Proposed CA Bill Would Cause Massive Tax Increase and Potential International Trade War

TaxesDespite multiple tax increases being adopted by voters just last November, SB 567 (Lara) was introduced that, if enacted, will result in another multi-billion dollar tax increase on businesses and individuals. And, the bill could once again raise the ire of major international trading partners, including Great Britain and Japan.

With the newly acquired super-majority status of Democrats in both the state Assembly and state Senate, the business community has been concerned about potential tax increases brewing in the Legislature. SB 567 represents the biggest threat so far.

SB 567 would make four major changes to California tax law. According to the bill’s author, this measure “will close four popular loopholes that benefit millionaires and ensure high income earners making above one-million-dollars annually, pay their fair share in taxes.” Senator Lara also claims, “Millionaires have mastered our tax code to take advantage of popular loopholes. As a result, the super-rich and the largest corporations in California do not pay their fair share in taxes.”

The approach of seeking new sources of revenue, such as that contained in SB 567, seems counter-intuitive after the electorate adopted multi-billion tax increases just a few months ago by passing Prop. 55 (12-year extension of the Prop. 30 personal income tax increases), Prop. 56 (a $2 tax imposed on each pack of cigarettes), and Prop. 64 (which includes several tax increases on marijuana and marijuana products).

What is different for the 2017 session is that Democrats have achieved the necessary 2/3 majorities in the state Senate and Assembly to pass tax increases without any Republican involvement under the requirements of Prop. 26 (amending Article XIIIA, Section 3(a) of the California Constitution), assuming signature by the governor – or enough votes to override a gubernatorial veto. California is one of just a handful of states that requires a 2/3 majority for increasing taxes by a vote of the Legislature.

What does SB 567 propose? As introduced, the bill contains four significant tax increase provisions. First, for tax years beginning January 1, 2018, SB 567 would require charitable remainder trusts (CRTs) to be at least 40 percent of the initial fair market value of all of the property placed in trust. Existing state law exempts from state tax any charitable remainder trust including that the value of the trust must be at least 10% of the initial fair market value of all the property placed in trust.

A CRT is an irrevocable trust that generates an income stream for the donor to the CRT with the remainder of the donated assets going to charity. Unfortunately, proponents claim CRTs benefit charities but allow taxpayers to avoid paying taxes. The bill would raise the amount going to the charity by 300 percent. It would make a CRT less attractive and adversely impact charitable giving. It would also take California out of conformity with federal law, which creates administrative burdens for both taxpayers and the Franchise Tax Board in administering the law.

Second, for persons who died on or after January 1, 2018, SB 567 would revise the law so that no adjustment is allowed where the person who acquires the property has an adjusted gross income or net income over a specified amount. Existing state law, for the purpose of calculating the gain or loss upon the disposition of property, generally the basis of property acquired from a decedent is the fair market value at the date of death.

California conforms to federal tax law on the “step-up in basis” for appreciated property that has been inherited. SB 567 would eliminate this provision of federal law for those with income above $1 million, once again targeting those upon whom the State of California is ever dependent upon financially. As a result, the bill would create different rules for California taxpayers complying with federal law and force those individuals to pay capital gains on inherited property that has appreciated in value.

Third, SB 567 would retroactively to January 1, 2017 eliminate the deduction for compensation paid to CEOs for pay based on commission or on meeting certain performance goals. Retroactive tax law changes are fundamentally unfair to taxpayers as they change the rules midstream. This creates undue hardship and confusion for residents.

Existing state law, in conformity with federal tax law, provides that a publicly held corporation may not deduct remuneration paid to the CEO to the extent the amount of compensation exceeds $1 million, except where the amount is based on commission or on meeting certain performance goals. As such, a deduction for that compensation is permitted on that basis even if it exceeds $1 million. This change in law would take California out of conformity with federal income tax law by disallowing the deduction for publicly-traded corporations.

Fourth, SB 567 would retroactively to January 1, 2017 remove the water’s-edge election and specify that all existing electors would be unable to file using the water’s-edge method for tax years beginning on or after January 1, 2023, thereby forcing all corporations to file on a worldwide unitary basis. Existing state law allows corporations to elect whether their income is determined on a water’s-edge or worldwide unitary basis.

While the U.S. Supreme Court upheld California’s use of “worldwide combined reporting,” the state allowed a “water’s-edge election” beginning in 1987 due to pressure from foreign governments and multinational corporations, as well as sound tax policy. SB 567 would re-open this debate and cause countries like England and Japan to again propose retaliatory measures against U.S. corporations.

The claim by proponents of this tax law change is that corporations stash money in tax haven countries and worldwide combined reporting is the only way to tax those revenues. SB 567 would repeal the water’s-edge election and force all corporations to pay much more in corporate taxes to California. Under this approach, California companies would end up paying taxes on foreign income earned outside the U.S. which would be inappropriately apportioned to California. The bill would represent a massive tax increase disguised as “fairness” in taxation.

