Recent Rains Nearly Eliminate California Drought

Recent rains have saturated California and reduced the portion of the state deemed to be abnormally dry to just 3.6%, according to the Drought Monitor released Thursday.

One week ago, the Drought Monitor showed 85.3% of the state as abnormally dry. Now, 96.4% of the state is drought free.

The data in the report released Thursday are as of Tuesday, so there is a slight lag between when the data are compiled and when they’re released.

The U.S. Drought Monitor is produced jointly by the National Drought Mitigation Center at the University of Nebraska-Lincoln, the U.S. Department of Agriculture and the National Oceanic and Atmospheric Administration. …

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

CalPERS, CalSTRS Trying to Figure Out Vague Newsom Order to “Mitigate Climate Change”

California agencies are trying to figure out the implications of a vague executive order issued by Gov. Gavin Newsom in September that orders many policy decisions to be made with the need to “mitigate climate change” kept in mind.

A recent Sacramento Bee story suggested that among the most vexed were the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, the two pension giants with estimated unfunded liabilities of $136 billion and $107 billion, respectively, according to 2018 data.

The Bee reported that while the Newsom administration wasn’t ordering CalPERS and CalSTRS to divest from firms involved in fossil fuel, it was requiring them to make new investment decisions that reflect “the increased risks to the economy and physical environment due to climate change.”

Newsom thinks fossil fuel companies are in trouble

This reflects the assumption of the Newsom administration that there will be a rapid shift away from fossil fuels – a view that many hedge funds, mutual funds and large institutional investors don’t share. Large energy corporations remain popular with their stock pickers despite global warming fears. And contrary to the idea that these companies are in decline, some investors see fracking continuing to increase oil production in the U.S. for years to come. Last week, for example, the Motley Fool investment website strongly recommended buying ExxonMobil in 2020, noting that its annual divided “has increased more than 100 percent over the past 10 years.”

Newsom’s edict is producing heartburn with some members of the CalPERS board. That’s because, as the Bee noted, “pension systems have a financial obligation to earn as much as cash as possible to provide retirement security for millions of government employees.”

Former Garden Grove Unified manager Margaret Brown, a CalSTRS critic who won election to the board in December 2017, wrote on Twitter that “unless the governor is willing to take even more $$$ from over-taxed California citizens, Newsom should step back.” 

Corona police Sgt. Jason Perez upset CalPERS Board President Priva Mathur in the October 2018 election after running a campaign that blasted Mathur and other trustees for not focusing solely on returns in their investment decisions.

But the CalPERS and CalSTRS boards have a history of using investments for decades to make political statements. In September, state Treasurer Fiona Ma – who sits on both boards – strongly endorsed such investment activism.

CalPERS quietly shifting from low-risk ‘passive investing’

That means CalPERS and CalSTRS executives are under heavy pressure to improve returns while making investments that can be defended as socially responsible.

The Naked Capitalism website reported in October that this pressure may have led to CalPERS making a major shift in investing part of its portfolio. Instead of traditional “passive equity investing” in index funds that track the S&P 500 or other large categories of stocks and emphasize diversified portfolios, CalPERS has begun to adopt a more aggressive “factor investing” approach that has a chance of generating bigger returns by focusing on industries with better prospects for short- and medium-term gains, among its many tenets. The approach is also somewhat riskier than using index funds.

Reporter Yves Smith wrote that this was a major shift in investment strategy on a par with “CalPERS’ renouncement of hedge funds” in 2014.

The website, which is run by veterans of the global financial industry, has broken a series of stories about CalPERS in recent years.

In August 2018, it revealed that CalPERS CEO Marcia Frost had misrepresented her academic background and didn’t have a college degree.

This August, it offered evidence that CalPERS was hiding a negative audit of its hiring practices that had been triggered in part by the agency’s failure to vet Frost’s claims.

This article was originally published by CalWatchdog.com

Drug Overdoses and Deaths Exploding in San Francisco

Admissions to addiction treatment programs in San Francisco have dropped by 20% over the past five years, even as drug use and overdose deaths have exploded, according to public health data published this week.

