Election 2018

California Democrats Rewrite Voting Rules in Their Favor

December 2, 2018 By Shawn Steel 11 Comments

Election night was painful for California Republicans, but it was nothing compared to the slow torture we’ve endured ever since.

For three agonizing weeks, Republicans have watched registrars update their tallies with late absentee and provisional ballots. From Orange County to the Bay Area, it’s the same story playing out with different candidates: Democrats flipping seats with late ballots.

First, Mimi Walters. Then, Young Kim. Now, David Valadao.

It’s not unusual for late absentee and provisional ballots to break against Republicans. What is unusual is the scale of the carnage. As of this writing, Republicans lost election night leads for five members of Congress, three state Assembly races, two state Senate seats and a Board of Equalization candidate.

Even the Associated Press was caught off-guard by late ballot counting. It has called California’s 21st Congressional District for Republican incumbent David Valadao only to retract its decision three weeks later. If the independent organization “which sets the standard for calling races across the journalism industry” is getting races wrong, something’s changed in California.

Legislative Democrats have rewritten election rules in their favor to expand voter eligibility, automatically register every voter, eliminate voting integrity laws and encourage questionable campaign tactics, such as ballot harvesting.

California has entered an era of near universal suffrage with illegal immigrants, felons, inmates and minors registering to vote. San Francisco now allows “people in the country illegally and other noncitizens the right to vote in a local election,” according to the Associated Press. The city has spent at least $310,000 in tax dollars to register 49 non-citizens to vote. …

Click here to read the full article from the OC Register

Filed Under: Top Stories Tagged With: David Valadao, Election 2018, Mimi Walters, Vote, Voting, Young Kim

California Voters Take Free Market Positions On Some Key Ballot Measures

November 18, 2018 By Marc Joffe 2 Comments

On Nov. 6, California voters defeated a statewide rent control measure and Los Angeles city voters declined to move forward with a public bank. These results suggest the electorate has the economic wisdom to turn back some of the state’s worst economy-damaging impulses. And it may even augur well for market-friendly policy ideas in the Golden State going forward.

Proposition 10, a measure which would have restored local governments’ ability to impose new rent control laws, was defeated by a wide margin. More than 60 percent of those voting on the measure opted to retain the Costa-Hawkins Act, a state law that prohibits local rent controls on properties built since the mid-1990s. Passage of the measure would have freed cities like Santa Monica to impose price controls on new rental housing, thereby likely choking off the already insufficient amount of new residential housing construction going up in California.

The vote against Proposition 10, along with the passage of two statewide affordable housing bond measures and a new corporate tax to support homeless services in San Francisco is suggestive of a pattern. Voters, aware of skyrocketing housing costs and widespread homelessness, want to see more housing supply.

New housing units can be added most cost-effectively inland, where land acquisition costs are lower. Unfortunately, a lot of the bond funds will be devoted to central city residential in-fill projects that could be built privately for market rents and without subsidies. While San Francisco’s leaders have rightly called for a regional approach to the Bay Area’s housing crisis, what is really needed is a statewide strategy.

It would be much cheaper to build large amounts of supportive housing well inland. The state should deploy affordable housing bond proceeds away from San Francisco, San Jose, Los Angeles, and San Diego, where land acquisition costs are so high. Instead, the state should consider increasing the amount of social service funding it makes available to inland counties if they approve affordable housing units and take in homeless or under-housed individuals from coastal counties.

In Los Angeles, voters rejected a measure that would have paved the way for the city to create a public bank. Municipal and state-owned banks have become a holy grail for some activists in the aftermath of the 2008 financial crisis. The Bush administration’s Troubled Asset Relief Program (TARP) reinforced suspicions that banking is a one-way bet, with bankers reaping windfall profits and big compensation packages during the good times and then handing taxpayers the bill for bad loans when the music stops. Why not end this rollercoaster through public ownership, the reasoning goes.

But, as recent experiences in Germany show, public banks don’t necessarily protect taxpayers; indeed, they often heighten risks to the public purse. While TARP loans were ultimately repaid with interest, failures at multiple German publicly-owned banks necessitated tax funded bailouts that will never be recouped.

A better way to take the excess profits and cushy compensation packages out of banking is to encourage more competition—from both for-profit startups and not for profits.