Moreover, SB 567 would grant California the ability to tax income earned outside of the water’s-edge of the United States, a practice which is not followed by any other state in the nation. The practical effect would be to allow the state to tax income that has already been subject to taxation by a foreign jurisdiction. And California-based companies would be subject to retaliatory tax measures by other countries in which they are conducting business.

As the Legislative Counsel has correctly determined, SB 567 makes multiple changes in state statutes that would result in a taxpayer paying a higher tax within the meaning of Article XIIIA, Section 3 of the California Constitution and thus requires a 2/3 majority vote of both houses of the Legislature in order to reach the governor’s desk. Hopefully, the Legislature will reject this measure.

Chris Micheli is a lobbyist with the Sacramento governmental relations firm of Aprea & Micheli, Inc. He can be reached at cmicheli@apreamicheli.com.

This piece was originally published by Fox and Hounds Daily.

Gun Groups Should Be Allowed to Put Lawmakers’ Home Addresses on Internet Says Fresno Judge

As reported by the Sacramento Bee:

Attorneys for the California Legislature are weighing whether to appeal a federal court ruling that could allow gun rights advocates to publish the personal information of individual lawmakers.

Diane Boyer-Vine, the state’s legislative counsel, said Wednesday that her office was reviewing the preliminary injunction issued by U.S. Chief District Judge Lawrence O’Neill of Fresno.

O’Neill had moved to halt a California law that restricts the internet publishing of home addresses or phone numbers of elected or appointed officials who feel their safety is threatened, or if the elected officials or their representatives demand that they not be published.

“At its core, plaintiffs’ speech is a form of political protest,” O’Neill wrote, giving the parties until March 10 to decide how to proceed. “The court therefore finds that the legislators’ home address and telephone number touch on matters of public concern in the context of plaintiffs’ speech.”

The case, brought last fall with the help of the Firearms Policy Coalition, was filed after the Legislature’s lawyer blocked a blog post from listing what its author described as the home addresses of 40 legislators who voted for gun control legislation signed by Gov. Jerry Brown. …

Click here to read the full story

 

Understanding California Legislative History and Intent

CA-legislatureAttorneys, lobbyists, legislative staff and others examining California statutes should understand the basics of legislative history and intent research. Unfortunately for attorneys, the subject of legislative intent is not a particularly well covered aspect of the typical law school curriculum where heavy emphasis on the case method of studying law tends to restrict the discussion of legislative purpose to what the courts say on the subject.

However, because California courts have a long tradition of relying upon bill analyses and other evidence of legislative history in the same manner as they do case law – to clarify the meaning of a statute and properly apply the Legislature’s intent – practitioners would do well to know how to discover and apply the Legislature’s intent with respect to the statutes that at are issue in their cases.

For others, such as lobbyists, staff or the media, the focus is typically upon the proposed solution contained in a particular piece of legislation, and not upon the accompanying expressions of legislative intent. However, both are important. At minimum, it is a good idea to confirm one’s understanding of a proposed legislative solution with the statements of legislative intent from the bill’s legislative history. Here are at least three reasons why:

(1)  Our codes are rife with ambiguities that the courts will look to the legislative history to clarify.

(2) The courts will overlook a statute’s plain reading if it collides with evidence of the Legislature’s actual intent or to avoid an absurd application.

(3) Courts will also look to legislative history to confirm their own plain reading of a statute.

Both attorneys and Sacramento Capitol watchers would do well to understand that evidence of California legislative history and intent serves as an important aid for interpreting statutes and understanding what was intended by the Legislature in enacting a particular new law or amending an existing law.

Sir Francis Bacon is attributed with the statement “knowledge is power.” Applying that wisdom here, lobbyists and others should be well versed in the legislative history and intent of the code sections that their clients have hired them to “watch” and or/amend. Attorneys should utilize a well-established area of legal research that can shed light on the meaning of statutory terms at issue. And solid news reporting should include relevant aspects of the story surrounding how and why the bill of interest was passed.

In California, the primacy of legislative intent has long been established by both statute and case law. For example, Code of Civil Procedure Section 1859 (enacted in 1872) provides this mandate to the courts: “In the construction of a statute, the intention of the Legislature … is to be pursued, if possible.” Also, the judicial notice statutes identify admissible legislative history materials in Evidence Code Section 452(c). The cases cited under those sections identify various records with which the courts have a high comfort level.

In general, evidence of legislative intent can be derived from two primary sources: An intrinsic analysis of the statute and its surrounding statutory context according to standard principles of statutory construction, and the use of extrinsic aids to reconstruct the legislative history of a statute.

The wider historical circumstances surrounding the adoption of a statute can yield extrinsic evidence of legislative intent that is outside the statute itself, such as relevant historical background, the chronology of events and the presumption that the Legislature is aware of prior law. Again, such evidence may even contradict any so-called “plain reading” of the statute which contradicts persuasive, extrinsic evidence of legislative intent.

