Californias

When a county judge put the brakes on what would be the largest data center in California, ruling the whole project needed extensive environmental review, Kristian Salgado was relieved.

The community organizer lives in Imperial County, where the nearly one-million-square-foot facility was proposed. The rural county near the Mexico border struggles with bad air pollution and has one the state’s highest rates of asthma hospitalization for kids, according to the National Institute of Environmental Health Sciences. One of Salgado’s nephews lives right next to the site and struggles with the respiratory disease.

“It just seemed very unusual that a project of this scale, with that many backup generators could be permitted without requiring any further [analysis] of what that would mean for residents,” she said.

Now, Salgado and others who share her concern believe Proposition 45 on the November ballot could roll back their wins. The initiative changes the California Environmental Quality Act, or CEQA, a law intended to inform decision makers and the public about a project’s possible environmental impacts — and mitigate them to the extent possible.

Supporters say Prop 45 will speed up environmental review for essential housing, transportation, water, health, education and other projects, cutting costly delays and passing the savings on to consumers. Opponents say it not only weakens environmental protections for many developments, but will cover potentially polluting ones — including data centers. The Yes on 45 campaign forcefully rejects the data center claim, but independent legal experts are divided.

At the heart of the debate is the definition of one of the categories covered by Prop 45: “broadband internet access projects” or “mass-market retail service … that provides the capability to transmit data to, and receive data from, all or substantially all internet endpoints.”

Dan Dunmoyer, president and chief executive of the California Building Industry Assn., which supports the proposition, was adamant: “We specifically excluded data centers” when crafting the measure.

Yet the proposition expressly names certain excluded projects: nuclear energy, high-speed rail, jails and Delta conveyance facilities. Data centers aren’t among them.

Dunmoyer maintains that even if they’re not explicitly listed, data centers just don’t fit the measure’s definition.

In a Daily Journal op-ed, Rachelle Chong, a former Federal Communications Commission member, similarly argues that the definition refers to internet access bought from a provider like AT&T or Comcast. “A conventional data center ordinarily performs an entirely different function,” she wrote, arguing data centers aren’t in play.

But land use attorneys Matthew McKerley and Richard Frank, in another op-ed, say many modern data centers fit the bill because they house equipment used to transmit consumer data to and from the internet.

They also highlight conspicuous campaign finance contributions, including $250,000 from Prologis, which developed two data centers in San Jose.

Ethan Elkind, director of the climate program at UC Berkeley Law, said data centers will argue they fit the definition — and then it will be up to the courts to decide.

“Anyone telling you that it’s definitely not going to be data centers, they cannot read the future,” he said. “The way they’ve written the language, they can’t provide 100% assurance.”

Eric Biber, a UC Berkeley law school professor with expertise in environmental law, pointed to language in the measure requiring it to be interpreted broadly “to afford the fullest possible weight to the interest of, and the approval and realization of, essential projects.” In a blog post, he called it “a thumb on the scale” that could lead courts to conclude that projects should be covered when their eligibility is in doubt.

But Ryan Thomason and J. Scott Miller, partners at the law firm Mitchell Chadwick with CEQA expertise, think it’s likely courts would rule otherwise. In an article, they note that the definition used in the measure hews closely to another section of California law, which distinguishes providing internet services from offering content, services and applications online. “Courts generally interpret identical language in related statutes to have the same meaning,” they write.

Dunmoyer, of the California Building Industry Ass., stressed that the measure doesn’t overthrow local zoning rules.

Opponents are “making it sound like in your backyard will be a data center,” he said. “Well, that doesn’t happen at all by this initiative. That has to happen by a county board of supervisors voting to put a data center in your backyard. And if they decide to do that, this initiative does nothing to expedite that CEQA review.”

But what if local officials run afoul of their constituents? In the case of the Imperial Valley Data Center Campus, the roughly 75 acres of unincorporated land where it would go had already been zoned for data centers. As a result, county officials said they had the power to move forward with the facility for artificial intelligence computing infrastructure without city approval.

They granted the project an exemption from the state environmental review.

Then came the backlash. Residents spoke out at public meetings, rallied on the streets, circulated a petition and formed a community organization. The city of Imperial and the Sierra Club sued. In the wake of the outrage, the county walked back its decision, declaring a moratorium on data centers. (The developer sued the county over the ban, and the county recently rescinded it following a court order.)

