Bill requiring Trump to release taxes to make CA ballot reaches Newsom’s desk

When Gov. Gavin Newsom got back from his vacation last week, awaiting him was a bill that some see as a principled attempt to force President Donald Trump to be transparent about his personal finances and that others – including California’s last governor – see as partisan meddling that could haunt elections across the nation going forward.

Senate Bill 27 was enrolled and sent to the governor’s office on July 15 after passing the Assembly 29-10 and the Senate 57-17 along party lines. Newsom has until July 30 to act on it. Introduced by Sen. Mike McGuire, D-Healdsburg, and Sen. Scott Wiener, D-San Francisco, it would require presidential and gubernatorial candidates to release their most recent five years of tax returns as a prerequisite for appearing on the California ballot.

McGuire and Wiener reject the characterization that it is an attempt to punish Trump, who has famously feuded with California officials via the media and in court since he began his presidential campaign in 2015. Instead, they say it is an attempt to preserve democratic norms by ensuring that voters know about candidates’ financial entanglements before they become U.S. president or governor of the nation’s richest, most populous state.

It’s unclear, however, whether the measure is constitutional. Some attorneys say the Constitution has long enshrined states’ rights, including partial sovereignty, on many fronts. But the U.S. Supreme Court has held that a state cannot add additional qualifications for candidates for federal office. California’s legislative counsel cited this history in a 2017 opinion raising doubts about whether Trump could be compelled to release his taxes as a precondition of getting on the Golden State’s ballot.

Brown vetoed similar bill, cited bad precedent

In vetoing similar legislation in 2017, Brown not only questioned its constitutionality, he worried about the precedent it would set in his veto message.

“Today we require tax returns, but what would be next? Five years of health records? A certified birth certificate? High school report cards? And will these requirements vary depending on which political party is in power?” he wrote. California’s enactment would start the U.S. “down a road that well might lead to an ever escalating set of differing state requirements for presidential candidates.”

There is a recent precedent for a state seeking to limit a sitting president’s access to the ballot. In 2011, the Republican-controlled Arizona Legislature responded to unsupported, much-ridiculed claims that President Barack Obama was born in Kenya or Indonesia by passing a measure requiring that presidential candidates provide birth certificates before they could be placed on subsequent presidential ballots. The validity of the birth certificates would have been determined by the Arizona secretary of state.

But GOP Gov. Jan Brewer, a former Arizona secretary of state, vetoed the bill. “I do not support designating one person as the gatekeeper to the ballot for a candidate, which could lead to arbitrary or politically motivated decisions,” she said.

Axios reported last month that lawmakers in 25 states have introduced bills linking ballot eligibility to presidential candidates releasing their tax returns. The Nexis news database shows California to be the only state that has sent such a measure to the governor. The most progress elsewhere appears to be in Rhode Island and Maryland, where the state Senates have given their approval to such legislation.

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Will Unions Promote Defined Contribution Plans the Way They Promote Pensions?

The virtue of a defined contribution plan is that once the employer has made their contribution, the employer’s obligation is fulfilled. The employee’s retirement benefit is based on a “defined” contribution – typically some fixed percentage of their base pay – that money is invested, and the retiree lives on the accumulated savings and interest. Often, with the same amount invested, these plans can offer participants a more lucrative retirement than a pension.

Given the potential of defined contribution plans to sometimes outperform pensions, why are public employee unions seemingly focused almost exclusively on the alternative, the so-called “defined benefit” pension? Far more common in the public sector, these defined benefit plans offer the retiree a guaranteed “defined” amount in the form of fixed payments for as long as they live, usually adjusted upwards each year for inflation. What the employer has to contribute to the fund is undefined and fluctuates as needed to maintain those promised payments.

The problem, however, with defined benefits is they were sold as costing taxpayers very little, when in fact the employer contributions over the past twenty years have soared. To say those undefined employer payments to the pension funds have “fluctuated,” in order to keep those defined benefits flowing, is to indulge in the understatement of the century.

