Archives for January 2014

Public Pension Measure Likely Off the 2014 Ballot

From The Sacramento Bee:

Efforts to put a public pension measure on the November ballot dimmed Thursday when proponents said they would sue to challenge the language assigned their measure by California Attorney General Kamala Harris.

The challenge, likely to be filed in Sacramento Superior Court within the next few days, will take at least a few weeks to resolve, shortening the time the measure’s proponents have to seek petition signatures.

“Every day that goes by is one less day to collect signatures,” San Jose Mayor Chuck Reed, the initiative’s primary backer, said in a telephone interview. “Realistically, it would be extremely difficult” to qualify the proposal for the November ballot, he said, leaving the presidential election in 2016 as the next opportunity to put his plan before California voters.

(Read Full Article)

public employee union pension

The Elitist Roots of American Liberalism

From The Daily Caller:

It’s not that liberals are utopians. Every society throughout history has had those. It’s not that they are convinced that Ivy League experts can bring heaven on earth if the masses just get out of the way — or are forcibly removed. Every civilization has its elites who think that they know best.

It’s that the left have convinced a majority of Americans to become utopians also. That’s the tragedy I took from The Revolt Against the Masses: How Liberalism Has Undermined the Middle Class, the new book by Fred Siegel. Siegel is an erudite and often brilliant scholar at the Manhattan Institute. His new book is a fascinating look at the recent history, and the many, many contradictions, of American liberalism.

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Independent Review Blasts Caltrans as ‘Out of Date’

From The Sacramento Bee:

An independent review of the California Department of Transportation, released Thursday, called for sweeping reforms of the department to improve mobility in the face of environmental challenges and a decline in the number of miles driven by Californians.

Gov. Jerry Brown had ordered the $270,000 review – conducted by the State Smart Transportation Initiative at the University of Wisconsin, Madison – last May.

Joel Rogers, an author of the report, said in a news conference that his group found long-standing problems in Caltrans operations, including “a mission, vision and set of goals that are not well aligned” with current needs, such as legislation that mandates improved mobility while reducing traffic demand and greenhouse-gas emissions.



Paul Ryan Reboots

From Politico:

This is Paul Ryan’s interregnum — and he’s making the most of it.

More than a year after he and Mitt Romney failed to topple Barack Obama, and a year away from deciding whether he’ll seek the White House again, the Wisconsin Republican is beginning to sketch the outlines for the next stage of his career — whatever it might be.

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Paul Ryan

Steinberg Won’t Act Immediately on Guilty Senator’s Fate

From The Sacramento Bee:

A jury of his peers found Sen. Rod Wright guilty of eight felonies this week, but his peers in the California Senate say he can stay on the job, at least for now.

Senate President Pro Tem Darrell Steinberg said Thursday that he is removing Wright from his position as chairman of the Senate’s Governmental Organization Committee but is not asking his fellow Democrat to leave office.

rod wright

Liberal Democrat Waxman Finally Retires

From The Daily Caller:

Twenty-term California Rep. Henry Waxman will retire at the end of this year, The New York Times reported Thursday.

The former chairman of the Energy and Commerce Committee helped author the Affordable Care Act legislation and is a close ally of Democratic Leader Nancy Pelosi.

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California’s Bullet Train Hobbled by New Uncertainties

Barely recovered from the damaging effects of the Sacramento Court ruling denying the California High Speed Rail Authority access to Prop 1A bond funding, the bullet train project has had to face fresh challenges.

First came the news that Congress has zeroed out any funds for high speed rail in the FY 2014 omnibus appropriation bill, the fourth straight year no new monies have been provided. This put to rest any lingering hopes of a future resumption of congressional funding for the California bullet train. But it has not deterred the California High Speed Rail Authority from officially still expressing a hope for federal subsidies. “We believe that it is reasonable for the federal government to continue investing in intercity and high speed passenger rail systems, like California,” Authority Chairman Dan Richard stated in his recent congressional testimony.

Next came a House Subcommittee on Railroads hearing on “The Challenges Facing California High Speed Rail.” Committee chairman Rep. Jeff Denham (R-CA) wanted some “straightforward answers to straightforward questions” as he put it in his opening statement. Specifically, how was the Authority going to match the $2.25 billion the Federal Government has provided to the project, now that the court has foreclosed the possibility of using Proposition 1A bond funds? And where would the remaining funds to complete the entire 300-mile Initial Operating Segment (IOS) come from?

Cap-and-Trade Funds as State Matching Contribution

Authority Chairman Dan Richard had some straightforward though not necessarily satisfying (to Rep. Denham) answers. Governor Brown, Richard said, has sent a letter to FRA reaffirming the State’s commitment to honor California’s obligation to match the federal spending. The matching money would come from the cap-and-trade pollution trading funds.

