Fortuna (Humboldt County): Why local governments are broke and coming after your $$

The people of Fortuna, in Humboldt County are somewhat lucky. They have a city council that does not like to raise taxes. Sadly, the same city council has no problem spending more than it takes it, cannot control its unions, special interests and programs.   Revenues have gone up 31% in ten years—but spending doubled that, going up 60%. Fortuna has a spending problem, not a revenue problem.

Now because they are out of control the city council wants to the people of this small rural community to pay for the excesses of government. If I were a resident, I would vote NO—and vote out of office all those that created this problem.

“Meanwhile, the costs of doing business continue to increase. As an example, Fortuna has seen general fund revenues increase 31 percent over the past decade while expenses have increased 60 percent. “Since 2003, costs for [Pacific Gas & Electric] increased by 58 percent, health insurance increased by 98 percent, vehicle fuel prices increased by 142 percent and [California Public Employee Retirement System] increased by over 640 percent,” City Manager Regan Candelario wrote in the city’s 2013-2014 budget.”

http://www.dreamstime.com/-image18514272

Why local governments are broke and coming after your money

By Thadeus Greenson, North Coast Journal, 8/14/14

 

Fortuna Mayor Doug Strehl hates taxes. So does Humboldt County Board of Supervisors Chair Rex Bohn. Strehl’s worked on Fortuna’s Main Street since he was 15 years old and has run Strehl’s Family Shoe and Repair for more than 30 years. A Humboldt County native, Bohn worked in private industry for 50 years before joining the board. Both men’s views on government finances probably lean more Tea Party than tax-and-spend. Yet they both recently voted to put tax measures before local voters in November, just one of many signs that local governments on the North Coast are at a crossroads.

Still battling the aftermath of the Great Recession, local governments have spent years tightening belts, shedding costs and tearing through savings accounts, many of them working to fend off the day when they would have to come back to the public, hat in hand. But that day is here. Four of Humboldt’s seven cities, as well as the county itself, will put tax measures before voters in November. Most say a tax bump is the only thing that will prevent large-scale service reductions, including fewer police on the street, fewer folks fixing local roads and less upkeep of public parks and facilities.

“As we’ve cut over the years, every department has taken a major hit and every department needs help — they’re all bleeding,” says Strehl. “The only light at the end of this tunnel is this measure.”

Some would say that tunnel extends all the way back to 1978, when California voters passed Proposition 13, capping property tax rates and shifting the balance of power between state and local governments. Prior to Proposition 13, local governments largely earned their revenue through property taxes while sales tax served as the state’s revenue bell cow. In the aftermath of Proposition 13, however, local governments — especially cities — have become both increasingly dependent on state funds and forced to look at other revenue sources, chiefly, sales taxes.

With many California cities heavily dependent on sales tax revenues to fund their services — Eureka, for example, gets almost two-thirds of its general fund revenue from sales taxes — the Great Recession hit local governments like a tsunami. When markets crashed in 2008, consumer confidence was shattered. People had less money to spend and what they did have, they increasingly saved and used to pay down debts. The result was less money trickling into local stores and restaurants and into the coffers of local government. Meanwhile, in the midst of a budget crisis of its own, the state launched a massive belt-tightening that included steeply decreased contributions to local governments.

Ryan Emenaker, a professor of political science at College of the Redwoods, says because sales tax revenues filter through the state, there’s a lag time between when you buy something at the store and when the local government gets its cut. So the full impacts of the recession in 2008 weren’t felt by local governments until 2009 or 2010. Then, Emenaker said, the first reaction of most local governments is to make do with what they have, even if it means dipping into their savings. That’s what’s happened on the North Coast.

In Fortuna, the city council cut spending in most departments but, not wanting to enact catastrophic cuts that would cripple services, the council also approved a staggering amount of deficit spending. The city went into 2011-2012 with a $10.5 million reserve, but will have spent that down to a projected $4.2 million at the close of this fiscal year. The Eureka City Council enacted four years of budget cuts through 2010-2011, when it approved the cutting of 12 police officer positions in the face of a structural budget deficit of $1.7 million. That year the council put a .5-cent sales tax measure on the ballot, which passed easily and is due to sunset in 2016. But it’s not only big cities that are feeling the pinch. Tiny Blue Lake has a structural deficit of $57,000, even after disbanding its police department in 2008, in part as a cost-cutting move. Rio Dell has a $100,000 structural deficit, even after the council downsized city staff by 30 percent in recent years.

And, while state coffers are looking rosier all the time as stock markets have rebounded, local governments continue to see stagnant sales tax receipts and increasing expenses. “Counties and cities rely on things that haven’t really improved: consumer confidence, consumer spending and property values,” Emenaker said. “They have no real options left. You can defer maintenance and not buy computers for a certain amount of time, but you can’t defer forever. You can ask people on the hefty end of the pay scale to retire. But, ultimately, you have to really start cutting those services where people are going to feel it, or you need to start generating more income.”

Meanwhile, the costs of doing business continue to increase. As an example, Fortuna has seen general fund revenues increase 31 percent over the past decade while expenses have increased 60 percent. “Since 2003, costs for [Pacific Gas & Electric] increased by 58 percent, health insurance increased by 98 percent, vehicle fuel prices increased by 142 percent and [California Public Employee Retirement System] increased by over 640 percent,” City Manager Regan Candelario wrote in the city’s 2013-2014 budget.

It’s that last line item that’s clamping down on local budgets throughout the state, says Michael Shires, an associate professor at Pepperdine University’s School of Public Policy who has written extensively about California’s tax structures. “The driving factor in all this is really pension obligations,” Shires says. “We have a bunch of commitments to spend money in ways we cannot afford.”

So, pinched from all sides, what’s a local government to do? In the case of Humboldt County and four of its cities the answer is voters: Are you willing to pay more to maintain services?

Ask most people and they’ll tell you they aren’t big fans of government. In fact, sitting in supervisors’ chambers just minutes before voting to put a tax measure before voters, Bohn declared that he hates government and hates taxes. But, Bohn clarified, he likes having streets without potholes to drive on and a sheriff’s office to call if the need arises.