Web-based, peer-to-peer lending platforms like LendingClub make it easier for savers and borrowers to connect with one another while limiting the amount taken by intermediaries. Alternative payment providers like Veem compete with expensive funds transfer services offered by banks. In recent years, the term fintech has come to embrace a wide array of technology-driven financial innovations that provide viable alternatives to consumers frustrated with banks. It is worth noting that banks have responded with significant innovations of their own – as anyone who deposits checks via their smartphone or uses Zelle for interbank transfers can confirm.

Alternative banking does not necessarily have to be a for-profit enterprise. Kiva is a non-profit that helps borrowers in 80 countries obtain subsidized microloans to help them start businesses. Another financial non-profit, EARN, helps low-income families save for retirement and other purposes.

So rather than pursue an initiative that could impose more risk on the community, public bank advocates in Los Angeles and elsewhere should consider partnering with startups and non-profits to provide better, cheaper and more socially responsible financial services. The $44,000 advocates raised for the Los Angeles public banking ballot measure could have more usefully invested in microloans to struggling Angelinos.

As for the potentially positive long-term political and policy implications, it seems many Californians remain open to economically rational public policies.

This article was originally published by the Reason Foundation

Filed Under: Top Stories Tagged With: Election 2018, Prop. 10, Reason, Vote, Voting

California’s Voters Approve New Taxes and Reject Tax Repeal

November 11, 2018 By Edward Ring 10 Comments

Although hundreds of election results remain to be decided across California, thanks to millions of vote-by-mail ballots still being counted, we can already project with reasonable accuracy the total amount voters approved in new taxes and borrowing. At the local level, new taxes nearly always are approved by voters. In 2016, out of 224 local tax proposals, voters approved 71 percent, adding $2.9 billion in new taxes. As shown on the table, if a similar percentage of November 6, 2018 local tax measures are approved by voters, California’s taxpayers will be providing local governments with another $1.6 billion per year.

Total Estimated New Annual Taxes Approved by California Voters, November 2018

$=Millions

While these new local taxes add billions – over time, tens of billions – of additional burden on California’s already beleaguered taxpayers, state ballot measures often offer even more significant tax increases. This November, voters turned down an opportunity, via Prop. 6, to eliminate an estimated five billion in new gasoline taxes. In all, California’s voters enabled another $6.1 billion in annual taxes, in a state that already has among the highest overall tax rates in the U.S.

California’s Total New Debt

The impact of new taxes is immediate. Rates go up, revenues increase, and government budgets swell. Compared to taxes, the impact of bonds is greater in the long run, but harder to recognize. In reality, bonds are just deferred taxes. From a financial perspective, it would almost be preferable to use taxes to fund many projects that currently rely on borrowing, because at least taxpayers would only be paying principal, and not interest. For example, if you assume 3 percent inflation, the present value of the payments on a $1.0 billion bond (5% interest, 30 year term) is $1.3 billion. That is, in real dollars, using a typical example, bond financing costs taxpayers 30 percent more than paying for services using operating funds. But the seduction of borrowing is hard to resist: big money today, while mortgaging tomorrow.

Total Estimated New Borrowing (incl. Annual Payments) Approved by California Voters November 2018

$=Millions

As it is, this November, voters mortgaged a lot of tomorrows. And as always, the big money in the case of new bonds was almost all local. In 2016, of the 193 new local bond measures, voters approved a whopping 94 percent of them. This added $32 billion in new debt, equating to an estimated $2.1 billion in new annual principal and interest payments. As shown on the table, if a similar percentage of November 6, 2018 local bond measures are approved by voters, California’s taxpayers will owe another $15.5 billion. The principal and interest payments on this new debt will cost taxpayers another $1.0 billion per year.

At the statewide level, despite rejecting Prop. 1, the water bond, voters approved three new major state bond measures totaling $6.5 billion. Adding that to the likely $15.5 billion in local bonds, Californians this November will have added $23.0 billion in debt, costing $1.5 billion per year in annual payments of principal and interest.

California’s Total Accumulated Debt

Who was it that said, “a billion here, and a billion there, and pretty soon we’re talking about serious money”? That would describe California’s total state and local government debt. When you look at what constitutes California’s total debt, accumulated over decades, it puts the relentless drive for higher taxes into context. The next table summarizes California’s total debt, as estimated by California Policy Center researchers Marc Joffe and William Fletcher in a 2017 study entitled “California’s Total State and Local Debt Totals $1.3 Trillion.”

