Newsletter: Essential Politics: Sacramento’s surprising new deficit

There was a time in California when a warning of a projected state budget deficit would have been the political equivalent of white noise. But then, the deficits disappeared.

Until this week, at least.

Good morning from the state capital. I’m Sacramento Bureau Chief John Myers, and three years of reliably strong tax revenues are giving way to a sobering reality delivered by Gov. Jerry Brown.

“The trajectory of revenue growth is declining,” Brown told reporters on Tuesday.

Still growing, mind you. But not growing at the rate both the governor and legislative leaders predicted last summer.

BROWN’S BUDGET: ERASING A DEFICIT

Our coverage of Brown’s budget rollout pointed out that the newly projected $1.6-billion deficit isn’t the only thing that presents risk. The bigger worry is that congressional Republicans and President-elect Donald Trump will cut federal subsidies funneled into California.

But like all rollouts of state budget plans, this one offered a lot of stories beyond the big headline:

Housing advocates might have been surprised that the governor clawed back last year’s $400 million in unspent housing subsidies.

Assembly Speaker Anthony Rendon (D-Paramount) took aim at Brown’s proposal to stop awarding new college scholarships to students from middle-class families.

Government leaders in California’s 58 counties weren’t happy that the budget is balanced, in part, by sending them a new $622-million annual invoice.

And you can put transportation groups under the heading of “cautiously optimistic,” as Brown’s budget includes a revised (but still hard-to-pass) $4.3-billion package for repairing roads and expanding transit.

We’ll be diving deeper into the state budget and taking the pulse of budget debates this winter on our Essential Politics news feed.

OBAMA’S GOODBYE, TRUMP’S HELLO

On the national front, this is simply an amazing 24 hours of political history. A president offers his farewell, and his replacement girds for what’s likely to be a contentious tussle with the press.

First, that goodbye. President Obama delivered the final speech of his eight-year presidency Tuesday night, an impassioned defense of democracy in front of a Chicago audience that seemed to beg him to stay on stage just a little while longer.

“You were the change,” Obama said. “You answered people’s hopes, and because of you, by almost every measure, America is a better, stronger place than it was when we started.”

(We’ve got the entire transcript of the president’s speech here.)

Meantime, the man who will take his place next week holds his first news conference in five months today. And there’s no doubt he’ll be asked about Tuesday’s late breaking news: Allegations of Russian espionage that focused on the president-elect’s personal life and political associates.

Those reports came after more testimony earlier Tuesday from FBI Director James Comey about other Russian efforts — namely, hacking of Republican computers for information that was never released.

Is there an upside for the president-elect with the swirl of attention focused on this morning’s first Q&A with the press? Perhaps, write Noah Bierman and Lisa Mascaro: It might divert some attention from controversies surrounding his Cabinet picks.

SESSIONS SHOWDOWN, KELLY’S COMMENTS

And speaking of those picks, Tuesday’s confirmation hearing made clear that Trump’s team will not get a cakewalk when appearing before various Senate committees.

The marathon hearing for Alabama Sen. Jeff Sessions included heated exchanges on the civil rights record of Trump’s choice for attorney general.

Meantime, there was a different kind of headline from the confirmation hearing of the man chosen to be Homeland Security secretary, John Kelly.

Kelly offered a new take on the president-elect’s promise of a border wall with Mexico. “A physical barrier in and of itself will not do the job,” Kelly told the Senate Homeland Security and Governmental Affairs Committee.

TODAY’S CAPITOL HILL HEARINGS

Up today for their Senate vetting: Rex Tillerson as secretary of State; Elaine Chao as secretary of Transportation; and Mike Pompeo as CIA director.

Our Trail Guide team will be keeping a close eye.

BECERRA PASSES HIS FIRST TEST

A much less contentious confirmation hearing on Tuesday in Sacramento (OK, not contentious at all) ended in an endorsement for Los Angeles Rep. Xavier Becerra to become California’s next attorney general.

As Patrick McGreevy writes, the Democrat won the approval of a special Assembly committee that considered his nomination while offering some tough talk about President-elect Trump.

A full vote by the Assembly will be held on Friday, and the state Senate will take action on Becerra’s nomination next week.

TODAY’S ESSENTIALS

— Lt. Gov. Gavin Newsom offered an idea on blocking Trump’s wall: an avalanche of environmental lawsuits.

— Trump’s attack on Hollywood seemed an odd fit, writes Cathleen Decker.

— California’s congressional Republicans are leading the charge, it seems, on trying to remove a hotly debated Capitol painting.

— Sen. Kamala Harris praised Tuesday’s shutdown of the adult section of Backpage.com.

— Democrats quarreled with Republicans in Sacramento over the legality of hiring the nation’s former attorney general, Eric Holder, as outside counsel to the Legislature.

— The governor’s new budget laid down a political marker over the future of the state’s cap-and-trade climate program.

— California’s rainy-day fund will near the $8-billion mark next year.

— Is $52 million enough for government regulation of marijuana in California? Some in the pot business don’t think so.

— Angelenos could soon be driving down the Vin Scully Highway, if Assemblyman Jimmy Gomez (D-Los Angeles) gets his way.

LOGISTICS

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