In properly researching legislative history and intent, interested persons should ask the following questions to guide their efforts:

  • What is the plain meaning” of the language in the statute? To what extent is the meaning self-evident?
  • Why was the statute adopted? What needs prompted it? What problem or evil was the Legislature trying to correct?
  • What happened in the Legislature during the process of adoption? What is the statute’s legislative history?
  • What was the law prior to the adoption of the statute?
  • What has happened since the statute was created? What has been the response of the courts, the agency charged with administering the statute, the legislature, the public, scholars, etc.?

The California State Archives has a vast collection of original legislative papers that can be accessed by source and session year (e.g., authors’ files, committee and study files, Governor’s Chaptered Bill Files, party caucus files, Senate Floor analyses files, agency files, Law Revision Commission Study Files). Interested persons can phone in research requests to the State Archives at (916) 653-2246, but be prepared to wait as they often have backlogs. “Walk-ins” receive priority treatment and the $.25 per page cost must be paid in advance.

In addition, a wide variety of state legislative offices have insightful materials (i.e., legislator offices, committee offices, partisan offices, floor analysis offices), especially when it comes to more recent legislation, as well as agency analyses and bill files. Access to records held by these offices varies widely depending on the personalities involved and their willingness to make their files available to members of the public. The Legislative Open Records Act, Gov’t Code Sections 9070, et seq. assures public access as specified.

Finally, there are numerous sources to help determine the legislative history and intent of a bill’s provisions such as:

  • The Legislature’s own online databases. They provide committee and floor analyses, bill versions, the final calendars, votes and governor’s vetoes, past session laws, journals, etc. It is not recommended that you rely upon the minimal collection of legislative history materials that Westlaw provides. In the main, it merely provides materials that you can obtain for free from the Legislature’s websites.
  • Previous related, failed legislation. The history of predecessor failed bills can be considered relevant when the legislative effort spans multiple sessions.
  • Interim hearing study and/or transcript and related files. Excerpts from testimony at public legislative hearings which preceded the enactment of a statute may be of some relevance in ascertaining legislative intent.
  • Other formal studies and/or recommendations, such as those published by the California Law Revision Commission or a state agency.
  • All versions of the bill, as introduced, amended, enrolled and chaptered along with Legislative Counsel’s Digest on the face of the bills. Always note when your language of interest came in and relevant amendments.
  • Legislative Journal entries addressing substantive matters. Letters of intent by the author, committee reports, and similar information contained in the Journals.
  • Bill Background Worksheets, which are requested by the committee and filled out by the author’s office, sometimes with attachments.
  • Policy and fiscal committee analyses (both partisan and nonpartisan versions).
  • Department of Finance fiscal reports.
  • Floor analyses for third reading (both partisan and nonpartisan versions).
  • Statements by the author for committee and floor purposes.
  • The legislative author’s letter to the governor. Note that the courts can be more friendly toward such letter if they cast light on the history of a measure and are a reiteration of legislative discussion and events, and not merely as an expression of personal opinion.
  • Statements by proponents and opponents, such as letters, testimony, position papers, etc.
  • Analyses by state agencies.
  • Opinions by the Legislative Counsel and the Attorney General.
  • Enrolled Bill Reports to the governor from various state entities, such as the Legislative Counsel, agencies and departments and the governor’s staff.
  • Contemporaneous, unpassed legislation may be a significant indicator of the intent underlying legislation passed during the same session.
  • Online research manuals can be helpful. For example, Legislative Research & Intent LLC, which is a commercial provider of legislative history research, supplies numerous complimentary research assistance and resources at www.lrihistory.com.

It is important for attorneys and others to possess a basic understanding of what legislative history research consists of and where to look for insights into what the Legislature intended when it enacted a new law or amended an existing statute. An insistence upon going beyond simply reading the statute allows one to consider valuable extrinsic evidence of what was intended by the Legislature in the adoption of the particular legislation of interest.

Carolina Rose is the President and Founder of Legislative Research & Intent, LLC which has provided legislative history research since 1983, and provides related expert witness services. Chris Micheli is an attorney and lobbyist with the firm of Aprea & Micheli, Inc. For more information contact carolina.rose@lrihistory.com or cmicheli@apreamicheli.com

Dem-on-Dem Contests Cost the Party $90 Million in 2016

democrat supermajority sacramento californiaA new report tallying the costs of running against members of your own party revealed that Golden State Democrats spent big in 2016 on races without a Republican.

This year, “Democrats raised or spent a total of $90.8 million on same-party races — a 67 percent increase from 2014 when Democrats spent $54.3 million,” according to the study, citing data from the California Secretary of State, California Fair Political Practices Commission and Federal Election Commission, and issued this week by Forward Observer. “The average budget for a same-party race between Democrats was $3.95 million in the 2016 cycle, up 30.7 percent since 2014,” the last year in the Congressional election cycle.

That means Democrats are now spending massive sums of money against other Democrats in political races due to the passive of Proposition 14, the California top-two primary law which went into effect in 2012.

