“What’s Next?” interviews one of our favorite principals, California political and public affairs strategist Matt Klink. We asked Matt to share his insights into California’s recent electoral behavior and what it might suggest for the future of business and government regulation in our society.
Q. Matt: the voters of California appeared to move left this fall while much of the rest of the country moved right. What does it all mean for businesses operating in California?
A. It means California’s embrace of left-of-center policy initiatives shows little sign of abating. It also means that not just the energy and oil and gas industries, but automotive, homebuilding and other companies to overhaul their compliance procedures in order to continue doing business in California. As California strengthens emission standards, increases the requirements for energy conservation and enacts other environmental controls, Oregon and the state of Washington are following suit—and so might other Western states and, in time, states farther East. All of which means that California’s environmental trend-setting, given the state’s size and market power, will have influence beyond our boarders. For companies to succeed in California requires that they not only understand this reality, but also figure out how to compete and win based on likely future state regulatory efforts.
Q. Another initiative, Proposition 55, extended a “special and temporary” tax on the affluent that Governor Brown helped guide through earlier in his administration. Will that hurt businesses’ ability to attract talent to live in the state?
A. It’s unclear, although some corporations and wealthy individuals are likely worried about the fallout from the tax. But, as November 2016 demonstrated when it comes to imposing taxes on themselves, wealthy Californians aren’t afraid to step up. They want a cleaner environment, they want better schools, they want better social services—and they’re willing to pay for them out of their own pocketbooks. Education and nursing groups spent tens of millions of dollars to extend the special tax—and it paid off in overwhelming support.
Q. Will this wave of California’s progressive agenda move east, as it so often has in the past?
A. All of it? Probably not. But the environmental issues—reduction of greenhouse gas emissions and increased renewable energy in particular—will probably migrate. It may take time, but state capitals around the country will be debating the issues that are now engrained in California’s public policy psyche.
Q. Is California politically out of step with much of the rest of the nation— or is it the other way around?
A. Time will tell. At the moment, it’s virtually impossible for a Republican to get elected statewide to any office in California. Democrats have super-majorities in both houses of the State Legislature. That’s not a healthy situation for any state, especially one as large, economically powerful and sprawling as ours. The California GOP has an opportunity to redefine itself and begin playing a larger role in state policymaking—the challenge is that Republicans have been saying this for decades in California and nothing ever changes. For the time being, California is a solid blue state that is a progressive governmental experiment that’s “in progress.”