Here is the update out of Sacramento.

Too many people were claiming victory over the king.

A deal will ultimately get done, but the leverage shifted.

The calibration now shifts….

People have played their hands…they exposed their lines and allegiances.

Read Politico this morning. Re-read it.

I am unsure what happens next, but stay tuned. The board just got thrown over.

Now, who will survive this round?

The “appetizer” indeed.

Politics is a messy game.

We will leave it to the journalists and PR professionals to drive the day to day narrative of the Governor’s “loss,” the win “for survivors” and so forth.

Claims of victory and defeat will dissipate over the next few days if not sooner.

The long-term story will be that the Governor won a “placeholder” in the reform of a program which needed it, and the advocates will be California-specific or Sacramento-specific. Sure the record will have a bunch of media in this narrow window, but those stories will dissipate over time with the ripeness of this issue. The midterms are around the corner, a new Governor, new legislature, and so forth will drive the narrative after the final bill signings take place around October 1.

The story will be discussed in private. It will be remembered in certain corners. The effects will be dissected. Winners and losers will be allocated based on the aging of this matter. Usefulness does not equate to effectiveness. The next round knows who did what, where, and how effective they were.

This trial was the appetizer course to the main one coming.

Who Moved the Needle?

Go beyond the headlines.

We have been arguing for that from the start. Our piece earlier really went to where the charade was mapped out.

Who truly “moved the needle” and “what was additive” will be considered and “war gamed” for those who claim their “seat at the table.”

Cutting through the “noise,” will continue since the story is moving fast. Claims of relevance will be tested against the results.

The Official Narrative benefits the current “posture.”

Leadership in the Legislature are protected. The Governor moves on and gets a win. The policy victories are there for all to see. We know the utilities did not get the most egregious “kill shot,” but they did get the chance to control things “through a thousand cuts” as we discussed there other day.

We Know About Utility Benefits but What About Insurers?

The biggest win here might be the insurers. It is telling because they were the “problem child” in the recovery up until the Governor decided to move the conversation to the utility reform and create a subrogation exemption for insurers.

What did the insurers give up to keep their ability to subrogate the claims to the wildfire fund?

I do not see very much, if anything.

Those who fought insurers in the past seemed to “lock arms” with their nemesis, including many of our community groups in Altadena.

For that “solidarity,” allowing the insurers the “patina” of propriety, did we leverage our position?

You already know the answer.

Nope.

Insurance, Unspooled…

Many of Altadena’s advocacy groups were “in the room,” party to the negotiations us on the outside (i.e. these pages) were not.

While we could see the contours of the Agreement, the details of negotiation were not for us to hear or see. Nor, actually did it matter. We could tell where the “hyperbole” was going as we wrote in these pages throughout the month of August. Our read held up, moreover, pretty solidly based on the outcomes which occurred.

The insurance play was way “under the radar” in our eyes. We did not pay much attention to it until now, mainly because there are certain groups leading this effort who could have leveraged their position with insurance much better.

Their familiarity with the issues and the weaknesses presented them a unique position to leverage the imprimatur of support for something in return- something they have been advocating for.

Instead, insurance won this round hands down.

They got to maintain subrogation for no real meaningful reform.

We were told advocates were “about survivors,” but insurance continues to leave vulnerable areas rebuilding at a massive rate.

Their desertion of the market is crucial because insurance is a major need for rebuilding.

While CalFAIR can do some of the insurance “lift,” it was supposed to be temporary and gone now, not the insurer of last resort.

The reality is, the insurance lobby got a huge win for almost nothing in return.

Pariah to knight in a blink of an eye.

They earned their money for sure.

What Would a Win Have Looked Like?

Frankly, to get their goodies, insurance should have given up the ability to vacate vulnerable communities at the pace they were doing it.

They should also have to make the claims held up whole.

It was the chance to get what you wanted for survivors and it did not happen.

In other words, those advocates should have insisted that they ensure insurance was reformed before allowing them a seat at the table and giving them a win as fulsome as they received.

What Victims?

Altadena allegedly was “so instrumental” in defending the rights of survivors per Politico today.

Yet, in the light of day, we were denied financial tools offered up.

We were also left without meaningful insurance reform.

No price was placed on the insurers to clean up their mess to get the continued State Subsidy.

Victims were props to those bigger causes.

Who negotiated for the victims?

Who looked after their interests?

I know I was not asked.

I know when we offered solutions, they were ignored.

I know insurance got a free ride after all the harm they caused us.

Who is responsible for this mess?

The Governor lost?

Not likely.

Victims lost.

Reform coming again? Remember this post when those who come out to support us, to champion us, to claim they have our best interests at heart, show up.

Failing Up

The bill will pass, but the bill itself is a huge lost opportunity for real meaningful benefits to survivors who were instrumental in the “legislature’s opposition to the Governor’s positions.”

Did someone win because of their own opportunity being above the survivors?

The multiplier was missed. Multipliers such as getting insurance to “give something to survivors” for their blessing. Multipliers such as finding the funding to rebuild (ahem utilities) after a fire.

Limiting hedge funds and capping attorney fees for subrogation claims is not real reform, it makes the system faster and compresses timelines. Those are not victim advocate wins, those are points for very specific interests.

For the inevitable next round, look to the insurers who failed us throughout and their “failure up,” and ask how it happened as such?

Both insurers and utilities have a precedent set now. They know the players they want to negotiate with and those they do not. Splendid neutrality indeed.

The lines for the next round are being drawn already. Loyalty was tested and people are known for what role they can play.

$15 million CARE Fund money will begin to flow to Altadena, likely to some of the organizations involved in this episode (see the budget trailer bill coming). Who administers the money? The ever present California Community Foundation (CCF).

Remember all of this when you look at alignment the next time around. Who did their part to ensure the message was aligned.

None of this is any different than the CDBG-DR alignment. CCF’s involvement is not coincidental.

Who ended up getting paid and who did not? Who benefitted financially from all this drama?

That will tell you all you need to know.

The Democrats “stood up to Newsom.” They stopped the wildfire fund as we have been seeing all weekend.

Gavin Newsom stars as the villain.

He can play that role so well. He is not a Mr. Smith Goes to Washington kind of guy.

Per the storyline, the Legislative leadership defeated him.

They will not roll over, accepting the “king” as David Crane called Newsom.

Not only did they beat him, to continue the conversation, they warned him too.

Per Senator Menjivar:

“I would hope our leadership would look at that, because he’s not going to be here next year. There will be nothing sensitive if we override vetoes and he’s not here,” said state Sen. Caroline Menjivar.”

Essentially, “we are not concerned about his vetoes.” Bring it on.

Threats.

We know how well that goes (see our piece on the Strait of Hormuz, but ok).

The Governor is now “Powerless” in the narrative.

In Sacramentoese, it is effectively, “do not let the door hit you in the ass on the way out.”

Ah, But You Know This is a Construct

This is the Governor who is running for President. He is lame duck, but not that lame.

He is not someone you piss off, ushering out the door with a middle finger salute.

There is something else going on.

Perhaps the “defiance,” is not that “defiant.”

The words of anonymous sources?

“What he was doing was incredibly unpopular," said a senior Senate staffer granted anonymity to describe private negotiations. “When he runs for president in two years, I'll be happy. I'll be happy they can't use this against him.”

See, they were “helping him by defeating him.” They are doing him the favor. Perhaps the favor is different than you might think.

Perhaps they are helping him by still giving him the win even though no one can take credit for helping these constituencies.

What if the story was deeper than is being presented?

What if both sides are so reprehensible (insurance companies who have screwed survivors and utilities who have caused the survivors in the first place), that both villains are the choice you have to align with?

Both pay up.

What if both are getting bail outs?

That would look horrible.

Someone has to take the “hit.”

The Governor is on his way out, so he can “afford it,” especially if he “still wins in the long arc of history” as the bail out is not as punitive as was presented.

Then, you construct a narrative of an arrogant leader, with extraordinarily offensive demands, and then you have the leaders of the legislature rail against him so you are not focused on insurance or utilities winning since both are losers?

They win by losing. Ah politics- it is far more sophisticated than the story being presented and more likely considering the players involved here than the facile story being told right now.

Altadena…

The above conundrum leaves a need to create “noise” to provide the cover, blessing one side, changing the optics of the deal to give the “villain” and “knight” model the simplistic framing needed.

Enter Altadena.

If they are “blessing” the insurance companies, then the villain is less a villain than the utilities which are too reprehensible to be anything less.

Who has vilified insurance more than Altadena?

No one. In fact, the same people leading the charge against the bill are those who were castigating the insurance companies not long ago. In fact, what is more poetic than working with your friend against the common enemy?

It is a soap opera the public will buy.

So, “get Altadena to bless the insurance side.”

That means the Governor is going to be “the bad guy” since he is lined up with the utilities. On the other side is the Legislature will support the “good guys,” the constituents they have to account to.

Now read this pull from the Politico piece:

“But that message was undercut when survivors of last year’s Eaton Fire in the Los Angeles area learned of the brewing proposal before it was public and labeled it a “utility bailout.” That chorus of criticism grew louder when it emerged that Newsom wanted to limit emotional distress damages for some victims.

Wildfire survivors protested at the governor’s mansion, held rallies at the Capitol building and handed out hand-painted flyers to every legislative office. That resonated with lawmakers, many of whom, including Senate President pro Tempore Monique Limón, have labored to help their communities recover in the wake of a blaze.

“At this point, you’ve got a lot of members who’ve been personally scarred by fires,” said state Sen. Josh Becker, one of the co-authors of the final compromise. “That’s important.””

Senator Becker was the perfect quoter in this piece.

He heard about our need for financing the rebuild but did not deliver it in the legislation though it could have been included. Fire survivors mattered for the surface but were never really part of the equation- “noise” but not the “right noise.”

The words mattered if they held the keys to giving the villains what they wanted and not what really informed the discussion, our lived experience, but I digress.

The Framing is Right…

So, now the Legislature got the “noise” from Altadena for their cover.

Meanwhile, as the negotiations went on, the “right noise” was working out the deal to give the “win” to all three parties- the Governor, the utilities and the insurance companies.

Not only did the Governor deliver, so did the Senate Pro Tem and Assembly Speaker.

Utilities and insurance companies were bailed out.

“Survivors” won, but they did not really?

Altadena remains unbuilt without the tools it needs to get the real rebuild going.

The Result?

Altadena and its groups were “pawns” in this chess game, masterfully played by all those involved.

We were there to give people cover while the real deal happened.

Survivors claim “Mission Accomplished” as it was said to me, while the real accomplishment is the fact the true protagonists won.

Insurance and utilities were never really “pitted against” one another, they were working together on different sides of the negotiation.

They needed a deal which made it look that way to “sell it to the public.”

Meanwhile, the Governor takes his licks as he leaves for South Carolina, “saved” from the “embarrassment of the horrible deal he wanted to offer.”

As we said this morning, we did not get what we asked for here in Altadena, the only losers in this discussion. It fits with the “Altadena never really mattered in this legislation,” as it was told to me.

“Listening” only went so far I guess.

A Disaster Investment Fund which costs our State nothing was not thrown in to help rebuild. Where are our tools? Millions are not the billions we need, even if a couple or a few million are sent our way in appropriations.

We are the lived experience which “mattered” until it “did not.”

Altadena was used to “give cover” so those in the Legislature do not have to answer for the fact they did the ultimate “deal with the devil” out of our eyesight.

The Bad Guy has Left The Building

Like Al Pacino in Scarface, our Governor can look around the room and remind them all that they are just as bad as he is.

They know it. He will leave and they will be here next year and beyond.

They are all part of the kabuki theater. They are all the same, words stated notwithstanding.

The truth is still there, no matter how much you want to “clean it,” getting the right pieces and quotes in Politico and beyond.

The Game will continue to go on. A new villain will have to be created then.

The utilities and insurance companies will continue to feast on the public risk capital while the private benefits accrue. Our Legislative Leaders and rank and file will say the words, but the actions belie what really happened. The “noise” is transferrable, maybe using the same people or different ones next time. The plot line remains intact.

They got what they needed. They got what they asked for.

Altadena?

Not so much.

Exit the Show Altadena

You got SB 1090.

Your fire is 2 years old now.

Your role here is now the same as Paradise.

You are a cautionary tale, left in the background, pulled out by the Media every so often, only to again be forgotten to the churn of the political cycle.

You served your role and now, when you had the chance to get something real, you missed that “gate” as they tell you in politics, leaving yourself to go down the path of “everyone else.”

You were never a player.

And in politics, as I have been cautioned many times, you only get asked “once,” and if you fail, “you don’t get another chance at it.”

Altadena missed its “chance.” The rest, they all won. Do not think survivors got all that much which was not already going to be given to them anyhow.

Those are the words that come to mind to explain how the biggest supporters of the SB 492 “victory” are “celebrating” their victory.

If the win was so epic, why are they are penning a letter of “neutrality,” neither for nor against the victory bill?

It was such a win for survivors right?

Will the tape tell a different story?

Are the biggest cheerleaders also the canary in the coal mine?

They do not want to be on the record for history to see they “supported” their biggest win?

Questions abound.

Not only are the bill’s terms not what are being sold, but are those who sold it to us as a huge win not telling us something?

What are we missing? That is the question we have been asking since last week.

What Happened?

Over the weekend the Governor published his Wildfire Bill, the “compromise bill.”