Those figures struck a sharp contrast to spending for similarly situated candidates in the California GOP, which spent far less over the same two-year period. Those state Republicans “raised or spent $2.76 million on same party races in 2016,” Forward Observer observed. “This is a sharp decline (approximately 84 percent) in spending on same-party races since 2014, when Republicans spent $17.2 million.” One key to the big divergence between Democrats and Republicans, the report noted, was the lack of any Republican-on-Republican competition for a seat in the state Senate or the U.S. House of Representatives.

Jungle primaries

Intraparty fights between Democrats attracted more outside spending this year. $339,000 went “to support Assemblywoman Nora Campos, D-San Jose, who is running against state Sen. Jim Beall, D-San Jose, in the 15th Senate District,” as the Sacramento Bee reported earlier this year, while “several hundred thousand dollars” went to “help former Assemblyman Raul Bocanegra or oppose the incumbent, Assemblywoman Patty Lopez, D-San Fernando, in Los Angeles County’s 39th Assembly District.”

“And in the Inland Empire, a campaign committee funded by the grocery workers union has spent $75,000 to support Eloise Gomez Reyes, the Democrat running to unseat Assemblywoman Cheryl Brown, D-San Bernardino, in the 47th Assembly District.”

For Democrats, the shifting political sands have complicated what was seen by some as an implicit advantage in the so-called “jungle primary” system California voters ushered in six years ago through Proposition 14. That initiative inserted a constitutional amendment to afford Californians a single, nonpartisan primary election, pitting the top two vote-getters, regardless of party, against one another in the general election. But instead of making candidates’ lives easier — and the Democratic party’s — Prop. 14 has appeared to have cost them, demanding higher expenditures. “Democrats have spent a total of $194.2 million on same-party races since Prop. 14 first went into effect in 2012,” Forward Observer concluded. “Republicans have spent $34.5 million over the same period. Thus, for every dollar spent or raised by Republicans, $5.64 was raised or spent by Democrats.”

Ideological Fights Within the Democratic Party

Another effect of the new system, harder to quantify but possibly more serious, has been a sharpening differences between the more moderate and more progressive wings of the party, sparking sometimes thorny disagreements that could have been soften had all candidates vying for office run against Republican opponents. In some cases, such as Kamala Harris’ race against Loretta Sanchez, the challenger was too weak to force a bruising battle over political agendas. In others, however, a more moderate non-incumbent drew a clear line on policy and was rewarded at the ballot box. Last year, for instance, Orinda Mayor Steve Glazer — a former aide to Gov. Jerry Brown who pitted himself against the BART strike and won support from Chuck Reed, the ex-San Jose Mayor spearheading public pension reform — bested Assemblywoman Susan Bonilla, D-Concord, the far more liberal Democrat who initially had been widely expected to win the race to replace outgoing state Senator Mark DeSaulnier.

This piece was originally published by CalWatchdog.com

Pay Hikes Result in a Happy New Year for State Workers

Money

In a recent column, I commented on how joyous the holiday season would be for members of the state Legislature and our constitutional officers who are seeing a 4 percent increase in their pay. California lawmakers were already the highest paid in the nation.

But as the song says, you ain’t seen nothing yet. In a state the U.S. Department of Labor rates as first in pay for state and local government workers, one of the largest public sector unions has negotiated a pay raise of up to 19 percent for many of its members. Union leaders claim that many of the jobs their members perform are in high demand and, without the increases, employees will be lured away to the private sector. Therefore, a 19 percent increase for “financial experts” currently making between $7,300 and $10,000 per month, is warranted. However, everyone has been invited to the party. Even janitors will be getting an extra 3 percent on top of the standard 4 percent that has been negotiated for all the represented workers.

Other unionized employees, now negotiating pay increases with the state, will likely see similar raises. And it is important to mention that most of these “public servants” are receiving health care and pension benefits that most in the private sector can only dream of.

In November, voters said yes to new taxes and to the continuation of the highest income tax rates in the nation. The expensive campaigns that put these measures over the top were funded primarily by public sector unions, so it is not hard to guess where the bulk of the tax revenue will be going. Instead of state government providing more and better services, most of the funds will go to paying for raises for government workers. And let’s not forget the need to fund nearly a trillion dollars in unfunded pension liabilities for which taxpayers will be picking up the tab.

This is not to lose sight of the fact that many public employees work hard and provide valuable service. Most citizens want to see these employees fairly compensated for good work.

However, because government holds a monopoly on most of the services it provides — there is no competition or alternative — much of the work actually provided is subpar. Anyone who must use government services cannot imagine that these across the board raises state employees are receiving are based on merit.

There are those who will justify the additional money as cost-of-living increases. But cost of living increases are based on inflation, which has been minimal due to the sluggish economy. Just ask Social Security recipients, who will receive an increase in their benefits of 0.3 percent (three-tenths of 1 percent) for the coming year. This translates to about a $4 monthly increase for the average retiree, or about $48 per year. Had the average recipient, who must get by on $1,355 each month, been granted a 4 percent increase (the minimum for so many state employees) their monthly checks would bump up almost $55, or $660 annually.

