After weeks of negotiations and at least one all-night bargaining session, Limón’s office had helped broker a wildfire liability agreement that backers said would protect fire victims while still holding utility companies accountable when their equipment sparks catastrophic blazes. The Senate had held firm against Gov. Gavin Newsom for months, refusing to budge on how the costs of wildfires should be shared and reduced for utility companies.

Then the deal collapsed.

In a chaotic hour-long meeting on the final morning of session — after the legislative deadline had technically passed — Assembly leaders walked away from the framework Limón had negotiated with Assembly Speaker Robert Rivas and the governor’s office. Rivas said the agreement didn’t deliver “the relief, the accountability or the meaningful reform that Californians deserve.” Utility workers and electric industry lobbyists had spent days mounting an aggressive campaign against the plan.

Shortly after the Assembly rejected the deal, Limón told reporters the Senate had the votes to pass it anyway.

“There’s certainly a sense of disappointment,” she said, standing alongside seven fellow senators she encouraged reporters to question directly.

Since her colleagues chose the Santa Barbara Democrat to lead the chamber last summer, one thing has become clear: Limón wants attention on her caucus, not on herself.

Interviews with current and former lawmakers and staffers describe a leader who has deliberately avoided a top-down management style. Unlike her predecessor, Sen. Mike McGuire — whom many members and staffers privately described as a micromanager — Limón has taken the slower route of building consensus, giving individual senators more ownership over issues they care about personally.

She didn’t end the session with a marquee victory to point to. But in her first year as pro tem, Limón made incremental but real progress on thorny issues including new tax proposals and reforms to sexual assault liability law, while shielding her caucus from several politically dangerous votes pushed by the governor’s office.

And even though a difficult budget year threatened to splinter the caucus and test the limits of her consensus-driven approach, Limón’s biggest wins this year came largely from keeping her members unified — even when that meant clashing with Newsom.

“Our ability to get things done isn’t based on just one, two, three or four members,” Limón said in an interview with CalMatters. “I think it’s really about the caucus itself.”

For some of her colleagues, even the failed wildfire deal counted as a kind of win.

“We didn’t come across as being unable to make a decision,” said Sen. Caroline Menjivar, a Van Nuys Democrat. “We were unified in the decision we made, and we stuck to it.”

Navigating a tight budget

Limón entered the year facing the possibility of a session dominated by infighting, given the state’s grim budget outlook and the long list of priorities competing for limited dollars.

Newsom’s budget proposal leaned heavily on capturing windfall revenue tied to artificial intelligence and shoring up the state’s reserve fund. New taxes to offset federal cuts and address the state’s longer-term revenue gaps seemed unlikely, given Newsom’s presidential ambitions and the Legislature’s own desire to lower the cost of living for Californians ahead of upcoming elections.

Even so, Limón and her caucus pushed forward with a new tax proposal known as the “fair share” plan, which would require large corporations with significant numbers of employees enrolled in Medi-Cal to pay a payroll tax to help cover those workers’ health care costs.

Sen. John Laird, whom Limón tapped to chair the budget committee, said the caucus coalesced around the idea during a two-day budget retreat in early spring. The Senate’s budget plan, released in April, included the tax. A month later, Newsom signaled openness to new revenue sources. From there, Laird said, Limón and Senate Democrats pushed the Assembly to at least study the concept.

The Legislature ultimately passed Senate Bill 177, a scaled-back version that ordered a study on how the state could implement such a tax, which Newsom signed in July. Limón’s team still counted it as a win: Democratic gubernatorial candidate Xavier Becerra endorsed the tax proposal and pledged to implement it if elected.

“She brought a unified caucus to the negotiating table, and I think she showed real skill in navigating all the differences within the caucus to reach one unified position,” Laird said.

Sen. Eloise Gómez-Reyes, one of five women of color serving as budget subcommittee leaders under Laird, credited some of that collaborative spirit to the number of women in leadership roles this year.

“I’ll tell you, when we first got together, when we looked around at each other, we said, ‘This is wonderful,'” she said of the budget leadership team.

Laird noted that as a member of Limón’s leadership team and the Rules Committee — which oversees the Senate’s internal operations and bill assignments — he often found himself in rooms filled mostly with women. He pointed out that he graduated college before the first woman was ever elected to the state Senate, in 1976. The chamber reached gender parity in 2024 and has maintained it since.

