California braces for second wave of the coronavirus

Health experts have long warned of a potential second wave of the coronavirus as the economy reopens. But while other states have seen the first wave fade, the Golden State continues to see cases rise at a rapid clip.

California is one of about 20 states where new cases are increasing over the past five days, according to Johns Hopkins University.

A Los Angeles Times analysis shows that the number of weekly cases in California continues to rise, exceeding 17,000 last week for the first time in the pandemic. There were nearly 10,000 alone in Los Angeles County alone last week, according to the analysis. L.A. County and the Southland remain the California epicenter of the coronavirus pandemic, but there have been some troubling increases in reported disease in some Bay Area counties.

Officials are not sure whether the new cases reflect a larger spike as the economy reopens or the result of increasing testing, or perhaps a combination of both. …

Click here to read the full article from the L.A. Times

Businesses Shuttered by Coronavirus Face Permanent Closure Following Riots

On Monday, many cities businesses across California began cleaning up following the George Floyd riots that reached a peak during the May 30th weekend.

Businesses look at increased challenges following coronavirus, riot losses

Some businesses have been attacked, damages, looted, and in some cases, burnt to the ground. With most businesses just beginning to recover from the coronavirus lockdown and economic downturn, re-closures and damages have set back an estimated thousands of businesses.

“A lot of California had curfews and closures during the past several days,” said economist Tony Lofton. “Even now Monday, we still have entire counties like Los Angeles and Riverside shut down at 6 PM. A lot of cities and bigger counties had just started opening up again too. That was a lot of time and investment in bringing them back up to code. People left unemployment. And now a lot of that momentum is gone.

About half of all small businesses were looking at failing due to COVID-19 and what happened afterwards. They had just hit the reset button. And now some are not only closed again, but they have been broken into and possibly destroyed.

Some of those businesses also either took a cheaper insurance coverage or wanted to risk not having commercial liability insurance, which is technically legal to do in California. So those businesses just looted or broken into, well, they are dead in the water right now.

Even if they were insured and not broken into, the coming days of closures will just add to even more lost profits and employee lay-offs.

This just made the situation even more dire for most businesses. What started as a legitimate protest against a murder and police brutality and inequality erupted into somehow hurting the economy even more and National Guard troops being called up in LA.” …

Click here to read the full article from the California Globe.

LAPD tactics get more aggressive as arrests soar during riots

After days of looting and vandalism and a barrage of criticism for failing to stop it, Los Angeles police have significantly increased their presence in affected neighborhoods and deployed more aggressive tactics to arrest those responsible for burglarizing businesses.

Police also have enforced overnight curfews to sweep streets clear in startling, militaristic shows of force, at times without any apparent effort to distinguish between passive bystanders and those engaged in crime.

“When violence escalates, including assaults on officers, arson, widespread looting … the department needs to resort to a stronger message,” LAPD Chief Michel Moore told the civilian Police Commission on Tuesday.

“We are not going to stand for looting,” said Asst. Chief Robert Arcos, in a separate interview. “We are doing all we can to make arrests immediately.” …

Click here to read the full article from the L.A. Times.

Santa Monica businesses hit by unrest and looting

Stunned business owners gathered Monday morning in the Santa Monica shopping district to access the damage and clean up debris, trash and graffiti following chaotic protests against police brutality a day earlier.

Most stores in the district were closed as workers placed plywood over undamaged windows out of precaution for whatever was ahead. The sidewalks near the popular Sake House by Hikari restaurant on Santa Monica Boulevard were covered with broken glass, charred chairs and tables outside.

Down the street, Jack Sarkissian, the owner of Jack’s Jewelers, which was looted on Sunday, said he felt like the city “let us down.”

Sarkissian was inside his store on 4th Street around 1 p.m. when groups of people started banging on his door and peeking through the window, he said. He put his jewelry in a safe and left. About an hour later looters broke into his store, sweeping up a safe full of jewelry. …

Click here to read the full article from the L.A. Daily News.

Who Runs the City of Santa Ana, Anyway?

