Chapter 5 of Part 1 of Division 2 of the Revenue and Taxation Code deals with deficiency determinations under the California Sales and Use Tax Laws.

Section 6481 provides that, if the board is not satisfied with the return or returns of the tax or the amount of tax, or other amount, required to be paid to the state by any person, it may compute and determine the amount required to be paid upon the basis of the facts contained in the return or returns or upon the basis of any information within its possession or that may come into its possession.

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One or more deficiency determinations may be made of the amount due for one or for more than one period. When a business is discontinued, a determination may be made at any time thereafter, within the periods specified, as to liability arising out of that business, irrespective of whether the determination is issued prior to the due date of the liability.

Section 6482 provides that the amount of the determination, exclusive of penalties, is required to bear interest at the modified adjusted rate per month, or fraction thereof, from the last day of the month following the quarterly period for which the amount or any portion thereof should have been returned until the date of payment.

Section 6483 states that, in making a determination the board may offset overpayments for a period or periods, together with interest on the overpayments, against underpayments for another period or periods, against penalties, and against the interest on the underpayments. The interest on underpayments and overpayments is computed in the manner set forth in law.

Section 6484 states that, if any part of the deficiency for which a deficiency determination is made is due to negligence or intentional disregard of this part or authorized rules and regulations, a penalty of 10 per cent of the amount of the determination is added.

Section 6485 says that, if any part of the deficiency for which a deficiency determination is made is due to fraud or an intent to evade this part or authorized rules and regulations, a penalty of 25 percent of the amount of the determination is added.

Section 6485.1 provides that any purchaser of a vehicle, vessel, or aircraft who registers it outside the State of California for the purpose of evading the payment of taxes due under this part is liable for a penalty of 50 percent of any tax determined to be due on the sales price of the vehicle, vessel, or aircraft.

Section 6486 requires the department to give to the retailer or person storing, using, or consuming tangible personal property written notice of its determination. The notice is to be served in one of the three specified manners.

Section 6487 states that, except in the case of fraud, intent to evade this part or authorized rules and regulations, or failure to make a return, every notice of a deficiency determination can be served within three years after the last day of the calendar month following the quarterly period for which the amount is proposed to be determined or within three years after the return is filed, whichever period expires the later.

In the case of failure to make a return, every notice of determination must be served within eight years after the last day of the calendar month following the quarterly period for which the amount is proposed to be determined. For taxpayers filing returns on an annual basis, except in the case of fraud, intent to evade this part or authorized rules and regulations, or failure to make a return, every notice of a deficiency determination must be served within three years after the last day of the calendar month following the one-year period for which the amount is proposed to be determined.

Section 6487.05 explains that the period during which a deficiency determination may be served to a qualifying retailer is limited to three years after the last day of the calendar month following the quarterly period for which the amount is proposed to be determined. The term “qualifying retailer” is defined.

Section 6487.06 provides that the period during which a deficiency determination may be served to a qualifying purchaser is limited to three years after the last day of the calendar month following the quarterly period for which the amount is proposed to be determined. The term “qualifying purchaser” is defined.

If the department makes a determination that the purchaser’s failure to timely report or remit the taxes imposed by this part is due to reasonable cause or due to circumstances beyond the purchaser’s control, the purchaser may be relieved of any penalties imposed by this part. Any purchaser seeking relief from penalties imposed by this part is required to file a statement, signed under penalty of perjury, setting forth the facts that form the basis for the claim for relief.

Section 6487.07 allows a deficiency determination to be issued to a qualifying retailer only for those liabilities arising under this part for sales made. The term “qualifying retailer” is defined.

Section 6487.1 provides, in the case of a deficiency arising under this part during the lifetime of a decedent, a notice of deficiency determination is required to be served within four months after written request therefor, in the form required by the department, by the fiduciary of the estate or trust or by any other person liable for the tax or any portion thereof.