As the contours of the “deal” were taking shape toward the end of the week, we were hearing the bits and pieces.

Subrogation prohibitions for insurance were removed.

Caps on damages for pain and suffering, the same.

Geographic limits and arbitrary timelines of eligibility also removed.

Advocates were claiming a “big win for survivors” on Friday and Saturday.

The Governor’s horrible deal was “defeated” by the “coalition of the willing.”

“Survivors were put first” we were told.

The bill was published Saturday AM.

It was ready to go.

The Greatest Trick the Devil Pulled Was Convincing the World He Did Not Exist…

Did the opposition actually get the deal they wanted? That is what I am hearing.

We asked the question these pages kept asking during the run up to the bill- “what are we missing?”

The Governor knew the opposition.

He and his allies knew where the votes were.

He also knew what was tolerable.

This is not a “rookie Administration-” they were at the end of their term, with the most experienced people in the Capital.

Something did not add up.

What was missing?

The Governor’s original push was a public “kill shot” to address their win, while most policy is “death by a thousand cuts.”

The “kill shot” baited the opposition into a public position. Privately, the contours of the real deal took shape allowing the kill shot to be replaced by those “thousand cuts.” Opposition believed the “devil was killed,” when in fact he was very much alive.

The Policy Goals

It is about letting your opponent think they won, while you were winning the whole time.

What was the goal of the utilities from the start?

They wanted stability to their “bail out fund” so they could continue to borrow at low bond interest rates.

SCE warned of the continued operation and bond costs which could raise rates in their earnings calls.

The utilities fundamentally wanted to ensure the system they in place continues to benefit their shareholders at the detriment of wildfire victims or whoever else.

Insurance had their hand in the jar too.

They wanted to ensure they got their risks underwritten without any changes to their underwriting requirements (i.e. they can still cancel policies as desired while ensuring the highest risk is underwritten by the bail out fund which is now shorn up with bonding capabilities).

They would be hedged in their underwriting to ensure their risk was “laid off” to the ratepayers indirectly. Why else have they been so slow in paying their claims?

If the wildfire fund could pay them for the losses before or quickly after paying out their claims, the cash loss is minimal at best.

So, to accomplish the goals of capping the losses, there needs to be leverage.

The leverage is in the “fast pay model,” which pushes to a “structured settlement” for future fires.

While there is no “hard cap,” a “soft cap” presents by virtue of the fact there is a “mandatory” settlement offer.

The victim still has the option to accept or take on the court case.

The leverage is the fast pay and then the removal of the ability for the victim to have “time.”

The time compression comes from the prohibition of selling any claims under the wildfire fund.

Effectively, one of the key components to a contingency lawsuit is the ability for the plaintiff to “ride out” litigation to allow the case to “ripen.” Many attorneys will provide plaintiffs the ability to “factor” their settlement for “upfront cash.”

Most of these “financing arrangements” come from hedge funds and alternative investors.

In SB 492, the legislation prohibits such options, meaning, structured settlements become far more attractive to those who need cash versus the longer-wick expensive litigation. Time is no longer on the side of the litigants, rather, the time is used the opposite way, to pressure a resolution with a stick and carrot.

See, a thousand cuts. The strategy is not pro-survivor.

To emphasize that point, the Public Records Act limitations on the settlements and data are clear and obvious. Accountability? Right. Like the Inflation Reduction Act actually reducing inflation, this act does nothing to increase transparency.

Meanwhile, the real goal was that while no hard caps exist, soft caps are in place by removing many of the mechanisms which would affect the caps otherwise.

For instance if 80% of the claims are settled with the structured settlement model, that is better than nothing.

Moreover, if the structured offering is about $150,000 for pain and suffering, and there is no way to “wait out the case,” then the utilities did not lose on the “caps” they were pushing for. They just got a “soft version” of what they were shooting for as a wish negotiation piece.

Who won this one?

How Will This One Age?

It is telling the biggest advocates are not taking a “win” besides press releases.

They are not going on the record to “support” SB 492, though the bill is the “best deal that could have been gotten” per them.

Instead, they are sending a “letter of neutrality” as their “official position.”

“Neutrality” in advocacy is the equivalent of voting “present.”

It means you are not on the record as “for the measure,” mainly because there are elements which are not “such a win.”

But you are also not against it because you “advocated hard for the win you supposedly got.” If you were against it, your public posture would be inconsistent.

What it tells me is there is concern about the “aging” of the bill.

How will it “age” against the “proclamations?”

The press release says “you won,” but the advocacy note says, “not really.”

You “split hairs” by saying “survivors won because the worst parts were removed.” Yet, you also get to claim when the victory turns into the exact defeat you claimed to have won.

One can see the line published, “well, we did not support it because there were weaknesses in the bill we could nevertheless not get behind.”

Splendid neutrality.

Altadena?

SB 492 was never really about Altadena, as much as Altadena wanted it to be.

We were used as a prop to show “lived experience,” but the effects were negligible on our town’s experience. We were brought in because we were used as “potential leverage,” though our leverage was very minimal at best.

Altadena was “forced” into the conversation to sell the cause.

Altadena never had a seat at the table. Altadena, moreover, never really mattered when the real negotiations were taking place.

In fact, and I know it is hard to hear, but, Altadena did not move the needle on this fight one way or another.

Opposition was different.

Insurance and trial lawyers wanted the system to remain.

Investor Owned Utilities (IOUs) wanted it their way.

The Governor and Legislature fought it out.

Altadena was “kabuki theater” for the purposes of this fight- we were not real. We were “noise,” but not the “real noise.”

To claim SB 492 defeating the Governor’s Plan was Altadena’s victory is misappropriation of reality.

Altadena’s leverage was not in “defeating this bill.” Our leverage was in demonstrating how the discussion could have helped us. We were not a factor in how the bill ultimately fell out.

Our leverage was wasted because the win/loss was defined before Altadena was ever a part of the conversation.

My sources tell me, “it was never about Altadena in the first place.”

We misplayed our leverage, moreover, “where we focused on a battle where our voice was marginal instead of focusing on what we needed, like money to rebuild.”

Materially, Altadena was not a part of this win or loss.

Yet again, Altadena was passed over where we could have had solutions to help us move ahead at scale.

Instead our community leaders focused on the wrong things- a battle over insurance and reimbursement which did not affect us.

Instead we could have discussed what would rebuild us, letting our voice cut through the noise to bring a real weakness which still exists in the State’s Disaster Recovery Plan to light and one we are still affected by and not resolved by legislation.

Another lost opportunity. Look at who missed yet again.

What Now?

The bill will pass because the negotiation is complete.

The bill is no win for survivors as it is being sold.

The reality is, the Governor has won as much as he could have and would have.

He had a negotiation going along all the way.

He knew the details.

He knew how it was going to go- convince the opponents to take the win he was willing to give all along.

It will be interesting to see what comes tomorrow, and the remainder of the week.

Watch for messaging, and those who are getting ahead of it as this story continues to unfold.

Ultimately however, Altadena and victims for the next fire(s) are not served by this episode one way or another.

Do not let anyone tell you otherwise.

No shocks. It contains what has been reported thus far.

No subrogation.

No caps on damages.

No affect on Eaton survivors.

Biggest additions- mixed financing sources optional on the wildfire fund, purchasing secondary claims from insurance is now prohibited, and potential caps (not meaningful) on compensation of CEOs of Investor Owned Utilities.

Big “meh.”

Bigger questions abound.

Why did the Gov go so hard for a bill he eventually “caved” on per some advocacy orgs?

What is the “win?

Insurers kept their subsidy.

Lawyers get no caps on pain and suffering.

Victims, well, they are still victims so…

Altadena and Eaton Fire residents are unaffected other than the fund can be topped up if necessary.

More questions remain.

Where is Politico and their coverage? They have been everywhere on this issue and now as of this afternoon at 3pm, nothing.

The Los Angeles Times was ahead of the curve?

Or, is there a bigger story still coming?

Also, “dumping” the “victory” narrative for the opponents of the measure on a Saturday when the news cycle is quietest seems another way to contain the fall out, letting the news cycle play out while grabbing the next one, recovering the comms initiative.

In fact, was it ever lost?

All the above makes a skeptical mind wonder- is there more to come?

If so, what?

These are sophisticated operators.

These are Gubernatorial staff who have eight years experience, with extensive intelligence of Sacramento. Even if some left, the orbit remains close to the Governor and able to be tapped for strategy.

One assumes, they knew the votes. They knew the opposition. They knew the tactics. Nothing was unique or “rocking people back.”

Something does not add up.

Directionally, we have been right so far for much of what has transpired.

Our “spidey sense” tells us something is happening.

Let’s see what comes. The next 48 hours have a lot of pieces and parts to come together.

And for those historians out there, none of what is happening is out of character for our Governor. He does big things at the end of a legislative session.

Leopard and spots right?

Interests aligned against the Governor. Information and misinformation was disseminated.

The stakes are huge- the utilities want to limit their liabilities going forward, while other interests want to ensure those liabilities are not limited.

The arguments are couched in terms about fairness and justice, but it is ultimately utilities on one side and lawyers and insurance companies on the other.

Consumers are a pawn- a discussion point as we have said all along.

Altadena’s Stake

The role of Altadena is as the useful “lived experience.”

The Wildfire Fund was first used and will be likely depleted on our fire.

The “test” of the system demonstrated where the weaknesses lay.

As it was said to me today, this effort in Sacramento WILL NOT AFFECT ALTADENA and the Eaton Fire discussion.

Many do not believe those words, but it is what has been communicated multiple times.

In other words, the discussion is about “going forward, what to do.”

So The Bill is Dead Right?

It is being reported the bill is on life support.

Legislators were sent home and no bill has been presented.

No session will happen tomorrow (it was scheduled but shifted to maybe Sunday).

“Delay is usually the enemy of progress” in politics, and if that statement is the case, there are now 2 legislative session days left to get the bill through. Delay could suffocate this bill or it might present the real deadlines for people to have to respond to.

But is the bill dead?

The answer is “no.”

There is still a path to getting things passed.

The main question is, does a bill get submitted tonight for “printing” starting the 72 hour clock?

If so, amendments to a “placeholder” bill could be submitted if leadership agrees to “suspend rules,” so options are limited, but not finished.

To make up for timing, the Governor can “extend” the session or call another urgent session of the Legislature with leadership concurrence.

Another interesting point is that the Governor’s discussion about “a package of wildfire bills” remains an option since many bills, including for instance AB 1642, remain unmoved on the floor.

These wildfire-related bills can still offer the Governor negotiation leverage (and leadership the same) to create the “post fire structure” he mentioned in Politico’s piece today.

For those in Altadena tracking, SB 1090 has passed the Assembly, but remains stuck in the Senate in its amended form for concurrence.

The latest whip count we saw meant it was short 1/2 the votes needed to pass, let alone the 2/3 needed to get the Urgency Clause invoked. In other words, it needs help.

What Could Happen?

The Senate Budget Committee (led by Scott Wiener) is “on call” for Sunday.

If a deal for the wildfire bill is negotiated, and leadership gives it a “green light,” then the negotiations can move a bill, or any set of bills, through for a vote Monday, when the session ends (at midnight on the 31st of August).

Budget Committee is also interesting because there is the potential of “authorities” to be put in the bill which can be “filled out in detail” later in a “trailer bill.”

For instance, if the Governor wants to include the authorities for a Disaster Investment Fund in this package, and pass it in a Trailer Bill later in the session without the “hair” of this bill, he could. In fact, a Budget Trailer Bill makes a lot sense so he could take credit for such a program independent of a large “omnibus package,” especially at the end of his term.

What other goodies can be included?

So, there is a chance the bill dies, but there is also a real chance a “deal” is worked out over the next 24 hours, allowing an amended package to be brought forth in the Budget Bill Sunday and Monday.

Watch closely what happens now.

Premature Celebration?

Nobody knows what’s going on, especially those leaking information or those on the outside looking in.

Negotiations, especially for a bill this contentious, will be down to the wire, going through ebbs and flows. Negotiations are ongoing, as late as this afternoon.

Faux deadlines will come and go.

Those with a certain interest would like “clarity,” and “victories” to celebrate to supporters. Sure, they “delayed” the outcome, limiting options, but not that much considering the strategy which was being employed all along.

Moreover, do not discount the Governor’s people. They were not expecting the bill to be a quick and easy one. They knew it would go through various iterations. In fact, these people live for this kind of moment.

The reality is, nothing has really changed as long as a bill is published tonight.

For those tracking HR 6644, how many times was it dead before it was resurrected? That bill was contentious, just like this one.

The Politico piece, which started the cascade of info “calling it,” today was filled with “hedges,” with the claim of subrogation “appearing” to be out.

Moreover, who knows why such a piece was “leaked.”

Considering this Governor’s Office, I would be very skeptical of anything short of a victory at this point. They are extraordinarily media savvy and Poltitico on the whole has been very friendly to them.

Also, the Governor wants a win, especially going into the Presidential cycle, where many in outside California are watching his ability to navigate these contentious negotiations.

The information could be correct from today.

This episode could go down as a loss to the Governor, but before we “call the game,” let’s see how it plays out in the last quarter.

How many NFL games are now being won on the last drive?

Enjoy Your Weekend

Go enjoy your weekend.

For Altadena, you can feel pretty good that the “Edison Settlement” will likely not change materially in any bill being presented. I have been told as much.