Back in 1999, during the internet bubble, when California’s public employers consented to an increase to the value of their promised defined benefits of well over 50 percent, the pension funds claimed it wouldn’t cost anything. The stock market was roaring, and apparently would roar forever.

Today, despite years of relentless increases to the required pension contributions by employers, most of California’s major public employee pension funds are only about 70 percent funded, with steep annual hikes in required contributions scheduled for the next several years. There is no end in sight.

So while a defined benefit may protect a retiree from mortality risk, where they outlive their savings, or market risk, where they happen to retire during a prolonged bear market and their savings evaporate, under the defined benefit plan all that risk is shifted to the taxpayer.

The cold fact that confronts California’s public employee pension systems is this: Their plans, which today are only around 70 percent funded despite the longest bull market in U.S. history, will not be able to financially withstand several years of poor returns on investment. The longer it is before defined benefits are right-sized to the capacity of state and local government to make contributions, the larger those benefit cuts will be.

Meanwhile, many government employers offer defined contribution plans to supplement defined benefit pensions. Given the precarious financial state of pensions, these defined contribution plans should not be attended to as an afterthought.

Some Defined Contribution Plans Are Better Than Others

Wading successfully through the arcana of retirement finance is a tedious exercise, but too much is at stake to avoid making the attempt. And it seems that California’s government unions, which have been universally consistent in making employee pensions run on autopilot, have not been nearly so proactive to ensure their members find the right defined contribution plan.

Since 1958, government employees have had the opportunity to make tax deferred contributions to retirement savings accounts as authorized by IRS Section 403(b). But these early 403(b) plans were marketed to public employees by insurance companies that had already been selling similar plans as tax sheltered annuities.

So far so good. But these plans, which are still aggressively marketed by insurance agents to public employees, carry much higher costs. Most of them have an entry fee – paid back to the salesperson as a commission – as high as 11 percent. Many of them have earnings that capped at rates as low as 3 percent. It isn’t uncommon for them to have a surrender charge as high as 15 percent. All of them charge annual maintenance fees – usually hidden from the plan participant – typically far in excess of more competitive mutual fund based plans that have emerged more recently.

An example of a good plan is the 403(b) option known as Pension2, offered by the California State Teacher’s Retirement System (CalSTRS). Pension2 offers a variety of low-cost index fund options and only charges annual administrative fees equal to 0.25% of the participant’s account balance. But Pension2 does not have an aggressive sales force pushing its product – which of course is one of the primary reasons the product is such a good deal. Other low cost 403(b) options are offered by Fidelity and Vanguard.

Why aren’t the unions encouraging their members to invest in these products? Maybe because the California Teacher’s Association offers its own 403(b) plan, which has an annual administration fee of $95 per participant – regardless of fund balance. By selling its own retirement product, the union loses its ability to act as a credible advisor to its members.

Another excellent option for public employees who want supplemental defined contribution benefits is an IRS 457(b) plan created by their employer in conjunction with a financial firm. Los Angeles Unified School District’s 457(b) plan administered by Voya won an award from the National Association of Government Defined Contribution Administrators (NAGDCA) for excellence and innovation. This excellent 457(b) plan is a good alternative to the 27 403(b) plans being sold to LAUSD educators, mostly by insurance companies.

Why isn’t the United Teachers of Los Angeles (UTLA) recommending this plan to its members? Recent history would suggest that UTLA thinks its members are undercompensated, and one easy way to improve teacher compensation is to reduce the overheads they pay on retirement savings.

While other unions have agreed to LAUSD automatically enrolling employees in their award-winning 457(b) plan UTLA has steadfastly refused. So instead of protecting member savings, salespeople pushing obsolete, needlessly expensive versions of a defined contribution plan continue to ply the halls of California’s schools.

Edward Ring is a co-founder of the California Policy Center and served as its first president. This article first appeared on the website of the California Policy Center.