“This isn’t one white guy running everything,” Laird said. “There’s diversity in the caucus, and everybody sees that in the leadership and in how all the Democratic senators are included.”

Committed to justice for victims

Sen. Sasha Renée Pérez, a Pasadena Democrat who represents fire-ravaged Altadena, said she was glad Limón included her on the Senate’s wildfire liability working group.

California’s three largest investor-owned utilities — powerful players in state politics — have aggressively lobbied Newsom to reduce what they must pay when their equipment causes wildfires. The companies pushed to ban subrogation, the practice that allows insurers to recoup claim payments from the parties responsible for a disaster, including utilities.

Limón, who previously advocated for survivors of the 2018 Thomas Fire in her own district, told Pérez she wanted to make sure victims remained the central focus of whatever policy the Senate ultimately supported.

“I recognize that wasn’t something she had to do,” Pérez said. “So it definitely meant a lot to me, and to my constituents as well.”

Pérez said Limón took time to meet with hundreds of Altadena residents who traveled to Sacramento to voice frustration over the governor’s proposal to roll back subrogation rights and cap non-economic damages, such as pain and suffering, for fire victims. At victims’ urging, the Senate succeeded in stripping both of those controversial provisions from the deal.

Limón similarly prioritized including survivors of sexual assault in discussions between the two chambers over how the state should help cash-strapped local governments and school districts facing lawsuits from people who say they were assaulted as children by employees of those institutions.

Menjivar said Limón appointed her to the working group addressing sexual assault liability in part because of her background as a social worker. Representing Los Angeles County — which has paid roughly $5 billion to victims — puts Menjivar’s district at the center of the issue. When the Senate tried to negotiate a deal on rising costs last year, Menjivar was one of five senators, including Limón, who opposed the plan because it too severely limited victims’ rights.

While cities, counties and school districts wanted to cap the amount victims could recover in damages, victim advocates argued that any cap amounted to putting a price tag on their abuse. Limón and Senate Democrats largely sided with victims and refused to accept any plan that included damage caps. Those caps were left out of the final agreement, which also introduced new strategies and safeguards aimed at preventing child sexual abuse.

“Listening to the most vulnerable people, the ones without special interest funding behind them, showed incredible strength as a leader,” said Chantel Johnson, an advocate for youth in foster care and the justice system at the Youth Law Center. “We definitely could have been left out.”

Standing up to the governor

Over the summer, Limón made the unusual choice to stay publicly silent on two controversial parole board commissioners whom Newsom had reappointed after they approved the release of men convicted of sexually abusing children in the 1990s — a move that largely slipped past both the press and Republican lawmakers.

The approach spared Senate Democrats from having to cast politically unpopular confirmation votes and effectively ended the careers of two veteran parole board members without a formal rejection. Criminal justice advocates said the maneuver further politicized the process. Newsom’s office declined to comment on the decision.

Limón’s office also gave local lawmakers room to push back on other gubernatorial priorities, including the tech billionaire-backed California Forever proposal for a shipyard in Solano County, and a proposed environmental exemption for a Santa Monica developer. Both efforts collapsed in the final hours of last month’s session.

Outgoing Senate Republican leader Brian Jones of San Diego said Limón has taken a firmer stance against the governor than her predecessors did.

Especially during the COVID-19 pandemic, Jones said, “the Legislature just kind of got run over by the governor, so to speak.” This year, he said, lawmakers knew what the governor’s priority bills were, but many of them “never got done.”

Sen. Roger Niello of Roseville, the incoming Republican leader, said Limón is well-regarded across party lines and remains consistently accessible to hear out the GOP’s perspective.

Looking ahead, Limón said the biggest challenge she anticipates is knowing when the time is right to step aside and hand the gavel to a new pro tem — a transition that can either be carefully planned or turn into an abrupt ouster. All state lawmakers face 12-year term limits, and Limón’s tenure runs through 2028.

“A leader has to know when it’s time to make a change,” she said.

Original source: CalMatters

The post California’s Most Powerful Woman in Government Is Reshaping the State Legislature appeared first on The Hemet & San Jacinto Chronicle.

The Santa Barbara Democrat, who took over as Senate President Pro Tem last summer, closed out her first legislative session without the marquee win her team had hoped for. A wildfire liability deal she spent weeks negotiating with Assembly Speaker Robert Rivas and Gov. Gavin Newsom collapsed in the final hours of the session, after utility companies and their allied labor unions launched an intense lobbying push against it. Rivas ultimately pulled the plug, saying the agreement failed to deliver real accountability or relief for wildfire survivors.