For SB 1090, well, that bill is still stuck in this “end of cycle surge,” and we did have a Senator who was very vocal against the Governor’s Wildfire Bill. It might be leverage being held out to bring the deal together at the end.

For those who are tracking the “inside baseball” on the legislative process, remember, there are many more plays left and it is anything but over.

You are best served to be careful celebrating too early.

Supporters should be mindful of these words of caution.

It might still end up as it is being portrayed, but I heard CDBG-DR was dead in the Housing Bill, and it was put in at the last second.

It is here in the process where the real players earn their salaries.

The rest of us are along for the ride. It is good to remember those facts and not get lost in the forest for the trees.

For a year and a half, all I have heard about is how insurance companies are not paying claims.

The stories are legion about how difficult it has been to get money from them for claims against losses due to our round of fires here in Altadena (and the Palisades).

However, now they are joining into the wildfire fund discussion, claiming caps on their ability “to recover” or “subrogate” losses will affect their ability to write policies in California?

Really?

Color me shocked.

They too want a hand out from our rates we pay into a fund so they do not have to insure things the way they want to.

This talk of them abandoning California’s insurance market over wildfire? Bullshit. They are already doing it. Look at the growth of the CalFair plan. How many people were without insurance that night on January 7th because their insurance was just cancelled, and they did not have an alternate in place? Insurance pulled out, regardless of the Wildfire Fund or not.

I am sorry, but now they are “fighting to ensure rates stay low?”

Come on.

They have been raising rates, regardless of whether they make good on their promises.

Were rates artificially low?

Yes.

That is a feature of the system we have created- an elected insurance commissioner who has to run statewide every four years.

The mandate as someone said to me this week?

Keep rates low, the equivalent of taxes.

If you raise them, guess what happens when you run for election again?

The disconnect in California’s insurance market from the “market realities” does not stop these poor insurers from “treating” our Insurance Commissioner to all expenses paid trips like what happened last year. If you are disgusted by the whole thing, you are right.

The root cause of our system’s dysfunction is the core disconnect of the real costs of the policy decisions made.

We do not charge the real rates, nor do we regulate in the real world. We hear they are “too high” in some corners and “too low” in others.

I have an idea to get to the bottom of it, but that will never happen.

Instead, we layer “fixes” on top.

We just put “band aids” to make the solution less painful.

The real root cause and solution are harder to deal with.

Land use, regulation of utilities and old equipment, environmental remediation, those have real constituencies in Sacramento who are a problem.

Instead, create a fund and move on. Insurance was the same…they get to eat at that trough too (same with local governments who allow development where it should not and do not properly regulate land use).

The fund is quick, relatively painless, and it works until it doesn’t and gets run out in one fire, but like we learned with the wildfire fund.

In fact, the solution is a gift that keeps on giving. Not only do you get the win for the policy which ultimately was incomplete, as the creator like Assembly member Chris Holden you can now advising lawyers on how to use it.

That is how the system works. In a sense, you “fail up.”

So, before the fires, we had insurers “pulling out,” forcing taxpayers to take on the risk (sound familiar)? Now, the latest threat?

They are going to pull out of the “riskiest policies.” Okay. Already done. Next please. They are really upset they may not get the “risk free” money they were hoping for as a result of this fire.

Get victims to march in front of the Governor’s mansion for, in part,….wait for it….the insurers they have been burning in effigy for the year and a half before.

Sorry, I am cynical, but this one takes the cake.

So today, when the Los Angeles Times publishes the 15 insurers sending a letter to the Legislature warning of the horrors of removing subrogation, I cannot help but roll my eyes.

These guys have no currency with which to discuss these matters, yet here they are, “fighting for the little guy.” Or rather, using the victims, the little guy, to fight for their corporate welfare.

I can accept working with the enemy of my enemy, but this one goes too far. At least, be honest about what it is. There is no sugar coating it. These people were the devil incarnate a couple months ago. Now, suddenly, they are a white knight helping us victims? Really? Leopards do not change their spots, they just need us to get billions.

There is only so much you can do when you hear about this mess.

Insurance cannot claim to be a white knight after all they did to us.

All they care about is themselves, their interests, and getting a piece of their risk free public capital, the same as everyone else.

Call it for what it is- a money grab, paid for by, us again. Insurance was never promised the ability to write policies against these risks, they fell into the Wildfire Fund. If they felt they would be ok, they would not have been cancelling policies at the rate they were.

Nevertheless, when it is all said and done, you have to go back to the root cause- the system is broken. This entire episode is just another example of it creating the wrong incentives and now the hypocrisy is there for all to see.

Believe your lying eyes, they are telling you the truth.

Case in point is this morning’s Guardian article about the Strait of Hormuz. Iran used the choke point as a perceived “nuclear weapon” as the IRGC has described it.

The reality is different.

When you use the Power, it starts to lose its value. As the Guardian explained, the Power of the Strait is actually declining now that it is being used. Perception is Power. Power, well, once used, begins to disintegrate.

The piece in the Guardian got me thinking.

Why is the example of Iran important?

It shows what people perceive differs when the angle of perception shifts. It goes back to all Power Politics, including California.

California’s Strait of Hormuz

Labor is considered the Power broker of California.

Everything and anything which wants to be done in Sacramento goes through Labor. They are all Powerful, or so the perception is. In fact, as City Journal wrote about this week, the infrastructure Labor has constructed in California is extraordinary.

Labor’s Power is so important in California that if you want to run for office, have any influence in Sacramento, and be able to affect any solutions, it all has to run through some facet of Labor.

The most Powerful (arguably) is the California Teachers Association (CTA) which has Prop 98 and its automatic budget allocation to thank for its outsized influence.

They are “playing defense” instead of having to be “offensive,” like say SEIU and the HCW-West (think Prop 40, the Billionaire Tax Act).

Power is perception.

Reading Rufo and Schrupp’s piece in City Journal, it seems there is no hope to shift California away from the dominance of the public employee unions and their adjacent support groups (the nonprofit sector which also depends on the grant cycle of the State).

You would have “to be crazy” to take them on and challenge their dominance of the political system in California. In fact, nobody in the system here would do so (think Matt Mahan’s consultants who were rumored to “be afraid of taking on Labor too hard” even though Labor famously politically dismissed Mahan and those supporting him.

Labor is King in California- for now.

All That Glitters is not Gold

Labor’s position on the surface seems unassailable, but it is not without weakness, the same as Iran’s control of the Strait is not without weakness.

There are work arounds, it is just that there needs to be a real effort to make Labor flex its threats into reality.

Prop 13

The first “leg” to the question here is Prop 13 and its use to keep various parties in control of the legislative “strings.” Prop 13 consolidates the revenue in Sacramento.

Financial Power is Political Power as we have said numerous times.

Since Sacramento is centralized, opposition will run into a “centralized” front. Prop 13 is the key to that “centralization.”

If Prop 13 is weakened, where property taxes are allowed to “float” at market rates with some limitations as we have written about here, the money flows to the Counties instead of Sacramento. Those dollars will shift discussions away from the Legislature as a whole.

To get Prop 13 reformed, we need to also agree there is one major factor we all understand- we are being held hostage because we allow the Strait to be the Legislature.

If we diffuse the funding, then more of those “funds” can “escape” the Sacramento straight jacket so to speak.

How do you get there?

You need a Proposition which is rhetorically unassailable.

What is that?

Prop 13 going to “market rates,” in return for lower income taxes coupled with the removal of State Sales Tax.

“Affordability.” Who can argue against that?

You can bog it up in the Legislature, but if we bypass the Strait and go to the people, it is harder to stop it.

What have we really done?

We have taken our “abundance” in California, and redistributed the funds to modern needs.

Not only will more houses be available, but also all Californians will see a tax cut, especially those most affected by regressive taxes like the State Sales Tax.

The key question voters get asked, “is the system working for me or thee?”

Prop 98

Once the Strait is loosened, other routes to get to the market exist.

Voters may begin to realize the system is not working for “me” unless you are part of the union/grant/nonprofit world (and that is not really be affected). You realize the system can still meet its needs and not “cut,” but “reallocate.”

The next obvious target is that Prop 98 is too of a different time- that of constantly growing populations. California is not growing. Schools are seeing a decline in enrollment and will continue to based on demographic trends.

So, now what?

The CTA will fight to keep its automatic stream of income coming in, unless the population realizes what’s happening.

Setting Prop 98 to inflation based on this year’s numbers would allow the State to shift upward of $40-$60 billion over the next 10 years.

$40-$60 billion to healthcare (note the figures from the Prop 40 income needed). Such a funding shift requires no cuts where they are not being used, rather, it is a reallocation of resources to where empty desks are replaced by full beds.

It is very basic.

Abundance says, it is not a question of funds, it is a question of how those funds are spent.

Well, here you have it- Prop 98 forces money into the wrong places at a time of record revenue instead of to the right places.

California Investment Funds

We have previewed California Investment Funds through specific needs here in these pages.

We focused on Disasters, but what if we broadened the use of capital gains which represent $10-$25 billion in income to the State annually and can leave without an inducement, to focus on helping rebuild?

We could encourage a portion to entertainment for investment like the UK does. We can encourage another portion to disaster relief and “climate hardening.”

What about small businesses in California?

Again, we can encourage funds to start ups and growing those businesses here in California.

These funds can solve a few problems.

First, they keep capital gains home (or encourage them to be reinvested in California as opposed to going elsewhere).

They also can be targeted for industries where we are spending time and money on tax credits instead of investments.

Third, they leave us independent of funding insecurity from Washington.

Jobs equal votes. Most important, to keep the funding for those union jobs, we need an economic plan to create taxes for the State to use.

If we allocate the investments properly, perhaps the State can grow instead of what could happen in 10 years.

Will Labor Fight or See the Bigger Picture?

Like Iran, there are factions which see the Strait differently. There is the IRGC which sees the weapon as a blunt object. There are the politicians which see the population getting restless, with inflation growing. A solution needs to happen before there is nothing left.

The CTA will fight, using their Power as a blunt object.

However, some of the others might see the situation differently, perhaps diplomatically. Perhaps they see a stronger base to go forward. Others like SEIU might see more healthcare funding as a basis to grow their program. Sure there are SEIU people in the educational sector as well as healthcare, so it is a net net zero.

Power dictates a response, but what the response is can be anywhere on a spectrum.

Once the response is made, what happens?

The Strait of Hormuz is teaching Iran that the threat is greater than the actual effects.

The Power beings to dissipate.

Diplomacy might be a way out of it.

Is it time to rethink some of those “immovable objects” in California?

He had been through it all.

SB 782 and its drama. The EDA push, where he was constantly having to navigate the trials and tribulations of Altadena.

Now this wildfire thing.

“I guess this is what it takes to get back into his orbit.”

“Altadena,” he muttered, “the gift that keeps on giving.”

They will be up here this week, making a push, aligning with the hated insurance industry and trial lawyers.

“They hate this bill,” he thought. “We all hate it,” he continued.

“The boss wants it though,” he said to himself as he sat back and took in the view from his office.

It was not much, but summer was in full swing in Sacramento. He was close to the Governor’s Office. He saw the traffic going in and out. He knew it was getting close to finish this session off.

The wildfire reform bill is contentious.

Nobody wants to give the utilities anything, but at the same time, there is a need to balance their indignation with the reality on the ground- 75% of our utilities are from Investor Owned Utilities, meaning, you cannot just cut them off. Bankruptcy, moreover, would be a mess too.

But he was taking heat from their Senator down there. She wanted “payback” for the original SB 254 she had to accept back last year.

“She was a team player back at the anniversary and when we signed her bills,” he mused.

Ah, politics. Things change so quickly.

Just then the Lobbyist from Southern California Edison walked in.

As if reading his mind, “she wants to move onto bigger things” he said, seeing the Staffer reading Senator’s comments.

He looked up. “I know,” the Staffer said. “She has brought out a group to protest, again,” he continued. “She has to be careful. She needs to remember who signs and who vetos her bills.”

The Lobbyist sat down next to the Staffer.

He has gotten to know him well.

It has been a long road for this bill, and the Staffer has had to carry the water on it.

He liked him. A little “green,” as they say, but he is a good guy. He tries hard. He has taken his lumps, but he has learned the dynamics of the recovery well.

The Lobbyist leaned over. “Listen,” he said. “I know how you feel about the guy in Altadena, but he put out an interesting proposal over the weekend.”

The Staffer recoiled.

“That guy again,” he thought.

His tension was obvious to the Lobbyist. Lobbyists are so good at reading people and the “unspoken.” It is their main job.

“Still,” the Lobbyist continued. “Look, I know how you feel about him, but his ideas are not crazy…well, not all of them. I am not sure about the transmission line thing, but the point was made. What about his Disaster Investment Fund? It seems logical and a way to bring in capital which can help rebuild, even with the haircuts we are negotiating.”

The Staffer leaned back.

“Look, the Governor wants to own the pieces and parts of this thing. That guy has been very open about that Disaster Fund thing. Everyone who knows, knows where it came from. From our perspective, it is not additive, or rather, not additive for us.”

The Lobbyist thought for a second.

This Staffer, while good, was also myopic.

He is an “A to B guy.” He is taking orders on this issue, but he is still the one who distills the proposals.

He thinks his proposal will be the best for the Governor but maybe not. “He gets paid what he does and I get paid what I do for a reason,” he thought.