Homeless Surge Hits Oakland, Silicon Valley, San Francisco Suburbs

San Francisco saw its homeless population rise by 17% in the last two years, but the rise in many surrounding counties has been worse.

report Monday by Curbed San Francisco summarizing the figures noted: “Five out of nine Bay Area Counties—i.e., all of those not located in the North Bay—saw their homeless counts spike during the same period, with each other county showing worse homelessness surges than SF.”

As Breitbart News has noted, homelessness has been rising rapidly in urban areas throughout the state. San Francisco’s rise in homelessness has been accompanied by a spike in Los Angeles that some say has brought the city to the brink of an outbreak of deadly disease — perhaps bubonic plague. San Diego recently suffered an outbreak of hepatitis A among the homeless, partly due to a plastic bag ban making it harder for homeless people living on the streets to dispose of excrement.

Now the problem is leaving downtown areas and hitting the suburbs. Curbed reports:

  • San Mateo County: rise of more than 20% in two years
  • Santa Clara County: rise of more than 31% in two years
  • Alameda County: rise of more than 42.5% in two years
  • Contra Costa County: rise of 42.8% in two years

In addition, the San Francisco Chronicle reported Monday that homelessness in the City of Oakland alone rose 47% over the past two years.

The Curbed report adds some “good news”: ‘While the rest of the Bay Area saw the levees break, homelessness actually declined significantly all over the North Bay during the same period.”

President Donald Trump has warned that federal intervention may be necessary to deal with the problem — a suggestion that has met with protest from the state’s Democratic leaders.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He earned an A.B. in Social Studies and Environmental Science and Public Policy from Harvard. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. He is also the co-author of How Trump Won: The Inside Story of a Revolution, which is available from Regnery. Follow him on Twitter at @joelpollak.

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More Tax Revenue, Bigger Surpluses … And Still Not Satisfied

Tax revenue and government surpluses are up all over California, but that fact doesn’t satisfy advocates for more and more taxes. Tax raising activists could step on each other in the charge for more money.

It was reported last week that the state brought in another $1 billion in unexpected revenue. Already, California is sitting on its largest surplus in history, more than $20 billion.

And that is just the surplus in the state’s General Fund.

Other pockets of money for special purposes in the budget are also enjoying surpluses. One calculation estimates that these special fund balances have surpluses totaling $16-plus billion. Combined with the declared surplus of the General Fund, there is nearly $37 billion stashed away for a rainy day.

And there could be more.

Remember the recent controversy stirred up by State Auditor Elaine Howle who reported that the Cal State system had a reserve “hidden” from legislators of $1.5 billion.

Yes, there is a reason to have surpluses in government accounts to deal with economic downturns. But when do surpluses become “obscene” for government hoarding taxpayers’ money? The term “obscene surplus” was coined by California treasurer Jesse Unruh, a Democrat, in the late 1970’s that became a crucial fact in the run-up to the vote on Proposition 13.

On the local level, money is flowing as well. Property values are soaring all over the state. Not only San Francisco (up 6.6%) and Los Angeles (up 6.25%) have enjoyed increased values which come with increased tax revenues because of new construction and property sales, but most other counties have seen similar boosts, for example Fresno (up 5.84%) and Kings (up 6%).

With the state awash in tax revenue and sitting on surpluses why is there so much talk of moving forward with major tax increases? The split roll property tax increase is already on the ballot in 2020 to raise taxes on commercial property. Now the School Boards Association is considering putting forward a tax increase on the wealthy income taxpayers and corporations. In each case, the tax take annually is estimated up to $11 billion; that is until real world economics hit.

Then there is the proposal in the Bay Area to raise taxes $100 billion over 40 years to deal with the areas transportation woes. Sure, traffic is terrible and it is good to think about how to handle it, but if this measure appears with the other big tax proposals all aimed at the 2020 November ballot–and all these tax increases became a reality–the Bay Area probably won’t have a transportation problem because a lot of people would just leave.

More, more and still not satisfied.

