Taxpayer Victories in an Anti-Taxpayer California Legislature

CA-legislatureRonald Reagan once said, “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” With a record $130 billion budget, we know that California state legislators are adept at all three practices, but none more so than taxes.

Democrats in Sacramento spent 2017 jamming three separate tax and fuel-cost hikes into law. They renewed the cap-and-trade program, continuing a multi-billion-dollar increase in fuel costs that brings in state revenue to fund high-speed rail. They invented a new tax on recorded documents that is supposed to fund affordable housing. And of course the SB 1 gas and car tax increase was said to be needed to fund road repair, even though billions of dollars have been diverted away from maintenance over the last decade. In the midst of an $8 billion surplus, Sacramento was steadily increasing taxes.

But fortunately, 2018 hasn’t been as dreadful for taxpayers as 2017. Here’s a sample of the proposals that, for now, have failed to pass:

Senate Bill 794 would impose a new three percent tax on fireworks at the point of sale. The abuse of illegal fireworks is a matter of statewide concern, and as such, it is totally appropriate to spend existing General Fund revenues on enforcement and safety. Instead, by taxing the sale of fireworks, Sacramento would be hurting all the non-profit organizations that raise a sizable share of their annual revenue from firework stands.

Assembly Bill 2497 would impose an as-yet-undefined tax on guns and ammunition to fund school resource counselors and police officers.

AB 2303 and AB 2560 would create a new tax of up to ten percent on small business vendors who contract out either with private prisons or with the California Department of Corrections.

Senate Bill 623 would establish a precedent-setting tax on residential water use. For now, local water agencies have joined with taxpayer advocates to vigorously fight this levy.

Assembly Bill 2486 would impose a $100 million tax on opioid manufacturers and distributors to fund prevention and treatment programs. Ultimately, this tax will be passed onto consumers, especially to patients who use opioids appropriately to manage pain. As an issue of statewide concern as well as a legitimate public health issue, opioid treatment should also be financed out of the General Fund. …

Click here to read the full article from the Riverside Press-Enterprise

California beats its 2020 goals for cutting greenhouse gases

traffic-los-angelesCalifornia has beaten its self-imposed goals for reducing greenhouse gas emissions, achieving a milestone in the state’s fight against climate change.

The California Air Resources Board announced Wednesday that total statewide carbon emissions fell to 429 million metric tons in 2016, a drop of 12 million tons from the year before. The decline means California met the Legislature’s goal of reducing emissions to 1990 levels, and did so a full four years before the target year of 2020.

Gov. Jerry Brown and other state officials said the results proved the state’s portfolio of anti-carbon laws and regulations is succeeding — and showed California can fight climate change while still enjoying a significant economic boom. They pledged to continue to fight efforts by President Donald Trump’s administration to roll back strict emission rules imposed by the Obama administration.

“This is great news for the health of Californians, the state’s environment and its economy, even as we face the failure of our national leadership to address climate change,” said Air Resources Board Chair Mary Nichols in a prepared statement. …

Click here to read the full article from the Sacramento Bee

Gov. Brown’s May Revise Shows No Need for Gas Tax Increase

The first takeaway from Gov. Jerry Brown’s May Revision of his budget for 2018-19 is that California didn’t need that $5.5 billion yearly gas-tax increase the Legislature passed last year. The proposal shows we have $8 billion in revenues in excess of projections.

In one area I persistently agree with Gov. Brown, “Despite strong fiscal health in the short term, the risks to the long-term health of the state budget continue to mount.” Unfortunately, according to the governor’s budget revision, we have $291 billion in long-term costs and the Legislature has done little to fix the state’s fundamental problems.

In his budget announcement and press conference, Brown emphasized the volatility of tax revenues, especially capital gains-tax revenues, shown in this chart:

moorlach-graphic

And he emphasized we’re overdue for a recession. Of course, he didn’t mention it has been President Trump’s economic policies – tax cuts and regulation reform – that have lifted the national economy above the sub-par performance of the Obama administration.