Even so, Limón emerged from the wreckage with her standing among Senate Democrats largely intact — a notable feat given how contentious the negotiations had become. Minutes after the deal fell apart, she stood before reporters flanked by seven caucus members and calmly noted that the Senate had the votes to pass the measure had the Assembly not walked away.

“There certainly is a sense of disappointment,” she said, before turning the microphone over to her colleagues.

That gesture, according to lawmakers and staff who spoke with CalMatters, captures much of what has defined Limón’s leadership style over the past year: a preference for sharing credit — and blame — rather than dominating the spotlight herself.

Interviews with current and former legislators and Capitol staff describe a marked contrast between Limón and her predecessor, Sen. Mike McGuire, who was known in Capitol circles as a hands-on, often controlling leader. Limón, by comparison, has taken a slower, more collaborative approach, building consensus among her members and giving individual senators more latitude on issues close to their hearts.

The strategy was tested early. Limón took the gavel amid a bleak budget outlook, with Newsom’s spending plan focused on capitalizing on artificial intelligence tax revenue and building up reserves rather than expanding programs. Passing any new tax seemed unlikely, especially with Newsom weighing a presidential run and lawmakers eager to ease the state’s cost-of-living burden ahead of an election year.

Yet Limón’s caucus pushed forward anyway, rallying behind what became known as the “fair share plan” — a proposal to tax large corporations that rely heavily on Medi-Cal to cover their employees’ health care. Sen. John Laird of Santa Cruz, whom Limón tapped to chair the Senate Budget Committee, said the idea gained traction during an early spring retreat and made its way into the Senate’s budget proposal by April. A month later, Newsom signaled he might be open to new revenue streams, giving Limón an opening to press Assembly leaders to at least study the concept.

The final product, Senate Bill 177, was far more modest than the original idea — a study of how such a tax could work — but Limón’s team considered it a foothold. Democratic gubernatorial candidate Xavier Becerra has since embraced the concept, pledging to pursue it if elected.

“She took a united caucus into the negotiations,” Laird said. “It was a high level of skill that navigated all the differences to get to a unified position.”

Sen. Eloise Gómez-Reyes, one of several women of color who chair budget subcommittees under Laird, said the caucus’s collaborative tone owes something to the makeup of Senate leadership itself. Laird, one of the few men in those closed-door budget meetings, noted that the Senate reached gender parity in 2024 — a milestone unimaginable when he was in college, decades before California elected its first woman to the chamber.

“It’s not a white guy herding everybody around,” Laird said. “There’s diversity in the caucus, and everybody sees it in the leadership.”

Limón also made a point of centering the concerns of wildfire and sexual abuse survivors in some of the session’s thorniest negotiations. Sen. Sasha Renée Pérez of Pasadena, whose district includes fire-ravaged Altadena, said she was struck by how Limón made time to meet with hundreds of Altadena residents who traveled to Sacramento to voice opposition to Newsom’s proposal to limit insurers’ ability to recover wildfire costs from utilities and cap certain damages for victims. Those provisions were ultimately stripped from the deal at residents’ urging — the same deal that later collapsed in the Assembly.

“I recognize that that was not something she needed to do,” Pérez said. “It meant a lot to me, and it’s meant a lot to my constituents too.”

A similar dynamic played out in negotiations over how the state should help school districts and local governments facing lawsuits from people who say they were sexually abused as children by public employees. Sen. Caroline Menjivar of Van Nuys, who works as a social worker and represents a Los Angeles County district that has already paid nearly $5 billion to survivors, helped lead that effort for Limón. Menjivar had broken with Senate leadership last year over an earlier proposal she felt did too little to protect survivors’ rights.

This time, Limón and most of her caucus rejected any deal that would cap damages for survivors — a red line for advocates who argued that any cap effectively put a price on abuse. The final agreement, signed into law, left those caps out and added new prevention measures.

“To listen to the people that were the most vulnerable and had no special interest funding really just showed incredible strength as a leader,” said Chantel Johnson, an advocate with the Youth Law Center who works with foster and justice-involved youth.

Limón also proved willing to quietly push back against the governor on other fronts. She declined to bring up for confirmation two parole board commissioners reappointed by Newsom after they approved the release of men convicted of sexually abusing children in the 1990s — a low-profile move that spared Senate Democrats an uncomfortable vote while effectively ending both commissioners’ tenures. Criminal justice advocates said the maneuver further politicized the parole process; Newsom’s office declined to comment.

