January 23, 2020

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Will SGMA pull California into a recession?
The Legislature delivered its first comments yesterday on Gov. Newsom’s budget proposal during an Assembly Budget Committee hearing. Among the many concerns raised by lawmakers, Republican Devon Mathis of Visalia wanted to know if crop losses could tip the economy into a recession as the state implements the Sustainable Groundwater Management Act.
The San Joaquin Valley could lose $2 billion per year from fallowing more than 500,000 acres, Mathis pointed out. Urban regions would see impacts to the shipping sector, with job losses in port cities, he said. Mathis wanted funding in the budget for fixing conveyance infrastructure and deliver more water to those farmers.
“Ultimately, if the San Joaquin Valley becomes a dust bowl,” he said, “your entire budget could be shot.”
In response, Department of Finance staff pointed to a proposed $60 million for supporting water trading and efficiency projects related to SGMA.
Keep in mind: When Newsom pitched his budget plan on Jan. 10, he emphasized that all signs are pointing to a slowdown of the economy in the near future but not necessarily a recession.
The Finance department is hoping the administration will issue a budget trailer bill on Feb. 1 that delivers more details on the proposed items.
On a similar note: Republican Jay Obernolte of Big Bear Lake wanted to know why the $6 billion being put into the rainy-day fund was not being invested into water infrastructure while the economy is strong. He argued that repaying the proposed $4.8-billion water and climate bond over the next 20 years would lead to paying an additional 80% in interest.
Finance staff said the current low-interest rates make it a good time for a bond, along with attending to more immediate costs for wildfires and homelessness.
With the proposed cuts to AB 617, Cristina Garcia of Los Angeles lamented that the state’s most disadvantaged communities will not be receiving the incentive funding they need for reducing particulate emissions. The governor would reduce the cap-and-trade funding to $235 million from $275 million last year.
Remember: Some of those AB 617 plans would deliver incentive funding for farmers to upgrade equipment like almond harvesters and irrigation pumps.
On that note: The full Senate Budget Committee meets today to give its first comments on the budget proposal.

Asm. Devon Mathis, R-Visalia
Becerra: Federal lawsuit over Bay-Delta Plan is ‘unripe’
In March, the federal government sued the State Water Board over its Bay-Delta Plan. It claimed the board’s plan to dedicate up to half of the flows to supporting fish habitats would hurt farms and other businesses. It also claimed the state failed to comply with its own environmental laws in the decision.
In a brief submitted Friday, Attorney General Xavier Becerra defended the Water Board, arguing “the court should find the claim unripe and dismiss it.”
Becerra says the U.S. Bureau of Reclamation is alleging it faced discrimination. Since the plan has yet to be implemented, that claim is “premature,” he writes in the brief.
Remember: The Water Board had approved the Phase 1 amendment to the plan in 2018, which affected south-of-delta flows. Phase 2 has not been approved yet and that will impact north-of-delta flows, with a greater percentage of water set aside for endangered fish.
That decision hinges on the ongoing negotiations over voluntary agreements – an avenue the governor supports as breaking the litigation cycle.

CDFA Sec. Karen Ross and Lenny Mendonca of GoBiz
Newsom could help Woodland grow into an agtech capital
It’s “criminal” that the city of Woodland is 15 minutes from the capital of the world’s fifth largest economy “but has terrible broadband” connection, said Trish Kelly of Valley Vision. Kelly was speaking in a panel discussion yesterday at the Woodland Ag Innovation Forum.
Kelly and other speakers pointed to broadband as one of several challenges for the agricultural community as it builds bridges to the tech investor community nearby in the Bay Area. The city will soon break ground on a 350-acre research park, in partnership with the UC ag division and local tech incubator AgStart.
Agtech entrepreneur Adam Englehardt said one of those hurdles is that “we have the technology but the two sectors are just not speaking to each other.” He said ag “can’t produce 600% returns like Salesforce can,” but farmers work hard every day and generate sustainable returns.
The head of Newsom’s economic development office, Lenny Mendonca, agreed. He said, on average, the returns for agtech investors would be higher with much lower risk.
With the governor’s “Broadband for All” initiative, there is “more to come,” he promised. Mendonca also mentioned the $33 million proposed in the budget as seed money for a new Fresno-Merced Food Innovation Corridor Grant Program. He said that may not be the only place where this program will occur.

Iowa’s Chuck Grassley, as Senate pro tempore, signs the United States-Mexico-Canada Agreement Implementation Act before it is sent to the White House.
USMCA signing evokes new trade optimism
Sen. Chuck Grassley, acting in his capacity as Senate pro tempore, signed the U.S.-Mexico-Canada Agreement Implementation Act Wednesday. The act sends the new North American trade pact to White House for President Donald Trump’s signature, but it also evoked a new sense of optimism among lawmakers and the ag sector for improving trade conditions around the globe.
USMCA, the trade deal with China signed last week and the pact with Japan that went into effect Jan. 1 are all providing new momentum for farmers that have been struggling with low prices, Chinese tariffs and adverse weather, said Sens. Pat Roberts, R-Kans., and Rob Portman, R-Ohio, who attended the signing Wednesday.
Trump wants EU trade deal finished this year
President Donald Trump bounced back and forth with reporters on whether he had a timeline in mind to wrap up a trade agreement with the European Union and then revealed that he wants to see it done before the 2020 election.
He said it:
“Why anyone would oppose a check and balance on a bureaucratic, unelected organization with outsized power is beyond me.” - Jesse Rojas, a farmworker rights activist, in an op-ed for Fox and Hounds on Asm. Lorena Gonzalez’s support for the Agricultural Labor Relations Board.


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