Solutions to Homeless Problem Should Not Target Homeowners

sanfranciscohomelessAs the search for solutions to the homeless problem continues, current property owners and the equity they have in their homes are often cited as targets for funding homelessness relief. What is ignored with these proposed remedies is that homeowners are counting on the equity in their homes to help with retirement or other needs.

Steve Lopez’s Los Angeles Times weekend article took issue with the wealth built up in homes partially because of limited housing stock while renters face difficult options.

While Lopez cited obstacles to housing reforms, he quoted two professors who suggested ways to find funding for homeless housing. One proposal was a “a tiered transfer tax on equity” promoted by Carol Galante of U.C. Berkeley’s Terner Center for Innovative Housing.

Lopez also spoke with UCLA professor Michael Manville who thinks it is okay to tax property because the increased value of the property has nothing to do with the efforts of the homeowner.

Manville, along with colleagues, wrote an opinion piece for the Los Angeles Times last July urging a $3 a day tax on property owners to build a homelessness fund. That $3 a day amounts to $1095 a year, a sizeable chunk of change for many homeowners who can find good uses for that money including maintaining or improving their homes.

Whether the increased property value comes from a wise investment decision or just dumb luck as Lopez writes, the value belongs to the homeowner. While the homeowner lives in the home, the increased property values are merely paper profits. Increased property value does not necessarily reflect an owner’s ability to pay increased taxes. When the increased property value is claimed it can be the lifeline to a comfortable retirement or for other needs.

While the legislature went down this path recently of charging property owners to help the homeless by creating fees for housing related documents, cutting into potential retirement funds with large annual or transfer taxes is a bad idea.

What’s disturbing is that those who enjoy government provided retirement pensions often suggest these proposals that can undermine a homeowner’s potential retirement fund.

Editor and Co-Publisher of Fox and Hounds Daily.

Could high taxes and crime push California voters to a tipping point?

VotingDespite changing demographics and a sharp veer to the ideological left, is it possible that California could take a political trip back to the future as two staples resurface that drove the state’s politics in the more conservative 1980s and 1990s? Look around and you’ll see indications that even in this liberal bastion on the left coast, the issues of taxes and crime are stirring again.

From the time when cinema’s Doc Brown (Dr. Emmett L. Brown, ably played by Christopher Lloyd) was sending his flux-capacitor equipped DeLorean back in time to today’s California run by Jerry Brown — a past-and-future character if there ever was one — attitudes on the issues of taxes and crime seemed to have shifted dramatically.

Considering recent evidence, one might think that the tax issue has faded from the conscience of Californians, most of whom were not around when the state’s voters kicked off a national tax revolt that helped propel Ronald Reagan to the presidency by overwhelmingly passing property tax-cutting Proposition 13 in 1978.

In a Wall Street Journal piece from a year ago leading up to the 2016 election, I asked, “Nearly 40 years later, many Californians are wondering: Will the tax revolt mind-set die where it all began?”

After all a measure on the 2016 ballot (Proposition 55) extended the highest-in-the nation income tax that voters put in place just four years previously; a cigarette tax passed, as did many local taxes and bonds.

This year’s legislative session included a gas tax increase, the cap-and-trade extension, which many call a tax increase because it raises revenue for the government to spend, and a document tax to fund housing issues. This legislative session probably produced the most pro-tax successes since the 1935 legislature created both a state income tax and a vehicle license fee.

Yet all this tax activity may be driving voters to a tipping point to say enough!

The first indication is the California electorate’s sour reaction to the gas tax. In a University of California Berkeley Institute of Governmental Studies poll conducted after the gas tax increase became law, 58 percent opposed the gas tax, 39 percent solidly opposed. The twelve-cent a gallon tax will not even be collected until November. The negative reaction to the tax seen in the poll likely would increase once the tax adds to the price of gasoline at the pump.

The test of new California resistance to taxes could well occur in November 2018. Two measures to repeal the tax have been filed. A gas tax repeal measure could rally Republican voters to the polls during the general election, especially if no Republican makes the runoff for either of the state’s high-profile offices, governor and United States senator. Since the state’s Republican Party is said to be behind one of the repeal initiative proposals,  polling shows that this is a powerful issue among voters. In addition a Southern California state senator, Democrat Josh Newman, is facing a recall effort centered on his gas tax vote.

The heated debate over extending cap andtrade to reduce greenhouse gases centered on the additional costs that would be felt by California consumers. The word “tax” would have dominated were a word cloud image created over word use frequency during the cap-and-trade debate. Increased costs generated by cap-and-trade demands were labeled a hidden tax.