But we shouldn’t have to argue over how much government employees should be paid. Since union leadership worries that the private sector will hire valuable workers away unless they are paid more, why not let them go? In the private sector, they can join or establish companies that can bid on doing the work currently performed by government employees. Let them pay themselves whatever they want, but they will have to bid on doing the work they now perform on the taxpayers’ dime. Government will hire the lowest qualified bidder and if their service is topnotch, they will keep their contracts. If not, the governor and Legislature can move on and engage another bidder.

As the late New York Governor Mario Cuomo — a Democrat and father of the current New York Governor — stated several decades ago, “It is not a government’s obligation to provide services but to see that they are provided.”

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

This piece was originally published by HJTA.org

State Agencies and Their Role in Public Policy

Photo courtesy Franco Folini, flickr

Photo courtesy Franco Folini, flickr

California’s agencies, as well as the departments, boards and commissions under them, engage in a tremendous amount of public policy making through both the rulemaking process and their interpretation and enforcement of existing statutes and regulations. These agencies are the ones who generally run the day-to-day operations of state government and implement the statutes adopted by the Legislature and signed by the governor.

With over 200 of these entities in California government, these state agencies influence policy by adopting regulations and implementing statutes. Moreover, they engage in policy making when these agencies issue guidelines, legal opinions, management memos, and other written documents that interpret the laws and implementing regulations.

Practitioners should be aware of the California Constitution Article III, Section 3.5. It provides that an administrative agency has no power to declare a statute unenforceable, or refuse to enforce a statute, on the basis of it being unconstitutional unless an appellate court has made such a determination. And agencies have no power to declare a statute unconstitutional.

This, for instance, when a Los Angeles Superior Court recently held that various teacher tenure and dismissal statutes were unconstitutional, local school districts, the Superintendent of Public Instruction, and the Department of Education were without authority to implement this decision. Without an appellate court ruling on the matter of constitutionality, local and state agencies must continue to abide by the challenged law.

When dealing with a given state agency, it is important first of all to know whether it is a plural executive, independent, or governor’s line authority agency. Generally speaking, the governor has less control over “plural executive” and “independent” agencies. These separate agencies are generally able to manage their daily affairs and conduct rulemaking without supervision or oversight from the governor. On the other hand, the governor has considerable authority to manage line authority agencies, including the ability to direct or restrict their rulemaking activities.

It is also important to know that state agencies within the executive branch of government consist of three major varieties:

  • Plural executive agencies” that are under the direction of an official elected on a statewide basis. For example, the Attorney General heads the Department of Justice, the Superintendent of Public Instruction heads the Department of Education, and the Insurance Commissioner heads the Department of Insurance. There are nine of these agencies in California headed by constitutional officers that are elected by statewide voters every four years.
  • “Independent agencies” that operate outside of the line control of the governor by virtue of constitutional provision, statute or common law. Some of the major independent agencies and their governing bodies include the University of California, governed by the Board of Regents; the California State University, governed by the Board of Trustees; the California Community Colleges, governed by the Board of Governors; the Public Utilities Commission, governed by the Public Utilities Commission; and the California State Lottery, governed by the Lottery Commission.
  • “Line agencies” include all the other agencies and departments within the executive branch that are under the line control and authority of the governor. Most state agencies and departments (more than 90 percent of them) within the executive branch of government are of this type. Many of these line authority agencies and departments have been organized into a hierarchy of major agencies or departments. The heads of these major agencies and departments sit on the governor’s cabinet.

When dealing with agencies that are under the line authority of the governor, it is important to know where they fit in terms of the organizational hierarchy. Departments or agencies that are under larger agencies or departments are subject to supervision and coordination by those agencies or departments. Their interactions with the governor also tend to be limited.

However, when it comes to rulemaking (i.e., the adoption of regulations under the state’s Administrative Procedures Act), the supervising or coordinating agencies usually allow significant latitude to the agency or department that is directed by statute to adopt such regulations.

Generally speaking, the authority of state agencies to adopt policy (by their rulemaking ability) is defined and restricted by statute. State statutes usually prescribe each agency’s authority to adopt policy; and, it is an established principle of administrative law that an agency cannot go beyond its legally-prescribed authority to regulate.

On the other hand, many statutes confer broad powers to some state agencies regarding matters that directly affect the general public (such as the Department of Motor Vehicles, the Air Resources Board, and the Department of Fair Employment and Housing). The regulations and administrative practices of these agencies affect millions of Californians in their daily lives.

Interested parties have significant access to the rulemaking activities of state agencies by virtue of the California Administrative Procedure Act (APA). In addition, every state agency is required to annually adopt a “rulemaking calendar” (Government Code Section 11017.6) that describes regulatory actions the agency anticipates taking during the calendar year. The APA is overseen by the Office of Administrative Law (OAL).

The OAL website includes helpful information for interested parties to track pending and adopted regulations. OAL also produces a guidebook on the rulemaking process that is of value to those who are getting acquainted with the APA process or those participating in the rulemaking process for the first time. In either instance, it is important to understand the rulemaking process and the role of state agencies.

