California: Time for a Major Change in Course

Governor Jerry Brown, California Attorney General Xavier Becerra, legislative and other government officials are fixated on battling the new administration in Washington with almost total disregard for California’s major problems and unmet needs. Failure to address these pressing problems threatens the viability of a state whose status is rapidly being transformed from “golden” to “tarnished.”

To help the political class refocus on the important, here is a list of the most exigent problems accompanied by modest solutions, as compiled by a couple of veteran taxpayer advocates who speak with, and hear from, thousands of California taxpayers.

  • car highway roadRoads & Highways – Just about any road trip one drives on in California confirms that we have gone from a world leader in highway capacity and quality to barely a third world contender. Major changes are in order. Our gasoline tax must be dedicated to roads and highways alone, not to other general fund uses like paying off state general obligation bonds, as is now the practice. Also, Senator John Moorlach’s demands to reform Caltrans should be a top priority. California spends 4.7 times as much per mile of state highway than the national average, according to the Competitive Enterprise Institute, and a 2014 government report concluded the transportation agency was over-staffed by 3,500 positions. Additionally, we should end the practice of requiring “prevailing wages” on public works projects, which are estimated to add up to 20 percent on every road and other public improvement.
  • Energy Costs – Gasoline formulation requirements, “cap and trade” and other responses to climate change must be revisited with demonstrable science and hard-headed realism to help low and middle income Californians who struggle with the costs of transportation and household energy. This is not climate change denial, but rather a recognition that it is patently unfair to burden the citizens of one state with the entirety of a global problem.
  • Business Regulations and Lawsuit Abuse – Manufacturing restrictions, wage and salary rules, workers’ compensation standards, frivolous lawsuits and “sue and settle” standards have driven the aerospace and most other manufacturing industries out of California. Time for tort and regulatory reform to establish a business-friendly climate that will encourage refugees to return and lure others to relocate here. Note: The Nestle Corporation has just announced it is moving its U.S. headquarters from Glendale to Rosslyn, Virginia taking hundreds of high paying jobs with them.
  • Land Development and Housing Costs – The mid ‘70s pioneering California Environmental Quality Act has created a nightmare for those seeking affordable, conveniently located housing, workplaces and shopping centers. It has been used as a weapon by environmentalists, competitors, “NIMBYs” and labor organizations to limit – and dramatically drive up the cost of homes, apartments and other needed facilities. Fortunately, despite the best efforts of some in Sacramento, Proposition 13 remains on the job protecting homeowners from runaway property taxes that could force them from their homes.
  • Public Transit – Gov. Brown’s “Bullet Train to Nowhere” is in a death spiral due to lack of public support, refusal of the federal government and the private sector to provide additional funds, and out of control costs due to mismanagement, malfeasance and insurmountable engineering hurdles. But fixed route/fixed rail transit remains part of the liberal social planners’ mantra. Other than in highly congested urban areas, public transit is unjustifiable in terms of both capital and operating costs. With the advent of Lyft, Uber, self-driving cars and even Elon Musk’s Hyperloop — that, within a few years, could move passengers at a faction of the cost of rail — private companies and entrepreneurs are offering answers to the mobility problem. This justifies placing renewed emphasis on fixing and expanding our highway system.
  • Education Improvements and Cost Control – “School choice” is the answer to improving K-12 student learning results. The political clout of the California Teachers Association and other teacher unions has blocked progress. Properly framed ballot initiatives may be the only realistic avenue to reform as we must stop the automatic and mindless Proposition 98 commitment of nearly half of general fund revenues – regardless of need – to K-12 and community colleges.
  • Public Employee Wages, Benefits and Pension Reforms – Public sector compensation costs for California, at both the state and local levels, are now clearly unsustainable. According to the Department of Labor, California state and local employees are the highest compensated in all 50 states. Pay, benefits and pensions of public employees have become disproportionate to their private sector counterparts who foot the bill. Adding to the approaching calamity is mismanagement – which has included criminal bribery – at CalPERS, the state’s largest public employee pension fund. Politically motivated investment strategies and fanciful predictions of return on those investments have left taxpayers on the hook for hundreds of billions of dollars in unfunded liability for current and future retirees. Consideration must be given to shuttering CalPERS and fairly allocating to each current employee their share of the retirement funds, arranging for the public employer to make up the difference for what has been promised to date, and move from “defined benefit” to “defined contribution” plans for all existing and future employees. Otherwise, this pension burden has the potential to grow so large that California will not be able to fund the most basic services and as residents flee to other states, the last one out will be asked to turn out the lights.