California citizens have yet to feel the additional costs that the cap-and-trade measure might add—anywhere from fifteen- to seventy-three-cents per gallon of gasoline over time, according to the state’s legislative analyst.

If the gas tax repeal makes the ballot, an interesting political dynamic will play out in defense of the tax. A campaign to preserve the tax would likely have the greatest financial support. The tax was supported by both labor and big business. They argued that California’s economy depends on improved transportation and updated roads and highways. Business also supported the cap-and-trade bill, fearing if it were defeated an unelected California Air Resources Board would put a tougher, command-and-control greenhouse gas restriction in place.

The individual voter who pays the freight of the gas tax increase, additional car fees, and increased costs linked to the cap-and-trade law, however, may want to use the gas tax repeal initiative to send a message.

A rejection of the gas tax increase would certainly be a marker that as liberal as Californians have become, there is still a conservative streak when it comes to taxes and a potent issue from the past could return.

Meanwhile there is the issue of crime—like taxes, also on the rise. A backlash is stirring to changes backed by criminal reform efforts in the legislature and on the ballot.

In response to a court order to reduce prison populations, Governor Jerry Brown championed AB 109 in 2011. Under so-called realignment, certain low-level offenders were moved to county jails from state prisons. In many instances, overwhelmed local jailers were forced to release prisoners from their jails to make room.

Along came two ballot measures, Proposition 47 in 2014 and Proposition 57 in 2016, that downgraded a number of felonies to misdemeanors and fast-tracked the parole process for felons convicted of nonviolent crimes.

Efforts to reform the justice system and reduce prison overcrowding prompted the law changes. Voters are sympathetic to efforts allowing prisoners to achieve rehabilitation. Voters passed both ballot initiatives despite major opposition from the public safety community.

The combination of laws, however, has the law enforcement community warning of a rise in crime with little ability to curb it. Property thefts, forgeries, frauds, illegal drug use, and more under $950 are labeled a consequence-free crime because few arrested for such crimes serve any time, and perpetrators are aware of the situation.

According to a release from the Association of Los Angeles Deputy Sheriffs, “Prop 47 has created a criminal culture where criminals know they face little, or far lesser, punishment for their crimes. Following the passage of AB 109, nearly 25 percent of jail space that could house criminals serving local sentences for property or violent crime is now occupied by those shifted from state prison to local jails to serve their time.”

Law enforcement officials reveal increases in crime as a result of the new laws, but it is the consequences on the street and in people’s lives that have changed the tone of the conversation. If you’re not convinced, take a look at neighborhood websites with constant chatter about break-ins and suspicious activity and how to set up alarm systems and security cameras.

In Sacramento a growing number of neighborhoods fed up with petty crime pooled money to hire private security for public streets. In the inland empire, vehicle thefts jumped from ninth in the nation to fifth in just one year. In the west San Fernando Valley, gang activity has increased 63 percent in two years. A number of California cities are joining in an effort called Taking Back Our Community, a coalition of local governments dedicated to public education and community advocacy surrounding the unintended adverse public safety impacts of recent changes to California’s criminal law.

This surge of activity recalls another time in California history when crime became a major policy and political issue. As noted California historian Kevin Starr wrote in his book, Coast of Dreams, California on the Edge, 1990–2003: “In 1980, California had fewer than 25,000 inmates in a dozen prisons. By January 1998 there were some 154,000 prisoners in 33 prisons.” Californians elected two governors in succession who were tough on crime. Republicans George Deukmejian and Pete Wilson occupied the corner office in the capitol for much of the 1980s and 1990s.

In his first inaugural address in 1983, Deukmejian said, “All the prosperity in the world will not make our society better if our people are threatened by crime. Therefore, it will be the highest priority during my administration to provide all the leadership I can to make California safe again.”

Wilson’s 1994 State of the State Address was one of many to pinpoint the crime issue. He called for get-tough measures against dangerous felons and repeat criminals. He also called for bills that would put three-repeat felons behind bars for good.

The legislature responded by passing a three-strikes law in March, but the people did them one better supporting a three-strikes ballot measure (Proposition 184) in November 1994 that received nearly 72 percent of the vote.

But the crime pendulum shifted with Propositions 47 and 57.

In a Sacramento Bee op-ed published a month before the November 2016 election in hopes of stopping Prop 57, which Wilson argued gutted the three-strikes law, he wrote, “The three-strikes initiative approved in 1994 and other sensible crime- control laws prevented millions of Californians from becoming crime victims. It would be gross dereliction of duty to discard laws that have provided us protection of such proven effectiveness.”

This time he was not as persuasive.