If Prop 45 passes — and data centers are covered by it — Eric Biber, of UC Berkeley Law, told The Times that such a moratorium wouldn’t be possible. That’s because the measure prevents state and local officials from changing the rules for a project once its application is submitted, he said. So if a community didn’t have a moratorium in place and its zoning laws allow a data center, “They’re done,” said. Existing bans aren’t expected to be affected.

Attorneys for the No on Prop 45 campaign argue that it could have real-world impacts for the Imperial Valley facility, saying the developer could claim the new rules apply. For instance, the measure would prevent courts from overturning approvals of qualifying projects because of CEQA violations. Courts would only be able to halt the affected portion of the project while the issue is fixed.

Sebastian Rucci, principal developer of the Imperial Valley data center, said he will fight for his project to move forward and that there’s an environmentally sound way to do it. He said he’s willing to negotiate and mitigate where necessary — but will not go through the CEQA process. If push comes to shove, he said he’ll move the project elsewhere. California could “get in the game” or be left in the dust, he said.

Imperial Valley Computer Manufacturing, the company behind the project, says it will create at least 100 permanent jobs and generate $28.7 million in annual property tax revenue.

CEQA requirements “are not about the environment,” Rucci said. “They may be for some, but they’re not for many. For many, they are about killing things.”

Business groups such as the California Chamber of Commerce, the California Teachers Assn. and Planned Parenthood Affiliates of California oppose the proposal.

Gov. Gavin Newsom and Democrat Xavier Becerra and Republican Steve Hilton, who are running to replace Newsom, also have spoken out against it.

Opponents describe the wealth tax as a “flawed experiment” that will harm California’s economy because companies and rich people will flee the state.

“If they leave, it will create a huge hole in our budget, threatening core services like education, healthcare and public safety,” arguments against the proposition say.

Opponents of the measure say the proposal is an ineffective attempt to address the long-term effects of the healthcare cuts and would harm California’s economy and budget.

The state budget in California already is largely dependent on income taxes paid by its highest earners. Because of that, revenues are prone to volatility, hinging on capital gains from investments, bonuses to executives and windfalls from new stock offerings, and are notoriously difficult for the state to predict.

Billionaires such as Palmer Luckey, the co-founder of defense tech startup Anduril Industries, and entrepreneur Mark Cuban have pushed back against the proposal on social media. Some tech executives have been relocating or moving their assets to try to avoid the potential tax. Google co-founder Sergey Brin has been cutting ties to California, relocating to Nevada while funding groups such as Building a Better California that are backing ballot measures that could nullify the billionaire tax.

More than $187 million has been spent opposing the proposition, with the bulk coming from Building a Better California, cryptocurrency company Ripple Labs and its co-founder Chris Larsen, data from the secretary of state show.

SACRAMENTO —  Look, Xavier Becerra could cruise to a South Pacific island and bask on the beach until election day and Californians would still choose him as their next governor.

So, last week’s televised CNN debate between Becerra and Republican Steve Hilton really had no election significance, although it was important for the Democratic frontrunner in other ways.

Who won the debate? Becerra, because he came across as calm, collected and capable of governing this troubled state — certainly very few voters’ ideal candidate, but the only real choice for most Californians.

There’s simply no way Becerra can lose on Nov. 3 because his only opponent is a Republican. Californians will not elect a Republican governor in this polarized era, particularly one endorsed by the reviled President Trump.

Moreover, Hilton’s only previous political experience was as an advisor to a British prime minister and his sole claim to U.S. notoriety was as a Fox News TV host–not exactly resume boosters in California.

Becerra — with public office experience spanning more than three decades — held a growing 25-point lead in a recent poll by the UC Berkeley Institute of Governmental Studies.

He’s a shoo-in simply because he has a “D” beside his name in this state where Democrats outnumber Republicans nearly 2-to-1 and despise the GOP president.

Californians haven’t elected a Republican to statewide office in 20 years — and that’s Hilton’s main pitch to voters.

“The definition of insanity is doing the same thing and expecting a different result,” the GOP candidate asserted during the debate, as he does several times a day.

Turning to Becerra, Hilton said:

“You’re the candidate who is supported by the machine in Sacramento — the unions, big business, all these people that for 16 years have given us the highest cost of living in the country, made it impossible to build anything, given us the highest unemployment rate, the highest poverty rate….