Added in column two of this table is the estimated annual payments on this debt. As can be seen, the conventional debt – bonds, loans, and other contractual debt – paid back over 30 years at an interest rate of 5 percent, is costing California’s taxpayers $27.7 billion per year. Add to that, of course, annual payments of another $1.5 billion on new debt approved by voters earlier this week. But it’s in the unfunded liabilities for public employee retirement benefits where truly serious money burdens California’s taxpayers.

California’s Total Estimated State and Local Government Debt 2018

$=Billions

The story of how California’s taxpayers ended up on the hook for unfunded retirement pension liabilities easily in excess of a half-trillion dollars defies glib explanations. Anyone wanting to dig deep into California’s public sector pensions is encouraged to read the California Policy Center primer “Resources for Pension Reformers” and click on the many links for in-depth analyses of this complex topic. Simply put, an unfunded pension liability is the difference between the assets being managed by a pension fund at any time, and the present value of all promised future payments to retirees and active workers that have been earned up to that same point in time.

Over nearly three decades, some critical mistakes were made in California’s public employee pension fund management. Pension benefits were increased, again and again, by politicians eager to curry favor with public employee unions, but didn’t want to blow their current year budgets by granting salary concessions. Instead, they sweetened future pension benefits which did not incur significant immediate costs. Then the required annual costs to fund pensions were underestimated. Rates of return on invested pension fund assets were overestimated. Life expectancies were underestimated. And as the assets of California’s state and local pension systems began to fall well behind the value of their liabilities, creative accounting was employed to understate the amounts needed to reduce that debt.

Because of all these unknowns, there is a wide range of estimates of California’s total public sector pension debt. At the least it totals over a quarter trillion; at most, about triple that amount. This much is reasonably certain: if there is an economic downturn, and if pension benefits aren’t further reduced, it is likely that payments on pension debt will need to be in excess of $50 billion per year. In all, absent reforms and an epic continuation of the bull market, Californians are likely to be paying over $90 billion per year on state and local government debt. More than half of that will be to pay down unfunded pension liabilities.

The Public Sector’s Insatiable Desire for More Money

It is impossible to view California’s relentless pattern of tax increases apart from its public sector pension crisis, which is just beginning. Currently, the estimated annual payments on unfunded pension liabilities in California is estimated at $17 billion. Imagine the impact of that amount soaring to $55 billion. Just based on modest adjustments to the assumptions governing projections of pension solvency, and based on official announcements already made by California’s largest pension fund, CalPERS, the ongoing (normal costs for pension benefits earned in the current year by active workers) plus the unfunded payments for pensions are estimated to rise from $31 billion in 2017 to $59 billion by 2024. No tax increase, anywhere so far, not even all of them added up, are sufficient to cover this shortfall.

If analysts find California’s looming pension funding crisis alarming, public employees who receive these pensions find it terrifying. That’s why, when a new local tax or bond measure is on the ballot, local governments use taxpayer funds to engage in “information campaigns” aimed at their voters that come very close to being political advocacy. Sometimes they cross that line. After such activities in support of a local sales tax increase in Los Angeles County, the California Fair Political Practices Commission found cause to charge the county, as well as the individual members of the Board of Supervisors, with 15 counts of campaign finance violations.

Californians had a chance to apply vigorous pressure to its elected officials by passing Prop. 6, which would have repealed the gasoline tax. That repeal would have cost state and local governments $5.0 billion per year. Why wouldn’t Californians seize an opportunity to lower what are the highest gas taxes in the U.S.? The answer reveals more about California’s public sector, and their desperate need for more revenue.

Earlier today and in the aftermath of the Nov. 6th election, Carl DeMaio, a former member of the San Diego City Council, who launched the Prop. 6 campaign, described the tactics of the opposition. California’s attorney general is responsible for reviewing ballot initiatives and approving the final wording of these initiatives as they appear on the ballot. According to DeMaio, rather than objectively describing the intent of Prop. 6, which was to repeal the new gasoline tax, his department used focus group research to compile a title and summary for the initiative that was worded in a manner more likely to get people to vote no. But it didn’t end there.