This is a pretty typical outlook, according to Emenaker. “In general, people hate the government and taxes in the abstract, but they love specific programs,” he says. So when it comes to getting the citizenry to vote for a tax increase, Emenaker says the best strategy is to tell them specifically what’s on the chopping block. Some local entities seem to be taking heed.

Eureka — which is asking voters to extend a temporary .5-percent transaction and use tax passed in 2010 — is warning that losing the roughly $4 million in annual revenue would decimate the city’s public safety services. Even with the additional revenue, City Manager Greg Sparks says the city is facing significant challenges, noting staff recommended 10-percent reductions across the board and the council dipped into the city’s meager reserves this year. If voters turn down the extension in November, Sparks says police and fire services — which combine for about two-thirds of the city’s general fund spending — will be cut.

Police Chief Andy Mills is a bit more specific: The popular Problem Oriented Policing team would be gone, as would a pair of positions the Eureka Police Department has to deal with homeless and transient issues. “There are two types of policing: proactive and reactive,” Mills says, adding that proactive policing includes surveillance, warrant checks and background investigations. “Without (the temporary tax revenue) we’re reactive, barely able to keep up with calls for service.”

Emenaker says that, from a tactical standpoint, telling voters exactly what’s at stake is a good approach. In Rio Dell, City Manager Kyle Knopp says the city’s proposed 1-percent sales tax increase is projected to bring in $173,000 annually, enough to bridge the city’s $100,000 structural deficit and, hopefully, restore one of the city’s three cut police positions. But, he says, the tax is really about maintaining — not enhancing — services. “Our baseline service level is at serious risk,” he says. “This is a real crossroads for the city. To have to cut an additional $100,000-plus out of the budget means we’re going to have a real problem.”

Blue Lake — which, without much of a business district to generate sales tax revenue, is proposing a 4-percent utility users tax — is taking much the same approach, saying the entirety of its $38,000 in anticipated revenue will go to protect against additional cuts to the city’s parks and recreation, police, maintenance and public works departments. Fortuna, similarly, says the additional tax revenue would go toward protecting all city services. “Everyone talks a lot about public safety, which is very, very important,” Strehl says. “But there’s also other things that make a community safe. We can’t just single out one department.”

On the county level, frustrations over sheriff’s office coverage areas and response times mixed with the prospect of additional cuts in the face of a $1.2 million structural deficit provided the impetus for the tax measure.

It’s interesting to note, however, that as soon as the board began seriously moving forward with a proposed .5-percent sales tax increase, county department heads — including the Public Works director, the public defender and the Health and Human Services director — all addressed the board, talking about their departments’ needs and their roles in public safety. While a polling firm hired by the county found no significant change in levels of support for a .5-percent tax as opposed to a .75-percent tax, the board opted to put the .5-percent sales tax before voters, foregoing the additional $3 million the extra .25 percent was projected to bring in. That’s a decision the board of supervisors may come to regret, Emenaker says, adding that a push and pull over the increased revenue seems to be in the county’s future if the measure passes. “When you have to draw a little blood, best to draw more than you need and not have to come back for more,” he says.

When Bohn and his board voted to put a county-wide sales tax increase before voters in November, one can imagine the collective gasp that went up in city halls that had already approved similar tax measures. The quietly spoken fear is that — if faced with multiple tax increases on the same ballot — voters are more likely to vote them all down, either due to confusion or spite.

“It’s always a concern when something like this happens,” says Strehl, conceding that Fortuna voters will be asked to up their sales-tax rate 1 percent by the city and .5 percent by the county, which — combined with the state’s 7.5 percent — would bring the total rate to 9 percent in city limits. “We’re just hoping the people in Fortuna will understand why we need it, and probably why the county needs it too.”

In Eureka, voters will face three tax measures — the city’s .5-percent transaction and use tax extension, the county’s sales tax and a Eureka City Schools bond — and Sparks said each entity has a legitimate need. Still, he’s a bit worried. “The concern is that you’ll get voter fatigue when you have three separate tax measures,” he says.

Knopp says there was some “hesitation” in Rio Dell when the county opted to move forward with its tax measure, noting that not only had Rio Dell moved forward with a ballot measure well before the county but that “cities are much more dependent on sales tax revenues than the county,” which receives the bulk of county property taxes. But, Knopp stresses that he views the county as a partner, and that Rio Dell benefits from healthy county services. “Certainly, having a well-funded district attorney plays a role in the level of safety in Rio Dell, just as having jail capacity and having a probation department that follows up contribute to the overall health of the community.”

Emenaker says it behooves local cities and the county to make these points and to advocate for each other moving forward, despite an understandable temptation to push one’s own tax increase over that of another entity. “They really have to promote them and they have to be unified,” he says. “They have to be very consistent in explaining how these affect real programs that voters can identify with.”

So, in the months between now and November, voters can expect to hear and read lots about governmental services on the brink, about backlogs of road maintenance and police staffing shortfalls. And, ultimately, it will be up to the voters to decide whether they want to pony up to hold the line, or if they’re willing to get less in order to keep a bit more coin in their pockets. But one thing’s for sure, Emenaker says: It doesn’t hurt that two avowed tax-haters are out leading the charge for higher taxes in Humboldt County.

“When someone gives an argument that runs counter to what their bias is or should be, we’re often persuaded by that,” he says. “People let their guard down.”

What Comprises the 7.5 Percent California State Sales Tax?

3.9375 percent to the state general fund

.25 percent to pay off economic recovery bonds from 2004

.50 percent to support local criminal justice activities

.25 percent to support education

.50 percent to support local health and social services programs

1.0625 percent to a local revenue fund

.25 percent to county transportation funds

.75 percent to city and county operations

Source: California Board of Equalization

Meet the Measures

Humboldt County‘s Measure Z

What’s being proposed? A .5-percent sales tax that would be implemented countywide and sunset in 2020.