“How you ride the tiger is what we now face,” he said. “It’s going up, but when it goes down, a lot of these programs will be cut. Life is very giddy at the peaks.” No doubt, he is right. But he also ignored most of the reasons for this volatility even as he pointed out the Rainy Day fund will be filled at $13 billion, though he estimated that an impending economic storm would require resources closer to $60 billion. That’s a budget hole expected in the next recession, which could be $30 billion a year for two years. In such a scenario, the Rainy Day Fund would provide just 22 percent of that potential revenue shortage.

I see a much bigger danger. Taxes are so high in this state. To survive the next recession, companies will flee to states with much lower taxes. Because of the state’s punishing taxes, including then-Gov. Arnold Schwarzenegger’s $13 billion tax increase in 2009, our state’s economy crashed hard. Unemployment soared to double-digits and was exceeded only by the rates in Michigan and Nevada. It may happen again.

The period of rising revenues we’re now enjoying should be used to reduce our already committed liabilities and the overall tax burden.

Of course, having increased taxes last year – not just the gas tax, but the cap-and-trade tax Brown pushed through, estimated at $2.2 billion a year – Brown wasn’t about to suggest cutting taxes. It will be up to the voters to repeal the gas tax this November.

Given that the rising tax revenues won’t be returned to the taxpayers who worked so hard to earn them, the governor at least is proposing spending the money on some true needs. I have worked up a list of options, below, of 15 one-time spending recommendations that should be prioritized. But first let me recognize three of Brown’s proposals that have some overlap to my suggestions:

  • $2 billion for infrastructure: “The proposal will target these funds to the universities, courts, state facilities and flood control. Investments are also proposed for high-priority capital expenditures.”
  • $359 million for homelessness. His proposal notes more funding will begin to flow “from a bond and a fee on real estate transactions” passed last year – another tax that I opposed and don’t believe we need. This money would be a “bridge” until these funds are spent.
  • $312 million for mental health “for enhanced early detection of mental health problems and the education of mental health professionals.” The budget proposal also would put the $2 billion “No Place Like Home” initiative funding on the ballot “to accelerate the delivery of housing projects to serve the mentally ill.”

My proposals include prefunding the $2 billion for No Place Like Home, which will be paid back with the bond proceeds.

I’d also like to help out cities and counties with their pensions by injecting several billion dollars directed to their unfunded liabilities in lieu of taxpayer rebates. In his press conference, Brown unfortunately answered, when that question was raised, “A lot of cities signed up for pensions they can’t afford. The state can’t step into the shoes of the cities and counties. They’re going to have to handle that.”

Again, he’s largely right. And he’s actually putting his legal resources and political chits behind the overturning of the so-called “California Rule,” which ratchets up pension costs with no ability for governments to correct costs at the front end, leading them to fiscal ruin at the back end.

Because of that, we’ve got cities and counties laying off police and fire simply because their pension costs are so high. And the cities and counties can’t raise their tax base more than 2 cents on the sales tax. Current leaders in our cities and counties weren’t the ones who spiked pensions decades ago, but the California Legislature made it really easy.

Sacramento is renowned for taking funds from cities and counties during recessions. Giving something back to them would be a noble thing to do.

The state also has a backlog of rape kits. Not only is that unfair to the victims, but after catching the Golden State Killer, how many more predators could we catch and prosecute?

We also need to harden power lines across the state. If this state wants to emphasize electric cars, we’re going to be sending a whole lot more electricity around, which means more wildfires unless the power lines are put underground.

Compared to his January proposal, the governor’s May Revise only tinkered with education funding. But we could use more funding for career technical education. A lot of kids don’t want to go to college, but could have successful careers in the trades or other vocations. They should be afforded the training opportunities just as much as those we send to our elite institutions.