Money

With rare exceptions, most cities in California are ran by public sector unions. There is the appearance of democracy, with public employees accountable to elected officials, who in turn are accountable to voters, but appearances can be deceiving. Because political campaigns to attract voters require money, and public sector unions have money. Lots of money. In California alone, public sector unions collect and spend over $800 million dollars per year.

Through slick advertising and public relations campaigns, money buys votes, and voters elect politicians. Especially in California’s big cities, public sector unions have perfected the art. Ask any local California politician why they have agreed to support another tax increase to pay for the latest pay and benefit increase to which they have also agreed. If they’re honest, their answer will be swift and unequivocal: Because if I don’t do what they tell me to do, the unions will spend whatever it takes to defeat me in the next election.

Cecilia Iglesias, former councilwoman for the City of Santa Ana, just learned this lesson the hard way. She wasn’t just defeated in the next election, she was recalled in the middle of her term. According to the Orange County Register, the Santa Ana Police Officers Association spent $341,000 on the campaign to oust Iglesias, and the city had to spend an additional $710,000 to conduct the special election.

The reason for the recall effort will vary depending on who you ask. According to the unions who backed the recall, Iglesias was corrupt. According to Iglesias, the recall was retaliation for her vote against granting the Santa Ana police $25 million in raises. Regardless of who you believe, Iglesias was right to oppose increasing police pay in her city. They can’t afford it. Not back on February 6 when the city council approved these pay increases, and certainly not today.

State Senator John Moorlach, a supporter of Iglesias and the only Certified Public Accountant currently serving in the California State Legislature, explained the difficult financial challenges facing the City of Santa Ana. In a guest editorial that appeared in the Orange County Register on April 24, Moorlach wrote, “Even before the coronavirus struck the world, city finances were abysmal. Santa Ana’s Comprehensive Annual Financial Report (CAFR) for June 30, 2019 showed an unrestricted net deficit of $471 million.”

Moorlach’s right. It’s going to take the City of Santa Ana long time to climb out of a hole that deep. A recent analysis by Truth in Accounting (TIA), a nonprofit government finance watchdog group, gave Santa Ana a “D” grade for its fiscal health. But like a sick person with a glowing suntan, Santa Ana does not show obvious signs of financial distress.

When Cecelia Iglesias ascended into the Moorlachian realm of high finance, down in the gutters and alleys of retail vote grabbing, street fighting politicians and their union backers were able to take her down.

Yes, Santa Ana has an “unrestricted net deficit of $471 million.”

Yes, Santa Ana’s officially recognized unfunded pension liability was $637 million.

Yes, that was based on their 6/30/2019 financial reports, which – thanks to snail like performance of pension actuaries – only reported the pension liability as of 6/30/2018.

Yes, even before the pandemic, many analysts would have pegged Santa Ana’s unfunded pension liability at over a billion dollars, because the official estimates have a history of being too optimistic.

And yes, the pandemic has caused an economic shutdown that is killing investment returns, which means Santa Ana’s unfunded pension liability is far worse.

So what?

What’s an “unrestricted net deficit.”

And what’s an unfunded pension liability?

In California’s cities, down on the street, and on the mailed placards that campaigners saturate the precincts with, it’s easy to dismiss warnings about the pensions as agenda driven alarmism. After all, in
Santa Ana, during the fiscal year ended 6/30/2019, the city collected $581.7 million and spent $494.4 million. They made $24.2 million more than they spent. Where’s the problem?

This is what fiscal reformers are up against. Public agencies are resilient entities. Whenever a deficit looms, the public sector unions and their kept local politicians will endlessly propose new taxes and borrowing. Normal voters are unlikely to understand the significance of pension storms on the horizon when the sun is shining on their front lawn. And politicians know that by the time the hailstorms arrive, they’ll be long retired.

Maybe for a change, just shine a light on the compensation profiles in Santa Ana, a city where the median household income in 2018 was $65,313.

How does that compare to the pay and pensions received by Santa Ana’s public servants? Using data provided by the California Office of the State Controller, the following table lays this out by department, taking into consideration only full-time employees of the city. As can be seen, when the value of benefits is included, working for the City of Santa Ana turns out to be a very rewarding profession. During 2018, the average pay and benefit package was worth $166,203.