Joel Fox is Editor and Co-Publisher of Fox and Hounds Daily.

This article was originally published by Fox and Hounds Daily.

California housing market officially now ‘weak.’

The once red-hot California housing sales market is officially now “weak,” state analysts say, but the year-long flattening does not necessarily suggest the state is headed toward an economic downturn.

In a brief report issued Monday, the state Legislative Analyst’s Office weighed in on the latest California home sales trends, noting that homes sales statewide in June were down from the same month last year, and notably lower than historic norms.

“Home sales were on a clear downward trend during the second half of 2018 and the beginning of 2019,” analysts wrote. “Sales seem to have stabilized in recent months and are no longer declining from month to month. …

Click here to read the full article from the Sacramento Bee

Democrats Pay For Hypocrisy on First Amendment

Democrats pay lip service to the First Amendment and claim to encourage political engagement but, in reality, their desire is to silence all views but their own. Last week, a Court of Appeal made them pay for their hypocrisy.

In 2017, one of the most hotly contested political issues in California was the imposition of a huge increase in the state’s car and gas taxes. While the effort to reverse that tax increase failed when voters — victims of a highly deceptive campaign — rejected Proposition 6 last year, the political fallout from that tax increase reverberated in other ways.

For example, as a result of his vote for the tax hike, then-Sen. Josh Newman was the subject of a successful recall campaign. That effort was supported by a number of grassroots organizations such as the Howard Jarvis Taxpayers Association and Reform California as well as the California Republican Party.

To say that the Democrats were angry at the recall of one of their own would be an understatement. In retaliation, they arranged for the filing of a lawsuit against HJTA, the CRP and the firm that managed the recall petitions alleging that somehow voters who signed the recall petition were fooled into thinking they were signing a petition for the repeal of the gas tax.

To read the entire column, please click here.

Looking Forward on Affordable Housing

With the state budget mostly concluded, now is a good time to look at future reforms to bring Californians more housing, affordable or otherwise.

It’s called a housing crisis, yet you can buy a 282-square-foot kit home on for $18,800, instructions included. If you need something bigger, there’s a 1,336 square foot kit home for $64,650.

So perhaps it should be called a property crisis. While building a house can be cheap, in California the property under it is the expensive component, requiring builders to meet all sorts of state and local regulations. State and local governments refuse to make it easier to erect any kind of housing.

Just Google “land entitlements” for a rude awakening on how complex property regulations are. This traditional approach needs a review.

The way not to do that is Assembly Bill 72 from 2017, by Assemblyman Miguel Santiago, D-Los Angeles. It ran roughshod over local governments’ control with their own housing regulations.

AB 72 is the weapon Gov. Gavin Newsom used in January in his unjust attack on Huntington Beach, which is in my 37th Senate District. Surf City allegedly failed to meet its affordable-housing goals mandated by state calculations for zoning to accommodate various income levels. Ironically, Huntington Beach is one of the major housing-approving cities in Orange County.

Gov. Newsom justified the lawsuit with a statement that “due to the rising house prices, it would prove to be a threat to the economy as well as deepen inequality.”

At the time, I called that “strong-arm tactics.”

Piling on, the state budget enacted last month included fines to cities of up to $600,000 a month for supposedly violating state housing goals. Cities don’t pay fines, citizens do. So, that’s effectively a tax increase.

Additionally, there is a problem with what is called the Not-In-My-Back-Yard (NIMBY) movement. 

As Carson Bruno of the Pepperdine School of Public Policy described it, “Considering that the housing affordability problem is less a local issue and more a regional problem, until municipalities collectively begin opposing the movement, actual progress on solving the affordability crisis will continue to be delayed and blocked.”

Next, there are the state’s unreformed environmental laws.

A 2015 report by the Legislative Analyst found California housing prices were only 30 percent higher than the national average in 1970. Considering the mild climate and lower heating and cooling costs, that was a tolerable divergence. Soon after, housing prices began to soar to 80 percent above the national average in 1980. By 2015, prices were 250 percent higher!