Why? The county faced a $2.7 million deficit in its 2014-2015 budget, including a $1.2 million structural deficit, meaning ongoing expenses are far outpacing ongoing revenue projections.

What if it passes? The tax is projected to bring in an additional $6 million in revenue to the county general fund to help pay for services. If passed, residents in the county’s unincorporated areas would see sales tax rates climb to 8 percent. Residents of local cities would see the .5-percent sales tax increase on top of the state’s 7.5-percent levy and any sales tax imposed by their city.

What if it doesn’t pass? The board of supervisors would be left to balance a $1.2 million structural deficit by cutting spending, and would likely be hard-pressed to find funds to increase sheriff’s office coverage and patrols, tackle a backlog of deferred road maintenance or increase county services in any way.

Blue Lake‘s Measure T

What’s being proposed? A 4-percent utility users tax that would be levied on all gas and electricity usage within city limits and would sunset in 2020. The measure includes an exemption for enrollees in Pacific Gas & Electric Co.’s CARE program, which offers subsidized rates for low-income customers.

Why? Facing ongoing annual expenses that are projected to outpace revenues by $57,000 a year, the city council says it has no other options to raise revenue.

What if it passes? The tax is projected to bring in about $38,000 annually, which would still leave the city spending $19,000 a year from its reserves to bring its budget into balance at current service levels.

What if it doesn’t pass? The city council will be left facing a $57,000 structural deficit and will consider cuts to law enforcement, parks and recreation, street maintenance and facilities upkeep services in order to bring the budget into balance.

Eureka‘s Measure Q

What’s being proposed? An extension of the city’s current .5-percent transaction and use tax. The current tax is slated to sunset in 2016 and the extension would extend that to 2021.

Why? Even with the roughly $4 million generated by the temporary tax, Eureka still faced a projected budget deficit when crafting its 2014-2015 budget, causing staff to recommend across-the-board 10-percent cuts to all city departments. In adopting its budget, the council allocated $200,000 from its already-depleted $1.2 million reserves to maintain police services.

What if it passes? The city will continue to receive the $4 million or so in projected annual revenue and consumers will continue to pay an 8.25-percent combined state and city sales tax within city limits. If the county’s sales tax also passes in November, folks shopping in Eureka would see their combined sales tax rate increase to 8.75 percent.

What if it doesn’t pass? Large cuts would likely be in order across all departments as the city would lose $4 million of its $30 million general fund revenue, a reduction of more than 13 percent.

Fortuna’s Measure V

What’s being proposed? A 1-percent sales tax to be implemented within city limits. The measure does not include a sunset date, but gives the Fortuna City Council the authority to end the tax at any time.

Why? The city faced a projected deficit of about $750,000 when crafting its 2014-2015 budget, which followed deficits of about $500,000 in each of the prior two fiscal years. Since the 2010-2011 fiscal year, the city has spent about $6 million from its reserve funds to bring budgets into balance, a practice that is not sustainable.

What if it passes? The measure is projected to bring in about $1.2 million annually, which would allow the city to bridge its structural deficit and maintain current levels of city services. Consumers in the city would see their combined state and city sales tax rate jump to 8.5 percent. If the county tax measure passes as well, Fortuna shoppers would face a sales tax rate of 9 percent.

What if it doesn’t pass? The city council would be left facing a structural deficit of more than $500,000 and would have to reduce staff and services or continue depleting the city’s reserve funds to balance its budget.

Rio Dell’s Measure U

What’s being proposed? A 1-percent sales tax to be implemented within city limits until 2020.

Why? Facing a deficit, the Rio Dell City Council spent $140,000 in reserve funds to balance its 2014-2015 budget and faces ongoing expenses that outpace revenue projections by $100,000 annually. This is after the council has cut city staff by 30 percent in recent years to reduce ongoing expenses.

What if it passes? The city is projecting the tax will bring in about $173,000 in annual revenues, enough to bridge the structural deficit, rebuild the city’s reserves and possibly allow the city to reinvest in its police and public works departments. Consumers in Rio Dell would see their combined state and sales tax rates increase to 8.5 percent. If the county tax measure passes as well, Rio Dell shoppers would face a sales tax rate of 9 percent.

What if it doesn’t pass? The city council would be left to find another way to bridge its $100,000 structural deficit, which would likely include either more cuts to services or a further depletion of the city’s reserve funds.

Where does your property tax dollar go?

63.8 percent to local schools

16.7 percent to the county general fund

7.5 percent to local special districts

5.1 percent to redevelopment*

2.9 percent to local cities

2.2 percent to county roads

1.8 percent to the county library

*Redevelopment agencies in California have been dissolved but this money is allocated to pay down debts accrued by the agencies prior to their dissolution.

Source: Humboldt County

 

Atwater, CA: Cut Council Meetings and Commissions to Save $$

Thanks to heavy debt, pension contributions exploding, unions demanding more, special interests and environmental regulations pushing firms out of State, local government is in trouble. Stockton, Vallejo and San Bernardino are bankrupt. If a sales tax increase is not approved in November by the voters of Adelanto, that city will go belly up as well. The dominoes are falling and people are being harmed.

The Merced County town of Atwater is being very creative—importantly it is doing what it should have done years ago and other towns need to do the same.

“The City of Atwater may soon cut its city council meetings down to once a month, at least temporarily.

On Monday, the city council approved a first reading of an ordinance which would do just that. The ordinance would also combine three city commissions (Parks and Recreation, Planning, and Traffic) into a single “super” commission.”

Alameda City Hall, Santa Clara Ave and Oak St, Alameda, CA

Atwater Considers Combining Commissions and Reducing City Council Meetings to One Per Month

California City News, 8/14/14

The City of Atwater may soon cut its city council meetings down to once a month, at least temporarily.

On Monday, the city council approved a first reading of an ordinance which would do just that. The ordinance would also combine three city commissions (Parks and Recreation, Planning, and Traffic) into a single “super” commission.

Monday’s vote was 3 to 2 with Council Members Joe and Jeff Rivero voting against the proposal.