Not included in this data is the amount required to pay down that $637 million unfunded pension liability, an amount which is likely to swell to over a billion dollars when the economic losses from the pandemic recession are fully played out.

This is a controversial issue, because public employee unions claim the payment on the pension system’s shortfall should not be considered part of an employee’s compensation. On the surface, this argument is ridiculous, because nobody else collects these pensions. If the system had been funded adequately to begin with, those “normal” payments would have been considered part of the employee’s benefits.

On the other hand, some of the payments being made today in an attempt to slowly restore adequate funding to the pension system are for retired employees. Why should current employees have that portion of the unfunded payment be considered part of the cost for their pension benefit? This is a reasonable argument, but before taking that into account, using data provided by CalPERS, it’s worth having a look at just how much this unfunded pension payment is costing the City of Santa Ana.

As can be seen in the yellow highlighted cells in the above chart, this year, the City of Santa Ana is going to pay nearly $45 million just to lower the amount of their unfunded pension liability. By the time of the 2025-26 fiscal year, according to CalPERS own data, that amount will increase to nearly $68 million.

It is important to emphasize that these figures are optimistic for at least two reasons. First, Santa Ana’s officially recognized unfunded pension liability existing at the end of the last fiscal year was despite an uninterrupted eleven year bull market in stocks, bonds and real estate. At the end of a bull market this long, pension systems should be overfunded, not sitting on a funded ratio of only 68 percent. Second, the global economic “correction” currently being experienced across all asset classes, thanks to the pandemic shutdown, is worse than anyone expected and could take years to unwind.

How resilient municipal finances will be during an economic downturn is impossible to predict. But it is wrong to award salary increases whenever the financial means exist to pay them. Instead, the most important context should always be consideration for the citizens being served. How much are hard working members of the taxpaying community earning? How much were they earning up until now, and how much will they be earning in the uncertain times ahead? The next chart brings this into stark focus.

Notice the second row on this chart, which adds in the per employee cost for half of the city’s annual unfunded liability payment. This is a fair calculation, which if anything understates how much, per active employee, these pensions are costing the City of Santa Ana. Anyone interested in reviewing these calculations can download the spreadsheet from the website of the California Policy Center.

For example, the average full time employee of the City of Santa Ana makes pay and benefits of $188,090 per year. The average full-career retiree of the City of Santa Ana collects a pension of $99,438 per year. These numbers would be unbelievable if they weren’t so well documented.

Perhaps voters should be handed rosters showing the actual amounts being paid to the City of Santa Ana’s active workers. This is easily done these days, using information provided by the website Transparent California. All of their information comes directly from the California State Controller, or directly from California’s many public employee pension funds including CalPERS.

Use Transparent California to have a look at the the City of Santa Ana’s individual pay and benefits reported for 2019. Note “pension debt” is estimated per employee based on 100 percent of the city’s unfunded pension contribution. As discussed, a more conservative method was used in this article and its underlying analysis. Either way, the numbers are staggering. And have a look at how much, per individual, is being paid to their retirees.

Voters should see this information. Then simply ask them: Is this fair?

The next time public employee unions attack a candidate or an elected official for objecting to another pay raise, providing voters with information on just how much they are already earning should be front and center in the discussion.

Of course we want to pay our public employees well. But we also want to respect the citizens they serve.

This article originally appeared on the website California Globe.

Bald eagles are back nesting in Orange County

Photo by Cristofer Jeschke on Unsplash

For the last three years, two bald eagles have landed in a north Orange County neighborhood where they have built a nest and tended to eggs in an old dead tree near a gully.

As the world has grappled with the ongoing COVID-19 pandemic, the eagles’ recent arrival has been a source of optimism and joy for the neighborhood.

“It’s just beautiful to see nature thriving in the era of COVID. Life goes on,” area resident Mary Cramer said.