The report found a major cause of the higher prices was the California Environmental Quality Act (CEQA), enacted in 1970. CEQA reports often caused cities and counties to deny “proposals to develop housing or approving fewer housing units than the developer proposed,” according to the LAO report. “CEQA’s complicated procedural requirements give development opponents significant opportunities to continue challenging housing projects after local governments have approved them.”

In May this year, the Senate postponed to next year consideration on Senate Bill 50, by Sen. Scott Wiener, D-San Francisco. A crucial part of the bill would “establish a streamlined ministerial approval process for neighborhood multifamily projects, thereby exempting these projects from the CEQA approval process.”

The reasoning is, by encouraging more housing closer to workplaces, people would drive fewer miles, reducing vehicles’ use of carbon fuels and the production of greenhouse gases. Thus, California would meet CEQA’s goal of improving the environment. I’m hopeful the Legislature will pass this component of SB 50 when it returns in 2020.

Another positive development I voted for is Assembly Bill 101, by the Committee on the Budget. Among other things, it would require the Department of Housing and Community Development to come up with a “methodology that promotes and streamlines housing development and substantially addresses California’s housing shortage.” The bill was approved without opposition in both houses and now is with the governor.

Finally, instead of punishing cities and counties with fines for allegedly not following state housing laws, how about rewarding them with more state aid to deal with the housing and homelessness crises? A carrot is a better incentive than a stick.

Rather than stigmatizing cities like Huntington Beach, an incentive approach would encourage all cities to work with the state to provide more housing.

John M.W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate.

This article was originally published by Fox and Hounds Daily

CA Legislature Now Determining Which Presidential Candidates You Can Vote For

What’s in President Trump’s tax returns?  It’s a mystery that has stumped cable television pundits since he refused to release them during the 2016 campaign.  At times, the furor has been so high that I’m surprised that Matlock or Jessica Fletcher were not called out of retirement to investigate.

Democrats in Congress are dying to know and are fighting with the President and his lawyers over a congressional subpoena issued earlier this year.

Now enter the California Legislature.  Not content to dictate how you run your business, raise your kids, or what care you drive, they now want to dictate what presidential candidates you can vote for on the California ballot.

Last week, lawmakers passed the “Presidential Tax Transparency and Accountability Act” (Senate Bill 27, by Sen. Mike McGuire, D-Healdsburg) to require presidential candidates to send the state 5 years of tax returns to qualify for California’s primary.  The Secretary of State would be required to post the returns online.  The Sacramento Bee reports that Gov. Newsom is expected to soon sign the measure into law.

What are the qualifications to run for President?

Article 2, Section 1 of the U.S. Constitution says that “no person except a natural born citizen . . . shall be eligible to the office of President; neither shall any person have been eligible to that Office who shall not have attained to the age of thirty-five years, and been fourteen years a resident within the United States.”

No mention of tax returns.  Since the Constitution sets the qualifications for President, not the states, it’s likely SB 27 would be tossed out in court.

In a press release, Sen. Scott Weiner, the bill’s joint author, said that, “voters should have confidence that their President is working for them and not to enrich himself or herself.”

It’s a fact that presidents from both parties – including Barack Obama, George W. Bush, and Bill Clinton – made money from serving as the nation’s chief executive.  Once out of office, presidents routinely make millions of dollars writing books, giving speeches around the world, and serving on corporate boards.

As the Bee noted, former Gov. Jerry Brown refused to release any of his tax returns during his most recent stint as governor.  Did Weiner lack confidence that Brown was not working for the people of California and only to enrich himself?  Probably not.

Brown also vetoed a prior version of this bill two years ago.  He wrote in his veto message that this effort would “start down a road that well might lead to an ever escalating set of differing state requirements for presidential candidates.”

