Only Voters Can Solve California’s Pension Crisis

unions pension benefitsDespite its growing economy and higher tax revenue, California still faces fiscal ruin from unsustainable government pension programs.

In these good times, the state, local governments, public schools and our universities are raising taxes, boosting tuition and cutting services to pay rising employee retirement costs.  Between 2003 and 2013, combined annual pension costs have nearly tripled, from $6.43 billion to $17.5 billion.

The State Controller also reports nearly $200 billion in unfunded liabilities for state and local pension obligations.  California Common Sense calculates another $150 billion of unfunded liabilities for state and local retiree healthcare obligations.  That’s $350 billion in unfunded legacy liabilities that are driving massive cost increases, again:

  • CalPERS has told its agencies to be prepared for increases in their contributions for 50% over 5 years.
  • CalSTRS has told school districts to prepare for increases of more than 100% over the next few years.

And those warnings are for optimistic scenarios that still assume investments will earn 7.5% annually during the next 30 years.

From a purely financial perspective, retirement promises and their debts are driving California’s fiscal crisis – but politicians are the real problem, unable to say “no” to the powerful government labor union bosses that fund their campaigns and then make expensive demands at the bargaining table.

Without immediate reform, California faces a future of even higher taxes and fewer services.  Some local governments already face service delivery insolvency and bankruptcy.

Our bipartisan coalition believes voters must be given a voice in important government employee compensation and benefits decisions and politicians should ask voters before making expensive, life-long retirement promises to new employees.  That is why we are placing a statewide initiative on the ballot in 2016.

The initiative provides a “check” on state and local politicians who too often cave into union bosses’ expensive, unsustainable demands.

Our initiative prohibits the enhancement of existing pension benefits or the granting of lifetime pension benefits to new employees without voter approval.  The measure prohibits taxpayers from paying more than 50% of new employee retirement benefit costs – unless voters authorize a higher contribution.

Recent efforts by some California communities to reform government compensation and benefits have been thwarted.  In San Jose and San Diego, state agencies tried to keep pension reform measures off the ballot and have obstructed voter-approved reforms.  In Ventura County, a state law was used to stop voters from even considering a reform package.

That’s why our statewide initiative prohibits politicians and government agencies from delaying, impeding, or challenging any voter-approved public compensation and benefits reform ballot measure.

Our moderate initiative also prohibits government pension boards from penalizing public agencies that close their pension plans to new members, a common tactic to maintain the status quo.

CalPERS did that in the Stockton bankruptcy by claiming a $1.6 billion fee when the unfunded liabilities were only $400 million. When San Jose wanted to stop putting elected officials into a small CalPERS pension plan, CalPERS demanded $5 million for a $900,000 liability.  Other cities across the state have received similar CalPERS demands, making it too expensive to put new employees into defined contribution plans.

Our initiative proponents are a bipartisan group of current and former elected officials who understand the devastating impacts that skyrocketing costs have on essential services.  We know the brutal budget math grows worse if California continues down this unsustainable path.  Cities all over the state need the power to control the cost of retirement benefits for new employees to offset the skyrocketing costs for current employees and protect essential services.

Of course, public employee union operatives have already launched personal attacks and Wall Street conspiracy theories to confuse the voters. Despite union rhetoric, this modest measure will not end defined benefit plans; it simply requires voters to approve adding new members.

This week the Legislative Analyst confirmed that our measure puts voters in the driver seat – and that the mandatory requirements of the measure would produce “significant savings.”

Even better, in addition to what is specifically mandated by the measure, the LAO confirmed that voters would have new powers to add to the savings.

Government union bosses are desperate to protect their gravy train at taxpayers’ expense.  That’s why they are spinning a web of lies about the measure.

Astonishingly, the government union bosses even going so far as to claim voters will opt to spend MORE money than the politicians if given the new powers our initiative grants the people.

At the core of their argument, the unions, along with the politicians, are arguing that voters might make bad decisions with the new powers our initiative grants them.  Telling voters they cannot be trusted to make good decisions is not exactly a winning message.

How much worse can we get beyond the disastrous decisions already made by the politicians who have been bought and sold by the labor unions?  That’s a debate we are looking forward to having in 2016!

Fortunately, no amount of misinformation can change the plain English requirements of the Voter Empowerment Act.

Ultimately, we trust the voters to chart a responsible financial future.  And that’s why our initiative is an important step on the long path to fixing California’s unsustainable public employee retirement benefits.

Chuck Reed, a former Mayor of San Jose, is a Democrat. Carl DeMaio, a former Councilmember of San Diego, is a Republican

CA Dems push ambitious energy bill

wind energy turbineA bold and controversial new bill, introduced by Senate President Pro Tempore and leading Democrat Kevin de Leon, D-Los Angeles, advanced through the Assembly on the strength of Gov. Jerry Brown’s vociferous rhetoric on climate change.

As CBS Los Angeles reported, Brown tied his support for the legislation to his broader climate agenda, which has seen him praise Pope Francis’ recent encyclical on environmental matters and earn a trip to Vatican City to push for global change.