Combined with recent reports of treatment center vacancies — on some nights, 1 in 4 beds is empty in San Francisco’s residential treatment facilities — the admissions data suggest that certain addiction programs are being underutilized at a time when the city is in a drug use crisis, some public health and elected officials say.

But much of the decrease in admissions may be explained by people seeking other types of addiction services that don’t require residential care. The data alone may not paint a full picture of a public health issue that is complex and currently in flux, addiction experts said. …

Click here to read the full article from the San Francisco Chronicle

Retired city workers get year-end bonus, even with pension shortfall at $3 billion

The extra year-end pension bonus for retired San Diego city employees topped $6.8 million this year, beating out last year’s total and setting a new five-year record for the program.

The “13th check,” which goes out in certain years as an additional payment on top of the regular 12 monthly distributions, was sent to more than 9,000 members of the San Diego City Employees Retirement System, or SDCERS.

Checks ranged from $17 to $1,760. Jessica Maloney, a spokeswoman for SDCERS, said the checks averaged about $670 each. …

Click here to read the full article from the San Diego Union-Tribune

The Many Unintended Consequences of AB 5

By now anyone who works as an independent contractor in California has heard of AB 5, which will force companies to reclassify them as employees. The justification for AB 5, which was reportedly written by the AFL-CIO, is to prevent companies from exploiting workers. Without AB 5, the reasoning goes, companies hire freelancers to do the same work employees would do, in order to avoid paying for benefits such as Social Security, Medicare, unemployment insurance, and workman’s compensation.

The Social Security argument has no merit, because freelancers are still required to pay Social Security taxes, and still get Social Security benefits when they retire. They pay the employee and employer share, because they’re self employed. Ditto for Medicare. The rate a self-employed independent contractor accepts in exchange for their services should take that into account.

While there may be some merit to the argument that companies hire freelancers to avoid paying unemployment insurance and workman’s compensation, there might have been other legislative solutions to that, such as setting up the means for independent contractors to purchase their own unemployment and workman’s compensation insurance – or, (gasp), roll a workman’s compensation individual option into Covered California.

Instead, AB 5 creates far more problems than it solves.

Predictably enough, those special interests with enough clout to carve out their own industries from being affected by AB 5 made their voices heard in Sacramento. Courtesy of CalMatters, here are some of the jobs that are exempt from the impact of AB 5:

Jobs Exempt from AB 5

Doctors: Physicians, surgeons, dentists, podiatrists, veterinarians, psychologists.
Some licensed professionals: Lawyers, architects, engineers.
Financial services: Insurance brokers, accountants, securities broker-dealers, investment advisors.
Real estate agents
Direct sales: Provided the salesperson’s compensation is based on actual sales rather than wholesale purchases or referrals.
Commercial fishermen (only exempt until 2023).
Builders & contractors: Construction firms that build major infrastructure projects and big buildings.
Professional services: Marketing, human resources administrator, travel agents, graphic designers, grant writers, fine artist.
Freelance writers, photographers: Provided the worker contributes no more than 35 submissions to an outlet in a year.
Hair stylists, barbers: Defined as a licensed barber or cosmetologist provided that person sets their own rates and schedule.
Estheticians, electrologists, manicurists (provided they are licensed).
Tutors: Provided they teach their own curriculum. Does not apply to public school tutors.
AAA-affiliated tow truck drivers

And who, overnight, will either have to be hired by the company they contract for, or be unemployed? Again, courtesy of CalMatters, here are some of them:

Jobs Affected by AB 5

Rideshare & delivery services: Uber, Lyft, DoorDash, Postmates
Truck drivers: Heavy duty trucks, Amazon delivery trucks, some tow truck companies
Janitors & housekeepers: Commercial cleaning services
Health aides: Nursing homes, assisted living facilities
Newspaper carriers: The author agreed to delay implementation by one year in a concession to newspaper publishers.
Unlicensed manicurists: Licensed manicurists will get a two-year exemption.
Land surveyors, landscape architects, geologists
Campaign workers
Language interpreters

Killing the Gig Economy

There are several significant consequences of AB 5, chief among them, and the one most discussed, is that it threatens to kill the so-called “gig economy.” While no balanced assessment of the growing gig economy should fail to acknowledge the challenges it presents – less job security, no benefits – killing the gig economy is not the answer.

