There is a lot to unpack with respect to what the recent election may mean for the California golf community, and most of the luggage is still packed.
While there are still races that won’t be determined until early December, there are certain important things we do now know. We know that through a combination of term-outs and retirements, one-fourth of the state legislature will consist of new members. We know that both houses will continue to sport super Democratic majorities; that is, more than two-thirds of both will remain in Democratic hands, rendering Republicans after-thoughts in the state budget process. And we know that all state constitutional offices and both United States Senate seats will continue to be held by Democrats – all in stark contrast to a White House and United States Senate that will flip from Democratic control to Republican control and a United States House of Representatives that will continue to be controlled by Republicans, albeit by the slimmest of margins.
We also learned a bit about the California electorate’s priorities. Through approval of the Climate Bond (Proposition 4), which was as much a park/open space initiative as it was a climate focused initiative, we know that Californians have an appetite for taking on debt to combat the effects of aridification. We know that through the overwhelming rejection of reducing the vote threshold necessary to approve tax increases, the California electorate wants to ensure that its appetites for debt and spending are shared by two-thirds of their fellow citizens, not a mere 55%. We know that Californians reject rent control as an effective means of dealing with housing shortages and runaway housing costs, albeit we didn’t learn much if anything about what Californians do support to address chronic housing shortages. Though, we did learn that the state’s largest county (Los Angeles; one-fourth of the state’s population) does support taxing itself to tackle homelessness. And we did learn that Californians’ appetite for further increases to the statewide minimum wage appears to have stalled, although it seems likely that it will continue to flourish on a jurisdiction-by-jurisdiction basis.
Most of the luggage yet to be unpacked involves what the election of Donald Trump means for a state whose electorate is viscerally opposed to what the new presidential administration hopes and plans to do in the next two years. That unpacking will take place over a long time. Anything we would write today is practically guaranteed to be rendered irrelevant if not moot by events yet to happen and impossible to predict.
But there is one matter that is sure to be unpacked or at least framed before the end of the year. And it’s a matter of visceral concern to the golf community. It involves one of the eight (8) California waivers now before the United States Environmental Protection Agency (EPA) – the one that would sanction California’s deviation from federal rules by banning the sale of gas-powered “Small Off-Road Engines” (SORE). If you are thinking, “didn’t the ban go into effect this year,” you are thinking correctly. It’s just that granting these waivers has been routine for 50 years. It has become standard practice to implement first and secure approval later. But “standard practice” and a second Trump Administration don’t necessarily align, and that is why Governor Newsom went to Washington DC immediately after the election to press the Biden Administration to quickly grant all eight waivers before January 20, including this one of most interest to the golf community.
But there is a catch, and as with all catches, this one is likely to end up in court. The Congressional Review Act allows Congress to scrutinize any major federal rule adopted within the final 60 legislative session days of a previous administration. However, Governor Newsom’s Office has invoked a decision rendered by the EPA last year (“Environmental Protection Agency—Applicability of the Congressional Review Act to Notice of Decision on Clean Air Act Waiver of Preemption”) to argue that while the Congressional Review Act applies to “federal regulations,” it does not apply to waiver approvals like the eight (8) that are before the EPA right now. Given the US Supreme Court’s recent decision limiting the authority of administrative agencies to divine Congressional intent in these kinds of matters, smart money would be on the Trump Administration invoking the Congressional Review Act to suggest that Congress ought to revisit the California Air Resources Board’s (CARB) ban on the sale of gas-powered SORE. This would certainly prompt California to file suit to block that effort, the result of which is anybody’s guess. Precedent would seem to favor California, but in case you hadn’t noticed, this Supreme Court isn’t shy about vacating precedent.
This is just the tip of a much larger iceberg sure to play out in 2025 (and beyond) as California’s 50-year collection of federal regulatory indulgences comes into direct conflict with a United States Government dominated by a Republican Party that unlike the one that came to power in 2017, is more unified in its animus toward regulation.
Stay tuned. There’s more. A lot more! We’ll continue to attempt to capture what of that “more” has a direct impact upon the golf community and report it. Of course, to the degree to which the golf community is part of a much larger California community, the line between impact and “direct impact” can be hard to discern.
Once upon a time our national elections were suffused with laments about there not “being a dime’s worth of difference” between the parties and the voters wanting “choices, not echoes.” Laments perhaps best placed in that big file labeled, “be careful what you ask for.”
EXPIRATION OF 2017 TAX CUTS – ASSOCIATIONS ON ALERT
As long as we’re putting things in “big files,” let’s put this one in, “the exception that proves the rule.” The “rule” in this case: That little if anything that happens in Congress has much effect on the California golf community. The “exception:” The danger posed by proposals from some respected think tanks that would affect IRS Chapter (c)(6) corporations, the tax status of most of the game’s national leadership organizations, their local/state chapters and sections, as well as virtually every amateur golf association in the nation.