“The citizens of Atwater are having less opportunities to have their voices heard,” Rivero said, likening the idea to that of a “dictatorship.”

Jim Murphy, chairman of the Parks and Recreation Commission, also expressed outrage. His sentiments were echoed by Planning Commissioner Fred Warchol who called the plan a “slap in the face.”

Proponents of the ordinance, however, say it could save the city $21,000 in staffing expenses, noting that the city is badly in need of cash. Since 2008, Atwater has cut its workforce by 42 percent, reducing the number of positions from 134 to 78 with furloughs every Friday.

A second reading and possible adoption of the ordinance will take place on August 26. If passed, it will take 30 days to go into effect. According to City Manager Frank Pietro, the monthly meeting reduction would only be temporary until April 30, 2015.

Read more about the proposed ordinance here. http://www.sacbee.com/2014/08/13/6627356/atwater-considers-holding-1-council.html

Proposed San Fran Minimum Wage Increase: Costs “ONLY” 15,270 Jobs

While most cities work hard to get their citizens employed, the leaders of San Fran have a ballot measure that ensures 15,270 people will be unemployed. This is a ballot measure to raise the minimum wage to $15 an hour. When government acts, it helps some and hurts others. Do you think the 15,270 are smart enough to know to vote NO on the measure—or maybe they prefer to not work and just pick up an unemployment check and watch Seinfeld reruns.

“That is the conclusion of a report authored by the city’s Office of Economic Analysis, which estimates that an hourly minimum wage increase will “reduce the city’s employment by approximately 15,270 private sector jobs by 2019… This represents approximately 2 percent of private employment in the city.”

price cost expensive money

Higher San Francisco minimum wage fattens workers’ wallets, cuts job growth, report says

San Francisco Mayor Ed Lee proposed the November ballot measure that would boost the city’s minimum wage to $15 per hour by 2018.

 

Eric Young, San Francisco Business Times, 8/14/14 

 

Most San Francisco minimum wage workers will pocket hundreds more dollars weekly if voters approve a pay hike on this November’s ballot, but that pay boost will be a drag on the city’s overall job growth.

That is the conclusion of a report authored by the city’s Office of Economic Analysis, which estimates that an hourly minimum wage increase will “reduce the city’s employment by approximately 15,270 private sector jobs by 2019… This represents approximately 2 percent of private employment in the city.”

This November voters will decide whether to have incremental hikes to San Francisco’s minimum wage — currently at $10.74 — to $15 by July 2018. That is an increase of almost 40 percent.

Some 60,000 workers in San Francisco, or about 11 percent of the city workforce, earn minimum wage. Those employees are heavily concentrated in restaurants and bars, retail, manufacturing and personal and maintenance and repair services.

Whether or not the minimum wage hike is approved, the Office of Economic Analysis said, the city’s employment base is expected to grow, provided a recession does not take hold. But the study says the minimum wage hike will deter employers from adding as many jobs as they otherwise would have.

“The benefits (of the minimum wage hike) is that minimum wage workers will see significant earning increases, but the downside is slower job growth,” said Ted Egan, the city’s top economist, who prepared the study with principal economist Asim Khan.

Their report laid out the estimated increased earnings that an average San Francisco worker would get:

  • Food services industry: additional $125 weekly
  • Retail: additional $185 weekly
  • Social assistance: additional $75 weekly
  • Personal services industry: additional $135 weekly
  • Manufacturing: additional $197 weekly

Proponents of the minimum wage initiative say it is necessary to help low paid workers keep pace with San Francisco’s increasingly expensive rents and overall cost of living. Plus, they argue, if lower paid workers have more income, that will raise spending levels and employment tied to consumer expenditures to the benefit of all.

Opponents have said the raise will mean less job creation and increased pressure on profit margins, causing a pull back in company spending, which is also a driver for the economy.

 

SB967: NO Sex On California College Campuses Without WRITTEN Agreement! Seriously

Any wonder California is laughed at by the rest of the nation and comedians have an endless supply of “look how silly California can be” jokes? Democrats have a bill that passed the Senate is now in the Assembly that would, “The bill, which is based on guidance from the Obama administration, requires an “affirmative consent standard” that school administrators would use to determine whether a sexual assault has occurred. The standard would define every sexual encounter as an “an affirmative, unambiguous and conscious decision” by everyone involved.”

The only way you can prove you have “affirmative approval” is by having a written agreement to have sex. Probably need to have it notarized as well. This guarantees attorneys lots of defendants. Imagine women being charged with rape—because they did not have written permission to have sex rom the man. Think of the revenge that will be brought on campuses. Of course, this originally comes from the Obama administration.

Maybe this is really an Obama/Democrat program to stop unwanted pregnancies and STD’s?

220px-Toilets_unisex.svg_

California Is About To Pass A Bizarre Law Making Sex A Legalistic Nightmare For College Males

Eric Owens, Daily Caller, 8/13/14

California lawmakers are poised to enact a regulation requiring every college and university that receives public funding to define consensual sex in a way that attempts to micro-manage everyone’s sexual affairs.

The first-in-the-nation legislation already passed California’s state Senate by a vote of 27-4 in May, The Associated Press reports. If the bill passes the assembly this month, it will then go to the desk of Gov. Jerry Brown.

The bill, which is based on guidance from the Obama administration, requires an “affirmative consent standard” that school administrators would use to determine whether a sexual assault has occurred. The standard would define every sexual encounter as an “an affirmative, unambiguous and conscious decision” by everyone involved.

Under the law, a person who communicates nothing would not consent to sex. A person who is asleep or drugged cannot consent.

At the same time, communication of consent can be vague and muddled — a nod of the head, say, or perhaps some kind of lean-in movement.

The bill says consensual make-out sessions leading to sex must be “ongoing” and “can be revoked at any time.”

“[I]f there is confusion as to whether a person has consented or continues to consent to sexual activity, it is essential that the participants stop the activity until the confusion can be clearly resolved,” the legislation declares.