Not only is California’s attorney general alleged to have doctored the language of Prop. 6 to draw down voter support, California’s public sector unions spent millions on an opposition campaign. Overall, the opposition to Prop. 6 spent $50 million on their campaign, compared to only $2.6 million spent by its proponents.

Even in California, $50 million buys a lot of airtime. Lost on California voters, sadly, was the irony of a veteran firefighter who made $324,000 in 2017, serving as the main television spokesperson opposed to Prop. 6 which would have lowered taxes. California’s public sector unions collect and spend at least $800 million per year. They can, quite literally, spend as much as they need to spend to defeat candidates and propositions that do not favor their own interests.

Why don’t California’s voters and policymakers overcome high taxes and an unaffordable cost of living? Partly it’s due to the grip that public sector unions have on politicians, which prevents the state legislature from ever getting spending under control. Partly it’s the lack of any effective opposition, since the supposedly tax averse Republican party in California is a hollow shell, lacking on-the-ground infrastructure, strong candidates, or a shared and compelling political agenda. Saddest of all, it’s because the media in California is entirely unwilling to make the connection between public sector compensation, the power of public sector unions, and the punitive taxes and living costs that are its consequences.

This article was originally published by the California Policy Center

Filed Under: Top Stories Tagged With: Election 2018, Election Day, taxes

Will California Voters Approve $3.6 Billion Per Year in New Taxes?

October 22, 2018 By Edward Ring 11 Comments

With the 2018 general election a few weeks away, it’s time to review just how many tax increases are on state and local ballots in California. And while media attention focuses on the statewide tax measures, even bigger money is represented by the sum of hundreds of proposed local tax increases.

Every election cycle, the California Taxpayers Association (CalTax) produces a list of local tax and bond proposals. After every election, they provide information as to how many were approved by voters and how many failed. Using CalTax data, it can be seen that in November 2016, California’s local voters approved 181 bonds, mostly for school construction, totalling an incredible $32.3 billion. Annual payments on these bonds will cost California’s taxpayers an estimated $2.1 billion per year. At the same time, local voters approved 159 new tax measures, mostly increases to local sales taxes and parcel taxes, adding another $2.9 billion in annual payments.

If you add up all the voter approved new taxes in November 2016, state and local, you have to include not only $5 billion in new local taxes and payments on local bonds per year, you also have to add the voter approved statewide measures. That would include Prop. 51, adding yet another $9 billion in school bonds (estimated payments $585 million per year), and Prop. 55, the extension of the “temporary” increase to state income taxes on personal incomes over $250,000 per year (estimated collections, between $4 billion and $9 billion per year), and Prop. 56, the $2.00 tax increase per pack of cigarettes (estimated collections just over $1 billion per year).

Before turning to 2018, it’s important to also note that in 2016 the Democrats recovered their two-thirds majority in the state legislature, meaning they could pass new taxes without voter approval. And in 2017, that’s exactly what they did, adding twelve cents per gallon to the already high state taxes on gasoline and increasing vehicle registration fees. Voila, another $5.4 billion per year in taxes on Californians.

When considering how California’s proposed new taxes will fare with voters in November, history is a good indicator. In November 2016, ninety-four percent of local bond measures were passed by voters, and seventy-one percent of new local taxes were approved. Similarly, this past spring, in the primary elections of 2018, California’s voters approved eighty-three percent of local bond measures ($200 million per year in annual payments), and sixty-five percent of new local taxes ($228 million in new taxes per year). Statewide, Californians approved a $4 billion “water” bond (Prop. 68), which equates to another $260 million per year in annual payments.

Which brings us to November 2018. The table below shows 125 new local bonds are proposed. If they are all approved by voters, that will add another $1.2 billion in annual payments. In addition, 259 new local taxes are proposed, which if approved will total another $1.6 billion in annual payments. This time, along with the perennial hikes to sales taxes and parcel taxes, the other popular new mode of taxation is marijuana, with 73 of California’s cities and counties proposing to cash in on sales of recreational cannabis.

California’s Local Tax and Bond Proposals – November 2018

If historical trends apply this time, California’s voters will likely approve four-fifths (or more) of the local bond measures, and two-thirds (or more) of the local tax increases. This will equate to roughly $2 billion in new taxes and payments on bonds per year. And then there are the statewide initiatives.