Richard confessed he could not predict whether the state legislature would approve the use of cap-and-trade funds for the project. Even if those funds were to be approved, they would not become available by the April 1 deadline when the state must start matching the federal grant. The Chairman did not elaborate how the Authority would handle its obligation, come April 1.(However, in the Governor’s proposed new budget there is a provision to advance $29 million to keep the project moving. The loan, which would come from the state transportation account, could presumably be used as a first down payment in the required matching funds).

Nor did Chairman Richard mention the strong opposition by environmental groups, notably the Sierra Club. “The problem with taking that money and applying it to high-speed rail,” said Kathryn Phillips, head of California’s Sierra Club, “is that we don’t anticipate that we’re going to get the benefits of reductions in greenhouse gas emissions in the short term. … It is irresponsible to not apply that money to those programs that will get you greenhouse gas emission reductions now.” Other critics alleged that the HSR project does not meet the legal test that it would result in reductions of greenhouse gas emission that are “real, quantifiable, verifiable and enforceable” as the law requires. Editorial opinion of some California newspapers (San Jose Mercury News, U-T San Diego) echoed these criticisms.Even the LA Times, a steadfast supporter of the project, expressed some doubts (“Yet the delays, the rising cost, the judge’s ruling and the waning public support should give pause to even the strongest advocates. Can the rail authority line up a financing plan? Is the project still viable? We hope the answer is yes. But the state shouldn’t spend a dime of cap-and-trade money on it until we know for sure.”)

A Re-defined “Usable Segment”

Chairman Richard did not address the court ruling requiring the Authority to identify sources of funds and show completed environmental clearances for the entire 300-mile Initial Operating Segment extending from Merced to San Fernando Valley. Instead, Richard testified that the Authority’s revised funding plan will consider the 130-mile construction section from Merced to north of Bakersfield to be the new “usable segment.” By connecting to existing Amtrak service at Bakersfield, the Chairman said, this stretch will have operational utility, hence it will qualify as a “usable segment” within the meaning of Proposition 1A. The judicial rulings pertaining to the longer 300-mile stretch from Merced to San Fernando Valley are thus no longer relevant in his opinion.

But longtime critic, attorney Michael Brady does not see this as a meaningful solution. The re-defined Merced-to-Bakersfield usable segment will be conventional rail only, he told us, whereas Proposition 1A requires that a “usable segment” be electrified, with all the attributes of a genuine high speed rail system. Moreover, Proposition 1A says a usable segment must operate without an operating subsidy and must have adequate ridership. The Authority’s redefined usable segment will flunk both tests, Brady said. “Hooking it up to an existing Amtrak line will not get them out of these requirements.”

Long-Term Funding

As for long-term funding, a precise funding plan for the entire system is not possible, Richard testified. However, the Governor’s budget proposal “establishes an ongoing state commitment of cap-and-trade proceeds to the project.” The measure includes an initial $58 million for planning and $191 million for construction and right-of-way acquisition in the first phase of the project. Once the line to San Fernando Valley (Palmdale) has been completed and operational, the opportunity for private investment will be ” greatly increased” according to Richard.

“This is an internationally proven investment model and is common to almost all recent high speed rail projects in the world, where capital investment begins with the public sector and then becomes shared with the private sector” to pay for further expansion, Richard testified. As an example, he cited high speed rail systems in France, Spain and The Netherlands which, he said, attracted private investment once ridership was established. However, the parallel is not quite correct. True, European high speed rail systems were able to attract private sector interest after EU opened up cross-border rail passenger services to competition in 2009 . But the public-private partnerships took the form of running private high speed rail services (such as Thello, Westbahn and NTV) on publicly-owned rail infrastructure—they did not involve private capital contributions to expand the physical facilities of the high speed rail networks.

Despite Chairman Richard’s reassuring statements, the prospect for future private investment in the California HSR project still remains very much an open question.

Federal Rail Administration Position

At the hearing, the Federal Railroad Administration and its Deputy Administrator, Karen Hedlund also came in for some sharp questioning. Why has the agency not suspended reimbursements until the High Speed Rail Authority presents a viable plan to identify a new source of the required state match, Chairman Denham wanted to know. Given so much uncertainty around the project, why wouldn’t FRA take the prudent step to hold off spending more taxpayer dollars until they are satisfied that California has remedied these legal setbacks?

Hedlund chose not to respond directly to the Chairman’s questions. Instead, she stated that “at this time,” the Authority was not in violation of the grant agreement. However, she conceded that should California fail to match the federal grants as required by the funding agreement (i.e. beginning April 1), the government could collect the owed matching funds by withholding other federal grants. Rep. Denham followed this up by introducing a bill, with the support of every member of the state’s Republican delegation, to suspend federal spending on high speed rail “until sufficient non-federal funds are available.”