It’s not clear what standard of evidence school administrators would use to determine who is telling the truth in a he-said-she-said (or he-said-he-said, or she-said-she-said, or he-said-they-said) situation.

It’s also not clear why California’s state politicians believe that college bureaucrats instead of police investigators, district attorneys, judges and juries should determine when the brutal and very serious felony that is rape has occurred.

Whatever the case, critics of the bill say it’s a recipe for disaster.

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The editors of the Los Angeles Times condemned the proposed new law as unreasonable and likely unenforceable, the AP notes.

“It seems extremely difficult and extraordinarily intrusive to micromanage sex so closely as to tell young people what steps they must take in the privacy of their own dorm rooms,” the Times editors opined.

Another critic, Ada Meloy, general counsel of the American Council on Education, observed that many of the cases likely to arise under the new regulation will be highly ambiguous.

“Frequently these cases involve two individuals, both of whom maybe were under the influence of alcohol or drugs, and it can be very tricky to ascertain whether consent was obtained,” Meloy told The Associated Press.

John Banzhaf, a public interest law professor at George Washington University who defended three Duke lacrosse players charge with rape, has suggested that college students facing rape accusations already have fewer rights than immigrants who illegally cross the border into the United States.

In an interview with Campus Reform, Banzhaf said that American colleges and universities have discarded the “very high standard of proof” — “beyond a reasonable doubt” — which government attorneys must meet to convict accused rapists. He noted that this trend is particularly apparent “in cases of date rape.”

In the place of the “beyond a reasonable doubt” standard, many colleges have instituted a “preponderance of evidence” standard, which basically means just a 50.01 percent certainty.

“Rape is a crime and colleges shouldn’t be involved at all,” Banzhaf told Campus Reform.
 

Congrats to Los Angeles Democrats: UCLA Study Shows LA LEAST Affordable City in Nation!

In a contest for being the most expensive city in the nation, San Fran is in the hunt—but Los Angeles takes the flag. But why is LA so expensive for renters? UCLA blames it on the cheap taxpayers not willing to lower rents by government fiat and spend tax dollars to subsidize housing for the poor. If only the middle class taxed themselves more and their paychecks redistributed to the poor, living in LA would be cheaper.http://www.dreamstime.com/-image19890499

A better idea is to end wasteful government programs, end the union monopoly owning government and create real jobs by not killing them off in the name of environmentalism. It is government policies that kill the economy and jobs, hence costs go up.

“The problem isn’t vacancy. There was a lower vacancy rate in 1970 (3.9 percent) than there has been recently (5.1 percent). So what explains L.A.’s increasing rents? The study identifies two main culprits:

Los Angeles has a lower median household income than comparable cities such as New York or San Francisco but only a small difference in median rents. At the same time, Los Angeles has relatively fewer publicly subsidized units and weaker rent control. This is particularly true in comparison to New York. The Los Angeles section 8 voucher program waiting list has been closed for almost a decade. Affordable housing production and preservation also slowed with the decline in state and federal funding.”

LA rent: New UCLA study confirms LA is least affordable city in US

Ben Bergman, scpr,8/13/14

A new UCLA study confirms that Los Angeles is now the least affordable rental market in the country, based on the portion of a renters’ income that goes to pay rent.

The study from UCLA’s Ziman Center for Real Estate shows that the average renter in Los Angeles, which has the highest percentage of renters in the country, devotes 47 percent of his or her paycheck to rent. (You can read the full study at the end of this post.)

It’s the latest depressing news about L.A.’s rental market, and it comes with a twist: affordability is not a new post-recession problem, but one that has been getting worse for decades.

“Our studies show a severe housing burden among poor renters has existed since 1970,” said Paul Ong, professor of urban planning, social welfare and Asian-American studies, who co-wrote the study, in a statement.

“During periods of increasing inequality, the burden has grown even more severe. Vacancy rates have risen only slightly — even dipping at times when the housing burden has increased,” Ong said. “And renters are paying more for the same quality housing, suggesting that neither market forces nor changing housing quality fully explain the increasing rents.”

The problem isn’t vacancy. There was a lower vacancy rate in 1970 (3.9 percent) than there has been recently (5.1 percent). So what explains L.A.’s increasing rents? The study identifies two main culprits:

Los Angeles has a lower median household income than comparable cities such as New York or San Francisco but only a small difference in median rents. At the same time, Los Angeles has relatively fewer publicly subsidized units and weaker rent control. This is particularly true in comparison to New York. The Los Angeles section 8 voucher program waiting list has been closed for almost a decade. Affordable housing production and preservation also slowed with the decline in state and federal funding.

According to the Los Angeles Department of City Planning Housing Needs Assessment, the city needs to produce roughly 5,300 units per year that are affordable to moderate-income households or below (Los Angeles Department of City Planning, 2013). Los Angeles has instead averaged roughly 1,100 units per year since 2006. Since 2000, 143,000 rental units that had been affordable to those making less than $44,000 a year became unaffordable.

The study notes that high-end apartment construction is “booming,” something KPCC wrote about recently.

It also finds that affordability has gone from bad to worse for L.A.’s poorest renters, with more than three-quarters of them severely burdened by rent in 2009-2011. Middle income renters hardly fared much better, with half considered cost-burdened in L.A., compared to a third of U.S. middle-class renters overall.

For high-income renters, though, there was a different pattern, according to the study. Fewer of them are cost burdened in L.A. than are in the U.S. as a whole.

 

 

More Evidence California Agriculture in Deep Trouble

We know that California production of cotton and wheat is down over 50% each this past year. The rice crop has been killed. All because of the water policy, NOT because of the drought. California has not built a new dam or water storage facility since Ronald Reagan was Governor. Jerry Brown in 1975 stopped the creation of new dams and freeways—today we see the disaster of that policy.

Now we find the raisin and olive crop is down as well. That means jobs are down, revenues for communities are down, value of farm land is down—so property taxes will go down. California has a $340 billion debt and a real unemployment rate of over 15%–we are in a Depression.