Cramer, 65, recently held a socially distanced viewing party in her backyard for neighbors who wanted to take a closer look at the eagles, which are perched in a tree about 25 feet from her property. Guests brought their own lawn chairs, fanned out and sat in the driveway to observe. …

Click here to read the full article from the L.A. Times.

Supreme Court rejects a challenge to California limits on church crowds

A sharply divided Supreme Court on Friday rejected a challenge to California’s limits on large church gatherings during the COVID-19 pandemic, dismissing an appeal brought by a San Diego-area church that argued state rules infringed on its religious freedom.

The justices by 5-4 vote said California could enforce its rules, at least for now. Chief Justice John G. Roberts joined the court’s four liberal justices in upholding the state’s rules.

“The precise question of when restrictions on particular social activities should be lifted during the pandemic is a dynamic and fact-intensive matter subject to reasonable disagreement. Our Constitution principally entrusts ‘the safety and the health of the people’ to the politically accountable officials of the states ‘to guard and protect,’” Roberts wrote. …

Click here to read the full article from the L.A. Times.

The Heroes Act Rewards Bad Behavior and Poor Governance

“That which gets rewarded, gets repeated” is a principle equally applicable in business management, dog training and public policy.

As to the latter, when politicians and bureaucrats are rewarded with more money after wasting the taxpayer dollars they already receive, what makes anyone think their behavior will change?

The Democrat-controlled House of Representatives has passed a staggering $3 trillion stimulus plan called the Heroes Act. Nearly a trillion of that is slated for state and municipal governments.

While the previous relief package called the CARES Act helped the private sector, a good chunk of that also went to state and local governments for mass transit, Medicaid costs and direct dollars to local budgets that were related — more or less — to the pandemic.

But the Democrats’ new proposal envisions a huge portion of bailout dollars that are unrestricted.

The good news for taxpayers is that the Heroes Act is DOA in the United States Senate, at least in its current form. Led by Mitch the Impaler, the Republican-controlled body will undoubtedly pare it down and — hopefully — place many conditions on the release of the funds that will incentivize good behavior, not bad.

Given that there are infinite examples of governing malfeasance in California, the federal government could make several reasonable demands as a condition for receiving additional relief funds.

First and foremost is pension reform. …

To read the entire column, please click here.

A stunned downtown L.A. surveys damage from looting, vandalism

Along the stretch of shops and tiny restaurants that line Broadway, the sound of pulsating banda music had been replaced by the whirring of power saws and the staccato of hammers pounding plywood as workers hurried to batten down damaged storefronts.

On a normal Saturday the street would be bustling with customers, most chattering away in Spanish.

But this was not a normal Saturday, with a global pandemic and a riot conspiring to keep people away, leaving the streets — and stores — empty. “It’s not because of this,” said a man guarding the door to the Fallas Paredes clothing store at 5th Street and Broadway, pulling on his face mask to show he was speaking of COVID-19. …

Click here to read the full article from the L.A. Times.

The EPA Should Retain the Existing National Ambient Air Quality Standards

Energy efficiency, the cost of delivering reliable electricity, and respiratory health have taken on an even greater importance for California with the recent turmoil brought about by the ongoing COVID-19 crisis. In mid-April the U.S. Environmental Protection Agency (EPA) announced that it would “retain without changes,” the existing National Ambient Air Quality Standards (NAAQS) for particulate matter (PM). NAAQS standards are mandated by the Clean Air Act, which is administered by the EPA. The standards limit the atmospheric concentration of a variety of pollutants, including both fine and coarse particulate matter – which cause smog, acid rain, and other environmental health hazards. California policymakers including Governor Newsom should advocate for and follow the current EPA standards.

The existing NAAQS standards were published in 2013 under the Obama Administration, and the EPA is required to review the latest scientific studies and reaffirm or modify the NAAQS every five years. The EPA’s Administrator, Andrew Wheeler, appointed to reaffirm the existing 2013 standards, justified recent decisions by pointing out the significant reductions in PM under the existing system. By all accounts, the 2013 standard is working. Current measurements from the Clean Air Act programs along with measurements conducted by state, county, local, and tribal governments, indicate that “on average PM2.5 concentrations in the U.S. fell by 39 percent between 2000 and 2018. Similarly, average PM10 concentrations fell by 31 percent during the same period.” These standards have benefited California’s environment and should not be changed since the state has a $54.3 billion budget deficit and trillions in unfunded liabilities to consider before enacting job-killing regulations.