She similarly gave local lawmakers room to oppose other Newsom-backed priorities, including a Solano County shipbuilding proposal tied to the California Forever development group and a contested environmental exemption sought by a Santa Monica developer. Both efforts died in the closing days of the session.

Outgoing Senate Republican Leader Brian Jones of San Diego said Limón has pushed back against the governor more firmly than her recent predecessors. During the pandemic years, he said, “the Legislature just let the governor lead them around by their noses, so to speak.” This year was different, he said — lawmakers knew which of Newsom’s priorities were coming, and several simply “never came” to fruition.

Incoming Senate Republican Leader Roger Niello of Roseville said Limón has earned respect across party lines, describing her as consistently “accessible” even to the minority party. His only concern going forward, he said, is how gracefully she’ll eventually hand off the gavel. All state lawmakers face 12-year term limits, and Limón’s tenure in the Senate is set to end in 2028.

“A leader has to know when it’s time to change,” Niello said.

Original source: CalMatters

The post Inside the Growing Influence of California’s Top Legislative Power Broker appeared first on The Hemet & San Jacinto Chronicle.

But here’s the problem: once the ballots are counted and construction crews move in, it becomes remarkably hard to answer a basic question — did these projects actually deliver what voters were told they would?

The state has done a reasonably good job tracking how bond money gets spent, largely as a safeguard against waste and misuse. What’s been missing is a consistent effort to measure whether that spending produced the results residents were promised.

The stakes are not small. Since 2000, California has issued $196 billion in general obligation bonds, with $81.8 billion still outstanding. This fiscal year alone, the state will pay nearly $8.6 billion just to service that debt. These bonds fund priorities that Californians clearly support, allowing the state to pay for long-term projects while spreading the cost across many years.

But as bond spending grows, so should the state’s commitment to showing what that money actually accomplished.

Did a wildfire resilience program funded by bonds actually reduce fire risk? How many families found housing because of bond-backed developments, and did those investments make homes more affordable? Did transportation or water projects deliver on their promises? These are the kinds of questions any investor would ask before putting money into a venture. Taxpayers and elected officials deserve the same clarity.

In the private and nonprofit worlds, measuring results is simply expected. Organizations don’t just report how much they spent — they show what that spending achieved. Public dollars should be held to the same expectation, not to point fingers, but to make smarter decisions going forward.

Right now, California requires state agencies to report on how bond funds are spent, but enforcement of that requirement is inconsistent, and the reports that do exist tend to focus on dollars disbursed rather than outcomes achieved. That leaves lawmakers, taxpayers and future voters guessing about what worked, what fell short, and what needs to change.

One modest step toward fixing this is Assembly Bill 1754, introduced by Assemblymember Blanca Pacheco. The bill would require future statewide bond measures to spell out clear goals from the start, establish real benchmarks for tracking progress, and gather data that can be shared publicly in an easy-to-understand format. Picture something like a one-page report card for each bond program — not a bureaucratic mountain of paperwork, but a simple summary anyone could read.

Importantly, the cost of this reporting would come from bond administration funds, not the state’s general fund, meaning it wouldn’t compete with other budget priorities.

Some critics worry that new reporting requirements could slow down funding or add red tape. But defining how a project’s success will be measured should naturally follow from the goals used to justify the bond in the first place. The reporting itself would be brief — often just a sentence or a single data point per project, folded into a short summary rather than a lengthy audit.

Accountability and efficiency don’t have to be at odds. Better outcome reporting can actually help lawmakers spot which investments are working, refine future bond proposals, and give the public more confidence in how their tax dollars are being used.

That confidence is going to matter a great deal in the years ahead. California will keep asking voters to fund schools, housing, transportation, water systems and climate resilience projects. Those requests deserve the backing of a public that trusts the system is working.

The best case for future bond measures won’t just be that the state has pressing needs — plenty of places do. It will be that California can point to past investments and show they made a real difference.

Evidence builds trust. Trust builds confidence in public institutions. And that confidence is what allows California to keep investing in its own future.

Original source: CalMatters

The post California Voters Approved Billions in Bond Measures — So Why Isn’t Anyone Tracking the Results? appeared first on The Hemet & San Jacinto Chronicle.