Back in December, we wrote that further delays in the project’s groundbreaking (already more than a year behind schedule), the prospect of multiple challenges over bond validation, a likelihood of drawn out negotiations over right-of-way acquisition and expropriation and, most importantly, the Authority’s inability to identify credible sources of non-federal money to complete the entire 300-mile line to the San Fernando Valley, “all add up to a very problematic future for this transformative project.” The events and disclosures over the past month have done nothing to lessen this impression.

On January 24, in an unusual move, Gov. Jerry Brown’s administration petitioned the California Supreme Court directly to overturn the Superior Court ruling that barred the State from selling the Proposition 1A approved bonds  The state’s request to skip the appellate court review is considered as unprecedented.  ”In my 47 years of appellate practice, I have never seen something like this,” said Michael Brady, one of the attorneys for the Central Valley landowners who sued the Rail Authority. The State in its brief argued that the normal appeal process could take years to resolve and the delay would cause “irreparable injury absent immediate intervention by this Court.” The brief is asking the High Court for an answer by March 1.  As reported above, the Authority is facing an April 1 deadline to begin matching the federal grant with state funds. There are speculations that, threatened with a cut-off of federal funds in the event of non-compliance with the deadline and  having concluded that using cap-and-trade funds would be politically unwise, the Brown administration concluded that it had no alternative but to take this drastic step in an effort to gain access to the bond funds.

The Authority’s move has caught observers by surprise. Just ten days earlier Chairman Richard gave the impression that the Authority would comply with the judge’s ruling and re-do the funding plan. “My view is that we go back and do exactly what the Judge has said,” Richard testified before the House Railroads Subcommittee.

(Ken Orski is the editor and publisher of Innovation NewsBriefs. Originally published on Fox and Hounds.)

Oil Severance Tax Would Hurt Economy and the Middle Class

San Francisco Chronicle writer Joe Garofoli recently wrote that California appears to be taking the lead in President Obama’s agenda to address “economic inequality.”  But this is bad news for California’s middle class families because, in actually, such a foolish pursuit will put a greater burden on their pocketbooks and stunt economic recovery.

This November, California’s ballot could be crowded with anti-business initiatives, from raising the minimum wage, to capping hospital executives’ pay to possibly imposing an oil severance tax.  While Californians may find the left’s rhetoric sympathetic, they also understand the consequences of raising taxes on our economy and how it will harm business because they have seen it firsthand.  The notion of making the rich pay their “fair share” is spreading like wildfire, yet the implications would be detrimental to our economy.

One idea in particular would not only damage our economy, but harm both the business community and consumers.  California hedge fund billionaire turned environmentalist, Tom Steyer, is proposing an oil severance tax that would tax each barrel of oil extracted in California.  It is unclear if his proposal will end up on the ballot or if it will morph into a legislative push.  One thing is for certain though, Governor Brown said in his State of the State address that he will not approve any new taxes this year when asked specifically about an oil severance tax.

It is easy for billionaire Tom Steyer to talk about making the rich pay their “fair share” when he has billions to spare – much of it made investing in energy companies.  Steyer – the poster child for environmental crony capitalism – fails to mention the consequences of an oil severance tax on the rest of the state and how it will not only effect the rich, but also hit the poor.  If we impose higher taxes on California’s oil companies we will certainly see the effects trickle down to small businesses that rely on delivered products and to any consumers of oil.

Voters just passed Proposition 30, a $6 billion per year sales and income tax increase now being spent on pay hikes state worker hires. We already have the highest state sales, income, and gas taxes in the country. The nonpartisan Tax Foundation ranked California as having the third worst business tax climate in the nation.  The Small Business & Entrepreneurship Council and Chief Executive Magazine both say California is the worst place in the country to do business.

California needs to focus on how to improve our business climate instead of finding ways to send our businesses – and the citizen taxpayers they employ – out of state.  Californians must resist the calls for higher taxes and urge our legislators to manage the surplus of money they have effectively instead of penalizing businesses.

(Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights. Originally published on Fox and Hounds.)

Imperial Presidency


Assembly Democrats Throwing More Money at CalSTRS

From The Sacramento Bee:

With California facing a massive teacher pension shortfall, Assembly Speaker John A. Pérez, D-Los Angeles, unveiled an effort Wednesday he hopes would fully fund the system.

An influx of revenue has allowed California to emerge from years of yawning deficits and protracted budget fights, and the pressure is mounting for the state to do something about an avalanche of liabilities that runs into the hundreds of billions.

Of those looming obligations, a substantial chunk comes from the gap between how much the California State Teachers Retirement System takes in and how much it will owe retired educators. Gov. Jerry Brown estimated in his budget this year that the liability has grown to $80.4 billion and would require a $4.5 billion annual infusion to balance the books.

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Photo courtesy Franco Folini, flickr

Photo courtesy Franco Folini, flickr