“‘We’ve got a serious problem here,’ he told KCAL9 Political Reporter Dave Bryan via satellite. ‘Burning oil and gas and coal and diesel is a big part of the problem. We’ve got to find new bio-fuels. We have to be more efficient. We’ve got a lot to do. And by the way, if we do nothing, the cost is unimaginable.’”

Brown has done his best to use his final term in office to amplify that message whenever possible. His trip to the Vatican, Sci-Tech Today noted, will be just “the latest of several international trips the governor has taken to urge others to do more to curb global warming. He’s also been rallying states and provinces to sign an agreement to match California’s target for reducing emissions by 2050.”

Stricter standards

While Brown has pushed the message, Democrat allies in Sacramento have crafted the content of regulations to match. De Leon’s bill, SB350, “imposes three significant clean-energy goals by 2030,” U-T San Diego’s Steven Greenhut observed: “Reducing the use of petroleum products in automobiles by 50 percent; increasing to 50 percent (from a current 33-percent goal) the amount of energy that uses renewable sources such as solar and wind power; and doubling energy-efficiency in current buildings.”

In fact, the legislation was crafted around achieving the outsized goals Brown set for ratcheting down California’s statewide emissions levels. As an interim step, the governor has proposed that the state “cut emissions to 40% below 1990 levels by 2030. It’s an ambitious target that members of his administration insist is achievable,” according to Sci-Tech Today.

De Leon himself has not shied away from using aggressive language to characterize the bill’s sweep and ostensible urgency, as Greenhut noted. “We need to break the stranglehold the profit-driven oil companies have on our economy and give consumers better options to power their homes and cars in cleaner, healthier and more sustainable ways,” de Leon said in remarks posted to his website.

Brown, for his part, has openly acknowledged the level of industry outrage the bill guarantees. “Well, of course, the people who are gonna sell 50 percent less petroleum are not only gonna have questions, they’re gonna have a fierce, unrelenting opposition,” he told KCAL-9.

But the coming regulatory shakeup has made for some strange industry bedfellows. “One of the issues both utilities and solar installers have raised,” according to GreenTech Solar, “is that distributed solar should not be treated any differently than utility-scale solar as the state crafts the rules around meeting the new 50 percent target.

A legislative scramble

Part of the urgency behind SB350 has been driven by environmental regulations voted into law years ago. AB32, the big climate bill passed in 2006, “established a goal of cutting the state’s greenhouse gas emission to 1990 levels by 2020. To meet that goal, emissions need to fall by six percent between 2013 (the latest year for which figures are available) and 2020,” CalMatters reported. “Brown and other political leaders expect that to happen,” according to SCPR, although, to date, “emissions have fallen only slightly since 2009, when the recession ended.”

The minor dip has been attributed to the difficulty involved in pushing California’s energy usage much lower than it is already. “Greenhouse gas emissions in California dropped by 7 percent from their peak in 2004 to 2013, compared to 9 percent nationwide over the same period,” according to CalMatters. “Reducing emissions is harder here because the state’s economy is already relatively energy-frugal.”

Endless Bipartisan Disdain for High-Speed Rail

high speed rail trainEvery once in a great while an issue comes along that is truly bipartisan.  Regardless of political persuasion … everyone hates it!  They say that politics makes strange bedfellows and this one is a great example.

When voters gave approval to Governor Jerry Brown’s legacy issue … The Bullet Train … approved by voters with a $9-billion bond in 2008, it was expected to connect Los Angeles to San Francisco in two hours and 40 minutes. Construction is slated to start this summer, more than two years behind the initial start date.

The Bullet Train is currently being funded by twenty-five percent of the state’s revenue from cap-and-trade fees, which discourages the use of fossil fuels by putting a price on carbon.  We are paying higher prices for gasoline and diesel fuel because of cap-and-trade fees, and that’s where a quarter of the money is going.  Governor Brown expects that carbon tax to continue into the future.

Part of the Bond stipulation was no state money would be used.  That has now changed and several private companies, which were going to bid on various parts of the project, have stated they will need State funding.  The price is no longer $9 billion but seems, according to some sources, to have doubled.

Personally, I am very much in favor of progress … especially for LA’s nightmare transportation issues … but it has to be smart progress.  There are so many disparate groups fighting this monster project that one has to take a step back, see it from a macro point of view but keeping in mind that a bunch of micro make up a macro.  Both working class and affluent areas are going to be affected.  What does it do to real estate prices having a tunnel or tracks near your back yard, let alone quality of life issues?

Last year the California High Speed Rail Authority (CHSRA) announced that they would hold meetings seeking the public’s suggestions through every phase of the project.  They kept their word.  Whereas they were seeking suggestions … they were slammed with complaints.  To sum up the suggestions … Don’t Do It!

I’m just going to discuss some of the issues in the Palmdale/Burbank plan.  At the present time four alternate plans have been presented to implement two routes.  One going through the mountains  through the East Valley to Burbank- the other impacting more of the central Valley  Take a look at exactly what they have in mind.

This will describe all of the new alternatives CHSRA has come up with as a result of their meetings.

Yes, the San Fernando Valley is the recipient of this controversial super project.  Before all of you City dwellers’ eyes glaze over … this will also affect you … not where you live but in your pocketbook because there will be tax payer subsidies.