We call on our representatives to stop pursuing discretionary causes and pet projects and come to grips with these real problems facing all Californians.

Lewis K. Uhler is Founder and Chairman of the National Tax Limitation Committee and National Tax Limitation Foundation. He was a contemporary and collaborator with both Ronald Reagan and Milton Friedman in California and across the country.

Jon Coupal is the President of the Howard Jarvis Taxpayers Association. He is a recognized expert in California fiscal affairs and has argued numerous tax cases before the courts. 

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Proposition 54 and the “We Can Do Whatever We Want Act”

TransparencyAmid the ballot initiatives gifting Californians with a 200-plus page voter guide is at least one sensible idea. Proposition 54 targets “gut and amend” (Ganda) bills, which are diametrically opposed to responsible legislative deliberation.

Ganda legislation takes “how a bill becomes law” civics book descriptions, then adds “not” at the beginning. In the race to beat the legislative end-of-session deadline, power brokers take bills that have cleared most legislative hurdles and replace them with completely different bills. Then they rush them through the minimal scrutiny of the last-minute frenzy (e.g., with multiple committee hearings in a single room in an hour).

This year’s appropriation of nearly $1 billion in pollution fee money is one example. Earlier illustrations include transforming a Silverlake Reservoir bill into requiring that gun buyback programs test weapons for criminal involvement (2014), California Environmental Quality Act exemptions for housing projects into increased alternative vehicle technology funding (2013), and pension reform into a fire prevention fee repeal (2012). The last three weeks of 2011’s session included 48 Ganda bills (my favorite: morphing a measure allowing tuberculosis information disclosure into one preventing local government bans of project labor agreements).

Unfortunately, bills sensible enough to command sufficient consensus can pass in daylight. Only legislation failing that test requires Ganda evasions.

That is what Proposition 54 addresses. It would require any bill to be both in print and available on the internet 72 hours before it could be enacted (with a ‘public emergency” escape clause). It would also intensify the sunlight on the sausage-making by mandatory videotaping of all public meetings, to be posted online within 24 hours, and by allowing any citizen to record any public meeting and use it without restriction.

Despite Proposition 54’s potential to protect Californians from legislative back-room bullying, it has opponents, particularly among power brokers. One rebuttal is, in essence, that despite missing deadlines or failing to get approval, sometimes legislatures “just need to act.” But that is not a reason; it simply assumes its conclusion — the powerful must be allowed to circumvent the rules whenever they decide it is necessary. That is why the Democratic Party opposes Proposition 54 with a preposterous rhetorical Ganda, twisting its protections against unwarranted legislative abuses into a claim that it would better allow “special interests” (i.e., those targeted for harm to fund legislative presents for others) to “block timely legislative action.”

The core problem is that for Ganda bills to benefit Californians requires several false things to be true.

The bill would have to be the Legislature’s business. Unfortunately, despite injecting itself everywhere, very little legislation can actually advance our general welfare. Benefiting some at others’ expense is another matter, but such bills deserve destruction, not greasing through.

Only the Legislature must be competent to deal with the issue. Where people can work things out for themselves, no legislation is needed, except repeal of what prevents voluntary private solutions. Those lauded by politicians for their wisdom during campaigns deserve the power to use it in their own affairs.

The problem must be too urgent to wait for ensuing terms. The sponsor must know how to implement an efficient and equitable solution. It must also come as a sudden surprise. But it is laughable to think of our legislators quickly developing real solutions to serious problems unrecognized just weeks before, and still needing to sneak them through.

Gut and amend survives only because it lets urgency insulate legislators from accountability. Capitol power brokers may “need” it for their purposes, but it harms citizens. That is why eliminating Ganda is important and also why all such legislative attempts have been killed. Proposition 54, which the legislature would morph into the “We Can Do Whatever We Want Act” at the last minute, given the chance, deserves support, in order to take such chances away.

Gary M. Galles is a professor of economics at Pepperdine University, a research fellow at the Independent Institute, adjunct scholar at the Ludwig von Mises Institute, and member of the FEE faculty network. His most recent books are Faulty Premises, Faulty Policies (2014) and Lines of Liberty (2016)