“And that’s why we’ve got to try something different this time instead of voting for more of the same.”

OK, fair point. But try what exactly? That’s where Hilton stalls or veers erratically.

He’d build “10 new cities.” Build them where exactly? He doesn’t say.

He definitely doesn’t want to construct new apartment buildings in the suburbs “when we have got so much space that we could be building on in California.”

Like out in Southern California deserts or Central Valley farm fields — requiring two-hour commutes to urban jobs?

And where does the water come from for these 10 new cities as the West scrambles for what’s left of diminishing supplies? But unfortunately there was no discussion of that during the debate.

One debate exchange that caught my attention was about vaccines. Hilton seemed to be carrying the torch for whacko anti-vaxxer Robert F. Kennedy Jr., Becerra’s successor as U.S. health secretary in the Trump administration.

Debate co-moderator Dana Bash recalled what Hilton said previously about children’s vaccinations: “The government should have nothing to do with these fundamental and vital decisions.” And she asked whether he’d push to eliminate California’s vaccine requirements.

“No,” Hilton replied. “I’m pro vaccine.” But then he seemed to wander all over the stage looking to have it both ways.

It’s a “very, very emotional issue for a lot of parents,” he said, adding there’s “data around the world” showing that where vaccine “mandates are lower… you actually have higher [vaccination] compliance, where parents don’t feel that they’re being bullied into doing something that they don’t want to do. And that’s what I want to see here.”

But he ultimately said,“I’d follow the law.”

In California, the law requires all children without medical exemptions to be vaccinated for several diseases — including polio, measles, mumps, chickenpox, hepatitis B and whooping cough — before they’re admitted to school.

That’s a blessing. When I grew up, practically every kid at some point was bedridden with one or more of those dangerous ailments. Then some saviors invented vaccines.

“We had nearly eradicated measles,” Becerra said, responding to Hilton. “When I left HHS, you rarely heard of a case of measles…. Today, children are dying of measles. Today, the spread of measles has reached a proportion we haven’t seen since the 1960s.

“That’s what happens when vaccine deniers take over.”

Becerra achieved all he needed to in the debate. He didn’t screw up. He kept cool and actually was fairly quick on his feet in replying to Hilton’s attacks, while planting a MAGA hat firmly on the Republican’s head.

He missed an opportunity to accomplish more, however — like making Californians feel really good about voting for him, rather than merely because he’s the only Democrat left standing in the contest to replace the termed out Gov. Gavin Newsom.

Voters might like to hear what Becerra’s vision is — if he has one — for the California he wants to build.

What does he have in mind besides just defending California against Trump? That’s a given. How’s he going to lower our living costs? Upgrade public education? Prevent wildfires? Details, not platitudes.

Rather than relaxing on his lead, Becerra should be constantly moving around the state, introducing himself to Californians and — more importantly — listening to their problems and ideas. To his credit, he’s doing that this week.

“The debate was boring and uneventful, but Becerra won it,” says Republican consultant Rob Stutzman. “He is perfectly vanilla and that makes it really hard to pin him down in an attack.”

“We got the genuine Xavier Becerra. That’s exactly who he is,” says veteran Democratic strategist Garry Sragow, a longtime political ally. “Thoughtful, committed and very decent, but does not go very high on the charisma meter.”

In California right now, a candidate’s charisma rates much lower than a simple “D.”

What else you should be reading

The must-read: Voter ID proponents accuse California Democrats of lying about Trump’s support for Prop. 39
Eyes of the World: Will or won’t they? Newsom and Harris weigh 2028 contest — and possible collision
The L.A. Times Special: Voter guide to the 2026 California general election

Until next week,
George Skelton

—
Was this newsletter forwarded to you? Sign up here to get it in your inbox.

California is considering Proposition 40, which would impose a one-time 5% tax on its billionaires. This initiative is seen as a way to generate funds for healthcare, education, and food assistance, given that California is home to around 250 billionaires worth over $2 trillion. However, political analysts suggest that the proposition’s chances of passing are uncertain, especially with rising debates around income inequality and the implications for the state’s economy.