Three measures advancing through the Legislature would either boost pay for Cal Fire firefighters or expand retirement benefits for public safety workers across California. Backers say the changes are a fair trade-off for people who put their lives on the line and endure the kind of physical toll that can cut careers short. So far, the bills have drawn strong bipartisan support in the Legislature.

“Every day has a cost, and it’s one that we pay with our lives,” Darrell Roberts, president of California Professional Firefighters, told lawmakers at a recent hearing on a bill that would let public safety employees retire at 55 instead of 57. “This job is physically and mentally demanding in the extreme, and asking us to work until 57 is pushing us not just to our limit but beyond it.”

The proposals aren’t cheap. Together, they could add hundreds of millions of dollars a year in new state spending and billions more in long-term financial obligations — a tough pill for Gov. Gavin Newsom to swallow given warnings of budget deficits ahead.

The retirement-related bills, in particular, are stirring memories of California’s pension crisis during the Great Recession, when the state’s major retirement funds lost tens of billions of dollars almost overnight. Critics point back to benefit increases signed by then-Gov. Gray Davis in the years before that crash as a cautionary tale.

Marcia Fritz, an accountant and longtime pension watchdog, sees history repeating itself. She noted that during Davis’ time in office, pension funds were riding high on a booming stock market driven largely by tech stocks — much like today. CalPERS and CalSTRS, the state’s two largest pension systems, still haven’t fully recovered from recession-era losses, though both have recently exceeded their investment targets thanks to a tech-fueled market rebound.

“They’re drinking the Kool-Aid that the markets are never going to go down,” Fritz said of lawmakers backing the bills. “We’re the ones paying for it with reduced services.”

California reined in retirement benefits for employees hired after 2012 under a law signed by then-Gov. Jerry Brown, which required workers to stay on the job longer to earn a full pension and to contribute more toward their own retirement. CalPERS estimates that reform saved government agencies $4 billion in its first decade and projects it will save another $24 billion over the next 10 years.

To taxpayer advocates, those savings are proof the Brown-era reforms are working as intended. Public safety unions see it differently, arguing that the savings show government agencies can afford to sweeten benefits without abandoning the 2012 framework altogether.

Here’s what the three bills would do:

Assembly Bill 1383 would lower the retirement age for public safety workers from 57 to 55. It would also let unions negotiate richer pension formulas — up to 3% of salary for every year worked — and raise the cap on pensionable earnings by nearly $60,000, to $249,000 annually.

Assembly Bill 1054 would establish a new deferred retirement option for California Highway Patrol officers and Cal Fire firefighters, allowing them to bank money during their final years on the job and collect it as a lump sum upon retirement — an incentive meant to keep experienced personnel working longer.

Assembly Bill 2129 would push for a new pay formula for Cal Fire firefighters, encouraging the governor’s office to bring their salaries closer to — though not necessarily equal to — the average paid by 20 local fire departments around the state.

The cost question

The bill lowering the retirement age carries the steepest price tag. CalPERS estimates it would require $282 million more in annual contributions and add $4.8 billion to the fund’s long-term liabilities. If local governments choose to offer even more generous pension formulas under the bill, that cost could climb to $353 million annually, with additional strain on the fund’s finances. Those figures don’t include California’s 20 independently run county pension systems.

That price tag has put city and county governments in opposition. “We do definitely support strong retirement benefits, but those benefits must remain sustainable and fiscally responsible for our local agencies,” said Johnnie Pina, a lobbyist for the League of California Cities, during a recent Senate hearing.

The financial impact of the other two bills is murkier. Supporters of the CHP and Cal Fire deferred retirement plan say it’s designed to be cost-neutral, though similar programs run by cities and counties have ended up costing more than expected. The bill would require CalPERS to review the program every five years, giving lawmakers room to make adjustments down the line.

The Cal Fire pay bill is even harder to pin down financially, since it’s written to give the governor’s office flexibility rather than a mandate. It calls on Newsom to negotiate “in good faith” toward narrowing the pay gap between Cal Fire and local fire departments — a gap a 2023 state compensation survey put at 11% to 29% in favor of local departments.

“Instead of being the lowest paid, we will inevitably be somewhere in the middle” if the bill passes, said Terry McHale, a lobbyist for the firefighters union, at an earlier hearing this year.

Newsom vetoed a similar, more forceful version of this bill last year, warning it would “create significant cost pressures for the state and circumvent the collective bargaining process.” That earlier proposal was projected to cost between $373 million and $609 million in its first year alone.