On California’s November ballot there are four bond proposals, totaling $16.4 billion in additional borrowing. Prop. 1 issues $4 billion in bonds for housing programs and veterans’ home loans. Prop. 2 sells future revenue from the millionaire’s tax for $2 to guarantee $2 billion in bonds for homelessness prevention housing – that’s tax revenue that has to be made up somewhere else, so yes, it counts. Prop. 3 issues a whopping $8.9 billion in bonds for water-related infrastructure and environmental projects. And Prop. 4 issues $1.5 billion in bonds for children’s hospitals. Total payments on these bonds? Another $1.1 billion per year.

To summarize, in 2016, voters approved new taxes and payments on bonds (not including the $4 to $9 billion per year in “millionaire” taxes that were not new, but were continued by the passage of Prop. 56) totaling $6.5 billion per year. In the 2018 June primary, California’s voters approved another nearly $700 million in new taxes and payments on bonds. And this November, voters have the opportunity to approve (or reject), $3.6 billion per year in new taxes and bond payments.

For the children. For education. For safety. For safe drinking water. The list goes on, and the stories are compelling. But here’s the problem: Even if all of the 2018 tax and bond payments are approved, and those payments are added to the payments on new taxes and bonds already approved in Nov. 2016 and June 2018, the total is “only” $10 billion. Why “only”? Because the estimated payments on public employee pensions in California are estimated to increase from $31 billion in 2018 to $59 billion in 2024, and that is the “normal” scenario, not one reflecting the impact of a major correction in the value of stocks, bonds, and real estate.

Money is fungible. When more tax revenues go to pension funds, vital publicly funded programs are either defunded or new taxes are imposed to keep them alive. Similarly, when more tax revenues go to pension funds, maintenance projects that might have been funded using operating budgets, suddenly become capital projects requiring debt financing.

Californians may expect a deluge of new tax and bond proposals for many years to come.

Filed Under: Top Stories Tagged With: Bonds, California Taxpayers Association, CalTax, Election 2018, taxes, Vote, Water Bond

Prop. 6 – Gas Tax Repeal – is a grassroots initiative

October 9, 2018 By Jon Coupal 7 Comments

Proposition 6 is an initiative measure appearing on the ballot less than one month from now that would repeal the tax hike on gasoline and cars imposed by Sacramento politicians last year without a vote of the people. If Prop. 6 passes, California’s gas and car tax would still be in the top five among all 50 states.

Supporters of Prop. 6, those advocating for the repeal of the tax hikes, have focused their campaign on several compelling points including California’s overall tax burden (highest income tax rate and state sales tax rate in the nation) and California’s high cost of living. Other arguments favoring Prop. 6 include the well-documented waste of taxpayer dollars spent on transportation, the lack of any reforms and a decades-long history of diverting transportation dollars away from roads and highways.

The Yes on Proposition 6 campaign is being advanced by a coalition of grassroots taxpayer organizations and the state’s Republican Party. It has virtually no big corporate support.

The opponents of Proposition 6, those who desire to retain our status as a high-tax state, consist of interests that benefit financially from public construction projects. These include construction companies, labor organizations and local governments who thirst for ever more taxpayer dollars. They have contributed tens of millions of dollars to the opposition campaign for an obvious reason. The millions they invest in a political campaign produce a great return on investment if the payoff is more than $5 billion of new taxpayer spending annually.

It is apparent at this point that the opponents of the gas tax repeal will outspend supporters by a 10-to-1 margin.

But the tactics of the opposition campaign have put it in hot water.

To read the entire column from the Los Angeles Daily News, please click here.

Filed Under: Top Stories Tagged With: Election 2018, Gas tax, Midterms, Prop. 6, Proposition 6, taxes

California Primary Today: Voters to Decide Shape of 2018 Midterm Elections

June 5, 2018 By Joel B. Pollak Leave a Comment

Voters will head to the polls Tuesday in the California primary, which will not only determine the final matchups in several key statewide races, including the race for governor, but will also set the framework for the overall battle for the U.S. House nationwide.