“Look,” the Lobbyist interceded with a firm tone of experience but also of sympathy for the pressure cooker the Staffer was in. “Altadena had an interesting idea. What if Altadena was aligned with us instead of against us. Look at that Senator and her opposition. Imagine if we could turn her ‘noise’ around to our ‘noise.’ This passage goes from opposition to support or passive opposition.”

The Staffer paused for a moment.

His face clenched up.

He knew the Lobbyist was not wrong as much as he hated it.

A Disaster Fund with language already written to rebuild Altadena and other communities after disasters. Sure it had to be “finalized,” but it was close enough.

The model can be a model for other States.

The Governor’s veto of AB 797 can be pushed aside.

He found the money for these communities going forward and after such a contentious time in DC over the federal money, it would be a win to cap his term.

Then the Staffer came up with the clincher for him.

“The Governor truly left California better than he found it in this regard.”

He said it out loud to the Lobbyist.

The Staffer hated the fact Altadena might actually be right here.

The Lobbyist smiled.

Then he went in for the kill shot.

“We are at the end of the line on this bill. The Disaster Fund is a throw away provision. But, do you really want to neutralize Altadena and have their Senator learn a lesson? What if you take her Bill, SB 1090, and throw the language she wants into the Utilities Bill, forcing her to have to either (a) tank her own bill at the expense of her community, or (b) have to go along with our reform and bring the community which fought so hard for this bill, to come along too.”

“Wow” thought the Staffer.

“Only in Sacramento could something like what you are suggesting be done,” he replied.

“It might be a leap, but it definitely puts her on the defensive. Do we want the NIMBY/YIMBY fight brought into this bill already” he asked. “I will have to look at the whip count and see how that suggestion could affect those on the fence.”

He shook his head.

He smiled, marveling at the absolute deviousness of such a play if it could work.

He also realized these people play for keeps. This Governor’s Office owns its space here. His people are merciless. They do their job well.

Everything Altadena said about the “all in” requirement to fight us is true. We are playing for keeps. We are going to force everyone’s hands. We are going to “trade.”

It is the Game. It is harsh. It is real. We expected everything they are doing and continue to do.

He looked at the Lobbyist.

“Great ideas. Look, I know things are getting close but these two pieces could bring it home. It gives us cover for sure. It will divide the opposition. It will force the hand of those making the noise. It gives Altadena at least, and disaster survivors going forward something to take. I will take it to the Senior Staff on this one”

The Lobbyist got up to leave. He patted the Staffer’s shoulder. He could see how much stress the project caused the Staffer but they were near the end of the line.

It is how it works this time of year.

This Bill is the toughest the Lobbyist has worked on in his career, but if he pulls it off, he has definitely earned his money.

He began walking out.

The Staffer followed him with his eyes, wondering, “if I get through this all, maybe that is the next stop.” Everyone is thinking about what’s next.

As if intuitively knowing, the Lobbyist looked back and said, “when the term ends, give me a call, and we can discuss what is next for you. First, however, let’s finish this thing off.”

The Staffer got up and went to his boss’s office to tell him this latest wrinkle. If anything, it will “rock people back,” just as our friend likes to say.

Now, the outskirts (western) of Reno, Nevada are threatened by an un-contained wildfire.

Maybe they dodge this bullet, maybe not, but the fundamentals are not changing.

We lost 12,000 structures due to fires in Los Angeles in 2025.

We sit, waiting, playing at the “periphery” for changes.

The rules of disasters, including fires, have shifted as written here for over a year and a half.

The concern will be “there are no tools available.”

Untrue.

The tools have been written here. We gave Spokane and Washington a clear lesson’s learned from Altadena.

The Federal Government is shifting the “base” from CDBG-DR, but there are options, so while CDBG-DR will be a part of the equation, it may not be the primary driver of disaster recovery funds.

Unfortunately, California (and others) have squandered the time to bring new alternatives to the table for others to see, banking on the old. They were, at least partially, concerned any new options could limit the application of “old.” They think if they wait it out long enough…

How has that strategy worked out so far?

It may work out ultimately, but at what cost?

$40 billion is now revised down to $15.7 billion between the City/County ask. Trump remains in office, regardless of the mid-term results.

California’s Delays

Meanwhile, as we sit here, AB 797 was vetoed last year.

A Disaster Investment Fund (DIF) has been slow walked even as fires rage close to the California/Nevada border.

Sure, the DIF may not work for places like Nevada with no capital gains taxes, but the ideas are there. AB 797 can be used to catalyze CRA money to bring in funding to rebuild.

Federal Reality?

The bigger question is what can the federals do?

CDBG-DR is a hold out for “what was.” $40 billion down to $15 billion is a $25 billion decrease, less than 1/2 of what was originally asked. That $15 billion could still be cut further. It is not a question of negotiating against yourself, it is a question of saying, “we have people who need tools and the options are what they are.”

Even electeds in DC have acknowledged “what worked before will not work now.”

Yet, you have this dichotomy of the “public” push for the same and the private acknowledgement of “the different is needed.”

If D’s give in though, then does that mean Trump won, an unacceptable outcome? Victims don’t care. They see the reality on the ground and want answers where they exist. Ignoring them is not helping.

Just Do It Already?

Instead of wasting another round of legislation (NDAA) to try and get CDBG-DR approved, what about enhancing the tools available?

Disaster Opportunity Zones. Shared appreciation loans to rebuild from SBA. Tax treatment for people who have to sell because of a disaster (double the capital gains tax exemption for those who have to move because their home is destroyed).

We have written about these options and more in these pages. The answers are there.

It is time to solve the problem versus playing politics.

So, let’s get the pieces in place so the next time and the time after, we are not wondering what to do, we have the tools to do it.

Hollywood’s answer to all our problems?

Tax credits.

The cupboard is bare.

Give more corporate give aways to large businesses to “stay” in California. So, Sacramento responds with the same tired playbook. $750 million in tax credits, matching other States and countries.

But, go back to the Los Angeles Times’s story on the origins of Hollywood’s decline and what the future looks like this past week.

It is costs in California which make us uncompetitive, regardless of the tax credits.

Therefore, as we increase costs, we offer more tax subsidies, and so on the cycle goes.

The whole model is kind of like giving more money to utilities to limit their liabilities for deferring maintenance. Or, it is like waiting for the federal government to give us a hand out instead of thinking about things differently.

California needs to change the fundamental point of view for its crisis management.

Change is hard, but the writing is on the wall.

New York has just taken over San Francisco for tech jobs. Hollywood redux?

Silicon Valley and tech are the last source of California’s economic engines.

Thinking Differently

What we really need is a plan.

We need someone to look at the entire system of California and ask the question, “what are we doing to attract, retain, and grow our businesses?”

The default answer is- we use the taxpayer fisc to do it (tax credits or grants).

It is the “rise, wash, repeat” model.

What neither does is change the structural weaknesses of the system, which are well documented so no need to re-litigate them.

The responses to our weaknesses in fact do not leverage many of our internal strengths.

We have unique circumstances in California which can be leveraged if properly catalyzed. Ironically, those same weaknesses can be strengths too. I know, I will land the plane.

We need to rethink some of our basic premises to bring in new businesses, and make California more affordable.

Instead, we compete by others’ rules, use their criticisms as something to run from, and in the process, let them dictate the playing field.

A “Uniquely California Approach”

Sometimes you have to break down silos to see the bigger picture.

California has a few pieces that will be gone very soon if we do not make major changes.

In other words, we have a small window to make these changes before the opportunity is gone forever, but if we do, we can recalibrate our model and maintain many of the promises California has made to its residents.

Here are the three major points we need to solve. Three points. That’s it.

1. We have a “bumper crop” of capital gains being created in California right now and will be lost forever if the investment environment becomes more hostile to founders (i.e. Prop 40, the Billionaire Tax Act).

2. We have a window to redirect a portion of those funds into “California Investments” which can be an incentive to keep the money in California (say a “Hotel California” model).

3. We have a Tax Regime which needs a recalibration to a modern day to realign incentives to actually induce business to be formed and stay in California providing broad based economic stability for our residents.

I know, you are saying, “how could you actually do all this?”

It is possible. It takes ideas you have read right here in this Substack, “adjusted” as necessary.

Perhaps it is Hollywood and Silicon Valley which lead the charge to accomplish these goals since they are the poster children of what is wrong with the approach taken thus far.

The Plan

Keep in mind, the idea here is thumbnail- it is not fully vetted.

Still, if I was running for office or if someone was asking my opinion on how to “address these challenges,” here is what I would do.

4 things.

That’s it.

1. Stop with tax credits. No more give aways to large businesses that take and do not give. We cannot be constantly having to compete against ourselves. We continue to lose. $750 million is already enough give it and then let’s do it different.

2. Create a California Investment Fund (CIF) modeled after our Disaster Investment Fund (DIF). Same idea- leveraging capital gains and keeping them here with a deferral, but focused on California businesses. Some can go to disaster recovery. Some can go to entertainment. Some can go to tech start ups. Some can go to aerospace and defense. The idea? Keep businesses and capital in California.

3. Reform Prop 13 to set all properties to “market rates” and cut income taxes for all Californians making under $100,000 (or $200,00 for a couple) to zero. Additionally, remove the State sales tax.

   1. Wait what? Cut taxes? Do not cut revenue? Yes. Make it so those who will start businesses, who will be employed, will get to have a tax incentive to be in California. Housing will be released as well as the natural incentives keeping people in their homes (see the Los Angeles Times’s piece this week) will be dropped.

4. If there is extra money available, use it to fund the California Dream for All to assist those looking to purchase homes, condos, and townhouses, to do so.

Can it be Done?

Yes.

The above is not that crazy when you think about it.

In fact, it is very realistic.

We have the capital gains.

We have the legislative structure to capture the money (been talking about it throughout the wildfire discussion this week), and we have the need (California is falling behind in not only Hollywood, but now technology).

Here is the key- we have a way to staunch those declines which no other State does. The same things which people criticize California for can be turned around and used to become strengths.

What About the Politics of it?

Sure, established players will be against it. But, let’s look at the trajectory of their leadership of our State (Hollywood, Industry, et cetera) or our State.

We are not cutting “revenue,” we are just “redistributing” it. Forget a Billionaire Tax, let’s just do what we need to on property.

But what about the fact Prop 13 is the most protected sacred thing for homeowners?

40% of California residents do not own homes. 40%. Pretty good starting point.

What about the trade off?

For those who do own homes and have limited income, if they make under $100,000 a year ($200,000 for a couple), they are getting a tax cut likely equal to many of their home tax increases, so net net, they lose nothing. And, the tax cut on the sales tax is another major one, where it reduces the most regressive tax out there (affects those who make the least the most). California could be “true” to its “progressivism.”

But, what about the housing stock? Is there enough?

Firstly, no incentives or bills in Sacramento can likely put as many homes on the market as such a shift in property tax. How many people remain in their oversized homes because of the property tax affordability? We can obviously “step” the process so it is not immediate. There are options for seniors to transfer their “tax basis” to a new home too. In other words, a shift is possible and would offer options for people to maintain their tax basis.

Would investors put their money into an “investment fund?”

In the conversations I have had, the answer is, “why not?” It is an investment, it defers taxes for a period of time, and then they get to pay the tax with the profits as well. So, we get the money but we also keep it here.

It is not costing taxpayers any cash out of their current “take,” and ensures the money “stays” in California since there is a way to cover the “cost of carrying” the tax liability which will “ultimately be paid.” Focusing on California businesses and priorities (like rebuilding after a disaster) should be something which resonates well and on a scale which exceeds “tax credits” as we imagine (10-25% of California’s total income tax is capital gains based).

The Synthesis

So, if you think about it, we are combining a model to drive investment using the fact we have these tremendous businesses creating a return for investors at this particular moment, and we have industries which we want to encourage, so how can we do it?

If we wait too long, look back and remember, “California did it to itself.”

All the tax credits in the world cannot change the fact California has certain advantages and disadvantages, which have ironically conspired to make the moment “right now.”

We cannot “wait forever” however.

We can “offer a choice” to keep the money here. We cannot “arrogantly” expect it will be here forever, similar to Hollywood in the Times’s piece.

The choice does not need to “cost the taxpayers,” and instead “could be beneficial to us all,” meaning we do not need to “cut” programs either.

What we need to do is “recalibrate” some of the systems in California which are “dated.”

As Jonathan Fleischman wrote on his Substack, even Republicans are not necessarily willing to undo everything, meaning we could meet them to align bipartisan support to see a “recalibration.”

So How Do You Do It?

Well, first, we need leadership in our electeds and leadership.

Legislation is needed like a Disaster Investment Fund, translating into a California Investment Fund (right now).

We need to capture these dollars as they exist or they can leave for good, Prop 40 or not.

Second, we need to have leadership across the spectrum to put forth a ballot measure addressing Prop 13 and how to recalibrate the funding allocations in Sacramento because such a change will never get through the sausage grinder in the legislature.

“Tax cuts but not program cuts,” is the message.

We just need to “reset” the system as it exists. Anti-establishment is very real and resonating right now.

Then you go to the California people.

You tell them “this is the moment.”

We have a case study of Hollywood if we do not act, where we thought “it could not happen,” and it did.

We see New York now taking more of technology.

We have these structural disadvantages which we can switch to advantages if we were to think differently.

It could be a moment where the “California Model” could be something the rest of the nation could look to.

We can stop Hollywood from leaving and invest in the newer businesses.

We could harden and invest in infrastructure to address climate change.

We can build affordable housing.