Section 6487.2 states that a notice of determination issued to an individual who was a general partner, as shown on the department’s records, and who, prior to the period covered by the determination, withdrew from the partnership, causing a change in ownership, and failed to notify the department, is to be served within four years after the last day of the calendar month following the quarterly period in which the change of ownership occurred.

An individual who was a general partner, as shown on the department’s records, who withdraws from a partnership without notifying the department of the change in ownership, is not liable for any unpaid, self-assessed liability of the partnership that becomes due at least three years after the last day of the calendar month following the quarterly period in which the change in ownership occurred.

Click here to read the full article in the California Globe

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California lawmakers vote to change childhood sex abuse law

September 1, 2026 By Dakota Smith Leave a Comment

SACRAMENTO — The California state Legislature voted Sunday to amend a 2019 law that extended the statute of limitations for childhood sexual abuse claims but was blamed for draining the coffers of municipalities and school districts.

Senate Bill 577 by John Laird (D-Santa Cruz) follows years of heated debate over the state law, which resulted in scores of lawsuits against cities, counties and schools.

Since the law was enacted, L.A. County has agreed to pay nearly $5 billion to settle more than 11,000 claims stemming from alleged sexual abuse committed by government employees in foster homes and juvenile halls.

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The bill passed by the Legislature on Sunday requires victims older than 40 to provide evidence that the public entity was aware of the misconduct that resulted in the assault and failed to take reasonable steps to avoid it.

It also states that attorneys who file fraudulent sex abuse lawsuits can be fined $25,000 per violation. The Times reported last year on nine plaintiffs who said they were paid to sue the county over sex abuse, some of whom said they were told to fabricate their claims.

Consumer attorneys, counties and victims rights groups jostled over the elements of the proposed bill over the last few months.

Lawmakers stopped short of capping payouts in the bill, a change sought by some local governments and school districts.

The legislation follows multiple attempts to change the law in recent years. Sen. Benjamin Allen (D-Santa Monica) tried last year to increase the burden of proof for sex abuse cases, but pulled the bill after outrage from victims rights groups.

Click here to read the full article in the LA Times

 

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Michael Gates Can Win: Raises $100K at Fundraiser

June 28, 2026 By Katy Grimes 1 Comment

Make Public Safety Great Again

Former Huntington Beach City Attorney and former Deputy Assistant Attorney General Michael Gates, a Republican, is running for California Attorney General against incumbent Democrat Attorney General Rob Bonta in the 2026 California Attorney General election.

Friday, June 26, at a  fundraising reception for Michael Gates, with Special Guest Ambassador Richard Grenell,  Gates raised $100,000.

This is indicative of a fundraising trend going forward, as Gates is campaigning on public safety as his top priority – something that has been eroded since Bonta’s appointment and subsequent election.

Gates is running a strong campaign and has already achieved a historic primary victory.

In California’s top-two “Jungle” primary, the top two candidates advance to the November general election regardless of party. Bonta and Gates advanced, defeating Green Party candidate Marjorie Mikels. Approximate final results:

  • Rob Bonta (D) (incumbent): 56.6% (4,978,431 million votes)
  • Michael Gates (R): 37.9% (3,336,367 million votes)
  • Marjorie Mikels (G): 5.4% (478,178 votes)

California’s Primary Election total turnout was high, with over 8.7 million votes counted in this race. Gates received a strong showing for a Republican in a statewide California race — especially in a top-two primary.

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“I am proud to support his effort to restore accountability, public safety, and the rule of law in California, and I would be honored to have you with us for this important evening in Bel Air,” Grenell said on the invitation.

Indeed. Make Public Safety Great Again.

This California Attorney General Primary Results 2026 map speaks volumes, and goes a long way to explaining California’s red versus blue counties.

Gates’ was one of the strongest recent Republican performances in this office.

Michael Gates’ campaign for California Attorney General has shown solid grassroots and law enforcement support but remains significantly outgunned by incumbent Rob Bonta’s war chest, according to the Mercury News.

Since entering the race in early 2026, Gates raised approximately $1.03 million leading into the primary. Total direct contributions reported around $1.05 million. 