But now that the effects of the crime reform initiatives and state laws are being tallied, that pendulum may be moving back again. Will state politics follow?

Certainly California is in a different place today than three and four decades ago, but growing unease can be detected about the tax and crime issues that dominated politics in that era.

Let’s just say that Jerry Brown, rather than Doc Brown, would recognize the modern social-media terminology associated with the taxes and crime in California.

They’re trending.

ditor and Co-Publisher of Fox and Hounds Daily

Originally published in EUREKA, Stanford University’s Hoover Institution’s online magazine.

Dems want to raise property taxes to fund government pensions

Pension moneyI guess I should use the old vaudeville line: Stop me if you’ve heard this one: the push to increase commercial property taxes is about government pension costs. Returning to this subject at this time (I wrote on the same subject for the Sacramento Bee last April) is prompted by the coming together of a couple of recent events.

There was the League of Women Voters and other groups hosting a meeting in Los Angeles this past weekend to “educate” people and advocate for a split roll property tax seeking to raise billions of tax dollars on the back of businesses. Also last week, Stanford University’s Institute for Policy Research issued a report by professor and former Democratic legislator Joe Nation describing the pension burden that is beginning to strangle state and local governments in California.

The services that are affected by both the split roll rally and the Stanford report are quite similar.

Supporters of the split roll say that raising taxes on commercial property will provide $9 billion a year needed for schools and services provided by local governments. Meanwhile, Joe Nation’s report says that because of pension contributions by employers (i.e. governments) increasing an average of 400% over the past 15 years, educational services, recreation, community services and others are squeezed for lack of money.

Many “core mission services,” as defined by the Stanford report, will be starved of money because of pension demands. The split roll advocates talk about the need for more money for local services. What they don’t tell you is that money for those services is being diverted to cover the pension requirements of state and local governments because these governments made generous promises to workers and accepted revenue projections to cover those promises that did not play out.

Instead of admitting that more money is needed to cover pension costs, split roll advocates create a false argument about business dodging its fair share of property taxes. They claim homeowners now pay a much larger share of the property tax burden than they did prior to Proposition 13. A Legislative Analyst’s Office report undercuts that false claim.

The report states in part, “Homeowners pay a slightly larger share of property taxes today than they did when Proposition 13 passed. Proposition 13 does not appear to have caused this increase. … In part, this may be due to faster growth in the number of residential properties than the number of commercial and industrial properties.”

The so-called grassroots activity seeking support for a split roll is backed by powerful public employee unions who support more revenues to cover the pension costs. Yet, you won’t hear anything from the split roll advocates about the pensions strangling local budgets or pushing some cities toward bankruptcies.

Meanwhile, the Stanford study makes it clear with numerous examples that pensions are absorbing greater and greater portions of local government budgets. The Stanford study states clearly there is “agreement on one fact: public pension costs are making it harder to provide services that have traditionally been considered part of government’s core mission.”

This piece was originally published by Fox and Hounds Daily

How Trump’s Paris Climate Agreement Decision Will Affect California Businesses

http://www.dreamstime.com/-image12155315The issue of how business will fare, respond to or be affected by President Donald Trump’s decision to pull out of the Paris Climate Change Agreement received much attention after Trump’s announcement yesterday. Responses to the move in California often highlighted the business issue in both supporting and opposing the president’s move.

Trump argued that his decision would help preserve jobs and businesses in the United States. But many business leaders, especially in California, opposed Trump’s move. The Wall Street Journal reported that many companies will not change strategies that are designed to reduce greenhouse gases because of the announcement. According to the Journal, these companies are responding to shareholder or customer demands to reduce greenhouse gases; are on the path to converting to renewable energies; or businesses in states like California are responding to state mandates to reduce their carbon footprint.

While some energy companies, particularly coal companies, applauded the president, other company leaders expressed disappointment. Business always likes certainty and many business leaders complained that they want to follow a consistent set of rules to face the challenge of climate change. One such company urging a consistent message was ExxonMobil, the country’s largest oil producer. General Electric’s chief executive, Jeffrey Immelt said, “Climate change is real. Industry must now lead and not depend on government.”

In California, both foes and advocates of the president’s decision used the business issue in commenting on Trump’s move.

Two prominent California based business leaders, Tesla and Space X head Elon Musk and Disney’s Robert Iger announced they were resigning from the president’s business advisory council because of Trump’s decision on the Paris accord.

Gov. Jerry Brown said California’s growing economy and new jobs were created under the state’s strong climate change mandates. “California, the sixth-largest economy in the world, has advanced its nation-leading climate goals while also growing the economy. In the last seven years, California has created 2.3 million new jobs – outpacing most of the United States – cut its unemployment rate in half, eliminated a $27 billion budget deficit and has seen its credit rating rise to the highest level in more than a decade.”