Corn Field

 

Raisin and olive production drops in California

Central Valley Business Times,8/13/14

 

•  Raisin harvest could be down 13 percent from 2013

•  Table olive harvest may be 45 percent under last year
There’s a new wrinkle to California’s raisin industry and it might not be overly welcome: The harvest is expected to be well under last year’s.

The California raisin-type variety grape forecast is for 1.95 million tons, down 13 percent from the 2013 final production, according to the latest objective measurement survey conducted by the National Agricultural Statistics Service.

Bunches per vine totaled 36.5, compared to last year’s record bunch count of 47.7. Acreage of bearing age is 200,000.

The 2014 California raisin-type grape crop has struggled with lack of water with some of the vineyards hit by hail in the spring during bloom.

Crop development is ahead of last year, which was already an early year.

Even grimmer estimates are greeting the state’s olive growers.

The 2014 California table olive forecast is 50,000 tons, down 45 percent from last year’s crop of 91,000 tons, according to a survey conducted by the USDA’s National Agricultural Statistics Service.

Bearing acreage is estimated at 23,000 for a yield of 2.17 tons per acre.

The Manzanillo production forecast is 41,000 tons and the Sevillano production forecast is 7,500 tons. Other varieties are expected to total 1,500 tons.

The California table olive crop is down due to a variety of setbacks after last year’s harvest, including a hard freeze in December, another freeze and wind during bloom, and the lack of water to allow the crop to fully produce, NASS says.

Some growers are not even sure they will bother to harvest what they have due to lack of sufficient production or the lack of labor. The southern growing areas in particular have been impacted by the drought.

 

Great News: As the Court Budget is Cut—So Are the Lawsuits Filed!

Thanks to the lack of money given the courts, they have had to cut back the number of courts and days the courthouse is opened. Delays are massive and finally the people get a positive results—the number of lawsuits in California have gone down 25% in five years. This allows adults to solve issues without attorney or lawsuits. The economy savings are enormous, the emotional turmoil is less.

At the same time the cost of filing a suit and other documents have gone up. This is causing the professional in the court system to worry if they will be needed in the future.

“The trend in court filings is worrisome,” Justice Douglas Miller, chairman of the Judicial Council of California’s executive and planning committee, said in a news release.

The trend coincides with and increase in court filing fees and closure of courthouses or cutbacks in hours as a result of state budget cuts, he said.”

judge justice court

 

Court budget cuts blamed for drop in cases filed

While most types of criminal case filings are up, most civil case types are down — suggesting that litigants, frustrated by court delays, are either pursuing alternative dispute resolution or dropping grievances altogether.

 

Kathy Robertson, Sacramento Business Journal, 8/13/14

California court filings dropped 9 percent statewide last year — and they’re down almost 25 percent from five years ago, according to new data released by the state courts system.

The same trend is showing up locally. Filings dropped 7 percent in Sacramento County last year; they’ve decreased 16 percent over the last five years.

The reason: state budget cuts that have hiked fees and reduced access to the court system, lawyers and judges say.

While most types of criminal case filings are up, most civil case types are down — suggesting that litigants, frustrated by court delays, are either pursuing alternative dispute resolution or dropping grievances altogether.

“The trend in court filings is worrisome,” Justice Douglas Miller, chairman of the Judicial Council of California’s executive and planning committee, said in a news release.

The trend coincides with and increase in court filing fees and closure of courthouses or cutbacks in hours as a result of state budget cuts, he said.

Statewide, there were 7.7 million case filings in fiscal year 2012-13, down from 8.5 million in 2011-12 and 10.3 million in 2008-09.

Case filings in Sacramento County dropped to 352,324 in 2012-13 from 380,0202 the year before and 417,150 five years ago. Filings in Placer, El Dorado and Yolo counties also declined.

Some of the decline is due to small claims and infractions, but the kind of civil actions filed by business owners are down, too. At the same time, complex cases — including felonies, probate, mental health and dependency cases — and certain civil cases concerned with personal injury, property damage and wrongful death have increased.

“It’s telling that business is staying away,” said B.J. Susich, president of the Sacramento County Bar Association. “(Business owners) could be going to alternative dispute resolution — or, which happens a lot — not pursing claims because they perceive the court system as too costly and too time consuming.”

Earlier this month, Susich and the county bar association complained to Sacramento Superior Court that new fees for online access to court documents hinder access to justice.

Read the court statistics report.

 

What Recovery? Cisco plans 6,000 layoffs in restructuring plan

Looks like the business community already knows that the near future is not a good one for the economy. Cisco is already planning to cut 8% of its workforce, 6,000 people next year. This is the first of several major announcements for the continuation of the California and national recession. Remember, we just found out that during the Obama Administration wages went DOWN 23%. That is proof that most of the jobs “created” were really part time low pay positions.

With gas taxes going up dramatically on January 1, 2015 in California, the State continues to take $6 billion a year in Prop.30slush funds, Obamacare killing full time jobs, we should expect many more such announcements. Oh, and as minimum wages go up based on politics not experience or productivity, expect more machines in fast food joints and fewer humans.

Obama Jobs Tour

 

Cisco plans 6,000 layoffs in restructuring plan

Sarah Drake, San Fran Business Journal, 8/13/14

Cisco Systems Inc. will cut 6,000 jobs, or 8 percent of its workforce, as part of a restructuring plan.

The San Jose-based company didn’t specify which offices and departments will be affected by the cuts but said the restructuring will affect “several areas of our business.” The company said it will make the restructuring actions in 2015.

“These actions are focused on investing in growth, innovation and talent, while managing costs and driving efficiencies. We expect to re-invest substantially all of the cost savings from the restructuring actions in our key growth areas such as data center, software, security, cloud, and others,” CEO John Chambers said on an earnings call.

For the fourth quarter ended July 26, Cisco reported stronger earnings and revenue than analysts were expecting and a smaller-than-expected drop in sales.

The company posted a slight drop in revenue to $12.36 billion from $12.42 billion a year ago, and earnings of 55 cents per share, an increase from 52 cents a share last year. Wall Street expected earnings to increase 1 percent to 53 cents per share and forecast revenue to fall 2 percent to $12.14 billion, according to Thomson Reuters estimates.