Finally, this budget largely is a stopgap getting the governor beyond his tenure in office. He said he wanted to leave it in good shape for his successor. But so much more needs to be done, especially in improving the state’s harsh anti-business fiscal policies, shoring up pensions, fixing long-neglected infrastructure and reducing the housing and homelessness crises.

Below is a list of my 15 policy proposals for spending the $8 billion in excess revenues. It is largely in priority order. And if the state wins the litigation for the No Place Like Home bond dollars, or it is approved by the voters on the ballot in November, then that money could be cycled into any of the remaining priorities.

Priority Description Amount
1 No Place Like Home Prefunding of approved bonding $2,000,000,000
2 Provide funding to 482 cities to be appropriated to their pension liabilities $482,000,000
3 Provide funding to 58 counties to be appropriated to their pension liabilities $580,000,000
4 Provide matching funds for city pension liabilities $964,000,000
5 Provide matching funds for county pension liabilities $1,160,000,000
6 Fully fund bringing current the Rape Kit testing backlog $12,500,000
7 Fund Armed Prohibited Persons System (APPS) gun holder backlog $12,500,000
8 Hardening of electric power lines around state $1,168,000,000
9 Oroville Dam state water project conveyance levee repairs $100,000,000
10 Temperance Flat construction $250,000,000
11 Refund the Fire Tax $471,000,000
12 Continue Career Technical Education Funding at prior level $200,000,000
13 Renters’ Tax Credit increase $300,000,000
14 Opioid treatment and prevention task force $100,000,000
15 Water Tax off-set $200,000,000
$8,000,000,000

This article was originally published by the Flash Report

Proposals to ban internal combustion engines in California are a bad idea

carpool-laneThe latest battle in Sacramento’s war on California’s middle class is the push to ban the internal combustion engine.

Luckily, the effort has stalled.

The legislation that would have imposed the ban, Assembly Bill 1745, died last month, but bad ideas in California have a way of recurring like nightmares. We will see this proposal again, either as legislation next year or perhaps even as a ballot initiative. A number of so-called progressive candidates on the ballot this year have publicly stated they embrace this foolish idea.

The bill that was stopped, AB1745, would have prohibited the Department of Motor Vehicles from registering a new vehicle unless it was a zero emissions vehicle, beginning on January 1, 2040. Under the proposed law, a new car with an internal combustion engine could not legally be driven in California after that date.

A ban on internal combustion engines would certainly limit mobility and transportation options for millions of California families and businesses. And it would arbitrarily limit the development and use of advanced and efficient vehicle technologies, the kind that have already achieved great success in squeezing extra miles out of a gallon of gas.

Today, despite the availability of ZEVs, a substantial publicly funded rebate program and access to HOV lanes, ZEVs accounted for only 1.9 percent of the over 2,000,000 new passenger vehicles sold in California in 2016. And many of these sales are repeat sales to the same households, according to the UC Davis Institute of Transportation, raising the question of whether plug-in vehicles are experiencing widespread consumer rejection, outside of a limited group of true believers.

A ban on internal combustion engines is an attempt to force consumers into buying vehicles that they have decided are not best suited to their needs.

The better alternative is leveraging all available vehicle technologies, including efficient internal combustion engines, so that California can reach its environmental goals without banning or discouraging any technological innovations. …

Click here to read the full article from the OC Register

Five more sexual misconduct cases released by California Legislature

The California Legislature on Thursday released a limited set of sexual misconduct records for five investigations before 2006 in which a lawmaker or high-level employee was found to have harassed a legislative staff member.

The heavily redacted documents contained complaints, investigative results and monetary settlements. They included a $117,000 settlement, reported by The Bee in 2001, for an aide to former Sen. Richard Polanco who accused him of retaliation after she rejected his sexual advances.

In response to requests from The Bee and other media outlets, the Senate and Assembly in February divulged a decade of investigations that substantiated sexual harassment complaints against lawmakers and senior staffers. More records were released Thursday after a follow-up request for similar material before 2006.