NextGen Climate president Tom Steyer went from the farcical calling Trump a “traitor” to urging “courageous action from American business leaders, who know clean energy is simply the better way to clean the air, protect our health and create jobs.”

California Manufacturers & Technology president Dorothy Rothrock said, “California has a new reason to provide meaningful leadership by adopting a market-based approach to reduce emissions that will protect manufacturing jobs and keep costs affordable for consumers.”

Majority Leader Kevin McCarthy (R-Bakersfield) said Trump made the right choice by relieving a burden on the United States and freeing private enterprise to create more jobs. “The American energy renaissance has been good for our country and the world. It created American jobs, freed the United States and our allies from OPEC price controls, and helped to reduce emissions at the same time…President Trump made the right call in leaving a deal that would have put an unnecessary burden on the United States.”

Jim Wunderman, CEO of the Bay Area Council business association, said California’s businesses will continue to pursue a clean-energy future. “Addressing climate change is not just an environmental or moral imperative, it is an economic imperative.”

ditor of Fox & Hounds and President of the Small Business Action Committee

This piece was originally published by Fox and Hounds Daily

What Exactly is the “Rule of Law”?

court gavelPart of the difficulty in finding common ground on the immigration debate in California is a different understanding of a basic governmental concept: the “rule of law.”

California officials have readily used the phrase when it comes to resisting the Trump Administration’s immigration policy.

Chief Justice of the California Supreme Court, Tani G. Cantil-Sakauye, admonished the administration for stalking courthouses looking for people in the country illegally when she told the state legislature in her annual speech on the courts, “I submit to you today that the rule of law is being challenged.”

California’s Attorney General, Xavier Becerra, in responding positively to a federal court’s injunction halting Trump’s executive order against sanctuary cities, declared, “This injunction is consistent with the rule of law.”

Yet, those opposed to sanctuary cities and California’s effort to become a sanctuary state ask that if people came into the country against the laws on the books, is not that a violation of the “rule of law”?

Some have even compared the efforts to ignore federal immigration laws to the nullification efforts future Confederate states used to challenge federal authority prior to the Civil War.

Differing views on what constitutes the rule of law intensifies the country’s political divide. Ultimately, the United States Supreme Court will determine the law.

Cases before that court on the issue of state sovereignty have occurred in the past, of course. One case cited that may influence the outcome of a new Supreme Court test is Printz vs. United States.

This 1997 case, dealing with the Brady Gun Law, said the state could not compel local officials to execute federal law. The 5 to 4 majority declared that the Tenth Amendment to the constitution allowed the state to ignore a federal mandate, in this case requiring local law enforcement to enforce certain gun laws, because the constitution did not address the specific issue covered by the law.

Interestingly, the court majority, lead by Justice Antonin Scalia, were the conservative jurists on the court. Liberals may now use this decision to argue the Tenth Amendment allows states to declare sanctuary despite federal immigration laws because the sanctuary issue is not in the Constitution.

However, the Printz decision may not cleanly cover the issue of sanctuary cities. The majority opinion in Printz argued that the Framers of the Constitution allowed for federal regulation of international and interstate matters but reserved internal matters for the judgment of state legislatures. It may be argued that border security between nations is an international matter.

Cities can choose to not enforce federal immigration law, but they cannot stop the federal government from enforcing it. This is where the denial of federal funds to sanctuary cities comes into play and will ultimately be tested in court.

Despite the legal battle, it seems a basic understanding of what is meant by “the rule of law” is in order for the on-going immigration debate.

The American Bar Association attempted to frame a discussion of “the rule of law” in a three-page document.

The Bar Association dialogue started with questions:

“The rule of law is a term that is often used but difficult to define. A frequently heard saying is that the rule of law means the government of law, not men. But what is meant by “a government of law, not men”? Aren’t laws made by men and women in their roles as legislators? Don’t men and women enforce the law as police officers or interpret the law as judges? And don’t all of us choose to follow, or not to follow, the law as we go about our daily lives? How does the rule of law exist independently from the people who make it, interpret it, and live it?”

The site contains differing views from two civil rights historical figures.

Elizabeth Cady Stanton, an American suffragist, social activist, abolitionist, and leader of the early women’s rights movement, is quoted: “It is very important in a republic, that the people should respect the laws, for if we throw them to the winds, what becomes of civil government?”