Bonta, in the same fundraising period, raised $605,000, but his overall campaign, built since his appointment as AG in 2021, had a war chest with over $6.4 million cash on hand.

Click here to read the full article in the California Globe

 

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How California Regulations Are Made

June 22, 2026 By Chris Micheli Leave a Comment

California has over 200 State agencies, departments, boards, and commissions

California has over 200 State agencies, departments, boards, and commissions that make public policy through their authority to adopt regulations. A list of State agencies that have adopted regulations can be found on the website of California’s Office of Administrative Law (OAL), which is found at www.oal.ca.gov

OAL’s website also provides direct access to the California Code of Regulations (CCR), which is organized under various subject matter titles, of which there are 28 titles. These titles contain the over 60,000 state regulations that are currently in effect.

California’s Administrative Procedure Act (APA) contains required procedures for rule-making and administrative hearings conducted by all of these agencies and departments. The APA is found at Chapter 3.5, 4 and 5 commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code.

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In addition, there are regulations governing the APA found at CCR Title 1, Sections 1 – 120. OAL’s website includes checklists used by OAL to review regulations, as well as their publications such as California Rulemaking Law under the Administrative Procedure Act.

Generally speaking, the authority of State agencies and departments to adopt policy (i.e., rulemaking) is defined and restricted by the authorizing statute. Statutes usually prescribe each agency’s authority to adopt policy; and, it is an established principle of administrative law that an agency cannot exceed its legally prescribed authority to regulate. On the other hand, many statutes confer broad powers to some state agencies regarding matters that directly affect the general public.

There are opportunities for interested parties to be informed, observe and participate in rulemaking activities of State agencies and departments. In particular, interested parties have significant access to the rulemaking activities of state agencies by virtue of the APA.

For example, every state agency is required to annually adopt a “rulemaking calendar” that is published on their website. Moreover, agencies establish interested parties mailing lists for notices of rulemaking activities by that agency or department.

California law requires every State agency to satisfy the basic minimum procedural requirements established by the APA for the adoption, amendment or repeal of a regulation, unless the agency is expressly exempted by statute. According to OAL, “California courts have long recognized that under the Constitution the Legislature may by statute delegate quasi-legislative powers to a state agency in the executive branch, so long as adequate standards are provided to guide the agency.”

The agency develops four required documents during the preliminary activity stage which are needed to initiate the formal rulemaking process: the express terms of the proposed regulation (i.e., the proposed text), the initial statement of reasons, the fiscal impact statement, and the notice of proposed rulemaking. These documents are initially filed with OAL and then published by the agency.

Next begins the 45-day opportunity to submit written, faxed or e-mail comments on all or any part of a proposed rulemaking when the notice of proposed rulemaking is published in the California Regulatory Notice Register. The notice of proposed rulemaking is also mailed to interested parties and is posted on the rulemaking agency’s website.

According to OAL, “a regulation must be easily understandable, have a rationale, and be the least burdensome, effective alternative. A regulation cannot alter, amend, enlarge, or restrict a statute, or be inconsistent or in conflict with a statute. “

Under the APA, an agency has an option as to whether it wishes to hold a public hearing on a proposed rulemaking. However, if an agency does not schedule a public hearing, and any interested person submits a written request for one within 15 days prior to the close of the written comment period, then the agency must hold a public hearing. Because of this requirement, an agency usually schedules a public hearing at the outset.

The APA requires a rulemaking agency to consider all relevant information presented to it during the comment period before adopting, amending or repealing the regulation. After the initial public comment period, the agency will often decide to change its initial proposal either in response to public comments or on its own.

Before a rulemaking agency adopts regulatory changes, it must mail a notice of opportunity to comment on those proposed changes along with a copy of the text of the proposed changes to each person who has submitted written comments on the proposal, testified at the public hearing, or asked to receive a notice of proposed modification. The agency must also post the notice on its website.

Click here to read the full article in the California Globe

 

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California Democrats deploy risky strategy to shut out Republican governor candidates

May 14, 2026 By Zain Khan 2 Comments

A growing number of California Democrats are embracing an unusual election strategy ahead of the state’s crowded gubernatorial primary: waiting until the final possible moment to cast their ballots.