The documents are not a comprehensive account of sexual misconduct cases at the Capitol in previous decades. The Bee reported on at least three other six-figure settlements in the 1990s and early 2000s involving alleged harassment by members of the Assembly. …

Click here to read the full article from the Sacramento Bee

What would make legislation in California truly ‘family friendly?’

CapitolEvery year California politicians push bills advertised as “family friendly.” This label is certainly useful to gain sympathy for a proposal. It’s akin to labeling a bill “The Protect Puppies Act.” Who could possibly object to that except heartless cretins?

Last year a number of bills were advanced as “family friendly” including Senate Bill 63 by Sen. Hannah-Beth Jackson, D-Santa Barbara. Known as the “baby bonding” bill, it is now illegal for an employer of 20 or more employees to refuse to allow an eligible employee to take up to 12 weeks of job-protected parental leave to bond with a new child within one year of the child’s birth, adoption or foster-care placement. It also mandates that an employer maintain and pay for the employee’s continued group health coverage during the duration of the leave. Prior to the passage of this bill, parental leave was mandated only for companies with 50 or more employees.

Another “family friendly” bill that became law last year was Assembly Bill 1127, from Assemblyman Ian Calderon, D-Whittier. It requires that diaper-changing stations be available to dads as well as moms at sporting arenas, auditoriums, libraries, passenger terminals, shopping malls, large restaurants and other places.

It is difficult not to be sympathetic to legislation which, at least on the surface, appears to make life easier for parents. But does the family-friendliness of such proposals cloud the judgment of our policy leaders as to the potential downside? California already has a horrible reputation as being anti-business. Indeed, for more than a decade CEO Magazine has ranked California dead last among states as a place to do business.

It’s no secret that, even with a resurgent economy, California continues to bleed jobs. Its share of the growth in the national labor force is a fraction of what it should be, given our population. The trend line of citizens moving out of California — known as “net domestic outmigration” — is well documented. …

Click here to read the full article from the Orange County Register

Something the CA Legislature Should Pass – But Won’t

CapitolWhen the California Legislature passes “resolutions” — as distinct from actual legislation, it is a meaningless exercise. Sure, it makes people feel better about some issue or crisis de jour, but because resolutions lack any force or effect of actual law, they are quickly forgotten.

Most resolutions are just silly, having to do with “fluff” issues like, “Resolved, we recognize National Puppy Day,” or a resolution establishing another country, such as Cambodia, as a “sister state” to California. Nice gesture, but substantively trivial.

In the last year, resolutions from our decidedly left-of-center legislature have been used to vent against the Trump administration, from establishing a separate immigration policy to whining about the Electoral College. At the beginning of last year’s session, so many days were spent on angry venting that almost no work got done, which for taxpayers may actually have been a good thing.

While those of us who are focused on actual law normally gloss over resolutions, one was recently introduced that caught our eye. Senate Joint Resolution 21 from Sen. Jeff Stone, R-Temecula, would encourage any individual taxpayer in California who disapproves of the federal Tax Cuts and Jobs Act to donate their tax savings to the state of California’s General Fund.

Democrats throughout the nation — and particularly California Democrats — have thundered for months that the tax reform bill is just a tax cut for the rich and would hurt the poor and middle class. Actually, for California, the opposite is true: The middle class is better off but, because of the loss of certain deductions, California’s wealthiest 11-12 percent will likely pay higher federal taxes.

SJR21 correctly points out that while “Californians are struggling with the rising costs of living due to high personal income tax rates and high housing rates due to burdensome regulations … the Republicans in Congress and the President have passed and signed significant tax reform legislation to ease the pain inflicted on California taxpayers.”

The resolution also lauds the new law’s positive effect on economic growth, noting that “leading tax experts have stated the Tax Cuts and Jobs Act will significantly lower marginal tax rates and the cost of capital, which would lead to a 1.7 percent increase in gross domestic product over the long term, in addition to a 1.5 percent increase in wages, and produce an additional 339,000 full-time jobs.”