I also checked to see how our City Council Members and State and Assembly representatives, whose constituents would be impacted,  were handling what promises to be almost as bigger issue as the San Fernando Valley trying to secede from Los Angeles.

Assembly member Patty Lopez, whose district includes most of the areas affected, has been holding a series of meetings for her constituents.  One held last week brought together Neighborhood Councils, Members of Valley Vote, Chambers of Commerce.

This is what she said:

“In an earlier statement, I declared my opposition to the high speed rail routes proposed and still disagree with the routes. To date I have heard the numerous and overwhelming concerns raised by my communities.   I share the serious concerns of my constituency as the four routes proposed not only severely impact urban areas of my district negatively, but could potentially devastate rural and natural lands. 

“After meeting with constituents, other stakeholders, and reviewing proposed routes, I have been made aware of the clear impacts to local businesses, properties, and overall quality of life. Additionally, many of my communitys questions still have gone unanswered; communities continue to remain frustrated with the process; and are still unclear as to their options or the next steps. 

“To aid my district through this process, I plan to actively pursue several possibilities.  I have directed staff to coordinate a meeting with the High Speed Rail Authority, the Administration, and to plan more community meetings to further hear the concerns of my District.” 

Both City Council members Felipe Fuentes and Nury Martinez have asked for more information and are holding meetings.  State Senator Bob Hertzberg seems to think it will make LA more cosmopolitan.  Sunland- Tujunga Neighborhood Council sent a letter to CHSRA presenting an excellent case against the routes.   They warned of severe environmental concerns as well as public safety issues such as building tunnels over earthquake faults.

Really caught in the cross hairs is the City of San Fernando.  They remind me of the children’s book, “The Little Engine that Could.”   This working class City, which is more than 90% Latino, has  been struggling with development problems; trying to attract more entertainment venues; improve their schools, among other things and now they have to contend with this.  They sit directly in the path of one of the proposed routes.

San Fernando City Mayor Joel Fajardo said the train would bisect his city, leaving only two crossing points separated by a massive sound wall.

“They would never propose a bullet train to go through Old Town Pasadena, Third Street Promenade or Rodeo [drive]” he said. “Yet they have no problem with this proposal if it is through a working class community like San Fernando.” 

San Fernando Mayor Pro Temp, Sylvia Ballin, told state officials the city would lose $1.3 million a year if the plan goes forward. Residents in the small, working-class city also worry that high sound walls expected to be constructed around the rails will become an eyesore. 

The bottom line is … you are not really welcome!” Ballin said. 

Opposition has also grown in several other Los Angeles-area neighborhoods that intersect with the planned route.  It is turning into a public relations nightmare.

Here’s a thought voiced by many:

 “If we want to go to San Francisco in an hour we can fly!  Why not take that money and fix our freeways, highways, bridges etc. which will benefit all Californians … not just those who are commuters, tourists or legislators going to and from Sacramento.”

I will continue to follow this and let you know what I find.

As always comments welcome.

(Denyse Selesnick is a CityWatch columnist.  She is a former Publisher/journalist/international event organizer. Denyse can be reached at: Denyse@CityWatchLA.comOriginally published on CityWatchLA.)

A Surge Against Proposition 13

prop 13In June of 1978 California governor Jerry Brown opposed Proposition 13, but voters passed the measure in a landslide. California’s ruling class has never ceased to attack it, and these attacks are certain to escalate with new ammunition from Nathan Gardels of the Berggruen Institute.

“The Proposition 13 property tax revolt of 1978 still defines the fiscal framework of California,” Mr. Gardels recently wrote in theSacramento Bee. “That revolt was sustained largely by an older, white middle class reasonably, at the time, seeking to protect their assets from a bloating state.”

Mr. Gardels is right about the “bloating state,” but he neglects to explain that government growth and inflation were taxing people out of their homes. In these conditions it was reasonable that people would seek to protect their assets, but for Mr. Gardels, these were mainly older people.

In reality, young first-time homebuyers championed Proposition 13. After making the biggest purchase of their lives, in a time of rampant inflation and high unemployment, young people did not aspire to be saddled with onerous and ever-rising property taxes. That’s why nearly two-thirds of California voters, Asians, African-Americans and Mexican-Americans among them, decided to limit those taxes.

Californians might recall that, under Proposition 13, property tax rates could not exceed 1 percent of the property’s market value and could not grow by more than 2 percent per year unless the property was sold. And unlike the California Coastal Act of 1976, which created the Coastal Commission, Proposition 13 created no new state agencies and included no mandate for new state spending.

Proposition 13 applied to all Californians, regardless of ethnicity, but for Gardels it was mainly about older “white” people. These old folks may have had a legitimate complaint, but in his view they represent the past.

“The political constituency of California’s future,” Mr. Gardels explained, “is largely Latino, Asian and youthful.” And this constituency of the future “is seeking to build their assets through upward mobility.” And for Mr. Gardels, that changes the equation.

“For aspirational constituencies striving to reach the middle class,” he wrote, “the most important thing is an opportunity web and trampoline to boost their chances.” Trouble is, “even though California has one of the most progressive tax structures in the nation, inequality is rising and dashing hopes.”

So if progressive taxes, which means higher and more punitive taxes, are not serving as a trampoline and opportunity web, what might do the job?