A list of state agencies that have adopted regulations can be found on OAL’s website, which also provides direct access to the California Code of Regulations (CCR), which is organized under various subject matter titles. The following are the 28 titles comprising the CCR:

Title 1 – General Provisions

Title 2 – Administration

Title 3 – Food and Agriculture

Title 4 – Business Regulations

Title 5 – Education

Title 6 – Governor’s Regulations (currently has no regulations)

Title 7 – Harbors and Navigation

Title 8 – Industrial Relations

Title 9 – Rehabilitative and Developmental Services

Title 10 – Investment

Title 11 – Law

Title 12 – Military and Veterans Affairs

Title 13 – Motor Vehicles

Title 14 – Natural Resources

Title 15 – Crime Prevention and Corrections

Title 16 – Professional and Vocational Regulations

Title 17 – Public Health

Title 18 – Public Revenues

Title 19 – Public Safety

Title 20 – Public Utilities and Energy

Title 21 – Public Works

Title 22 – Social Security

Title 23 – Waters

Title 24 – Building Standards Code

Title 25 – Housing and Community Development

Title 26 – Toxics

Title 27 – Environmental Protection

Title 28 – Managed Health Care

An interesting phenomenon is that businesses cannot rely in good faith upon the written determinations issued by state agencies. For example, even if a business asks for and receives written guidance from a state agency as to how a law is interpreted, the business does not have any legal protection against a liability suit. This is an instance where the state agency’s written interpretation is not given any legal weight by a reviewing court. The courts can consider these determinations, but they do not provide an affirmative defense to those receiving them.

In other words, despite being charged with interpreting, implementing and enforcing California statutes and regulations, individuals and businesses that obtain written guidance from state agencies have no protection from legal liability even if they follow that guidance. However, there are a few agencies that provide limited protections.  For example, the Fair Political Practices Commission has advice letters to requesters that provide immunity from liability. The Franchise Tax Board and the Board of Equalization each have Chief Counsel Rulings that provide protection to taxpayers.

State agencies play a key role in public policy development in California through their rulemaking activities, as well as their interpretation and enforcement of statutes and regulations. There are both public (through interested parties) and private (administration with line control agencies) influences on these agencies in their policy role.

Thomas Nussbaum is the former Chancellor of the California Community Colleges.  Chris Micheli is a lobbyist with Aprea & Micheli, Inc. Both are Adjunct Professors of Law at McGeorge School of Law.

The GOP Needs to Improve Its Marketing Skills

Photo courtesy of DonkeyHotey, flickr

Photo courtesy of DonkeyHotey, flickr

California is now a one-party state, with Democrats having a supermajority in both the state Assembly and Senate.

How is it that the GOP can’t adequately explain to California residents that our ideas are better? Why is it that Republicans can’t convince Californians that our solutions will bring prosperity and a better life for everyone, Democrats included? The fact is that Republicans in California are poor marketers. We have a great product but don’t know how to sell it.

We need to learn how to market it. You can manufacture a great widget that will do incredible things, including saving people tons of money. But if you don’t know how to market it, you won’t make any sales, even if it is better than sliced bread.

The blame is not completely with the Republican Party. Selling our ideas is only one of the ways we can improve our standing with California voters. We have many obstacles in California. The populous cities of the state are predominantly filled with secular progressives who aren’t interested in limited government, lower taxes and a better business environment. The unions run the Democrat Party and they and multi-millionaire Democrats provide funding to Democrats and their candidates that Republicans can only dream about. It isn’t easy to overcome the Democrat funding, no matter how well we sell our ideas.

Also, the Democrats have been very successful over the past several decades in convincing voters that Republicans are heartless, racist, misogynist and white supremacists, without compassion, and who are essentially evil. We have let them get away with that and have done very little to counter those false charges.

We also need to get active in the inner cities and show the African American community that we care about them. We do, but saying so means nothing compared to getting into the communities and actually doing something to help their community.

We have been active in the Latino community, and have several Latino-American elected officials and party leaders. Programs like the Grow Elect program are doing great things in the Latino community, and state and local leaders like Mario Guerra, Jack Guerrero, Ignacio Velazquez, Alex Vargas and others are making a big difference in the Latino community. We need to do more to show Latinos that their future and the prosperity for their families lies with the Republican Party.

With the supermajority now in the Legislature, one way we can make a public relations difference is to propose legislation that will benefit Californians. Go the the extremes. Eliminate the carbon tax, reduce stifling regulations on business, propose lowering taxes. Of course, none of these bills will pass, but we can then issue press releases that Republicans are trying to make life better for Californians by submitting important bills that are being voted down by Democrats. Let’s learn how to use the press and public relations. In the next two years let’s see if we can convince Californians to try voting for Republicans. Let’s convince the voters that they have nothing to lose, and might have everything to gain.

I know we can do it.

By Gary Aminoff, Treasurer, The Republican Party of Los Angeles County

‘Public Servants’ or ‘Well-Paid Elite’?