Wheeler’s sensible decision ensures continued California and nationwide reductions in PM, while leaving room for energy generators in both the renewable and fossil fuel sectors to provide cost-effective energy. More importantly, when you consider the impact of more onerous regulations in the midst of a pandemic and global recession, maintaining existing compliance burdens simply makes sense.

Unfortunately, environmental activists have pounced on Wheeler’s announcement, alleging that the decision to maintain existing standards is an erosion of the United States’ environmental protections. When placed in the context of a global pandemic ravaging the American and California economy, this environmental crusading is particularly concerning. Despite this fact, certain voices in the environmental movement have continued to leverage the pandemic to attack Wheeler’s decision.

Recently, Harvard University’s T.H. Chan School of Public Health hurriedly trotted out a study, which attempted to link long-term exposure of particulate matter pollution with higher coronavirus fatality rates. Gina McCarthy, a former EPA administrator who oversaw the implementation of Obama-era NAAQS standards and now heads the National Resources Defense Council, touted the Harvard study while attacking Wheeler’s decision. McCarthy called the decision ‘indefensible,” and “passing up an opportunity to make the air cleaner for millions of Americans – choosing instead to do nothing.” McCarthy’s comments are vexing, considering that Administrator Wheeler is electing to continue using the standards that she helped establish, enforce, and have benefited California’s environmental health and air quality standards.

Abrupt and conveniently-timed policy shifts are nothing new for McCarthy. For example, during her EPA tenure in 2015, McCarthy said “There’s nothing inherently dangerous in fracking that sound engineering practices can’t accomplish.” She now runs an organization that outwardly opposes the practice of fracking. McCarthy’s changing positions seem duplicitous. Whether fracking or NAAQS, consistency matters, and it’s clear that setting unrealistic NAAQS standards while U.S. emissions are declining doesn’t make economic or environmental sense.

In response to the politically motivated Harvard study, Administrator Wheeler appropriately responded by saying that the “Harvard researchers had misinterpreted EPA’s March coronavirus-related enforcement policy as a wide waiver for companies to pollute more.” In contrast to the study, EPA findings show PM2.5 levels fell 40% in the U.S. since 2000 as power plants and cars became less pollutant and America transitioned from coal-fired to natural gas-fired power plants. In fact, only nine U.S. counties failed to meet the EPA’s PM2.5 national standard.

County-wide data continues to be quoted without adjusting individual health differences, death rate differentials over exposure to high or low amounts of PM2.5, or varying pollution in neighborhoods across the U.S. The San Bernardino valley in California, which sits in a bowl lodged between mountains, offers vastly different geography than a poor neighborhood in Pennsylvania where trash is incinerated. Harvard, McCarthy, Bloomberg, and others fail to consider the significant geographic and topographic considerations.

Pushback has also popped up from unlikely skeptics of the Harvard study, and the associated push to enact more draconian PM standards. Carleton University’s Paul Villeneuve and McGill University’s Mark Goldberg said, “As epidemiologists who have studied air pollution for more than two decades, we found the study’s impacts staggering. When we looked closely at the research, we saw so many shortcomings we were not convinced of the results.”

At the same time, industry and business groups are in full support of Wheeler’s decision. The American Chemical Council and the U.S. Chamber of Commerce’s Global Energy Institute have touted it as a balanced approach to sensible environmental stewardship, public health awareness, and buttressing the sagging American economy. As California goes, so goes American economic growth and vitality.

Now is simply not the time to shutter energy production and other commercial activity that will save lives and deny livelihoods to millions of Americans and Californians. Let’s keep the existing standards that are working, invest in peer-reviewed research that exempts political agendas, and avoid enacting new regulatory barriers on businesses that are contributing to the recovery from the current pandemic.