SRJ21 acknowledges that “the Republican Tax Cuts and Jobs Act limits the amount of state and local taxes that can be deducted on individual income tax returns” but notes that “placing limits on the state and local tax deduction allows individuals in high-tax states like California to finally recognize the true amount of their state tax liability.”

The resolution lists the many benefits of the tax reform law for Californians, including the doubling of the federal standard deduction, doubling of the child tax credit, and reduction of individual tax rates and number of tax brackets.

On the business side, SJR21 recognizes that “the lowering of the corporate tax rate has already resulted in at least one million employees receiving significant bonuses, salary increases, and benefit increases” as well as a massive repatriation of billions of dollars from overseas. Other beneficial economic impacts include a marked increase in GDP and record employment levels for African-Americans, Hispanics, and minorities across the United States.

Yet despite the proven benefits of tax relief, “the California Legislature has considered no fewer than 89 proposals in the current legislative session that would cost taxpayers more than $373 billion annually in higher taxes and fees, including taxes on gasoline, diesel fuel, sodas, candy, groceries, and services, among others.”

After listing examples of questionable spending in California — “the High-Speed Rail Program, which has already cost more than $20 billion, and free college tuition for undocumented immigrants while legal residents are subject to tuition rate increases” — SJR21 comes to the real point, declaring that “the Legislature encourages any individual taxpayer in California who disapproves of the Tax Cuts and Jobs Act to donate their tax savings to the State of California’s General Fund, which pays for programs including, but not limited to, the bullet train that has already cost the state tens of billions of dollars.”

This resolution, of course, has no chance of passing. But it exposes the hypocrisy of the high-tax crowd in a most entertaining way.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

This article was originally published by the Orange County Register

Loss of local control a big issue in new water tax fight

Shower head water droughtThroughout his tenure as governor, Jerry Brown has consistently pursued new revenue for transportation, housing and water. The Legislature, whose default reaction to any problem is to raise taxes on middle-class Californians, has only been too happy to oblige. As a result, California drivers were hit last year with an annual $5 billion gas and car tax and property owners were burdened with a new tax on real estate recording documents to fund affordable housing. As if those tax hikes were not bad enough, now comes the third in a trifecta of tax insults: a new tax on water used by homes and businesses. That’s right, the Legislature is preparing to tax a public good that is essential to life, a precedent-setting tax that is unheard of anywhere else in the nation.

Supporters of the bill will argue that the tax is needed because roughly one million people (mostly in the Central Valley) don’t have access to consistently clean drinking water. This is a legitimate problem due to decades of neglecting basic infrastructure, contamination of water supplies and the failure to make access to water delivery the priority it deserves.

But raising taxes is the wrong solution to this problem. It is unconscionable that California, which has a record-high $130 billion General Fund budget with a $6 billion surplus, can’t provide clean drinking water to a million people using existing resources. Is this not the first role of government, providing a public good essential to life? Moreover, why should taxpayers in Los Angeles, San Francisco and Sacramento have to pay higher water bills for a problem that is mostly limited to groundwater contamination in the Central Valley?

Most Californians haven’t even heard of this proposed tax hike. But that’s only because the Legislature is going out of its way to keep it hidden. Originally introduced as Senate Bill 623, the bill failed to advance last year because of widespread opposition. Nearly all residential homeowners would pay a dollar a month if this tax went through. The tax works on a sliding scale based on meter size — heavy commercial and industrial water users could pay up to $10/month. Not content to just abandon the bill, the governor has now decided to drop this tax in a budget trailer bill. These bills, often dozens of pages long with multiple topics, is the perfect place to hide a tax. If the bill moves forward, taxpayer advocates will watch carefully to ensure that the two-thirds vote requirement for tax hikes is enforced. Because most budget bills only need a majority vote, a lawsuit will quickly follow if the higher threshold is not met.