MoneyOnce upon a time we called them “public servants.” Today, most taxpayers struggle to keep a straight face when this term is used to describe the well-paid, elite who govern us.

In a state where the median per capita income is just over $30,000, Gov. Brown, legislators and other state elected officials will celebrate the holidays with a 4 percent pay raise. The California Citizens Compensation Commission, whose members are appointed by the governor, decided the improved economy and healthy state budget justified the raise. California lawmakers, who were already the most generously paid in all 50 states, will now receive $104,115, earning them $14,774 more per year than the next highest. Of course, this does not count the additional $176 per day in “walking around money,” living expenses lawmakers receive for every day the Legislature is in session, amounting to an average of $34,000.

The governor, too, is now the highest paid at $190,100 — Pennsylvania’s governor is actually slated to make $723 more, but Gov. Tom Wolf does not accept the salary.

Do Californians pay their governor, the top executive of a state government responsible to nearly 40 million constituents, enough? The fact that there is never a shortage of candidates for this job is an indication that the pay is sufficient. So, the question arises, why do many government employees receive more than the governor?

At the local level, most cities have as their chief executive, a city manager. Of 479 cities – out a total of 482 – reporting to the state controller, 279 are paid more than the governor. Of these, 24 receive over $300,000 annually.

For some cities, paying their top administrator a high salary seems to be a matter of vanity. Council members, who approve generous compensation, will take the position that their city deserves a highly-paid manager, the same way some car buyers justify the purchase of a luxury vehicle. Just as the neighbors may be impressed by the new Mercedes, neighboring cities will be impressed with their city’s ability to overpay the help. This, of course, puts pressure on surrounding cities to keep up with the Joneses.

While some city hall insiders will argue that higher pay is justified by a larger population, there seems to be no actual correlation.

Escondido, California’s most generous city, has been compensating its manager $413,000 annually to serve a population of 151,000. In slightly larger Palmdale, the manager receives $138,000 to look after 160,000 residents. And then there is Garden Grove with a population of 177,000 where the city manager gets $89,000.

A few years ago, the city manager in Bell went to prison for illegally compensating himself $800,000 per year. However, although it may not be illegal, the city of Vernon stands out as a candidate for the most profligate in the state. Its top executive is paid more than $328,000. The city’s population is only 210, which means that each resident is responsible for over $1,560 to compensate the manager. (The rumor that Vernon’s top executive insists on being called “Your Majesty” could not be verified.) Another small city, Gustine in Merced County, with a population of 5,482 gets the award for most frugal. It pays its city manager $909 annually.

While there are other areas of government employee compensation that beg examination, the range of pay for city managers seems to be the most irrational.

Still, none of these local administrators is close to the state’s top salary of $3.35 million. But since the program generates the revenue to pay UCLA football coach Jim Mora, he is more likely to be criticized for his record more than his salary.

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

This piece was originally published by the HJTA.org

Legislature Tries to Dodge Prop. 54 Transparency Requirements

TransparencyThe voters speak, the legislature interprets — and sometimes the translation is not faithful to the original meaning. We saw that last week with resolutions and rules changes that seem to fly in the face of the newly passed Proposition 54 demanding a waiting period before any measure is passed and last session with Senate Bill 1107, which ignores the clear language contained in 1988’s Proposition 73. Now there is a lawsuit on the senate bill charging the new law is out of bounds and a violation of Prop. 73. Perhaps a legal challenge will follow on the Proposition 54 issue.

SB1107 set up public financing of campaigns claiming that the bill was furthering the purposes of the political reform initiative, Proposition 73, passed by voters nearly thirty years ago. One major problem with the reasoning — Prop. 73 banned public financing. How can you further the purposes of a law when a bill takes the law in the exact opposite direction?

The Howard Jarvis Taxpayers Association teamed with former state senator and judge, Quentin Kopp, a co-author of Proposition 73, to file suit against SB1107. In a release, HJTA president Jon Coupal said, “California voters decided to prohibit taxpayer dollars from being used as political slush funds.  If politicians want to change that, they have to take the issue back to the voters.”

I signed the ballot argument on behalf of Proposition 73. At the time SB1107 was being considered I wrote in this space that the bill was a back door way to avoid the voters wishes on public financing. Only a vote of the people can change the dictates of Prop. 73.

I expect the courts to see the law the same way. That could lead to a test on the newly passed Proposition 54.

Prop. 54 requires that bills be in print for three days before a final vote can be taken. The idea is that due deliberation occur before legislators pass judgment. Yet, when the legislature was sworn in last week, resolutions were immediately passed calling on Congress to pass comprehensive immigration reform and calling on the president-elect not to seek deportation of undocumented immigrants. In addition, the legislature set a rule that a bill passed in its original house did not have to submit to the three day rule under a theory that the bill would come back to that house with amendments from the second house.

The legislative majority made a rhetorical defense of their action on the resolutions justifying the procedure by declaring that Prop 54 only covered bills not resolutions or constitutional amendments.

One wonders if the voters made that distinction when voting on the ballot measure.