We can keep the money in California with a simple “offer.”

We do not need government to pay for it all.

Not all of the money will stay, but if enough does, we can stem the tide and see where the new, new goes. We can do it in a way no one else can right now.

Politics and Power is always about perspective. Here is one where a “shift in mindset” could have “tremendous benefits.”

For those who try to stop it, who oppose it, who scare you, the question is “why?”

Are you not for “more housing?”

Or are you only interested in “building” housing, not providing more supply?

For those who are against the tax cuts, are you not for creating “affordability?”

What about those having to pay their fair share live in a home which has appreciated tremendously while your neighbor is paying 10x or more relative to you?

Is that “fair?”

For those who want to keep investing tax credits to corporations instead of putting that money into full hospitals and providing health insurance to stabilize our system, why would you not want an “investment pool” which focuses on and shoots film, tv, and whatever in California?

I could go on and on.

Let government do the work of good, leading, providing vision to a better California. They do not need to be doing the work of corporations like what is happening with our utility situation (which is unfortunate but a relic of the “old” system).

Is anyone listening? The moment is now. Do not let it pass.

The hope was something would be available with the amendment deadline for legislation on Friday of this week (yesterday).

All week it was regurgitation of existing proposals (published by Politico), and posturing by the Governor and Opponents.

The definitive piece was published yesterday.

It summarizes much of what we have heard.

Moreover, a “primer” was published Thursday night on the “issues” by Politico as well (entitled “Wildfire Liability for Dummies (and Smarties))”.

The Politico piece identifies “subrogation” or where the insurance companies are trying to get reimbursement as the “major sticking point.”

Could be from a legislative point of view, but the liability stems from “inverse condemnation” more than anything.

In fact, it seems to be inverse condemnation as the basis is the root cause of all this drama and the most complicated part of the liability as we wrote about this past week.

Still, the lead up was uneventful because the “leaks” are very minimal and everyone is holding their “cards close to the vest.” The tidbits I have gotten are very minimal and unremarkable (hence not being published).

The “Horse Trading” is Happening

What is going on is pieces and parts are being “horse traded” right now. Parts are coming out, others are going in. Legislators are leveraging priorities for the Governor’s.

For those who tracked the Disaster Funding from DC on these pages through the Spring and its attachment to the Housing Bill (HR 6644), you know the back and forth which goes on in these negotiations. If you were not, you can go into the “search” feature of this Substack and type “HR 6644” and pull up a lot of the writing around it.

It looked like CDBG-DR would be taken out of the bill, then it was re-inserted, then it was removed, and ultimately included in the end (but with a “twist” as we note below).

The President was heavily involved in the Housing Bill, to the point it was written in the Wall Street Journal, he working with Elizabeth Warren to pass one of her priorities.

At the end, he just did not sign it, but the bill was not vetoed because he needed it.

Similar experiences are likely going on here (without the drama at the end).

Rumors will swirl.

The legislation is controversial. It has a lot of emotion.

Pieces are being used to leverage others.

Some items may be added at the last minute while others get removed.

What will the final package look like?

We do not know yet, but it will likely follow some form of what has been publicly outlined with some “tweaks” similar to what happened with the Housing Bill in the House/Senate. It is how controversial legislation meanders if it gets to the finish line.

Disaster Investment Funds- What Needs to be Included

Whatever happens regarding liability and other issues, the big question is, can Disaster Investment Funds (DIFs) get included in the package as we have advocated throughout the discussion. If they do not make it, then that is the true missed opportunity in this bill.

DIFs are a way to bring in catalytic investment dollars in a way similar to Opportunity Zones which are being re-aligned and allocated under Opportunity Zones 2.0 by the Governor’s Office.

The idea is to use the capital gains being realized by the State to create a “deferred” tax payment regime where investors can “defer” their capital gains to invest and allow those funds to grow “tax free” until a certain period where a tax can be paid.

There are various incentives for investors to use the model, and the State can administer it to focus on investments in rebuilding areas like Altadena and the Palisades in lieu of allocating Federal Opportunity Zone allocations to those areas (a request already being made by both locations of the Governor’s Office).

The model is a multiplier beyond just the Opportunity Zones.

DIFs allow for the negotiations around liabilities to shift because the Disaster Investment Funds can be used to “harden” areas too against the fires and disasters coming.

Another factor the Disaster Investment Funds allow for is the question of a different type of disaster in the future.

The funds can also be used to build infrastructure and other needs in lieu of or in addition to the federal money.

Such a fund would put us ahead of other States and the federals.

What about an earthquake or a flood?

Fires might he top of mind right now, but they are not the only disaster to befall our beautiful state.

In fact, Mike Davis writes of the myriad of ecological disasters which befall the Los Angeles area in Ecology of Fear as merely an example of just Los Angeles alone.

Bottom line is if we are going to have to accept a bad deal, why not make it easier to accept with the real tools to fix these problems in the future.

Just as the Governor “defined his first part of the term” by rescuing PG & E with regards to the original wildfire fund to “prop them up,” why not do the same to “prop up our communities” with a true investment fund tool and the end of the second term?

We know the State is “broke,” and the federal debt just passed $40 trillion this week, so let’s stop doing the same thing and start charting a path forward to new ideas.

If I was running for President…well, anyhow, I am not, but we know someone who might very well be…

Final Pieces

This legislative push is the end of the line for this major issue.

The “on again, off again” back and forth will be there for a major issue, especially one publicly identified by the Governor.

He wants it.

It is going to be a major if not the defining measure of his last term. Because of that, people will want to get what they can in the moment and in the future from a potential Presidential candidate.

Negotiations will insert and remove pieces and parts of bills which have been introduced up to this point. Vetoes will be threatened. Bills will be “killed” if there is not alignment (or if there is alignment).

It is how it works in Sacramento. Arms will “be twisted.”

Fates of issues prioritized this session by legislators (i.e. SB 1090) will be decided. We know the Governor wields the veto pen all too well (see AB 797 last session).

Sure, there will be a new Governor next year, but will there still be the same dynamics to bring about reform like exists right now?

Crucially, will the leverage that a single lawmaker holds today be there tomorrow?

It is how it works in Sacramento and everywhere else. Take your moment while you have it.

What will be the final result of these bills and these negotiations?

We don't know.

What we do know the Disaster Investment Fund should be a key part of whatever recovery is happening going forward.

Just remember also the Housing Bill and “CDBG-DR flexibility” looked dead until it wasn’t.

Legislation is like that.

Sometimes the reality necessary creeps into these negotiations. Sometimes the good ideas actually happen. Sometimes the necessary changes are there without the fanfare.

Need a case in point?

Read all the words on these pages during the Housing Bill negotiations, the need for flexibility for the federal money, the need to break the “local government monopoly.”

Can it happen again?

Time will tell.

Sometimes you have to be an optimist and be prepared to be disappointed.

Governor- here’s looking at you to do it right.

You do have a historical chance here.

Fulfill the moment.

2026 will be a major part of that discussion, but 2026 for the Mayor of Los Angeles. It is not just a City, it is a toe hold for the insurgents and a warning sign for the Establishment. .

Ok, enough hyperbole for you?

We see it as more than the Party apparatus, rather, it is through the Power Brokers- Fight (Agency) versus The Bear (Star) that is.

“Surgents” versus the “Establishment.”

Candidates matter.

Take a look at the Gubernatorial. It was Steyer versus Becerra. Bearstar got off easy. Fight is coming back. Nithya is the start.

The Wings of the Party

We have written about it- there are two factions of the Democrats fighting for Power. It is a Revolution. Go back to September 2025.

We said Prop 50 was the embodiment of it. It was an early “truce” before the “real battle.”

Prop 50 made California’s Congressional seats more “blue,” which means “more vulnerable to Progressives.”

Old Line Democrats are losing in Primaries, proving out our assessment.

Progressives are knocking off long-term incumbents, and not just in California. In fact, California has held on because of their “jungle primaries” limiting Republicans from coming in.

AOC’s take down of Joe Crowley was remarkable when it happened in 2018.

Today, such challenges are expected.

Just this week, Eric Swalwell’s district was won by a Progressive over an Establishment-based Candidate.

And on it goes.

Those Are the Candidates…Not the Power of the Party

Again, we have seen “some stuff” this year with Democratic politics in our Gubernatorial.

The fall of Eric Swalwell and the rise of Xavier Becerra was a result of the alignment of the real Power in Politics in California, Bearstar Strategies.

Bearstar represents the who’s who of California politics one the last decade (Newsom, Harris, Padilla, Pelosi) and worked to install Becerra with the help of their work on the “anti-Steyer” Political Action Committee (PACs).

We wrote about this dynamics back in the Spring.

Our point was, as much as Bearstar was a part of the Becerra rise, there was also the need to keep The Fight Agency which was representing Tom Steyer and his supporters going forward.

Fight is the same group behind Graham Platner, some of Abdul El-Sayed’s ads, and Mayor Mamdani’s campaign. Before those three, they also worked on John Fetterman (and Dan Osborne in Nebraska among others).

Fight making a move on Bear Star would have been a huge tectonic shift in California Politics.

Why?

Because controlling the Governor’s chair would have controlled the patronage and been a huge bully pulpit for Fight to showcase their talents.

Moreover, the removal of Bearstar would have removed the Power Brokers there who influence so much of the intersections of California politics including Media and Advocacy Groups.

Much More “Fight” Left

According to the Los Angeles Times, Nithya Raman has hired Fight to help with her campaign.

Fight has been reeling from its spectacular flameout (though not failure) with Graham Platner and what that experience represented in early July (6-9). Fight was flying high with the ascendent Progressive wing, even if they failed with Tom Steyer’s $200 million.

Fight is obviously not cheap even without a billionaire funding the Campaign.

Look at the fact $14 of the $16 million raised by Platner was gone before the Primary was done even though he was essentially uncontested. Most of Platner’s money was small donor money.

They might be Progressive, but they are still Capitalists.

So, even with losing on Steyer’s campaign, Fight was not done with California. We fictionally had our “Consultant” packing up after the Primary in early June, and it certainly was a fiction.

We were seemingly prescient titling it, “One Door Closes, Another Opens…”

According to Michael Trujillo, Fight has been around since June 23 when they were discussing their role with Raman’s Campaign (after the Primary). It was, according to him, only after the “watermarks” were too visible that Raman came out with Fight’s role in the campaign this past week.

The Stakes Are Real

Fight’s role in California was “tested” like everything with the ascendent left in the Gubernatorial.

They took Steyer, a terrible candidate by all measures, and turned him into a contender.

Steyer in fact, in those early days after Swalwell, looked poised to be Governor.

It was not until the end of that fateful week that Becerra began to “circulate” among the talking heads as the “replacement” for Swalwell. Still, were it not for Katie Porter staying in the Election, Steyer, not Becerra could have been the nominee against Steve Hilton.

We documented the rise here in the weeks following Swalwell, tracing the rise to Newsom’s inner circle, which Bearstar is an integral part of.

While Bearstar won the Gubernatorial ultimately, the question is what does the re-emergence of Fight with Raman represent?

As we noted yesterday, Raman is an Establishment v. Progressive contest we are seeing throughout the Democratic Party in safe seats.

Progressives are ascending obviously, and it is not just the Candidates, it is also the machine behind them as Evan Barker has written extensively about.

Each win cements the parallel “machine” so they do not need to take over the current Democratic Party. They have their own people, with Fight on the “vanguard” (yes chosen for a reason) of the communication and campaigns needed to win the seats.

Bearstar got this one, but will they get the next?

As it exists today, their wins are more than their losses based on how it is being sold to the electorate in these Primaries. Will the success translate into general elections?

Moreover, even Platner, while a failure from a Candidate perspective, provided valuable information- the Democratic base is so eager for someone new that they will accept almost anything negative which would have disqualified a Candidate in the past.

Bear Star’s Strength is Their Weakness?

The strength Bearstar and their allies demonstrated in California was remarkable with the deftness they moved from Swalwell to Becerra within a week.

They brought the media, the Establishment Power Brokers, and maintained their position in California’s political ecosystem. Once they secured the base, they dispatched Steyer for the flawed Candidate he was, but through maneuvers (seemingly) more than a successful campaign operation itself.

When Becerra likely ascends to the Governor’s Mansion, what will Bearstar and their allies do?

Will Fight run a more dynamic Candidate in 2030 (likely), and will Becerra tack left to obviate the attacks from the left to keep a Fight Candidate at bay (likely too).

We saw it with Joe Biden in 2020 with real ramifications for the Party. California is a Democrat stronghold, but things need to work here or else.

Can Progressives govern? Can their agenda work here?

Fight continues to force the conversation. They have “freedom of maneuver” which makes them very dangerous.

Bearstar indeed controls the levers currently, but they are weighed down by the mechanisms needed to control the levers.

Moreover, the dissatisfaction with the Machine is very real.

Raman versus Bass will be that battle playing out in the General, a presage to what comes next.

Padilla and 2028, the Next Round?

Bearstar represents Alex Padilla.

Will they be able to withstand what is going to be a challenge in 2028 for that seat?

Will Fight want to take their shot again at a Statewide push?

Alex Padilla is seemingly strong, but there are “weaknesses” people “in the business” say.

He has been the picture of “Establishment” in California.

If someone young, exciting, and dynamic were to take a run at him, could Fight bring enough to get there? It would be a hell of a campaign.