Product sales revenue hit $9.53 billion, exceeding analysts expectations of $9.34 billion. Cisco doled out a cash dividend during the quarter of 19 cents per share and repurchased about 61 million shares of common stock.

Read through the entire earnings press release here.

 

HHS Spends $750,000 On a Healthy Eating Video Game, But We Have A Better Idea

For tens of thousands of years parents have been feeding their children. Mothers and Fathers provided the milk, fruits, vegetables, solid food when the baby was ready etc. Now we find out that Michelle and Barack Obama know parents are as dumb as a rock and have no idea how to feed children. So they took $750,000 of tax money and created a video game! Yup, a video game—so parents can use their smartphones and tablets to learn to give milk to babies.

The next time government says it needs more money tell them to create a video game on how to create jobs instead. Here in governmentese is what the money was flushed down the toilet for:

“Video games, therefore, offer a compelling intervention mechanism for delivering parenting skill training. Games appear most engaging when they involve a storyline (also called a “narrative”). Narrative is a primary form of human communication and has had significant impact on cognition, affect, and health behavior.”

Photo Courtesy of newfilm.dk, Flickr.

Photo Courtesy of newfilm.dk, Flickr.

HHS Spends $750,000 On a Healthy Eating Video Game, But We Have A Better Idea

By Michael Hausam, IJR, 8/13/14

Now that all the pressing problems of the country have been neatly cleaned up and put away, the Department of Health and Human Services has given Houston gaming company Archimage  $747,891 to create a video game to help parents learn how to properly teach their children to eat vegetables.

A portion of the description from the National Institutes of Health web site:

Parents are important influencers on the dietary intake of young children but they commonly report difficulty getting their child to eat vegetables. Food “parenting practices” identify procedures parents implement to maximize the likelihood their child will consume a healthy diet.*

Some parents require training to use effective food parenting practices, and training through behavioral interventions has been shown effective. Video games are a pervasive and persuasive form of mass communication. Providing engaging experiences that capture and focus a player’s attention, video games enable theory-based behavior change to be delivered for maximal effect. Simulations of real world experiences in low risk environments with feedback have proven an effective behavior training procedure.*

Video games, therefore, offer a compelling intervention mechanism for delivering parenting skill training. Games appear most engaging when they involve a storyline (also called a “narrative”). Narrative is a primary form of human communication and has had significant impact on cognition, affect, and health behavior.

In other words, parents don’t naturally know how to put food in their children’s mouths and so keeping them even more focused on their smart phone is the answer to solving the age-old conundrum. And if in the process we can fleece the taxpayer out of a cool 3 quarters of a mil, all the better.

A quick click to Archimage’s website shows a host of articles on the subject of healthy eating. The most current being published February 25, 2011. The “Latest and Greatest” game they have is from March 11, 2010 and appears as if it was the result of a 4th grade computer-programming semester. On the other hand, the copyright for the site does extend through 2014, so not everything they’re doing is ancient history, as least as far as legal compliance goes.

Back here in the current day, the details on the NIH site show that in the last 2 years almost $17 million on children’s food projects. This includes another $583,509 to the same company. Money well-spent, we’d hazard to guess.

After a long and harrowing all-hands-on-deck staff meeting, we at IJR came up with an idea we’ll propose at no cost to anyone. Simply do what parents have done since the beginning of time – sternly say “You’re not getting up from the table until all of those vegetables on your plate are finished.”

You’re welcome.

 

Ring: Los Angeles Police Average Total Compensation $157,151 Per Year

Cops put their lives on the line every time they put on a uniform or wear the badge. They are in a profession that demands courage and the willingness to get into a fight, with fists or with guns. Every time they stop a motorist for a DUI or a speeding ticket, they are in jeopardy. Now we have many citizens carrying secret videos to record any encounter with the police—or any police encounter with other citizens. It is a dangerous job and it is physically, emotionally and possibly economically draining.

Yet, the police in Los Angeles are very well paid. A deal was struck just yesterday to bring the starting pay of a Los Angeles police officer to $57,000. Not many jobs pay that after twenty years. But is it too much? The pension system for LA police and fire is combined—and that is the problem. It has a $3 billion unfunded liability—that the taxpayers are on the line for—the city has a $4 billion budget, this would wipe out the city.

The official unfunded liability for LAFPP is $2.97 billion. At a discount rate of 7.75%, just a minimal interest only payment would be $230 million. This means that during FYE 6-30-2013, the LAFPP received an unfunded contribution from the employer that was $101 million less than the amount required just to pay the interest! The fund necessarily incurred negative amortization. In that context, 100% of that unfunded contribution belongs allocated to the active employees as part of their total compensation, because at that rate, a generation from now, these unfunded contributions will continue unabated to shore up the system they will then benefit from as retirees.”

440px-LAPD_officers

 

Los Angeles Police Average Total Compensation $157,151 Per Year
By Ed Ring, Executive Director, California Policy Center, 8/13/14

Turns out the Los Angeles Fire and Police Pension system return rate was 17.3 percent for 2013-2014, and other public pension funds reported similar double-digit returns and five-year returns exceeding their assumed rates. 
– LAPPL Board of Directors on 08/07/2014, in their post “Misuse of statistics behind erroneous LA police officer salary claims.”

The above quote was made in response to our recent article “How Much Do Los Angeles Police Officers Make?” that analyzed total compensation for LAPD officers. The substance of their overall response was to challenge two assumptions made in that editorial, (1) that the annual rate-of-return projection of 7.75% used by the LAFPP (Los Angeles Fire & Police Pensions system) is too optimistic, and (2) that the employer’s “unfunded contribution” – that annual sum paid to LAFPP by the City of Los Angeles towards reducing the plan’s unfunded liability – must be considered part of an officer’s annual total compensation. Only the 2nd of these challenges, by the way, might indicate any downward impact on our average total compensation estimate of $157,151 per year.