Opinion polls indicate a divide in support for the tax. A UC Berkeley poll from August showed 48% of likely voters in favor while 41% opposed, and a September poll showed support at 52%. However, historically, California ballot measures need strong initial support to succeed, and undecided voters often lean towards rejecting measures. Critics of the proposition argue it might drive billionaires out of the state, lowering potential tax revenue in the future.

Notable figures, including billionaires like Sergey Brin, are actively campaigning against Proposition 40, with Brin sharing his personal experiences to express concerns about socialism and its effects. Additionally, Governor Gavin Newsom opposes the measure and is advocating for a federal wealth tax instead.

California’s history with ballot initiatives reveals a complex relationship with taxation. While the state has a history of direct democracy, it has only approved about a third of citizen initiatives in the past. A recent attempt to raise taxes on high earners, Proposition 30 in 2022, was rejected, reflecting that even in a predominantly Democratic state, voters may not support aggressive tax increases on the wealthy.

The uniqueness of this initiative lies in its retroactive tax structure, which could limit billionaires’ ability to avoid the tax by relocating. However, supporters like economist Emmanuel Saez argue that the tax will not significantly deter wealthy individuals or tech startups, stressing California’s attractive qualities, such as its universities and infrastructure, which he believes outweigh potential tax burdens.

Overall, Proposition 40 encapsulates the ongoing conversation about wealth inequality in America and the contentious debate surrounding the taxation of the ultra-rich, making it a critical issue for California voters in the upcoming election on November 3.

With information from Reuters

In another push to revitalize California’s film and TV industry, Gov. Gavin Newsom on Saturday signed the state’s first standalone post-production tax incentive.

The new incentive is aimed at bringing back jobs for the industry’s editors, sound mixers, composers and visual effects artists. It will allow a 35% to 50% credit on qualified expenses related specifically to post-production work done in California, and unlike the state’s existing film and TV credit, it doesn’t require productions to shoot here.

“This legislation protects the extraordinary people who make this industry possible and makes it unmistakably clear: California is still the future of film and television,” said Gov. Newsom in a statement. “We have the talent. We have the infrastructure.”

The bill, AB 2319, was authored by Assemblymember Nick Schultz (D-Burbank) and introduced earlier this year. It cleared the state Senate 33 to 5 on Aug. 30, and the Assembly approved the final version 72 to 2 the same day. Schultz originally sought $100 million for the program. It is expected to start in January with $10 million, according to the Assemblymember Schulz’s office.

“It’s a historic moment for California’s post-production community. But it’s also just the beginning of what we really need to do to to fight for our industry,” said Marielle Abaunza, president of the California Post Alliance, a group advocating for the bill. She said the group is readying its strategy to get more funding for the program next year.

As Hollywood productions continue chase tax credits to other states and countries, much of the post-production work is going with them. California’s share of U.S. post-production employment has fallen from 53% to 42% over the last 13 years, according to CVL Economics, an economic consulting firm tied to California Post Alliance. The state had about 12,000 post-production jobs last year, per CVL Economics.

Ben Urquhart, 51, spent 18 years as a post-production executive at NBCUniversal. The Culver City resident hasn’t been able to find work in the two and a half years since he was laid off.

“It’s grim and it’s hard. There are jobs, but we have a large amount of extremely qualified people competing for every level of job,” Urquhart said. “When I was a kid, I was a [production assistant] in the 90s, and you could get a job within a couple of weeks. But when I got laid off a couple of years ago, I realized that is certainly not the case at all anymore. It’s been a large-scale transformation.”

Urquhart said the new incentive would help California compete with jurisdictions that already offer these credits and “level the playing field.”

Last year, California expanded its film and TV tax credit program, more than doubling the old $330-million cap to $750 million through June 30, 2030. The existing program already covers post-production, but only if 75% of filming or the overall budget is spent in the state.

Newsom also signed a bill that would strengthen the current tax incentive program overall. In June he revealed a state budget measure that capped how much in tax credits a business can claim each year, a limit industry groups warned would undercut the expanded program. But the new Senate Bill 186 enhances refundability for the industry and exempts independent productions from the credit limits, starting next year.

There’s also been a recent push for a federal film and TV tax incentive. President Trump has previously voiced his support for the effort, and Rep. Laura Friedman (D-Glendale) and Rep. Brian Jack (R-Ga.) are leading a bipartisan effort to draft one.