Our concern is that the governor has become so obsessed playing the “hide the tax” game that he hasn’t bothered to look at other alternative funding sources to solve this problem. If using a $6 billion surplus is off the table, there’s an option to tap into federal funding which is available for precisely this purpose. Or there are billions of dollars of unspent bond funds, including the recently voter-approved Propositions 1 and 84 that can be used to provide clean drinking water. Bond dollars are perhaps the best vehicle to provide major infrastructure improvements needed in the Central Valley. …

Click here to read the full article from the Orange County Register

California Democrats Seek to Ban High-Interest Consumer Loans

money bagCalifornia Democrats have filed a bill that would cap annual interest rates at 19 percent and wipe out about $2.7 billion in loans to California residents.

Assemblyman Ash Kalra (D-San Jose) and Sen. Holly Mitchell (D-Los Angeles) introduced AB-2500, which would set a 19 percent interest rates cap for consumer loans with balances of between $2,500 and $10,000. The legislation in the last three weeks has picked up eight additional Democrat co-sponsors.

The California Legislature ended interest rate limitations for small loans above $2,500 in the 1980s. As a result, there was an estimated $1.5 billion in un-bankable intermediate-term loans issued to state residents, with over half the lending is at annual interest rates over 100 percent or more.

The new bill does not target very short-term pay-day loans, which can charge interest rates of up to 400 percent annualized to borrow up to $500 to bridge the gap between paychecks. But it would raise the cap from $2,500 to $10,000, for loans subject to a 19 percent interest rate limit.

The forecast impact on the $2.7 billion California industry would be to eliminate 98 percent of the $2,500 to $5,000 loans, and 95 percent of the $5,000 to $10,000 loans.

Kalra and other Democrats tried last year to ban the high interest rate practices, but the effort ran into industry lobbying and consumers desperate for emergency cash.

But as Chair of the Assembly Aging and Long Term Care Committee, Assemblyman Kalra has been able to host a number of large meetings for his “Safe Consumer Lending Act”over the last four months, including his latest in Sacramento on February 15.

Kalra highlights residents like JoAnn Hesson, who suffered from diabetes for many years. She is living on Social Security, and required twin surgeries to amputate a leg and provide a kidney transplant. Although she only borrowed $5,000, Hesson was eventually required to repay $42,000.

According to Assemblyman Kalra: “California has no shortage of predatory lenders. We see them pop-up around the state, especially in low-income neighborhoods. These types of loans, those with exorbitantly high interest rates, hurt hard working families the most,”

Principal co-author Sen. Holly J. Mitchell (D-Los Angeles) added: “Compound irresponsible behavior by unscrupulous lending institutions with a recent federal proposal to end key consumer-protection measures for payday loans, and it is clear California must do more to protect families.”

AB 2500 is also co-sponsored by the African Methodist Episcopal Church (AME) – 5th Episcopal District; Asian Law Alliance; Coalition for Humane Immigrant Rights of Los Angeles; Unidos US (formerly the National Council of La Raza); and the Western Center on Law and Poverty.

This article was originally published by Breitbart.com/California

Democratic Assemblywoman’s ex-staffers say she had sex with other lawmakers

The latest sex-harassment scandal in the state Legislature took an interesting turn the other day when four of state Assemblywoman Cristina Garcia’s former staffers alleged that she “spoke graphically” about having sex with other lawmakers in their offices.

According to the ex-staffers, Garcia said having sex with other elected officials “was a good way of getting information,” their lawyer, Daniel Gilleon, wrote in a letter to the Assembly Rules Committee.

The former staffers declined to name the lawmakers “out of respect for their privacy,” Gilleon said. And the lawyer wouldn’t name the former staffers, saying they might want jobs again in the Legislature and figured going public would hurt their chances.

The former staffers also said Garcia pressured them into drinking in the office and at outside events, belittled her aides and often disparaged other lawmakers. …

Click here to read the full article from the San Francisco Chronicle