Mr. Gardels wants a new philosophy of governance that focuses on the “overall progressive outcome.” In this vision, the very high state income tax should be reduced “while extending a sales tax on services.” Politicians will be happy to oblige.

Proposition 13, meanwhile, prevents the state from inflicting punitive property taxes on all Californians. It is one of the few measures actually to limit the power of government.

If ruling-class types find it objectionable, there is something they can do: Craft a measure that nixes Proposition 13, pegs property taxes at 10 percent of the property’s value, and allows increases of 15 percent per year. Put that on the 2016 ballot and let California voters decide.

If facing the people proves too daunting, maybe the Berggruen Institute—a group “dedicated to the design and implementation of new ideas of good governance” —can offer a 12-step plan to trim California’s bloated government. As Mr. Gardels makes clear, the government’s appetite for more of the people’s earnings remains ravenous as ever.

Lloyd Billingsley is a policy fellow with Independent Institute in Oakland. He and his family bought their first house in California in 1977. Originally published on Fox and Hounds Daily.

Cap-and-Trade Funds Targeted for High-Speed Rail Project

High Speed RailBills being introduced that monitor or change terms for the state’s high-speed rail project are a rarity. However, there are two bills brewing in the Legislature.

One has a shot at passing. The other doesn’t.

Senate Bill 400 would require the California High-Speed Rail Authority to use at least 25 percent of its cap-and-trade funds for projects to reduce or offset construction emissions. The bill comes as two groups have brought legal challenges to the state’s cap-and-trade program and the state’s plan for measuring emissions from the high-speed rail project. The bill traces its origins to the powerful Hispanic caucus and is expected to pass in the largely pro-rail legislature.

SB400, introduced by Sen. Ricardo Lara, D-Bell Gardens, has been approved in the Senate and is moving through committees in the Assembly.

Last year the Legislature appropriated 25 percent of the state’s revenues from cap-and-trade auctions to the high-speed rail project. SB400 would reduce construction funds to 18.75 percent of the revenues, with the remainder going to “reduce or offset greenhouse gas (GHG) emissions directly associated with the construction of the high-speed rail project and provide a co-benefit of improving air quality,” according to a Senate analysis of the bill.

The analysis suggests that this bill might save the cap-and-trade program, which is being challenged by two lawsuits.

Lawsuits against AB32 and HSR

A suit brought by the Pacific Legal Foundation, which favors limited government and “sensible environmental policies,” claims that the very existence of the cap-and-trade program is an illegal tax. The case is on appeal and expected to be heard in the fall.

A second suit asserts that a state plan to reduce emissions improperly calculated the impact of the high-speed rail project — which the plaintiffs allege will actually contribute to greenhouse gases instead of reduce them.

The plaintiffs in their complaint say that the state’s estimates “were neither real, permanent, quantifiable or verifiable but were instead illusory because in reality the construction of the (rail) project would result in a significant increase in (greenhouse gas) emissions prior to 2030 or beyond.”

The suit is being brought by the Transportation Solutions Defense and Education Fund, a nonprofit environmental group.

Cap and trade bailing out high-speed rail project

The rail project is not slated to be operational by 2020, which is the deadline in state law to reduce the state’s greenhouse gas emissions to 1990 levels.

The Senate analysis points out that state law restricts the use of cap-and-trade funds.

“The Constitution requires that a clear nexus exist between an activity for which a mitigation fee is used and the adverse effects related to the activity on which that fee is levied. …

“It is important that legislation allocating cap-and-trade revenues ensure that the funds are being used to reduce (greenhouse gas) emissions. If opponents of the program can convince the courts that the revenues are not being used appropriately, the entire cap-and-trade program could be jeopardized.”

The analysis hints that the rail program’s use of cap-and-trade funds, as currently outlined, doesn’t meet legal standards, and that passage of the bill would shore up the legal standing of the program and help the state win the pending court cases.

“If opponents of the program can convince the courts that the revenues are not being used appropriately, the entire cap-and-trade program could be jeopardized,” the analysis reads.

The cap-and-trade program is estimated to bring in as much as $2 billion a year in fees.

Further analysis on SB400

An analysis in the Assembly shows that some lawmakers remain sympathetic to the aims of the bill but not as positive on its potential effects.

The bill would significantly drive up the cost of the rail project by reducing its only stable revenue stream, according to a summary of transportation committee members’ concerns. This could threaten completion and jeopardize any future environmental benefits.

“The project is already sorely underfunded,” the analysis states.

The analysis also points out that SB400 is intended to offset environmental impacts from construction but does not impose any requirement that the redirected money, approximately $125 million, be spent in communities near the construction zones. The bill could result in “millions of dollars being spent in Southern California, hundreds of miles from the high-speed rail construction sites.”

In other words, it could result in a money grab for other transit projects in Southern California, not the “disadvantaged communities” proposed in the bill.

Republicans in the Legislature have been unsuccessful for the past three years with more than a dozen bills that attempted to manage, change or end the high-speed rail program. All failed on party-line votes to get out of committee. In fact, Rep. Jim Patterson, R-Fresno, has a graveyard with little tomb stone markers set up in his backyard for failed bills he’s introduced on various subjects including high-speed rail.