The tactic is being fueled by anxiety within left-wing circles over the state’s open primary system, where the top two candidates advance to the November election regardless of party affiliation, infamously earning the name “jungle primary.”

With multiple Democrats splitting the vote and two Republicans performing strongly in polling, some progressive activists fear a scenario in which Democrats are entirely excluded from the general election, CalMatters reported.

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The concern intensified earlier in the race when many Democratic voters rallied around former Congressman Eric Swalwell in hopes of consolidating support behind a single candidate.

Swalwell’s campaign, which at the time was gaining momentum as he lead polls among others his block, collapsed after multiple women accused him of sexual assault, reopening uncertainty among Democratic voters searching for a viable contender.

Now, some party activists and politically engaged voters are urging Democrats to hold on to their ballots until late in the election cycle, monitor polling trends and then unite behind whichever Democrat appears most capable of advancing.

Katie Evans-Reber, a San Francisco voter, said the uncertainty has changed the way she plans to vote this year.

“In a normal year,” Evans-Reber said she would likely support former U.S. Rep. Katie Porter, even though Porter currently trails the frontrunners in polling. But Evans-Reber said the political stakes feel much higher this election cycle.

Click here to read the full article in the New York Post

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With more money than ever, California’s biggest pension funds are a political battleground

May 12, 2026 By Adam Ashton Leave a Comment

Keeping up with your California representatives felt impossible before. Now you can watch them like a hawk: Sign up for My Legislator, your weekly, personalized report that tracks what your state representatives say and do.

California’s two biggest public pension funds have more money than ever — and they’re hearing from more people than ever on how those assets should be used to change the world.

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The boards at the California Public Employees’ Retirement System and the California State Teachers’ Retirement System are facing campaigns from groups that want them to pull money out of companies associated with the Trump administration, scale back investments in fossil fuels and break with private equity firms over their labor records.

The list includes electric car maker Tesla, surveillance company Palantir, private companies that operate immigrant detention centers, ExxonMobil, Chevron and private equity firm Apollo Global Management.

To some extent, divestment campaigns are routine business at CalPERS and CalSTRS, which hold assets worth a combined $1 trillion and are headquartered in the capital of a deep blue state. 

But the combination of Trump-era politics and a concerted push by labor in the Legislature to force the pension funds to open the books on private equity holdings is attracting the focus of a more diverse mix of advocates.

“It’s politics,” said Richard Costigan, a Republican who served on the CalPERS board from 2011 to 2019 as an appointee of Democratic Gov. Jerry Brown. “When you look at Palantir and Tesla, it’s driven by politics. Seriously, why would you not invest in Palantir?”

The rebuttal: Despite their earnings and stock value today, the companies affiliated with the Trump administration’s immigration enforcement program are taking on serious reputational risk that could backfire on the funds. Separately, they say putting money into fossil fuel companies poses hazards both for the environment and for pension systems banking on long-term investments.

The pension funds “should be aligning their investments with the values of their state, the values of their members, and the long-term interests of their members,” said Richard Brooks, the climate finance program director at the advocacy organization Stand.Earth.

He recently released a study tallying CalPERS and CalSTRS investments in companies that participate in the Trump administration immigration sweeps, such as Palantir and private prison companies CoreCivic and GeoGroup. 

“I see a disconnect right now,” he said.  

Staff at CalPERS and CalSTRS oppose divestment and they consistently fight legislation that would tie their hands. Both systems are underfunded and owe tens of billions more than their assets, a crisis that in 2012 led the Legislature and then-Gov. Jerry Brown to pass a law mandating less generous pension benefits for employees hired after that year. 

But CalPERS and CalSTRS have pulled money out of industries in the past. CalPERS divested from firearms in 2013 and from tobacco in 2016. They’re also barred by state law from investing in coal as well as in businesses connected to Iran.

Click here to read the full article in CalMatters

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