The proponent of Proposition 54, Charles Munger Jr., told Capitol Public Radio, “It is unfortunate that they would choose to pass their own rules and a resolution without giving their members and the public 72 hours to think about it.”

Perhaps Munger will go to court or wait to see how the Jarvis/Kopp lawsuit plays out.

One odd feature dealing with these two measures is that the Common Cause organization supported both Proposition 54 and SB1107. In fact, Common Cause sent out an email fundraising appeal preparing for a legal defense on SB1107. So here they support the legislature’s interpretation of the law. Will they be so willing to take the same course on Proposition 54?

The goal of the lawsuit is simple: When it comes to the initiative process the people’s verdict is final unless the voters themselves choose to change it.

This piece was originally published by Fox and Hounds Daily

Can California’s Legislative Supermajority Act Responsibly?

After a thunderstorm of post-election recounts across the Golden State, it appears that Democrats have reclaimed a supermajority in the California Legislature.

Whatever one’s political sway – and this applies to national election results, as well – it’s important for all voters to respect that “the people have spoken,” turn the page and hope for the best.

Having said that, as a proud entrepreneur, supporter of my community, rancher and surfer, I love the great state of California and want nothing more than to see our economy and future thrive for generations to come. To that end, I thought it might be timely to offer our new crop of Democrats in the State Capitol a few words of instructive advice before they settle in all too soon. 

First and foremost, think carefully about the consequences of your agenda. There are more than a few rumblings about the new Legislature and governor poised to tackle many big issues in the new year – issues for which the two-thirds vote, in my opinion, play a critically important role in assuring a level of caution and restraint. Transportation and infrastructure reform, climate change, affordable housing are some of the hot-button items that appear looming on the legislative horizon. To many, these may seem noble and venerable priorities and opportunities for an improved quality of life. But at what cost – literally? Will these trailblazing new policies be funded on the backs of small business owners, working families and future generations through taxes, fees, levies, assessments and other costs? Californians already pay the highest income tax, statewide sales tax, gas taxes, minimum wage and myriad fees to comply with onerous regulations. A bold agenda is one thing, but crippling our small employers and communities with hordes of new, unanticipated costs is another – and one that will further prolong our state’s economic and jobs recovery. Think before you act.

Second, don’t forsake your Republican colleagues in the Legislature – they represent voters, too. It may be easy for some to render the GOP irrelevant – but they’re not. And neither are the many, many voters in their districts who are looking to them for hope, help and a future bursting with promise. The Moderate Democrats are and will continue to be a vital bloc, focused on advancing a pro-business agenda within their party. I am hopeful that they will remain true to their words on the campaign trail and match their actions with their slogans – and inspire others within the Democratic Party to follow their direction. But no one should ever count the Republicans out in California – theirs is a party of ideas, individualism, and economic success. A one-party rule can have dire consequences if the majority fails to heed the thoughts, ideas and concerns of everyone in the electorate. Work across the aisle every day, respect the GOP, and it will result in better policy for everyone in the long haul.

Finally, it’s time to focus on making California government work more efficiently for the people. It’s time to clean up the still-obscene piles of waste, paper, logjams and errors that are ultimately treating taxpayers like a non-stop ATM. I hope our leaders and others will join me in making this a primary focus and priority in 2017 and beyond. I’m committed to this cleanup because I’ve heard from one too many small business owners, seniors, veterans and community leaders that our politicians and bureaucrats are still spending hard-earned tax dollars like drunken sailors (apologies, drunken sailors). Our new supermajority should halt discussions about new spending and first look to eliminate much of the inefficiencies and frivolity that have grossly infected our mammoth government beast. Our leaders should continue a bipartisan crusade for historic pension, workers’ comp and unemployment insurance reform – all costs that threaten to leave our children’s children with irreparable debt. And the new legislature must continue to insist on opening the books of every department, agency and operation, demanding answers to where our money is being spent, and seeking alternatives or reductions that will improve efficiency and keep more resources in the pockets of families, consumers and “mom and pops”?  We should all urge our legislators to push for increased transparency and accountability with every single program and activity so that Golden State government works for us, not for itself. We need to regularly audit our expenses. It’s something every job creator must do each day if they want to keep their doors open; why shouldn’t the “body politic” which we’re all funding be held to that same standard?

November 8th is finally behind us. The ads have stopped running, the polls have closed, and the people have, indeed, spoken. Now is not the time for protests, sour grapes, crossed arms or furrowed brows. Now is the time for our newly-electeds to take a breath, take their oath of office, and take their job seriously. I’m hopeful that the new supermajority will remember to think about the impact of their agenda, work with Republicans who still represent and serve many voters out there, and fight vigorously to make our government more efficient – and affordable – for all of us. That’s the California wave all of us will be proud to ride for many years to come.

Wayne Hughes, Jr. is a California businessman, philanthropist and founder of SkyRose Ranch and Serving California in Central California which treats veterans with PTSD and other disorders. Find out more atwww.bwaynehughesjr.com @BWayneHughesJr