Despite the fact that Senate Bill 3 has bipartisan sponsorship, from Sens. Andy Vidak, R-Hanford, and Rudy Salas, D-Bakersfield, it’s expected to suffer a similar fate.

The bill would direct the Legislature to approve putting high-speed rail back on the ballot. It would redirect high-speed rail funds to retiring the debt incurred from the issuance and sale of bonds. It would also require that unsold bonds use half the net proceeds for funding repair and new construction projects on state highways and freeways. The other half would be used to fund projects on local streets and roads.

(Originally posted on CalWatchdog)

Bill Gives Illegal Immigrants Access to Medi-Cal

meteor obamacareCalifornia Democrats have ramped up their push to extend health benefits to in-staters who immigrated unlawfully.

High-stakes legislation

Sacramento Democrats have advanced a piece of legislation, authored by State Sen. Ricardo Lara, D-Bell Gardens, that would grant access to Affordable Care Act benefits to unlawful immigrants. SB4, which would open up Medi-Cal enrollment, cleared the Assembly Health Committee on a party line vote, drawing a few dozen opponents at the bill’s hearing.

According to Lara’s website, some “three to four million people in the state will remain uninsured in spite of ACA, and almost a million of those will be undocumented residents eligible for coverage, save for their legal status.”

Last month, the state Senate voted to clear the bill, also known as the Health For All Act, with Lara describing the scheme as “a transformational and decisive step forward on the path to achieving health for all,” according to MSNBC. But Gov. Jerry Brown’s office already intervened once to scale back Democrats’ ambitions.

“The initial bill, which would have allowed all undocumented immigrants to sign up via Medi-Cal, was pared down after it was estimated to cost up to $740 million a year, a price tag Brown said was unacceptable. The governor has not indicated whether or not he’ll sign off on the latest legislation.”

Nevertheless, as Politico reported, Brown did sign off on spending “millions in state dollars to provide health care to undocumented children, mirroring similar efforts in a handful of other liberal states.”

Covered California, the state-run health care exchange, has become an Obamacare keystone, although its second-year enrollment numbers have fallen short of goals. Continued tension between Gov. Brown and state Democrats on the costs of expanding coverage could pose problems for the party on a national level.  “Republicans never trusted Democrats’ repeated assurances while the law was being drafted that the Affordable Care Act wouldn’t cover undocumented immigrants,” Politico noted. “That built up to Rep. Joe Wilson’s infamous ‘You lie!’ moment, when the South Carolina Republican interrupted President Barack Obama’s 2009 health care address to Congress.”

Walking the line

In some parts of the state, strategies for expanding benefits have had to adapt to changing political circumstances. Although state Democrats at the municipal level have long adopted a generous attitude, a new expansion of health funding stopped short of including the unlawfully present.

The San Francisco Department of Health was recently put in charge of administering a new effort under its so-called City Option initiative, which makes it easier for workers to buy insurance through Covered California. Previously, beneficiaries were eligible for reimbursements supplied by the city, whereas, under the new effort, San Francisco will directly subsidize purchases made through the state exchange. “The new subsidies will not benefit immigrants living in San Francisco who are in the U.S. illegally,” however, according to the San Francisco Chronicle.

As the Chronicle added, illegally present immigrants have already received some favor under municipal law: “They are still eligible to receive health care services through the city’s Healthy San Francisco program.”

In the city, illegal immigration has become a freshly charged issue in the wake of a shooting that made national news, eliciting comments from Republican presidential candidates. While Donald Trump tied the killing to the city’s so-called “sanctuary” status, Jeb Bush, on a recent visit reported by the Los Angeles Times, said it was inappropriate to “prey on that fear,” suggesting “it’s not a winning message either.”

If San Francisco’s decision not to extend the new subsidy to unlawful immigrants reflected unease on the left, Bush’s remarks suggested something similar on the right. “I think candidates ought to lay out proposals to solve problems rather than basically prey on legitimate fears and concerns,” he said, trying to strike a moderate tone.

(Originally posted on CalWatchdog.)

Rent control ages badly in Los Angeles

http://www.dreamstime.com/-image19890499“I own rental property,” Assembly Member Donald Wagner, R-Irvine, told a recent gathering of apartment owners, “but I won’t own rental property in California. You guys have a target on your backs. We’re trying to get that target taken off.”

How bad is business for apartment owners? Ask Arnie and Debbie Corlin, who own six properties in Los Angeles. “We’re thinking of selling them and buying rental property in Detroit,” Arnie said.

That’s how bad it is. Detroit is more business friendly than Los Angeles.

“Income has to cover expenses,” said Iona Blackwell, who owns 72 rental units spread out over several buildings in Venice. “A building has to pay for itself. I am not a charity.”

Actually, she is. By owning rent-controlled apartments in the city of Los Angeles, Blackwell is donating to her longtime tenants, every month, the difference between what they’re paying in rent and what the units could bring on the open market.

Unlike government housing subsidies, rent control is not based on income. Landlords can find themselves subsidizing tenants who earn more than they do.

L.A.’s Rent Stabilization Ordinance ties rent increases for existing tenants to the Consumer Price Index. This year, rents can rise 3 percent.