Many people working in the gig economy could not possibly work in any other way. They can choose their hours and they have steady work. For people who want to supplement full-time work, or balance their time between family obligations and work, the gig economy is unambiguously good. And since independent contractors still pay for and receive Social Security and Medicare, which are the main benefits they allegedly were going to lose, what’s really going on?

If you peruse the list of job descriptions exempt from AB 5, vs the list of those affected by AB 5, there isn’t a lot of logic. In general, highly compensated professionals are on the exempt list, but the trades were randomly distributed – hair stylists and estheticians are exempt, janitors and health aides are not. What’s going on?

Perhaps the most concise answer to that comes from California Governor Gavin Newsom, who personifies the alliance of big business and big labor that controls California. In a guest editorial for the Sacramento Bee, Newsom had this to say:

“This Labor Day, I am proud to be supporting Assembly Bill 5, which extends critical labor protections to more workers by curbing misclassification. While this step is important, we must do more to reverse the 40-year trends that have hollowed out our middle class and driven income inequality. We can do this by partnering with labor and supporting their efforts to create ways for workers to join together and speak with one voice. Across the country, unions are paving the path for new ways to organize – whether it’s the fight for a federal $15 minimum wage, organizing freelancers and contractors, or bargaining project labor agreements.”

“Partnering with labor.” “Paving the path for new ways to organize.”

Let’s be clear. Newsom understands this partnership very well. Big labor controls the workers. Big business controls the market. Small competitors wither away under the twin onslaught of union pay scales and work rules they’re not ready to match, and regulations they’re not yet big enough to afford.

Consequences of AB 5

If you assume the government has any role whatsoever in protecting the rights of workers, then what Newsom euphemistically refers to as “misclassification” is, at the least, an issue worthy of honest debate. And even right-to-work advocates recognize that collective bargaining, properly regulated, has a valid role to play in the private sector. But AB 5 is a poorly conceived overreaction to the challenges of the gig economy.

The reason AB 5 passed is because it will make it easier for labor unions to organize workers in a host of industries. Clearly they have their sights set on those gig economy jobs where very large corporations like Uber and Lyft dominate the sector. Californians should ask themselves, given what unions have done to the public sector, do we really want them organizing ride share workers, truck drivers, custodians and housekeepers, health aides, and so on down the list?

The biggest losers in the AB 5 implementation, ultimately, will not be the big companies like Uber and Lyft. These companies will adapt, one way or another, because they’re billion dollar companies. Don’t be surprised if they come to some sort of accommodation with California’s union controlled legislature, and withdraw their planned referendum to repeal AB 5.

Across all sectors, this is the defining theme: If you’re a billion dollar corporation, you’ll figure out how to manage AB 5, but if you’re a small company, you won’t. AB 5, combined with the $15/hour minimum wage, is going to kill small businesses in California. Does Gavin Newsom care? No. Because, as previously noted, he personifies the alliance of big business and big labor that controls California.

Freedom of Speech

The impact on small media companies is particularly troubling, unless you actually believe that corporate media stalwarts such as David Muir, Norah O’Donnell, Lester Holt, and Judy Woodruff actually engage in unbiased, genuine investigative journalism. Despite growing online censorship, the internet still provides an opportunity for truth seeking media entrepreneurs to deliver diverse points of view and contrarian analyses, and eke out a living. Not so fast.

Now, thanks to AB 5, the game just got tougher for anyone who writes for a small media company, whether it’s a community newspaper or a national website with a niche audience.

In a dazzling display of either blithe indifference or shocking cluelessness, the author of AB 5, Assemblywoman Lorena Gonzalez, agreed to exempt employers from having to hire their freelancers as employees so long as they didn’t contribute more than 35 articles per year. Exactly how might this work in practice? There are freelancers who are paid to contribute several posts per day, usually in the 200 word or less range, for which they are paid accordingly. Then there are freelancers who are paid to contribute lengthy feature length articles which can exceed 5,000 or even 10,000 words.