Cal Fire’s union is essentially seeking a benefit that only one other state employee group enjoys: automatic raises tied to what other agencies pay. CHP officers already receive annual pay bumps based on compensation at several major California police departments, a perk no other state employee union has secured through legislation rather than negotiation.

What happens next

All three bills face a critical test later this month in the Senate Appropriations Committee, which can shelve legislation over cost concerns. Bills that clear that hurdle typically have a strong chance of reaching the governor’s desk.

At a recent hearing, several lawmakers said recruiting and retaining first responders was worth the cost, even if it meant trimming other programs. They pointed to the response to a chemical spill in Orange County this past May as an example of the risks emergency workers take on without hesitation.

“I still get goosebumps for these firefighters and their families that had to know that they were putting their lives on the line to save that explosion from happening, which they actually ended up doing,” said Sen. Tony Strickland, a Huntington Beach Republican. “You can’t put a price tag on that.”

Public safety unions have long been a fixture at the Capitol. Since 2019, firefighter unions have contributed $6.2 million to lawmakers and campaigns, while the Peace Officers Research Association of California has spent $4.5 million, according to CalMatters’ Digital Democracy database. Both California Professional Firefighters and the California Correctional Peace Officers Association were also major donors backing Newsom during the 2021 recall election.

Still, that support doesn’t guarantee the governor’s signature. As mayor of San Francisco during the Great Recession, Newsom championed a ballot measure requiring city workers to contribute more of their own money toward their pensions — a track record that suggests he may scrutinize these latest proposals just as closely.

Original source: CalMatters

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The proposal, included in the governor’s budget plan, would cap business tax credits beginning in the 2027 tax year. State finance officials say the change is intended to ensure that large corporations pay a minimum amount of tax while avoiding harm to small businesses. The cap is projected to bring in significant revenue for California as the state works through ongoing budget pressures.

But leaders in biotechnology, pharmaceuticals, medical devices and other research-heavy industries warn that the move could weaken one of California’s most important economic engines.

California’s life sciences industry says it generates nearly $400 billion in annual economic impact. In Southern California, the sector is especially important in San Diego, Los Angeles and Orange County, which together account for tens of thousands of direct industry jobs. According to a 2026 report by California Life Sciences, San Diego and Los Angeles each had about 54,000 direct life sciences jobs in 2025, while Orange County had about 47,000. The Bay Area led the state with 107,000.

At issue is California’s research and development tax credit, a benefit used by companies that invest heavily in developing new products, medicines and technologies. A tax credit directly lowers a company’s final tax bill, unlike a deduction, which reduces taxable income.

The Newsom administration’s proposal would not eliminate the credit. Instead, it would limit how much large companies can claim each year. Under the plan, a business could use credits up to $5 million or 50% of its tax liability, whichever is greater. The cap would not apply to net operating losses.

The Legislative Analyst’s Office estimates the proposal would primarily affect fewer than 100 of the state’s largest corporate taxpayers. The May budget revision projects the cap would raise $850 million in 2026-27 and between $1.7 billion and $1.8 billion annually from 2027-28 through 2029-30.

Supporters argue the state’s R&D credit has become one of California’s largest corporate tax breaks and that major companies can afford to pay more. Darien Shanske, a UC Davis law professor who helped draft a proposed billionaire tax and has suggested a similar limit on business tax credits, said some companies have accumulated credits from research conducted years earlier, allowing them to greatly reduce or avoid state taxes.

Shanske said the state is effectively forgoing about $3.5 billion a year under the current structure of the R&D tax credit, according to the Legislative Analyst’s Office analysis.

Industry representatives strongly disagree with the administration’s approach. They say research and development credits help keep high-paying jobs, laboratories and investment in California at a time when other states and countries are aggressively competing for biotech and technology companies.

Sam Chung, senior vice president for government relations at California Life Sciences, said California remains a leader in biomedical innovation but should not assume that position is permanent. He said drug development is costly, uncertain and time-consuming, and companies may look to states with more favorable tax policies if California reduces long-standing incentives.

Chung also raised concerns about international competition, particularly from China, as well as other proposed state policies that he said could affect the industry. He argued that large and small companies are closely connected in life sciences, with startups often depending on major pharmaceutical or biotech firms to help bring discoveries to market.