Apartment owners argue that the CPI reflects the prices of consumer goods, not the expenses of running a building. “Water up 24 percent, sewer charges up 44 percent, trash collection up 30 percent,” one owner said irritably.

“We can’t control how much water the tenants use,” another added.

And installing individual meters for each apartment is wildly expensive. “The DWP charged me $3,500 for one meter in 2007,” Arnie Corlin said.

Rent control has been in effect in Los Angeles since 1979. Early on, in 1981, the city paid the RAND Corporation to study the impact of rent control on the housing market. “In the long run,” the findings warned, “it may create the very housing shortage it was designed to alleviate.”

The RAND researchers documented in 1981, and again in 1988, that building owners cut back on maintenance until expenses matched rent revenue — and sometimes removed the units from the market altogether, converting the apartments to condos or demolishing the buildings to use the land for something else.

When the California Supreme Court ruled that landlords did not have the right to evict their tenants and go out of business, the state legislature changed the law. The 1985 Ellis Act says government entities can’t force an owner of residential property to continue to offer it for rent or lease.

But the Ellis Act is perpetually under attack. This year, a proposed state law, SB 364, would have allowed the city of San Francisco to force landlords to stay in the rental business until all owners of the building had owned it for at least five years. California Association of Realtors president Chris Kutzkey called the bill “an unreasonable and unjustified attack on property owners that need or want to take a rental property off the market.” The bill was defeated.

Los Angeles officials are trying to implement a local crackdown on Ellis Act exits from the rental housing business. A motion by Councilman Gil Cedillo would require clearance from the Housing and Community Investment Department before any permits for construction or demolition could be issued for a formerly rent-controlled property. The extra scrutiny and red tape would continue for five years.

Mayor Eric Garcetti said he supports Cedillo’s motion as a way of “preserving the affordability we have now.”

More likely, it’s a way of forcing L.A. property owners to stay in the rental business because they won’t live long enough to get the permits to build anything else.

This tactic would have met with the approval of Whitey Bulger, the Boston gangster who was on the lam for 16 years until the FBI found him living in a rent-controlled apartment in Santa Monica in 2011. Bulger, who kept his guns and $800,000 in cash hidden in the wall, had resided quietly for more a decade in the two-bedroom apartment on 3rd Street, just blocks from the ocean. His rent was $1,145 a month.

“Rent control confers most of its benefits early and extracts most of its costs late,” the RAND researchers said. After 36 years of rent control in Los Angeles, we now are dealing with the cost — a reduced supply of affordable housing. Piling more mandates, penalties and regulations on housing providers will only speed up the run for the exits.

(Susan Shelley is a columnist for L.A. Daily News. Reach the author at Susan@SusanShelley.com or follow Susan on Twitter: @Susan_Shelley.)

Left Uses Bullying Tactics to Shut Down Opposition

democrat party liberal“End of discussion!” is what those on the political left yell in your face when they know they are losing an argument. It is also the name of a compelling new book by Mary Katharine Ham and Guy Benson with the revealing subtitle of “How the Left’s Outrage Industry Shuts Down Debate, Manipulates Voters, and Makes America Less Free (and Fun).”

While it is true that attempts to marginalize political opponents isn’t the exclusive domain of progressives, in the last couple of decades it is the political left which has perfected these tactics to an art form.  Perhaps it is because these latest efforts reflect a full manifestation of Saul Alinsky’s Rules for Radicals.  An important strategy from this famous anarchist is to avoid at all costs an honest debate over whether socialist policies actually work.

And it’s not just conservatives who are sounding the alarm.  Bill Maher, the left of center host of his own show on HBO has said that liberals are too easily offended and that an overly politically correct society actually breeds more hostility between the parties.  Jerry Seinfeld, lifelong Democratic and famous comic, has said that he doesn’t play college campuses anymore because students have been brainwashed into being offended at almost anything.

While political correctness is a national problem, it is much worse in California.  Indeed, for all the alleged “openness” of the California lifestyle, here are the three things about which you cannot possibly have a rational discussion with a liberal:  Global warming, immigration and traditional marriage.

Let’s just look at global warming.  How many times have you heard Al Gore, President Obama, Jerry Brown or Tom Steyer say “the debate is over?”  As I have advised college students on both the right and left numerous times, when someone says “the debate is over” that usually means the debate is just beginning. While there is substantial evidence (mostly based on computer modeling) that man’s activities might have an impact on the earth’s climate, there are simply too many ancillary questions and unknowns for anyone to say the “debate is over.”  Shockingly, even noted environmentalists including a co-founder of Greenpeace and Bjorn Lomberg, former head of the Environmental Assessment Institute in Copenhagen, have been savaged by the global warming alarmists for suggesting that the hype might be overstated.

On immigration, if one dares to raise the very legitimate issues of the costs to taxpayers that flow from unregulated immigration you are immediately branded as a racist.  Despite being far more open to legal immigration than others in America, I have personally felt the wrath of this unfounded accusation.

The progressives are not interested in hearing anything that deviates one iota from their rigid orthodoxy.  And they don’t want others to hear any contrary message either.  Somalian Ayaan Hirsi Ali was disinvited to speak at Brandies University because she dared speak out against Islamic extremism.  These are prime examples of the “heckler’s veto” even before a speech begins.  Other luminaries “disinvited” from commencement speeches due to left leaning pressure include International Monetary Fund Director Christine LaGarge and Condoleezza Rice.