According to Gonzalez, apparently, there’s no difference whatsoever between these submissions. It reminds one of the contest Gimli and Legolas were having in the movie version of Lord of the Rings. They were competing to see who would kill more enemies. Legolas had just slain a gigantic war elephant. To which Gimli shouted “That still only counts as one!”

The reaction of freelance writers so far ranges from disbelief and denial to defiant schemes. But by this time next year, unless a successful referendum occurs, there will be a lot of silenced, bitter voices. AB 5 is a form of deplatforming, but less subtle and equally harmful. It is blatant oppression.

AB 5 and Political Campaigns

Less discussed but possibly of greater oppressive consequence is the impact AB 5 will have on political campaigns. It is certainly no accident that “campaign workers” are included on the list of workers affected by AB 5. But why? Working for political campaigns is one of the most temporary of vocations. Most people hired by political campaigns either have other jobs in different industries, or they are accustomed to working in political jobs during campaign season then finding other work between campaigns. Now campaigns have to hire them as employees.

Understanding how AB 5 impacts campaign workers furthers understanding how big business and big labor control California. Because in the one-party state, a permanent army of full time union operatives, most of them supported by public sector employees, are easily seconded to political campaigns. Other vendors who are part of the one-party political ecosystem are found in political consulting firms, public relations and marketing firms, publishing and printing shops, and an assortment of nonprofits. The full time employees of these vendors are defacto campaign workers, with job security funded by the torrent of union political money that’s used explicitly for politics when campaigning for candidates and lobbying for legislation, and otherwise used indirectly for politics through public education campaigns.

The financial stability enjoyed by the one-party political operatives, and the firms that employ them, makes them immune to the impact of AB 5. Public sector unions alone collect and spend over $800 million per year in California. That money, and the army it pays for, constitutes a formidable foundation, atop which California’s many generous – and very liberal – billionaires add their tens if not hundreds of additional millions.

The opposition, on the other hand, relies primarily on volunteers. When they scrape their way to having a paltry war chest to fund a campaign, there’s no extra money. AB 5 will have a chilling effect on underfunded political campaigns, making it even harder for them to challenge incumbents in the one-party state.

One final and very sad question raised by AB 5 is how it will affect signature gathering campaigns for ballot initiatives. To-date, it is impossible to qualify a state ballot initiative in California without relying on paid signature gatherers. Nonetheless, it is a powerful expression of citizen democracy and represents the only remaining way Californians can preempt their bought and paid for legislators. Changing signature gatherers from independent contractors to employees will add another layer of cost onto a very costly enterprise. But big labor and big business will not care. Another million, another ten million, that is not a concern. For the authentic grassroots campaigns, on the other hand, AB 5 could be the difference between success and failure.

One may hope all of California’s new one-party aristocracy, from Lorena Gonzalez to Gavin Newsom, are terribly proud of AB 5.

This article originally appeared on the website California Globe.

Gov. Newsom Picks Fish Over Farms

When a union president was asked about his end goal in negotiations with his members’ employers, he responded with: “More.” No matter the proposal, he always demanded more of whatever was being offered to his union.

I thought of that cynical retort when looking at the latest battle over water flows through the Sacramento-San Joaquin Delta — the tangled web of rivers, sloughs and marshland that supplies fresh water to millions of Southern Californians. When it comes to water supplies, environmentalists always demand “more” water for habitat preservation — they’re never satisfied with any compromise proposal.

Gov. Gavin Newsom’s administration has given environmentalists much of what they presumably want as it released a 610-page draft Delta environmental report recently that calls for $1.5 billion in habitat restoration among other environmental projects. The governor simultaneously announced a lawsuit against the Trump administration to halt its plan to increase federal water exports to thirsty farms located south of the Delta.

He’s leaning on the side of fish in the state’s never-ending fish v. people debate, but is at least trying to deal with farm and urban water needs. The last thing the administration wants is a crisis of water availability in the midst of the ongoing electricity crisis. But as much as they cheered the lawsuit announcement, environmentalists were aghast at the report because the state plan will allow some additional water for farms.

There’s no pleasing them. An attorney for the Natural Resources Defense Council slammed the report as “Trump lite.” Others were more circumspect, but urged Newsom to take on the state’s big water users. Anything short of more water for unrestricted river flows simply won’t do.