The 2017 Tax Cuts and Jobs Act (TCJA) expires at the end of 2025 and does so at a moment when the federal deficit and the national debt are at record levels. President Elect Trump and the Party that controls both Houses of Congress were just elected on promises to continue those cuts for high income earners, increase those cuts to lower income earners, and also increase cuts to the corporate tax rate.
Something has to give, whether in the form of cuts (e.g., laying off ½ of the federal workforce and eliminating certain departments like the Department of Education) or targeted tax increases. Given that at least two highly respected D.C. think tanks have proposed taxing the association community at the corporate rate, the nation’s non-profit associations need at minimum to point out that unlike past threats to associations that involved only increases on Unrelated Business Income (UBI), this one proposes to tax the net of all non-donation revenue streams of tax-exempt organizations, including membership dues, sponsorships, investment income, and educational program revenue. The impact upon golf’s (c)(6) associations would be great to say the least.
The American Society of Association Executives (ASAE) is organizing an effort to make clear the damage such proposals would cause to the public benefit nonprofits that perform so many of the functions that make life richer and better in each Congressional District in the nation – functions that both the private sector and government cannot – functions that Alexis De Tocqueville attributed to the American Republic’s unique fascination with what he termed the “voluntary associations” that were central to his prediction in 1830 that America would soon be the preeminent nation in the world.
Okay, that’s laying it on a bit thick. But some things do merit a bit of thickness. And this would be one of them. Given that National Golf Course Owners Association (NGCOA) CEO Jay Karen is an officer of ASAE, it’s a given that the American Golf Industry Coalition (AGIC), of which Jay is also one of the leaders, is up to speed about all this and likely prepared to support in terms of 2025 National Golf Day focus (AGIC oversees that show) and much more importantly, communication of the importance of this to the rest of the golf nation.
WATER STORAGE CONTINUES TO GAIN TRACTION
Ramping up storage capacity is not now, nor has it ever been just a Southern California thing. It may be a greater concern in the much more arid half of the state, but it’s not as if wide swaths of the central and northern parts of the state aren’t also dependent upon it. The City of San Francisco is 100% dependent upon imported sources. Other parts of the greater Bay Area, the Central Coast, and certainly the San Joaquin Valley are dependent as well – not 100% dependent, but “dependent” to significant extents, nonetheless.
Governor Newsom may have vetoed legislation (SB 366) that would have established a water storage target of an additional 9 million-acre-feet by 2050, but he has been an ardent supporter of the Sites Reservoir and the single tunnel Delta Conveyance Plan. Our reporting about that disappointing veto has gone to great lengths to make clear that two out of three is more cause for optimism than it is for alarm – not to mention that it is practically inevitable that some version of SB 366 is likely to pass into law sooner than later. 2050 is a long way off.
Last week the Biden Administration and eight (8) California water agencies reached an agreement to expand the San Luis Reservoir an additional 10 feet to expand its storage capacity roughly 130,000 acre-feet, which translates to enough water to serve 400,000 households per year. The additional water will serve roughly 2 million persons in Central and Northern California (Santa Clara and San Benito Counties), roughly 1 million acres of farmland, and wetlands in the Central Valley critical to the survival of certain wildlife species.
Governor Newsom and California’s senior Senator Alex Padilla attended the kick-off announcement along with US Bureau of Reclamation and the eight water districts that have agreed to help fund the project. The federal government is putting up the lion’s share of the funding.
As one of California’s more water dependent sectors, golf is better served by a long-term water ethic that balances conservation with capture of what Mother Nature provides in wetter, snowier years than it is by an ethic that suggests that California can achieve economic sustainability and the water reliability upon which it depends through conservation alone.
As such, the California golf community ought to be encouraged – particularly so for what this all portends in terms of a more equitable balance between conservation and capture, both of which are integral to the long-term health of the state, and if balanced responsibly, amenable to the continuing environmental integrity of the Sacramento Delta. It’s important that golf be equally attuned to both.
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There will be a Volume II of election reflections in December when all of California’s elections have been tallied and finalized. No doubt there will be more about conflicts between California and the incoming national administration. That may be a saga that just keeps unfolding. And there will be detail about some of the changes at the California Alliance for Golf (CAG), which has retained for the first time in its history a part-time executive director in an effort to build a firmer foundation atop which a larger and more robust statewide advocacy alliance can be constructed over time, as well as new Sacramento lobbying services.
If you discern in this an increased focus and commitment to advocacy on behalf of not just California’s allied associations/organizations but many of the game’s national organizations as well, you’re discerning well. Whether in December or early 2025 we hope to explain in some detail why we draw this conclusion, particularly with respect to some of the national organizations.
The information in this newsletter is being distributed among allied associations that form the California Alliance for Golf (CAG), the organization that speaks with one voice in the Capitol regarding legislative and regulatory issues of statewide scope.