And our final California example of shutting off debate is an embarrassing incident in the California Capitol when Rodger Hernandez, Chairman of the Assembly Labor and Employment Committee would not even allow the Republican Vice Chair, Matthew Harper speak on one of the most contentious and dangerous bills emanating from the California Legislature – Senate Bill 3, a huge increase in the state’s minimum wage.  Hernandez even went so far as to order the Sergeant at Arms to take away Harpers’ microphone.  Talk about “end of discussion!”

So how should we respond to this wave of political correctness run amok and efforts to limit debate?  First, realize it won’t be easy as the main stream media is rarely on our side.  Second, it is entirely fair to call out these tactics for what they are and challenge our adversaries to debate the issues honestly.  Third, appeal to the desire for truth.  Scripture tells us veritas vos liberabit — the truth will set you free. Or, as Andrew Breitbart said, “The truth isn’t mean. The truth is the truth.”

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayerorganization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights. Originally posted on HJTA.

Beyond the Perfect Drought: California’s Real Water Crisis

Shower head water droughtThe record-breaking drought in California is not chiefly the result of low precipitation. Three factors – rising temperatures, groundwater depletion, and a shrinking Colorado River – mean the most populous U.S. state will face decades of water shortages and must adapt.

The current drought afflicting California is indeed historic, but not because of the low precipitation totals. In fact, in terms of overall precipitation and spring snowpack, the past three years are not record-breakers, according to weather data for the past century. Similarly, paleoclimate studies show that the current drought is not exceptional given the natural variations in precipitation of the past seven centuries. Nor can it be confidently said that the current drought bears the unequivocal imprint of climate change.

It is also clear that this drought is exceptional and should be seen as an historical turning point. Indeed, California is moving into new — and worrisome — territory for three reasons: rising heat, which causes increased evaporation; the continuing depletion of groundwater supplies; and growing water shortages on the Colorado River, the main external source of water for Southern California.

A decade ago, I first wrote about California and the “perfect drought.” Now, unless bold steps are taken to deal with a growing water crisis, California may be facing a future of perfect droughts.

First, there is the heat. Although the current precipitation deficit cannot be attributed to global climate change, the record-breaking high temperatures of 2014 can be. These elevated temperatures produce increased evaporation from reservoirs and exacerbate irrigation demands. The commonly used Palmer Drought Severity Index combines both temperature and precipitation and in doing so shows that 2014 is indeed off the charts. The current drought in California might well be considered the harbinger of droughts to come. Evaporative losses fuel the crisis now being faced.

Climate models do not provide a consensus on the changes in precipitation that might occur in California over the 21st century. Moving forward, there may well be no significant increase or decrease in the average annual precipitation. However, the models do agree that temperatures will continue to rise. Water demands to meet evaporative losses will therefore increase significantly. There is also some evidence that the length and depth of droughts will increase in the later 21st century. As for high temperatures and persistence of extreme conditions, the current drought might well be considered the harbinger of droughts to come.

Second, increased reliance on groundwater has been an important mechanism by which California coped with past droughts. However, the groundwater resources of the state are displaying clear signs of unsustainability. Over the past 150 years, agricultural and domestic extraction has caused water table depths to fall by 100 or so feet in some instances, and the deep aquifer water level to decline by even greater depths in parts of the San Joaquin Valley, one of the most productive agricultural areas in the world. In some places the land surface itself has subsided by more than 20 feet. The current drought has led to increased demands on groundwater in regions such as the San Joaquin Valley, where more than 2,400 well permits were issued in 2013 as the drought hit home.

Analysis of such trends and new groundwater storage data collected by NASA’s GRACE satellite has led NASA hydrologist Jay Famiglietti to suggest that the collapse of the San Joaquin groundwater reserves may be only decades away. In 2014, more than 1,400 domestic water supply problems largely related to groundwater were reported in California, with more than half in the San Joaquin Valley. Going forward this century, the San Joaquin Valley is projected to experience high degrees of warming, and this will greatly increase agricultural water demands in the region. The strategy of drought relief through increased exploitation of groundwater here and elsewhere in the state has reached its limits.

The third concern is the Colorado River. The Colorado is the largest single source of water for Southern California, but it is primarily fed by precipitation from far-away sources in Wyoming, Utah, and Colorado. The Colorado water has served to mitigate the effects of local droughts. Each year, 16.5 million acre-feet of Colorado River water is apportioned to the states of the Colorado Basin and Mexico. California has been allotted the largest share of the river’s water, some 4.4 million acre-feet each year. Prior to 2004, California was able to lay claim to additional “surplus” waters that could total 1 million acre-feet or more of additional water annually.

Now, several challenges confront this potential source of drought relief. The original apportionment of 15 million acre-feet was devised in the 1920s based on an estimated annual discharge of 17 million acre-feet. Over the 20th century, however, the long-term average discharge of the river has only been 15 million acre-feet. The drought lifeline afforded by the Colorado River is further shrinking as the climate warms. Thus, there is a systemic over-allocation of the water, and in 2003 California agreed to wean itself down to no more than a 4.4 million acre-feet allocation.