It also has no bearing on who the GOP will pick as their presidential standard bearer.  The Republican Party could cancel the presidential primary and pick convention delegates by caucus instead.  Also, Trump will appear on California’s general election ballot as the Republican Party nominee, regardless of whether he discloses his tax returns.

At the end of the day, it’s up to voters to decide if a candidate’s finances are disqualifying.

Every voter has their own individual checklist when deciding on a presidential candidate.  Some may be interested in their position on taxes, while others are interested in where they stand on foreign policy.   And yes, some may be interested in reviewing a candidate’s tax returns.

California voters can weigh the facts and decide for themselves.  They certainly don’t need meddlesome state lawmakers getting in the way when choosing America’s next president.

Tim Anaya is the Pacific Research Institute’s communications director.

This article was originally published by the Pacific Research Institute

California misspent $330 million that should have helped homeowners

California must use money it obtained from banks through a lawsuit over unfair mortgage practices to help homeowners after the state’s highest court rejected arguments from Gov. Gavin Newsom’s administration that it could use the money for other purposes.

The state secured the money in 2012 as part of a nationwide settlement with Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial.

California as a whole received $18 billion as part of the settlement, according to Bee archives. Much of that money went directly to homeowners. …

Click here to read the full article from the Sacramento Bee

San Francisco Residents Use Environmental Lawsuit to Stop Homeless Shelter

In the most played-out storyline in urban politics, San Francisco residents are alleging that a new housing development was approved without appropriate environmental review.

The development in question is a planned 200-bed temporary homeless shelter on the city’s Embarcadero waterfront area. It would replace what is currently a publicly owned parking lot used by fans visiting the nearby Giants stadium.

The shelter was first proposed by Mayor London Breed back in March as part of the city’s Navigation Center program, which provides temporary shelter to homeless people while they are connected to other city services.

These plans met immediate opposition from neighbors, who in, public hearings, protests, and official appeals raised objections that commonly dog proposed homeless shelters: The new shelter would bring drugs and crime to the nearby residential neighborhood. Its 200-bed size would prove too large for the city to effectively handle, particularly given its record managing other Navigation Centers. The presence of contaminated soils and groundwater at the site would create health hazards for the people who would live there.

The city’s Board of Supervisors ultimately rejected these complaints, approving the Navigation Center in June. In doing so, they also declared the project was exempt from the California Environmental Quality Act (CEQA), which requires that government agencies study the environmental impacts of proposed projects before approving them.

The kind of environmental impact reports that CEQA demands cost a lot in both time and money to prepare, and would have delayed the approval of the Navigation Center by months at the very least. Because of how long and expensive these delays can be, NIMBYs frequently use the law to slow down, alter, or even stop projects they don’t like.

This includes not just homeless shelters and affordable housing, but also regular market-rate developments as well.

City officials tried to avoid this problem in this case by saying that an exemption built into CEQA for urban infill projects applied to the Embarcadero Navigation Center.

But in a lawsuit filed last week, the neighborhood group Safe Embarcadero For All (SEFA) has argued that the many, many negative environmental impacts the project would bring to the neighborhood amounted to “unusual circumstances” that made this infill exemption inappropriate.

“This project will have a significant effect on the environment due to these unusual circumstances, including by attracting additional homeless persons, open drug and alcohol use, crime, daily emergency calls, public urination and defecation and other nuisances,” reads the lawsuit.

Their lawsuit also argues that the state government’s sign off is necessary for the Navigation Center.

SEFA is currently asking for an injunction to stop the Embarcadero Navigation Center from going forward while the case winds through the courts.

San Francisco’s homelessness population has increased by 30 percent in the last two years.

This is not to say that the city’s Navigation Centers have been a huge success at transitioning people into permanent housing. They haven’t.

But the SEFA lawsuit is nevertheless a good example of how any response to the city’s dire homelessness problem, whether its the constructions of more shelters or just the construction of more housing in general, is hamstrung by the state’s onerous environmental review laws.

CHRISTIAN BRITSCHGI is an associate editor at Reason.

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