Padilla will have Labor. He will have certain interest groups. They have been the basis of California politics for a long time, but there are fractures developing. Prop 40 (the Billionaire Tax Act) has split Labor. The “old line” Labor groups are against it. The California Federation and Democratic Party (more liberal factions) are for it.

The Narrative Can be Switching Aligning a Generation Instead of Parties

Can Fight create the narrative which can bring the Progressives together on left and right (see the Wall Street Journal about this issue and the “Young MAGA Socialists”).

Is this alliance something a new Candidate can align on to go after Padilla? What of the CEO in Los Angeles County/?

What will Bearstar be able to do since they represent the system being challenged by Fight and others.

Bearstar is “one” entity, but they are also representative of the bigger California Consulting Class.

Bearstar’s Waterloo?

We have not even elected our Governor and I am already discussing what comes next, so I know, it is early.

However, while Becerra and his allies sidestepped the land mines during the Steyer election (Katie Porter anyone?), the reality is the bigger issues are not leaving.

It is not about the Seat anymore, it is about the governance structure which is giving rise to the insurgency.

Fight is on the forefront of crafting that message. Bearstar represents the governance structure.

The wounds are festering.

The Gubernatorial got Bearstar and the “California Crew” off the hook for that one, but the Los Angeles Mayoral is the next one.

Karen Bass is the “Establishment,” and all the tricks they used to position Becerra cannot rescue her Mayoral the way it was done in 2022 with Rick Caruso.

Raman is not flawed like Caruso. She is clean.

She is like Mamdani in that respect.

There is no “file” to “slide across the table” it seems, to control her, to give rise to real opposition research.

Now, she took the biggest available firepower off the bench with Fight, bringing them back to California (or they never left).

Fight is going to get another toe hold if they win the Mayoral of Los Angeles. What is Bear Star’s counter?

Will Bearstar hold onto their territory because it has to be held onto, even though they do not care about a Mayoral in Los Angeles?

Can they stop the “insurgence” or is it too late, like the rest of the Party, to stop what is coming?

The battle of the Party goes beyond Candidates, and it is really seen in the groups like Bear Star and Fight who are able to shift the broader trajectory of the Party.

Evan Barker is right, it is more than the people, it is the machinery which is being replicated and no longer the key to winning elections since the left has their own system.

With that in mind, watch Raman for more than her taking on Bass, she is really taking on the entire Democratic Establishment, even if it is not presented as such.

They are laboring to hold on. They are fraying. They are tired. They maneuvered a “trick” to hold the Governor’s seat, but was it their Waterloo?

Here is the latest language of the bill which will be the last amendment (tomorrow is the last day).

It effectively gives us what we asked for, save a carve out for nonprofits and land trusts focused on 100% affordable housing.

The final product also tracks very closely to what we were told in June (published on June 18) right down to the last minute nature of what the final product would be to limit discord.

Deals were worked out obviously.

There is still a question of whether existing properties can be “grandfathered in.”

Also, the final language seems very “deliberate” around such considerations, but we will leave that to the Courts to decide the ultimate outcome.

As it exists, we are where we are, which looked a lot better than it did in June when we were going to be creamed for a bill which would have lost in court and divided our town.

The worst is the 10 properties (or so) which went to developers will be developed.

Alternatively, they can potentially convert the properties to nonprofits to accomplish a similar outcome, though to get through, they need 100% affordable housing, which diminishes the financial returns.

All in all, the worst considerations were addressed and a three year hiatus is afforded Altadena. It could have been far worse.

Now we have to get the bill passed the Assembly and Senate and signed by the Governor. He and our Senator are going toe to toe on the Wildfire Insurance Fund reauthorization.

The hope is the “conflict” there does not “limit” his signing of a bill like SB 1090 which helps the Town itself.

Tomorrow is the last day of the session for amendments and then it is about getting the volume of bills (hundreds) through to the finish line.

They also worked on Tom Steyer out here (turned him into a contender).

They were called Fight and they were taking the world by storm.

Sure, like all campaign people, they have their losses.

Platner…

Graham Platner is probably the visible and most public.

The “lack of vetting” was a major issue as the Wall Street Journal reported, but that was a feature, not a bug in the eyes of Fight and the crew which propelled him.

He was a neophyte, a nobody in politics, who rose to take the nomination of the Democrats in Maine, potentially ousting a long-tenured Susan Collins until the “past caught up with him.”

Much of the blame was centered around Fight, the campaign managers and media constants who propelled Platner from obscurity to the doorsteps of the “most exclusive club in the world.”

The Senate is not just any representative body- it is supposed to be where policy goes to be shaped and grow our nation. Originally Senators were appointed by State Legislatures to be the “Ambassadors” of their States in Washington. Today, the tradition continues, though they are popularly elected.

Platner’s meteoric rise and fall, alongside the $200 million failure of Tom Steyer, had people asking, “what will happen to Fight?”

We wrote at the time when Morris Katz’s head was being sought by those looking for a scapegoat, Fight actually won.

The Press will go through its cycles, but the reality is, Fight was far more successful than presented (though caught in hubris for sure), and they would be back.

As we saw it, they did the unthinkable.

On July 8, we wrote the following:

“In fact, those supporting Platner, have their own, independent support. The Consultants won big time. They took a nobody and made him the nominee of the Democrats for the United States Senate. It was more than transforming Tom Steyer from billionaire to progressive warrior. They proved the message mattered more than the messenger, and thus, they control the message. The Consultants will not be blackballed, they will be celebrated.”

Nithya Raman Proves Our Point

We were not the only ones to realize Fight has a very strong brand.

Yesterday, the Los Angeles Times published a piece about Raman’s campaign hiring that same group of consultants.

Blackballed? Right. As we predicted, they would be back and in spades.

Raman is smart.

She knows what works.

If Fight took Platner with all his faults, Steyer who had minimal political instincts, and got both of them that close, imagine what they could do with her?

Were they already there for debate prep?

Last night’s debate performance was vastly improved over her Primary performances.

Per Gustavo Arellano in the Times:

“This time, the challenger offered concrete answers instead of word salads. She mostly stuck to the allotted time limits while Bass repeatedly whined that she wasn’t given enough time. Raman effortlessly turned the mayor’s rhetorical traps around like Bugs Bunny twisting Elmer Fudd’s rifle right in his face.”

Hmm….

What’s different?

And, do these guys do good work?

They Are That Good

Fight is good.

Damn good if you ask me. The politics, well, I am not a fan of, but the product is definitely working.

In their niche, they are definitely the “hot commodity” and should be. The “chip on the shoulder” is what makes them unique, authentic, and speaking to the times and electorate out there.

Yes, Platner was a bit over the skis, but the point was proven.

There still needs a Candidate capable of carrying the message, but when the two are put together with Fight, things are very different. Good on Raman to see that. Watch what they do to Bass. If she continues like last night, look out.

Out of the Penalty Box and Gloves Off

Knowing how Politics works, it was only a matter of time.

There was a little “time out” if you will, but they are back.

Lord knows what they will do to Bass in her campaign.

It is a preview of what they could have done to Becerra et al if they had the right candidate in the Gubernatorial.

2030 is a scary proposition if someone other than Steyer was running in that Progressive Lane.

Look at what’s happening to Bass, the quintessential “establishment” candidate.

As Arellano was saying, the wheels are falling off the bus.

Meanwhile, Becerra did not knock anyone’s socks off through the primary.

The right Candidate on the left could be very hard to beat in 2028 (Senate) if one wants to run against Padilla, and 2030 when Becerra has to run again for Governor.

Nailed It.

They won with Platner even if Platner imploded. Fight proved they could do something nobody thought. Fetterman was a Statewide Candidate. Mamdani was an elected representative. Steyer never stood a chance.

They had to take their “lumps,” but Raman and her campaign will propel them back into the mainstream if she wins (and by the looks of it, she is far more inspiring than Bass). I have heard less generous descriptions of LA’s Mayor.

I said it back in July.

Now, with Fight, I would be very scared if I was Bass and the rest of the Establishment. Last night’s performance is a very clear warning.

Old, tired versus young, enthused.

Fight is back as predicted. Now let’s see what they will do.

Bear Star, et al, start worrying, there may be a new player coming to California.

I know, I wish I did.

I am sure others do too!

I have an idea. I do not think it is going to make people happy though.

Before getting there, let’s start at the top.

I think it is important to understand a few things about utilities, power, and California when trying to understand this issue. I am going to try and simplify as much as possible for me and readers not ready to get into the intricacies of nuanced and detailed legal minutiae.

Historical Context

Power was delivered around the turn of the 20th century in California. Much of the original electrification occurred in urban areas, before the New Deal and rural electrification.

San Francisco had its Hetch Hetchy dam for hydroelectric power, but the transmission lines and equipment were owned by Pacific Gas and Electric (PG & E).

The “dual use” system remains today (a microcosm of our broader electric issues in California).

Los Angeles was different.

It has the Los Angeles Department of Water and Power, (LADWP) founded in 1902 for water and 1916 for power, with its own history.

Unlike San Francisco, LADWP bought out Southern California Edison (SCE) in 1922 of its “transmission infrastructure,” and in 1939 “fixed its boundaries” with SCE cementing the largest municipal utility in the nation.

Today, roughly 75% of Californians are supplied power from Investor Owned Utilities (IOUs).

The remainder are supplied by municipal utilities.

What is Inverse Condemnation?

As we have written before, “inverse condemnation” is a legal basis where if something is “taken” by an entity which affects the public good (i.e. a utility), the liability of that utility for the “taking” of “property” is born by the entity.

The above summary is very general and subject to legal details, but it is good enough for a general working knowledge of the problems. The Stanford Law document we will discuss later will go into more details on inverse condemnation if you want to read about.

What Is Happening in Sacramento With All This Legislation?

The legal premise of inverse condemnation has been growing with the size and severity of wildfires over the last 20+ years.

The scale of the losses are corresponding with the growing implementation of inverse condemnation as an assignment of “strict legal liability” as the courts are seeing it.

In 2019, with the bankruptcy of PG & E due to wildfires in Northern California, the risk that almost 1/2 of the population of California covered by an IOU could be without a power company.

Such a situation, akin to an insurer going out of business with tons of policies involved, was unacceptable. Losing upward of 40% of Californians with Power would have been a disaster.

The Governor and Legislature created a Wild Fire Fund which would effectively be an insurance policy to back up the liabilities and prevent bankruptcies of utilities in the future. The idea of having the 75% of the State covered by the IOUs to pay into a fund, the “mutual aid” would “satisfy” the public good requirements in the inverse condemnation liabilities.

SCE “Taking.”

Well, the size and scope of the liability for SCE in Altadena will ensure the current funds int he account will now be depleted by one IOU- SCE- and its liability. SCE effectively “took” the “taking” mutual aid.

Effectively, the Fund is a bail out of SCE and no other utility, though all the other utilities have put in to it.

Reform is needed, hence SB 254 and the current discussion.

Stanford Article

Alongside SB 254, which was to begin the process of “addressing the problems of inverse condemnation,” Stanford Law School professors put out a 48 page article explaining the history, liabilities, and features of the current situation.

To save you the time of reading it, the essence is, as I boil it down, we have a model which is essentially putting a square peg in a round hole.

We have a system (inverse condemnation) which is interpreted as a constitutional issue (meaning reform through legislation is far more difficult than other issues).

At the same time, the limitation of inverse condemnation (applying only to property) affords the government some peripheral control (i.e. the control of non-property liability).

In other words, while the California Constitution protects property rights, that is as far as the strict liability extends for those being sued under the precedent, and as far as the constitutional “protections” via court challenges to any inverse condemnation arguments could be applied with certainty.

The Fundamental Disconnect

The whole system goes back to its origins and why it is uneven.

We have a public/private interface designed where the chain of events can be broken by different entities with incongruent needs.

We also have a liability structure “imposed” by an “interpretation” of a nuanced read of the California Constitution, which was written before this “public/private” model was ever envisioned.

In our power company situation, the IOUs are required to keep prices cheap via regulation by the State and the California Public Utilities Commission (CPUC), but also offer a return to shareholders to make the stock valuations attractive to investors.

How do you reconcile the different incentives?

It is a paradox.

You can defer maintenance, hoping land use and municipal policies will ensure if a fire occurs, it does not turn to an urban fire. Increasingly those concerns are becoming bigger and more difficult to manage since there a disconnect between each party’s incentives to manage its responsibilities (think climate change, wildlife clearing, land use pushing into broader areas, cutting back municipal budgets).

Meanwhile, it is not that the “limited profits” the IOUs are getting are providing a better deal to ratepayers than municipal utilities.

For instance, in some circumstances, LADWP is charging approximately $0.25 per kWh, and SCE is charging upward of $0.32-$0.35 per kWh.

So, not only are rates different (with the profit motive potentially keeping rates higher for IOU customers), but we are also getting “deferred maintenance” to increase returns to shareholders, affecting the public good in the process.

The disconnect goes beyond just rates and profits.

Land mixed governance over land is a problem.

Did SCE verify that maintenance of its lines and surrounding areas were in accordance with its deferred maintenance program?

If the lines were “dormant” but not taken down, they should have been maintained to ensure the lines would not create a wildfire with adequate clearing around the line.

That did not happen. Was the lack of communication because SCE or LA County control the land below?

We can go on and on (think Sempra turning off gas too slowly to contain the urban fire, think limited resources from fire departments because of budget constraints, think notification system which did not notify or get out people when the fires were coming which may have contributed to the deaths from the fire).