Like most of the Southwest, the Colorado River basin has also experienced generally hot and arid conditions over the early 21st century. The flow of the Colorado River has declined and the water stored in its massive reservoir system has dropped precipitously. Lake Mead, the largest reservoir in the U.S., now stands at 37 percent of its maximum capacity.

The Bureau of Reclamation recently projected that by January 2017 the surface elevation of Lake Mead will have fallen to below 1,075 feet above sea level. This will invoke a federal water shortage declaration and a reduction in water appropriations to Nevada by 4.3 percent and Arizona by 11.4 percent. Although California with its senior rights will not take a cut, it is conceivable that there will be political and public pressure on California to do so. In the history of Lake Mead and the Colorado River management, there has never been a water shortage declaration.

Recent research by the Bureau of Reclamation estimates that future climate warming alone will lead to a 10 percent increase in evaporation in Lake Mead as the 21st century progresses. Like California’s groundwater, the Colorado River has been oversubscribed and the drought lifeline is further shrinking as the climate warms.

Ten years ago, my colleagues and I framed this situation as a perfect drought that affects local Southern California precipitation, extra-regional supplies from Northern California, and the external supplies from the Colorado River for periods greater than one or two years. What we are experiencing today is indeed a perfect drought. We will not be able to depend on groundwater or external water supplies to see us through future hot droughts.

Beyond that, we looked at Southern California’s perfect droughts as discrete events. Although, hydrologically, droughts are indeed discrete events, and the current one will come to a close sooner or later, this drought should focus our attention on what has changed in terms of the context in which these droughts occur. The rising temperatures will, year by year, increase the demands for water, particularly in our agricultural sector, which accounts for about 80 percent of the applied water in the state. Due to the ever-increasing rates of evaporation, each future drought will have a deeper bite than the previous one.

So, what is to be done? At the household level, we can continue to change our landscaping mix from lawns and other water-intensive plants to increased use of water-sipping native plants. At the municipal level, we can expand the use of recycled water and desalination, which will likely lead to higher water costs. Stormwater capture will also help on domestic and citywide scales.

But the big prize, of course, is agriculture. In many cases water-saving irrigation technologies have already been installed. Now, hard decisions must be made about the best crops to grow in a water-stressed environment. These options raise serious economic, rural environmental justice, and food security questions. Some gains can be realized by adding infrastructure for water capture, storage, and distribution. In some cases, though, these infrastructure strategies buck up against important environmental concerns or competing interests, such as the conflict in the Sacramento Delta between water demands of the San Joaquin Valley and Southern California, versus the water rights of local farmers and protection of endangered fish species.

No matter what we decide to do, we will not, as we have done in the past, be able to depend upon either groundwater or external water supplies to see us through these hot droughts of the future. Should Lake Mead fall below the turbine intakes and lowest outlets of Hoover Dam, at 895 feet in elevation — as some have predicted — the fact that California has senior water rights will be meaningless. With groundwater, we face an agricultural cataclysm if the aquifers in the San Joaquin and other parts of the state should fail.

We need to look at the situation today as representing Tomorrow’s Drought — a view into the hydrological future of California and the West. There is no question we will see similar climatological droughts over the next century. The question is: Will we have the foresight to learn all we can from the current drought and the will to put in place the changes in infrastructure, policy, and public attitudes needed to cope next time around? Whether it is dry again next winter or rains like mad, the hydrological clock is ticking toward an increasingly difficult 21st century. The time to tackle our long-term water challenges is right now.

(Glen MacDonald is the John Muir Memorial Chair in Geography and a Distinguished Professor at the University of California, Los Angeles. His research focuses on climatic and environmental change and its impacts on ecosystems and humans.  This article was first published in Yale Environment 360, a publication of the Yale School of Forestry & Environmental Studies.)

New Property Tax Increase Initiative Filed

property taxWhile discussion about amending Proposition 13 to reassess commercial property has heated up, especially with the introduction of SCA 5 by Senators Mitchell and Hancock, a different property tax increase measure was filed with the Attorney General’s office. “Lifting Children and Families Out of Poverty Act” is a 47-page detailed, complex plan to fund specific programs that are hoped to achieve the measure’s goal expressed in the title. Major funding for the plan is a surcharge on real property valued at over $3 million on the current tax roll.

The measure doesn’t make a distinction between commercial property and residential property. Once again there is proof that those looking for property tax increases have residential properties in their sites.

The measure would set up a number of segregated funds to achieve its goals.

Beginning in 2017-18 the measure proposes a .3% surcharge on assessed value between $3 million and $5 million; on property valued between $5 and $10 million the charge will be .6%; over $10 million the charge is scheduled at .8%. For some properties then, the base property tax will nearly double.

The surcharge is supposed to expire in 20 years. Where have we heard about temporary taxes before?

One of the authors of the measure is former Board of Equalization member Conway Collis.

How this tax increase proposal would affect other tax initiatives being discussed for next year’s ballot will surely be debated in different conferences rooms around Sacramento.

You can dive into the 47-page document here.

(Originally posted on Fox and Hounds Daily.)