This article will examine and defend both of these assumptions, starting with our assertion that a 7.75% rate-of-return projection is too optimistic. How much a pension fund can earn each year, on average, over the long-term, is a topic of intense expert debate. The historical performance of the LAFPP shows that as of 6-30-2013 their one year return was 13.01%, but the five year average return through that date was only 5.05%. If you go back ten years the annual average was 7.66%. But as investment professionals always remind us, past performance is not an indicator of future performance. The global economy is in the terminal phases of a debt binge that began back in the 1980′s; we’re in uncharted territory; nobody knows how investments will perform as this debt unwinds. What we do know is that throughout the industrialized world the population is aging – as a percent of total population, we have twice as many people selling their investments to fund their retirements as a generation ago. These twin phenomena, debt and demographics, suggest investment performances from now on face unprecedented headwinds. To debate this point is not to “misuse statistics.” To ignore this debate is intellectually dishonest. We are at the top of a bull market and LAFPP is only 83% funded. If the long-term average annual earnings projections aren’t overly optimistic, when you’re at the top of a market there should be a surplus in the pension fund.

Ultimately, if the LAPPL Board of Directors are so confident that a 7.75% rate-of-return can be sustained over the next 20-30 years, then they should support building triggers into the benefit formulas, allowing them to be lowered if and when earnings do not meet projections. Here is a summary of proposals to do just that: “The Case for Adjustable Defined Benefits,” CPC, July 2014. The sooner they adopt options like these, the less likely their entire defined benefit system will eventually catastrophically implode.

Which brings us to the unfunded liability, and why employer payments against this unfunded liability belong included in the total compensation of employees.

The LAPPL argument appears partly valid when they state “unfunded liabilities include pension liabilities of already retired and deferred plan members, not just active officers.” That’s true – but the problem with that reasoning is this unfunded liability is not being paid down. This means the payment towards the unfunded liability – to the extent it is not actually reducing the amount owed – is a permanent annual payment required to financially sustain the pension fund. If that is true, then currently active employees will benefit when they retire from the employer’s ongoing unfunded contribution that will, at that point, be allocated to those still active employees. Only if the unfunded liability is being paid down can you begin to make the argument that all of it does not belong included in total compensation for active employees.

Basic accounting concepts support this. If the unfunded liability is not being reduced, then the entire employer’s payment towards the unfunded liability is additional deferred compensation towards their future pension benefits. So how much of an unfunded payment is being made by the City of Los Angeles into the LAFPP? Is it reducing the balance owed?

Reviewing the most recent publicly available statements, the City of Los Angeles, Fire and Police Pension System – Financial Statements, 6-30-2013, on page 19 there is a discussion of the allocation of employer pension contributions. In that fiscal year, the employer made a $246 million “normal contribution” and a $129 million “unfunded contribution.”

The official unfunded liability for LAFPP is $2.97 billion. At a discount rate of 7.75%, just a minimal interest only payment would be $230 million. This means that during FYE 6-30-2013, the LAFPP received an unfunded contribution from the employer that was $101 million less than the amount required just to pay the interest! The fund necessarily incurred negative amortization. In that context, 100% of that unfunded contribution belongs allocated to the active employees as part of their total compensation, because at that rate, a generation from now, these unfunded contributions will continue unabated to shore up the system they will then benefit from as retirees.

For these reasons, our organization stands behind the earlier estimate of total compensation for Los Angeles police officers of $157,151 per year. The debate over whether or not any of the unfunded contribution should not be allocated to individual officers as part of their compensation is moot until the amount of the employer’s unfunded contribution, at the very least, is sufficient to avoid negative amortization.

When discussing what levels of total compensation are affordable and appropriate, especially in the case of police officers who risk their lives every day to protect the public, the best approach is to strive for accuracy and fairness, to always behave with intellectual honesty, and to engage in the debate with mutual respect. Unfortunately, the tone of the LAPPL rebuttal to our editorial deviates from these ideals. But that is their job. As unions, their rhetoric easily gravitates to an “us vs. them” mentality. This can have a corrupting effect on public servants, alienating them from private citizens.

The job of public sector unions, and they do it all too well, is to get as much for their members as they possibly can, utilizing the extraordinary leverage they have over public officials who they help elect, and then negotiate with. This tone, and this leverage, does not belong in government work. Public employee unions should be illegal, and can be replaced by voluntary associations that would still wield considerable influence. And public employees should look to the deeper causes of our shared middle class struggle; high taxes, excessive regulations, failed welfare and immigration policies, and inordinate restrictions on land and energy development.

*   *   *

Ed Ring is the executive director of the California Policy Center.

REFERENCES

The quantitative work for this article and the preceding one is summarized on the Excel spreadsheet that can be downloaded by clicking on the link provided below. The CPC welcomes commentary and corrections, if any, and will acknowledge and if necessary retract any statements, calculations or estimates that are demonstrated to be inaccurate:
http://californiapolicycenter.org/wp-content/uploads/2014/08/Los-Angeles-Retirement-Fund-Analysis.xlsx

RELATED POSTS

How Much Do Los Angeles Police Officers Make?, August 5, 2014

The Case for Adjustable Defined Benefits, July 31, 2014

Two Tales of a City – How Detroit Transcended Ideology to Reform Pensions, July 22, 2014

Government Employee Unions – The Root Cause of California’s Challenges, June 3, 2014

Conservative Politicians and Public Safety Unions, May 13, 2014

Public Pension Solvency Requires Asset Bubbles, April 29, 2014

Evaluating Public Safety Pensions in California, April 25, 2014

San Jose’s Public Safety Pensions – Reduce Now or Slash Later, April 15, 2014

How Much Does Professionalism Cost?, March 11, 2014

A Policy Agenda for Union Reformers Stuck Inside Unions, November 5, 2013

How Public Sector Unions Skew America’s Public Safety and National Security Agenda, June 18, 2013

Should Police and Firefighters be Exempted from Union Reforms?, March 12, 2013

Bipartisan Solutions For California, February 25, 2013