Governance Failures

As we have seen for so much of these fires, governance is an issue.

The failures extend beyond government and their responses.

The failures go to the heart of the system itself.

Where the dynamic of profit over public good is evident, it is hard to ensure the toxic mixture of deferred maintenance, shareholder value and maximization, and public good are maintained.

This post is not advocating LADWP was much better in ensuring wildfires did not spread (we need not talk about the deplorable state of their own infrastructure), but the point is, the chain of liability is clear with LADWP and therefore the incentives should align to ensure the system is congruent. With the IOUs, the system is more murky and jumbled.

Accountability is also different. LADWP answers to its municipal owners and ratepayers are residents. IOUs answer to shareholders.

Stanford Ideas to Solve The Disconnect

Stanford makes recommendations on Pages 45-46 of the study.

I am not going to explore them because they are not anything you have not heard before (State Wildfire Insurance Fund, no fault liability, capping reimbursement, reinsurance program), but what we did not do is go beyond the paradigm to address the broader issues.

Most rely on the public fisc, which is a difficult proposition in California these days.

Going Beyond The Solutions of the Government Spending Money to Get Nothing in Return…

As we have said here, CalFAIR plan is that insurer of last resort, so let’s shore it up and make it a multi-line insurer to broaden the liability costs.

Another idea is what about purchasing and maintaining transmission lines if the IOUs will not maintain them?

“Transmission” should have some profit in the business.

I know pipelines do well. Ask Rich Kinder who bought Enron’s transmission lines (the only profitable part of the company).

Ah Enron. We know all about them in California.

Anyhow, perhaps redirecting resources and incentives to “transmission” versus “last mile” will focus the mitigation where it needs to be most focused (since the IOUs seem to have difficulty doing it). It seems the “transmission” issues are where the fires most commonly occur.

To the extent we have fire damage, we can introduce a Disaster Investment Fund (DIF) (as we have written in these pages). The DIF can bring in private funding to not only rebuild, but when there is no major disaster or a surplus, focus on prevention of disasters like wildfires.

We need to broaden our mindset and focus on where the incentives and alignment are. These ideas are merely those to discuss where we could be going and addressing the root cause.

Public/Public

To the extent IOUs want to maintain their business, the failures seem to be in the ability to maintain the transmission lines more than anything. Deferred maintenance and shareholders do not satisfy the billions of dollars in losses incurred in Altadena (not to mention the fact so many were affected beyond monetary damages).

The fact is, the effects of these private failures are public and therefore, since we are now addressing the umpteenth failure of an IOU in the last decade, it is time to rethink the entire system.

There is flexibility in the legal boundaries which exist, but let’s to the heart of the problem.

The chain of events needs to be public to public insofar as major liabilities.

If a San Francisco model is the final answer, though the maintenance of the transmission lines until the municipal limits is the State, then so be it. Since the difference in incentives cannot be aligned in the current market conditions and focus on earnings, the corners being cut are not going to resolve without a major change.

Either investors take a “hair cut” or the State takes over.

Doing the same thing over and over again and expecting a different result is the definition of insanity, and we need to move beyond it.

What ends up happening will be potentially a long-term process, which has an immediate resolution today with the current wildfire fund, but the wound of the policy disconnect could take a decade to resolve.

I speak from experience.

AbilityOne

In 2016, CNN broke a story about fraud, waste, and abuse in a federal program which employs people with disabilities. The story was an extension of a story which broke in the early 2000s by The Oregonian which exposed similar allegations. The earlier stories by The Oregonian led to hearings by the Senate Health, Education, Labor and Pension Committee but no legislative solutions.

The 2016 story had a deeper effect. Senator John McCain wanted to cut off all Defense Department contracts from the program until a proper audit resolving the allegations about fraud, waste, and abuse were resolved. The result was a Commission called the 898 Panel to recommend solutions (see 2017 National Defense Authorization Act, NDAA).

At the heart of the discrepancy is the fact the Program (AbilityOne) and the Workforce Innovation and Opportunities Act (WIOA) are in tension (similar to our wildfire fund and the policy objectives).

2016 and a Lawsuit

AbilityOne had another thing going on at the same time. The Program was politically very protected, with the ability to reach deep into Administrations (including the White House). They had never been beaten in 80+ years of existence until a lawsuit was filed (PDS Consultants v. United States).

From there, something changed.

The initial concerns about the Program with WIOA and the fraud, waste, and abuse presented an opening.

The question was, how would the Program be attacked politically to backstop the legal win before legislation could change it?

Would it come from “the front,” as was done so many times in the past, or would the political attack take a different approach?

We opted for the latter, and they expected the former.

What Was Different?

The lawsuit proved the Program’s preferences in contracting were not invincible.

However, the response to a bad legal decision is to get the law changed (think our current wildfire situation).

We had to make the situation different so the legal approach was going to be painful, not just by direct attacks, but to make it rhetorically difficult for AbilityOne to argue their approach was “morally superior.”

How?

The answer was to offer an alternative which complies with federal law which the Program was not in compliance with.

We created a new procurement program, forcing the program to defend the fact they were not in compliance with federal law any longer.

We “rocked them back.”

We told people there was an alternate way to achieve the same objectives (employing people with disabilities in a protected environment) the Program existed for.

We called the new solution the Social Enterprise Set Aside (SESA).

We forced the Program to defend why the new set aside was bad. They were explaining, which in politics means they were losing.

The Opposition

Their answer to our proposal was to make the new solution seem “unwieldy.”

Like in AB 797 where the “cost was too high” justifying the veto, the same argument was essentially used here- the new system “could not work.”

A new set aside would create a burden on the Small Business Administration (SBA). SBA was about entrepreneurship, not about workforce development (which is untrue because there is something called a HUBZone), and we said as much to SBA.

The bureaucracy wanted to stop us. They were all tied together. Therefore, the burden was used to make the solution seem “too far afield.”

Dark of Night Legislation…

Fait accomplis are a feature of contentious legislation. They are designed to limit the opposition or make the situation look preordained.

In our case, it was a bill called HR 4920 which was introduced and pushed through the House with little input outside the interest groups pushing it. Today, in Altadena, we hear it as SB 254’s successor.

In our case, we opposed HR 4920, and were ignored.

Even though we said the bill was unnecessary, it was pushed through.

Sound familiar?

The Stoppage of the Bill

The bill was ultimately stopped in the Senate due to friendlies exercising support. We got that stoppage because of our “creativity” in “crafting a solution to AbilityOne,” which did not create a “direct conflict.”

It is important to “do it different,” as that “earns respect” to get you to these points.

After the bill was stopped in the Senate, things got “messy.”

The advocacy to get a final compromise in place took time with a fair amount of “threats.”

AbilityOne did “save” their preference, but the wound was inflicted, festering, waiting for the next opportunity since the solution was not totally “baked” yet.

The Community Development Corporation (CDC)

What we did not realize at the time of our original advocacy was our solution, while elegant, already existed in the books, just in a different name.

In fact, the solution was already in Statute, and the Regulations were in place to allow it to do almost everything the SESA could have accomplished.

Right church, wrong pew I guess. The mistake cost us years in finding a solution which could have been deployed at during the legislative run up.

Interestingly, the Statute and Regulations still exist today. With the issues around reforming AbilityOne continuing to come up short, perhaps the CDC can be the solution which ultimately resolves these ongoing shortcomings.

CDC Solves the Main Objections of AbilityOne

The primary “public” issue the AbilityOne program had with our Social Enterprise Set Aside (SESA) was the fact they needed to maintain their nonprofit status to continue their missions and the SESA would foreclose that option because to compete in a Small Business Administration set aside, you have to be a small business.

The CDC solved that problem.

CDCs, when properly formed, could be a nonprofit parent organization with for profit subsidiaries using a preference program at the government to protect workers through sole source contracts- exactly what the Program was asking for. The CDC is the SESA.

We had found it too late since the legislative battle was over.

Waiting for the Prime Time

Because the CDC solution was too new and untested, it needed a “pilot” program to “prove it out” before a multi-billion dollar Program would embrace it.

During the “interlude” of AbilityOne’s next battle between our lawsuit and whatever was coming, we worked to get the solution “proven.” Our goal was to create a model of sustainable funding for economic development, but it also helped that the solution could be a resolution to a lot of the issues with the AbilityOne Program as well.

In fact, we figured out how to get the grant to make the CDC qualify for the special requirements from SBA, and submit a for-profit subsidiary for approval by SBA as an 8(a) business owned by a nonprofit.

The Moment Arrives

This week, Fox News Digital published a piece documenting, guess what, noncompliance for contractual terms and conditions within the AbilityOne Program.

The General Services Administration (GSA) had sent a letter to the AbilityOne Program outlining a list of concerns asking for a response by November 12.

In the letter, representations of domestic end products were questioned. Chinese technology which could be a security risk were identified.

Meanwhile, additional examples of “arbitrary and capricious” program management were also evident, including the use of regulatory authority beyond what was contemplated.

The old problems came roaring back. In fact, the tinkering of the 2000s and 2010s did not resolve the issues which seem to crop up within the Program.

2006 became 2016 became 2019 became 2026.

Same root cause, different format.

Like the wildfire fund, the incongruence of the program and the reality were there for all to see.

You can only paper over it so long before something causes things to change.

The difference between 2006, 2016, and even 2019 is the time has come for a new solution to come in.

The CDC exists to replace AbilityOne for the “ills” and replace them with “compliance.” The CDC is tested. Its path to implementation is known. It is the SESA.

Will GSA’s letter prompt the change needed?

Conclusion

The wounds existed for decades. It was a matter of time where the policy and the implementation fell out.

It is now here if this Administration wants to take the moment and reform a program which has sidestepped the true reform for years many have asked for.

Perhaps it is also a lesson for those in Altadena- eventually the poison can kill the host, though it takes time to get there. Also, an alternate solution needs to be ready to go so when the time arrives, the solution is “shovel ready.”

It will be longer than you expect, it will be more expensive than you expect, and it may not ever happen, but the opportunities may evidence as they did yet again here.

You have to be ready when the moment happens.

The key quote is as follows as it relates to the dynamics which shaped his ascendancy.

“Becerra effectively punched his ticket to lead America’s largest state — a progressive bastion, a Democratic bellwether and a national launching pad — by winning 28 percent of primary voters.”

Yup. 28% of primary voters equals the Governor.

Scary.

You can read the rest to see (or not) what is forthcoming.

The truth?

Nobody knows. A lot of parlor game guessing.

Even more platitudes and noncommittals.

I get it.

“Don’t try to make a happy baby happier,” right?

He is going to win so why do anything to change the status quo.

Anyhow, it is worth a read, and remember the quote we pulled.

It echoes words written here before, like on June 10.

“She learned a lot of how it is played here.

“30% of the population will pick the next Governor,” she mused. Democracy in action- California style.”

Indeed.

It is probably something Sun Tzu discussed in The Art of War.

For me, the approach is common sense.

However, it is also amazing how often we go into the “teeth,” whether in politics, business, or warfare.

Sometimes the “suicide” approach is unavoidable.

We celebrate those who survive such examples of bravery since sacrifice is inevitable.

Their comrades were sacrificed to the “greater good.”

Stories are retold of the horrendous conditions which predicate the unavoidable attack, doing exactly what the opponent expects, and just a few, if any, surviving.

I, for one, would prefer something the opponent does not expect.

Sacrifice is noble, but we too often assume it is inevitable. Politics is replete with these examples.

Altadena in August 2026- Wild Fire Fund

So, as I listen to some of the current discussions around our Wildfire Fund Reform hubbub over the last few weeks, I am starting to see a similar “march into the fire” inevitability being presented.

Fait accomplis on both sides.

I hear the misplaced notion of Altadena thinking they can push back against the Governor’s legions by embarrassing him, calling him out, using the usual tactics.

Alternatively, I hear the “inevitability” of the effort succeeding. Information to stake positions.

Will the Governor’s Reforms Affect Us?

The big question is, what are we even discussing?

Today, the word is the Governor’s proposed reforms (capping “pain and suffering,” limiting insurance companies from recovering their losses from the fund, limiting the recovery of wildfire liabilities using insurers, et cetera) will not be applied to Altadena. However, because the language in the bill is not public (as of August 13, 2026), nobody knows what the effects will be.

So, Altadena is Used as a Pawn?

And here is a theme we have heard again and again.

Altadena is an example of the dysfunction of the entire system since it is the first “test” of this new model created in 2019.

Designed out of the wreckage of PG&E’s fire in Paradise, the system was designed to not bankrupt another Investor Owned Utility.

As we learned with Altadena, it will likely protect Southern California Edison (SCE) so well that shareholders will get a limited “hit” on burning down our town with their negligence. In a sense, it worked.

But, the question of how much of the money in the account (now the amount varies from I have heard $22 billion but may only have $14 billion in it) leaves one to wonder how much will be available.

Then there is the question of how much of the money in the account goes to “victims” or to “others” like hedge funds (which have fronted people’s settlements) and contingency lawyers (who will collect upwards of 25% of a settlement amount for a “no brainer” as they described the case).

25% of $20 billion is $5 billion…not chump change.

People are going to fight to ensure it stays in their pocket.

Reform To Clean it Up?


The Governor is now claiming the system needs “reform.” He got SB 254 through last year, which caused some discomfort for our freshman Senator (we wrote about it here).

One of the outcomes of the bill was to create a study to examine the system and recommends “reforms.”