This particular battle goes back to 2018, when the Trump administration announced its plan to increase water deliveries to farmers. Federal scientists released an 1,123-page biological opinion arguing that the water diversions would threaten Chinook salmon. The administration called it a draft and then in October released its final opinions that justified the additional water releases.

The state runs the State Water Project and the feds run the Central Valley Project, so the bifurcated authority complicates the situation. The feds’ final plan allowed more water flows when it was safe to do so, but also enabled reduced pumping when fish species were most in need of the water. It was hardly radical, but congressional Democrats slammed it as a scheme to divert water to “politically connected irrigation interests” and obliterate fish.

Earlier this year, Newsom drew the ire of environmentalists when he vetoed Senate Bill 1, which would have required state agencies to adopt any federal environmental restriction that had been weakened or eliminated at the federal level. He opposed the bill because it threatened voluntary water agreements among water users, agencies and officials, which were being hashed out since the Brown administration. Those negotiations would have collapsed had SB 1 become law.

Most of the state’s water simply flows out unimpeded to the Pacific Ocean. Since the completion of the State Water Project, California’s population has grown dramatically—yet the state has not built adequate storage to capture and store water during wet years. To make matters worse, state officials have thrown obstacles in front of every project designed to feed more water into our statewide plumbing systems.

The state has opposed raising the Shasta Dam because of concerns about a small, wild river nearby. The California Coastal Commission has balked at a desalination plant at Huntington Beach over concerns about plankton. U.S. Sen. Dianne Feinstein has been gunning for the environmentally friendly Cadiz project in the Mojave Desert, which would tap an aquifer the size of Rhode Island and send water into the Colorado River Aqueduct to supply Southern California water users. That project has passed many levels of environmental review.

And Newsom has threatened the future of the Delta tunnel plan by cutting it down from two tunnels to one, which imperils its economic viability. That project seeks to address both key issues — fish habitat and human uses. Currently, river water gets tangled in the messy estuary, where regulators shut down the pumps near Tracy anytime they find endangered smelt in the fish screens. The project, funded by water users rather than general taxpayers, would restore the degraded estuary’s habitat to permanently boost fish populations and then re-route the southward-bound water under the region.

Environmentalists offer no solution other than flush more water into rivers as people conserve more, even though nonnative fish species such as striped bass are the biggest threat to salmon. They also propose multimillion-dollar schemes to build fish ladders and other contraptions to save a few fish — often at the cost of tens of thousands of dollars per fish.

Californians need “more,” also — more water storage and a more sensible water policy. Unfortunately, the administration’s latest efforts, and the environmental response to them, probably means less of both.

This column was first published in the Orange County Register.

Oracle Moving Annual Conference to Las Vegas Because San Francisco is Too Expensive

Photo courtesy disneybrent, flickr

Oracle’s OpenWorld conference, one of the biggest annual technology events in San Francisco, is moving to Las Vegas in 2020 and will remain in Sin City for at least three years.

According to an email that the San Francisco Travel Association (SFTA) sent to its members on Monday, Oracle has signed a three-year agreement to bring its flagship event to the Caesars Forum in Las Vegas.

“Oracle stated that their attendee feedback was that San Francisco hotel rates are too high,” the email, which was viewed by CNBC, said. “Poor street conditions was another reason why they made this difficult decision.”

The SFTA, a private nonprofit organization that promotes San Francisco tourism, said it’s issuing a cancellation bulletin, covering five days and over 62,000 room nights in October 2020, October 2021 and September 2022. …

Click here to read the full article from CNBC

Lawsuit Claims SAT And ACT Are Illegal In California Admissions

Fatima Martinez knows there’s a lot riding on her SAT score.

“My future is at stake,” says the Los Angeles high school senior. “The score I will receive will determine which UC schools I get into.”

But that may not always be the case.

A lawsuit expected to be filed Tuesday is challenging the University of California system’s use of the SAT or ACT as a requirement for admission. A draft of the document obtained by NPR argues that the tests — long used to measure aptitude for college — are deeply biased and provide no meaningful information about a student’s ability to succeed, and therefore their requirement is unconstitutional.