“Scientists who develop something need big companies’ backing,” Chung told CalMatters. “It’s a very symbiotic relationship. Everyone needs to work together to get to the finish line.”

The debate comes as California’s life sciences sector is also facing uncertainty over federal research funding. Industry leaders have pointed to cuts or threatened reductions in National Institutes of Health grants under the Trump administration as another source of pressure on research organizations.

Tim Scott, president and chief executive of Biocom, said reducing the state tax credit while federal support is in question would compound the strain on companies. He said the life sciences sector directly employs more than 336,000 people statewide and supports about 1 million jobs directly and indirectly, including in biotech, pharmaceuticals, medical devices and medical equipment.

“That R&D tax credit keeps those jobs here, it keeps the facilities being built here,” Scott told CalMatters, warning that without it, keeping investment in California becomes more difficult.

The proposal is also drawing concern from other innovation industries, including semiconductors, software, clean technology, aerospace, advanced manufacturing and artificial intelligence. Business groups have noted that the R&D credit has already been temporarily limited to $5 million for tax years 2024 through 2026 because of budget concerns.

In a letter to Assembly Speaker Robert Rivas and Senate President Pro Tem Monique Limón, 50 Assembly members — 33 Democrats and 17 Republicans — urged legislative leaders to reject the permanent cap. They wrote that limiting research and development incentives may help the state budget in the short term but could carry long-term economic risks.

“The answer to the state’s long-term budget challenges is not to weaken the sectors driving California’s economy and generating state revenues,” the lawmakers wrote.

California’s corporate tax rate is currently 8.84%, lower than the 9.6% rate in 1980 and 9.3% in 1987. At the federal level, corporations have paid a lower tax rate since 2017, when the Trump administration reduced the federal corporate tax rate from 35% to 21%.

Rowan Isaaks, the Legislative Analyst’s Office economist who reviewed the proposal, said lawmakers have questioned whether the current tax credits are actually encouraging companies to conduct additional research or whether those companies would have performed the work anyway. He said one alternative could be to redesign the R&D credit to make it more targeted.

The issue now rests with state lawmakers as they negotiate the budget. Nick Miller, a spokesperson for Rivas, said the Assembly is reviewing the governor’s proposals. Limón’s office referred questions to state Sen. John Laird, chair of the Senate Budget and Fiscal Review Committee.

“California’s innovation economy is enormously important, but we’re also facing significant fiscal challenges,” Laird said in a statement. “Our job is to carefully weigh those considerations as we work toward a balanced budget.”

Original source: CalMatters

The post California Tax Credit Cap Proposal Raises Concerns in Life Sciences, Tech Sectors appeared first on The Hemet & San Jacinto Chronicle.

Don’t get too excited. The charges are still high by historical standards. The state expects to spend $9.8 billion on contributions to CalPERS next year, more than double the $4.8 billion cost from 2016.

But a new CalPERS analysis projects the state’s contribution rate toward pensions will decline over the next few years.

It’s most evident in what CalPERS expects to bill the state for California Highway Patrol pensions. This year, the state is paying 69 cents toward CHP pensions for every $1 it spends on wages for officers.

The formula reflects both the costs of investing for current officers’ retirements as well as extra money the state plows into pensions to pay down debts from past CalPERS losses. 

CHP pensions were especially expensive because until 2013 those officers and other public safety employees were eligible for generous pension formulas that allowed them to retire at age 50 with retirement income worth 90% of their salaries. 

Next year, the state’s contribution rate for CHP pensions will drop to 64 cents for every dollar in offer pay.

Hey, that beats a number with a 7 in front of it.

Recent strong investment returns are part of the reason the contribution rate is declining a bit. Another is that the state has been on a hiring spree for CHP officers. That means more employees are paying into the fund. They put 14.5% of their earnings into CalPERS.

The new hires also earn benefits under a less generous formula and work longer to earn a full retirement. Officers hired under the post-2013 retirement formula now make up 48% of the CHP workforce, according to CalPERS.

Further out, CalPERS anticipates pension contribution rates will drop for other state workers, too.

These results, of course, are subject to change. If CalPERS misses its investment earnings targets, the state will have to kick in more money to make up for the loss. Today, CalPERS is considered underfunded because its assets are worth about 80% of what it owes over time to its beneficiaries.

The post How a CHP hiring spree started to bend the curve on CalPERS contribution rates appeared first on The Hemet & San Jacinto Chronicle.