Those reforms were issued this year.

They discussed how the system benefitted the “others” above, and not the victims (and by virtue of those words, the Investor Owned Utilities since they are paying “half” of the money into the fund).

Instead of getting rid of the entire system of public risk capital for private benefit, the recommendation was to “limit” the use of the money in the account, doubling down on the “shield” the system affords the Investor Owned Utilities.

In other words, more “form” instead of “substance” in California politics.

We will get a “bill” from the legislature to clean up the parts of the Plan which benefit a group of people who essentially exist in California (i.e. attorneys and financiers specializing in large scale tort cases around wildfires) because the system benefitted them too much.

Where Altadena Comes In.

Altadena is ground zero for the system, its failures, and its benefits for a select group.

The new “disaster industrial complex” beneficiaries created by the Wild Fire Fund are not going to let upwards of $5 billion go without a fight.

Furthermore, since other fires will happen, $5 billion is merely the beginning to the next stage.

The Investor Owned Utilities also are not going to give up their “public risk capital.”

They have to save that portion of this equation alongside potentially getting “reform” in their mind.

Who else Benefits?

What about the insurance companies?

They get public risk capital too. They write policies in higher risk areas with the hope these funds would reimburse if negligence occurs.

The reforms may “change” that equation, limiting recoveries from the Wildfire Fund.

Who is Coming Up Against It?

Since the stakes are high, billions of dollars in fact (sound familiar), interests are lining up to get involved.

Contentious legislation brings attention.

Deals need to be cut.

Deals are important because favors can be “traded.”

Interest groups, legislators, et cetera, are needed to move such a piece of legislation through. What can their “trade” be worth here?

You start to see interesting alignment.

Lawyers, insurance companies, and consumer rights advocates wanting to keep the same system.

The Corporate interests, Governor, and others (who remain obscured) in the background trying to reform things.

Where Altadena Fits

Since we are ground zero, we are the “example,” the “prop” again. The Governor used us in DC and every chance he gets to discuss the lack of financial support from Washington (never mind he has limited his support for us throughout too).

The Alliance of “the Willing”

Now, the insurance companies who have screwed us on our payments now need us (the citations are too many to list).

They want us to fight the “reform” coming so they too can get in on the Wild Fire Fund paid for by our fees each month on our utility bills.

How ironic. They wait years to pay us but we have to move fast to protect them.

It is not just the insurance companies, it is the lawyers too.

They have a job and I do not begrudge them, but the fact they stand to make billions on this disaster, billions which are not going to go to the victims, is problematic from an optics perspective.

Then there are those who have “invested” millions or more to “bridge” people with “loans” against the “no brainer” settlements. They are everywhere. Hedge funds, private credit investors, et cetera, respectable and some not so much, doing work to help people get back on their feet, would now be at risk of seeing their investments not pan out. They need to fight back.

Do not think these people have our backs.

Once More Into the Breech

So, the word is a “secret” deal is being worked out in Sacramento to get us “whipped up” and to “charge over the trench” to support these groups and their own vainglory.

Expectations of Altadena have been sold regarding these wildfire fund settlements, with many eschewing the SCE structured offers which have been made because they believed they would get more from litigation (as the laws existed at the time).

Now, the threat is, however remote, the Governor will get legislation to “claw back” those settlements. That is the motivation. People’s money they are owed is at risk, and we go blindly to stop the threat.

People have expectations.

They will fight to maintain those.

After being manipulated and lied to through the entire fire situation, here we go again.

Tell us we lose, send us into the fire, and see what happens.

Why?

Nobody cares what happens to us, we are a prop.

We only matter if it benefits their causes, right insurance companies?

Rock Them Back

With all the above, the question is are we doing it right or are we being sent on another “suicide mission” for someone else’s vainglory?

Look who we have supposedly fighting alongside us.

What are we planning on doing to solve the problem?

Are we just sitting here, saying “no,” and then benefitting those who want us to do it so they can negotiate their own plays?

Is it even our fight, or are we being used to enter a battle which does not affect us so certain constituencies can get a benefit long term on our back?

What is the detriment to us (i.e. Governor veto of SB 1090 and other potential solultions)?

Since self interest is involved in all this around the WildFire Reform Fund, what does Altadena get out of it?

The system which failed us propped up?

Deals are Going to be Cut

The reality is deals around this effort will be cut.

Interest groups are trading off their support. They are using our experience to benefit their “deals.”

“If Altadena makes noise, then the Governor’s path is more difficult,” so we are told.

We are a “chit” to be “traded.”

What’s in it for us?

Do we need to preserve our Wildfire Fund?

Is it at risk for real or just “theoretically” for our fire?

Is it more so future litigation can occur with the same “payday” as ours today?

The problem is, people are presuming our support because it seems “logical” but nobody asked us. The presumption is a mistake many make.

I made it early in the fires myself with some groups I thought would be aligned, but learned things were more nuanced than people realize.

It feels the same here.

If we are so valuable, what can we have?

Or are we not that valuable?

The Governor’s Calculus

And therein lies the rub regarding our value- the Governor’s calculus either (a) factored us in to go and protest and does not care or (b) does not care about our reaction because it is irrelevant to the matter at hand.

Either way, do you think protesting will make a difference?

Will it benefit us or be detrimental? Are we really adding anything to this discussion or just giving away a good opportunity to leverage something else?

If the bill is going to go through one way or another, and the Governor did his calculus, are we fighting on the winning side?

The Alternative Calculus

“Rock them back” by offering our support to those who could really use it.

If we are willing to accept the Insurance Companies as an ally (who we spent years vilifying), what about the Utilities themselves?

We have something they need, something very valuable- political cover for legislation they are proposing.

What is that worth?

Would a multi-billion dollar settlement to create a Community Foundation for Altadena only as a “fine” be something we would accept so we can use those funds to truly rebuild?

Would tools like a Disaster Investment Fund to unlock funding we need to rebuild (and other like us in the future) be more beneficial?

Those two things would give us more freedom from the County to make our own decisions if implemented.

What if we had features in those funds like shared appreciation to address the gap financing needed and capped it?

Where is our value really in this equation and are we being co-opted into making the wrong deal?

All the above are even more important because if the current situation does not affect our settlements and only those going forward, why would we not get the best lessons in place for those going forward?

The system is wrong. But, if they insist on keeping it, where does Altadena and others coming after us benefit the most?

Conclusion

The reality is Altadena has been wronged in every way.

We continue to be wronged.

The question we need to ask is at this point, if we have to pick a group, who has the leverage to give us what we want?

We are have leverage with two groups who have wronged us- those who burned our town down, and those who we trusted with monthly premiums to rebuild us.

Neither has been there.

Add in the Governments and their actions here, and you wonder why we are so distrustful.

So, this is a moment where we might get something meaningful.

This is a moment where we might be able to get something because those who wronged us need us.

What is it we want?

We need money. We need capital to rebuild our houses, our businesses, our town.

Those who could have gotten us there failed us.

We did not have leverage.

Today we potentially do, if we play it carefully.

Who gets the most out our support and what can we get in return?

It is what everyone is asking, and so should we.

Let’s rock them back.

Nobody is expecting this move.

If we do what the expect, perhaps we get nobility in our sacrifice, but remember, it was a sacrifice which did not need to be.

Zero sum means, someone wins, someone loses.

We saw half assed with Matt Mahan.

Our issues for Altadena are where we need to be “all in.”

Our opponents will beat us, and we are not talking about the Gubernatorial, we are talking about King Gavin (or whoever is Governor of California). These guys play for keeps.

Sure, there are “compromises,” generally for big things. However, the issues we are dealing with in Altadena, Land Use on SB 1090 and the Utilities Reform are not going to be “compromises” per se.

The decisions will be made from “on high” and while we have “input,” there are “other forces” which will be more important.

Altadena is a part of a game, but the game is much bigger.

The stakes are for housing policy across the State and a quasi-religious belief in “build, build, build” from the “Abundance” crowd for SB 1090.

For utilities, maybe it applies to us, maybe not, but the future will be far different than our reality. Caps, limits, insurance changes, et cetera will be part of the whole package. The Investor Owned Utilities (IOUs, an unfortunate but telling acronym) will get a partial immunity from liability for their own negligence for their equipment, or so they think.

Are all aligned behind the IOU issue?

Nope.

Are all aligned behind land use?

Nope.

Compromises were reached, but only after the diktat was issued.

Where Does it End Up?

I have had multiple conversations over the last few days about these happenings.

Up front, I have no idea how these issues end up. There are a lot of “twists and turns.”

Some of the information (likely most) is meant to confuse the issue. Legislation like we are seeing is messy. It touches on broader policy but affects us at the local level. Many different groups have constituencies they have to serve. At this point, we will know more soon, but we cannot call the final ending in the middle of the story.

We can posit.

We can guess.

However, the issue remains, there are a few key pieces which need to be dropped in.

These two pieces are a big part.

Will the Wildfire Settlement money (I am going to stop calling it Edison’s money) be capped?

Will we get a legislative conclusion to our land use issues?

Once those two pieces are settled, a lot of the residential questions can be resolved.

The Pressure Cooker

We wrote back in June a fictional account of the “pressure” which was going to be “brought to bear” on Altadena.

We were going to be “squeezed” as it related to the land use question (we will get a choice- take it or leave it, no matter what the “take or leave” is).

The Governor is doing the same with the Utilities reform too.

His threat- “he will veto whatever bills matter to those who go against him here-” is being said everywhere.

Since legislation is how things get done in Sacramento, how electeds get “good press,” having a signature issue vetoed can be devastating.

Favors traded. Staff time worked. Allies won over and now disappointed. Constituencies aligned and then when it got to the goal line, the Governor whips out his pen to exact retribution.

Does he care for Altadena or the policy implications?

Not really.

He wants to get what he wants and if you are in the way, you do not get what you want.

The pressure cooker reduces the timeline, compresses the decisions, and forces hands.

Politics is about waiting until the last minute to press the solution.

Negotiations become far more limited when you use the tactic.

You are given the choice- and it is zero sum- how much do you want the bill/issue, and if so, what are you willing to sacrifice?

The clock is ticking and the leverage is clear. Power is unforgiving.

And On it Goes

Real politics, real advocacy is about testing constantly.

Everyone talks a big game at first, but when push comes to shove, actions speak louder than words.

Words are designed to communicate a position, but in politics, actions dictate the direction, the true intent.

For instance, a group might publicly declare opposition to a policy, but they may “stand down” when that opposition is most needed, signaling tacit “support.” Opposition might not be opposition per se. This dynamic is what we mean by “the right noise,” where the “opposition has to be communicated directly and explicitly” by the party or else it is not “really opposition.”

I know, the whole example is confusing.

Welcome to politics.

The “duplicity” described above is why people “lose their minds” being involved in Politics. There is no trust. Everyone has a motive. No one knows who is really supporting what position.

In reality, many interests are “fluid” in their support for whatever justifies “their ends.”

Going All In

Then there is the “all in” moment. It is where all legislation or advocacy inevitably lands. It is the moment of having to decide what is most important in the deal.

Will you align with those you are against to get something done?

Will you accept a moral compromise?

Will you be attacked for your opposition?

Are you willing to take the risk?

I remember talking to someone close to me about an issue they were advocating for.

It was about tax policy and the arbitrary attribution of a tax matter on a nonprofit. The person was “all in” they said.

Then I asked, “how far are you willing to go?”

They responded, “as far as I need to.”

I responded, “okay, are you willing to take the pressure of yourself, your family, your closest donors getting audited by that tax authority?”

They responded, “no.”

Then you are not “all in.”

There was the limit. It was the point when they would “back off.” It would never have gone that far, but the point was made.

The leverage was bigger than they could push. Same here. The Governor and other interests have more leverage than we do. We have to push harder to get it through if we want it. They know this and can “call our bluff” or at least parts of the coalition.

Everyone has their limit.

Legislators will have their signature issues at risk from a venial Governor, whether true or not, it enforces discipline. Advocates do too.

What about after he leaves?

Will those who work for him remember the “noncooperation” when the next Governor comes in, and you need a favor?

Is Altadena and a settlement cap really worth the price of the long-term damage to your Sacramento relationship? How “invested” are you? Are you part of the “noise” or the “real noise?”

And on it goes.

People might say they support you, but where are they?

What are their push points?

What is the moment they push back?

Will others “peel off,” getting something when they are needed most?

What is their motivation?

The bigger you make “the tent,” the harder it is to keep “the tent full.”

Still, you need more groups to make the issue resonate, so how do you do it?

The End Result

At the end, the system is designed to work a certain way and has done so for thousands of years, large organizations and small.

It is not about bluffs, it is about finding who really cares about what they are advocating for.

The process is supposed to be difficult. It is supposed to grind you. It is supposed to put pressure on those to see where they really are.

We have warned Altadena and its advocates of these concerns as events have gotten more real. I have been there. I have had them push me “beyond.”

I know what they are willing to do.

Billions of dollars, Political Power, and more than a few careers are hanging in the balance.

Who do you want in the foxhole with you? Are those around you the ones you trust?

The Governor knows his limits. He knows his people. He has the high ground. He controls a few levers and can leverage those points.

He may run for President, but he may not.

If he does not or he loses, then he has friends he is taking care of right now, friends who “will not forget.”

These are real moments where the shooting is going on and people can get hit hard.

Are you ready Altadena?

Are you “all in?” This is the big game.