“The evidence that we’re basing the lawsuit on is not in dispute,” says attorney Mark Rosenbaum of the pro bono firm Public Counsel. “What the SAT and ACT are doing are exacerbating inequities in the public school system and keeping out deserving students every admissions cycle.”

Public Counsel is filing the suit in California Superior Court on behalf of students and a collection of advocacy groups. …

Click here to read the full article from NPR

Bait and Switch on California Pensions

Local officials, particularly those in California’s 400-plus cities, have been complaining loudly in recent years about pension costs, raising the specter of insolvency if they continue their rapid increase.

Last year, the League of California Cities issued a report declaring that “pension costs will dramatically increase to unsustainable levels.”

The California Public Employees Retirement System (CalPERS) confirms that projection in a new report.

The report reveals that mandatory “employer contributions,” including those from the state and school districts, as well as local governments, rose from $12 billion in 2016-17 to $20 billion a year later.

It also warns that the payments will continue to rise well into the next decade as the giant trust fund tries to recover from dramatic investment losses in the Great Recession, adjusts to lower earnings projections and handles a surge of baby boomer generation retirees claiming benefits.

“The greatest risk to the system continues to be the ability of employers to make their required contributions,” the new report declares, adding, “It is difficult to assess just how much strain current contribution levels are putting on employers. However, evidence such as collections activities, requests for extensions to amortization schedules and information regarding termination procedures indicate that some public agencies are under significant strain.”

Pension costs for “safety employees,” police officers and firefighters mostly, are rising especially fast. They now average about 50% of payroll and are projected in the new report to top 55% by the mid-2020s. A few cities are already nearing or reaching 100%.

However, as much as they complain about CalPERS forever dunning them, California’s local officials are largely unwilling to directly ask their voters for more taxes to pay pension bills.

Hundreds of local tax increase measures were placed on the ballot last year and hundreds more are likely to be proposed next year, but almost universally they are billed as improving popular local services, such as “public safety” or parks.

It’s where the concept of “fungibility” kicks in. If a city’s voters can be persuaded to raise their taxes for parks and recreation, for example, it effectively frees up more money to pay its pension bills without acknowledging that motive.

We saw a wonderful example of fungibility last year in Sacramento, where voters were persuaded to raise local sales taxes on the promise of civic improvements by an amount that closely matched increases in the city’s obligations to CalPERS.

We may be seeing another in Oakland next year.

The Oakland City Council is placing a “parcel tax” — a form of property tax — on the March ballot to improve parks, recreational and homeless services and stormwater drainage. The tax, $148 annually per real estate parcel, would generate an estimated $20 million a year.

As it happens, however, the most recent CalPERS report on Oakland’s pension obligations reveals that they will increase from $194 million in 2020-21 to $226 million by 2025-26, which would more than consume the revenue from the parcel tax.

So why don’t city officials just own up and publicly acknowledge that pension costs are driving their budgets into red ink and ask voters for more tax money to cover them?

They — and the unions that finance tax increase campaigns — clearly fear that being candid would backfire. If voters knew they would be paying more taxes to support pension benefits for city workers that are probably much better than they have themselves, they might refuse to go along.

Bait and switch is more politically expedient.

Dan Walters is a columnist for CALmatters.

Another California Tax Revolt on the Horizon

While 1773 and 1978 may seem like they have nothing in common, both years go down in history books as two famous taxpayer revolts.

The Boston Tea Party’s protest on December 16, 1773 by American colonists sent a strong message to Britain that Americans would not take taxation sitting down.

Fast forward two centuries later, inflation and property taxes were skyrocketing 3,000 miles away from the Boston Harbor.

Families were being pushed out of their homes because their property taxes were unbearable, and a taxpayer revolt was brewing in California.

On June 6, 1978, California voters overwhelmingly passed Proposition 13, which tied property taxes to one percent of the purchase price and capped annual increases at two percent a year, bringing certainty to homeowners and businessowners by allowing them to predict their property taxes long into the future.

Sadly, California politicians have forgotten about the taxpayer revolt that occurred just over four decades ago.

To read the entire column, please click here.