Democrats are targeting at least seven, and as many as ten, congressional districts in the Golden State, hoping that widespread opposition to the Trump administration will draw their voters to the polls. However, Republicans have seen a surge in voter enthusiasm lately, thanks to the conservative pushback against California’s “sanctuary state” laws. In addition, a glut of Democratic candidates in otherwise winnable districts has given Republicans new hope.

California’s primary is a “top two” or “jungle” primary, in which all of the voters may choose from all of the candidates, regardless of party. The top two finishers qualify for the general election ballot — again, regardless of party. In 2016, that meant an all-Democrat final for the U.S. Senate election between eventual winner Kamala Harris and then-Rep. Loretta Sanchez. But in 2018, it could mean that Democrats fail to qualify for the November ballot in some districts, simply because they are splitting their vote among too many independently viable choices.

Voters will also be determining the fate of State Sen. Josh Newman (D-Fullerton), who voted to raise the gas tax last year by 12 cents per gallon and now faces a recall election. While many other legislators also voted for the gas tax hike, Newman is from a swing district where Republicans believe they can mount a successful challenge.

Typically, more than two-thirds of California voters submit their ballots by mail, but for the rest, polls will open at 7 a.m. Pacific Daylight Time and close at 8 p.m. Turnout is expected to be low, though that may not be the case in November.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He was named to Forward’s 50 “most influential” Jews in 2017. He is the co-author of How Trump Won: The Inside Story of a Revolution, which is available from Regnery. Follow him on Twitter at @joelpollak.

This article was originally published by Breitbart.com/California

Filed Under: Top Stories Tagged With: California primary, Donald Trump, Election 2018, Josh Newman, Sanctuary State

Will Top-Two Primary Provide Typical Wacky Results?

June 1, 2018 By Darry Sragow 3 Comments

With less than a week to go before voting closes in California’s June primary, political insiders’ attention is riveted on the endless range of possible outcomes that are a function of the three-dimensional political chess game we call the Open Primary.

Big Bang’s Sheldon Cooper, while likely considering all this child’s play, might be amused, if not fascinated, by developments in the closing days of the campaign that include, but are by no means limited to, the following.

In the race for governor, ads for the Democratic frontrunner are aimed at driving Republican voters into the arms of the Republican frontrunner, with the hope of avoiding a Democrat versus Democrat fall face off. Ads for the Democratic runner up in current polling are aimed at driving Republican voters in the opposite direction, with the hope of achieving a Democrat versus Democrat general election match-up.

In the battle for control of the U.S. House of Representatives, the Democrats assert that a few pick-ups in California are essential to regain a majority. Toward that end they have unloaded on the order of four million dollars on Republican contenders in three Congressional districts that the Democrats have consistently tagged as toss ups, ignoring the vote history in both. Having boasted that they could win these historically Republican seats, they will suffer an embarrassing setback if one or more of them wind up with Republicans taking the top two spots for the fall.

To the pols in Washington who have no real understanding of California, the tumult of our top two primary season has undoubtedly confirmed their view that this is a certifiably wacky place. But, irrespective of how wacky the outcomes will be next Tuesday compared with what a traditional closed primary would have produced, good old Will Rogers must be laughing in his resting place.

More than a year ago, the Democratic Congressional Campaign Committee announced with some fanfare that it was deploying a platoon of at least eight staffers from Washington to Irvine to help capture the five southern California House seats where Hillary Clinton beat Donald Trump for President. This notwithstanding the fact that no Democrat other than Clinton has ever carried any of those districts.

That high profile effort clearly inflamed the passions of would-be Democratic Members of Congress and produced a bounty of candidates who, it became evident at some point, could wind up splitting the collective Democratic vote into so many pieces that the top two vote getters turn out to be Republicans.

Whether the Democrats’ effort also inflamed the passions of voters in those districts we will know next week. If it did, the Party’s strategy will be proved brilliant. If it didn’t, we come back to Will Rogers and his confession more than 80 years ago that “I am not a member of any organized political party. I am a Democrat.”

The California Target Book will host a comprehensive Post Primary Analysis and Look Ahead to November the afternoon of Monday, June 11 in Sacramento. For details and to register please visit CaliforniaTargetBook.com.

Darry Sragow publisher of the California Target Book and USC professor.

This article was originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Donald Trump, Election, Election 2018