But one can respect laws and still resist, The Rev. Martin Luther King wrote in his Letter from the Birmingham Jail. “I submit that an individual who breaks a law that conscience tells him is unjust, and who willingly accepts the penalty of imprisonment in order to arouse the conscience of the community over its injustice, is in reality expressing the highest respect for law.”

The Bar Association comments, “The rule of law is intended to promote stability, but a society that operates under the rule of law must also remain vigilant to ensure the rule of law also serves the interests of justice.”

Strict adherence to laws on the books in relation to a concept of true justice reflects the current debate over immigration issues in this state. Yet, perception by the public of how laws are enforced is as an important part of this debate as is a finally sliced Supreme Court decision on the law. The public’s understanding of the “rule of law” is the tie that keeps in place the foundation of a civil society. So, it is incumbent on all sides of this debate to make clear what is meant in arguing for the “rule of law.”

Joel Fox is editor of Fox & Hounds and President of the Small Business Action Committee.

This article was originally published by Fox and Hounds Daily.

Don’t Rush Toward Gas and Transportation Taxes

LA-Freeway-Xchange-110-105The governor and legislative leaders came out from behind closed doors with a transportation tax and road fix plan and demand to pass the measure through the legislature in one week. Feels a lot like the federal experience with the health care reform bill. And, like that measure, despite one party controlling the executive and legislative branch, the bill might not find necessary support.

The campaign to pressure wavering legislators to get behind the bill kicked off yesterday in Concord with a lineup of Governor Jerry Brown, Assembly Speaker Anthony Rendon and Senate President pro tem Kevin de León teaming up with union members to visit Senator Steve Glazer’s district and convince Brown’s one-time aide to publicly embrace the tax increase.

I seem to remember unions opposed Glazer when he first ran because of his stand against BART strikes. Different time and different unions, perhaps, but Glazer is still behind that issue. There are indications that Glazer is holding out for a no-strike provision in the transportation bill before he decides if he will support it.

While Brown, De León and Rendon will play old-fashioned political hard ball with legislative members in attempting to secure the needed two-thirds vote to pass the tax increases, ultimately individual legislators are going to have to be satisfied that their constituents will swallow the tax increase.

Voting patterns and attitudes have changed since Gov. Gray Davis was kicked out of office in great part because he increased the vehicle tax. While just about everybody believes road repair is necessary for improving the state’s economy and for the general public’s mental health while driving congested highways, yet, the double whammy of an increased vehicle registration fee and 43% gas tax increase will be a hard sell. Especially, to less well-off constituents those who have to drive a long way to get to work.

The transportation issue and health care issue are different in many ways, but the idea of rushing through a measure that will pile new burdens on the public has a familiar feel to what happened recently in Washington.

The strategy behind quickly passing the two quite different bills is similar: Pass a measure before it gets tangled up in amendments. A lot of amendments can and should be had.

At the Concord news event yesterday, Gov. Brown said, “There is nothing more fundamental in the business of government than making sure the roads and bridges don’t fall apart, and they are falling apart.”

But if roads and bridges are a fundamental responsibility for government, why wasn’t attention paid to them when the state budget grew dramatically since Brown returned to the governor’s office?

Brown says if we don’t address the problem now it will only get worse—and more expensive to fix. Right on both counts. However, using current transportation related dollars that find the way to non-transportation services or including proposals that will allow for more cost efficient repairs would go a long way to convince voters that government is trying to get the job done right and give good value for their tax dollars. It might even convince voters to chip in a little more to get the job done.

Legislators like Glazer are independent and not so easily coerced. Legislators should hear  from their constituents before voting on the bill. Rushing through the transportation bill without sensible changes could result in the same fate as the health care bill.

This piece was originally published by Fox and Hounds Daily

To Prioritize Infrastructure, Consider All State Spending

Infrastructure constructionNotable in the reaction to Governor Jerry Brown’s Friday press conference outlining money for dam and water infrastructure, while declaring the need for California to tackle all its infrastructure backlog, was the response from one of the leaders of the fight for improved infrastructure. California Business Roundtable president Rob Lapsley issued a release echoing the governor’s call on structural improvements and cost, but focused on “the real issue at hand” — state spending.

Everyone agrees that California infrastructure needs repair and the money to make those repairs happen. The debate is over how to fund repairs and build projects.

Negotiations on reaching a deal on funding infrastructure improvements have been going on for some time and business community leaders have been deeply involved. Meanwhile, the more open debate on infrastructure funding continues with the capitol generally separated into two camps, one headed by Democrats who want tax increases and the other by Republicans who want to redirect current funding for infrastructure purposes.

However, Lapsley broadened the debate by discussing overall state spending as part of a larger fix for funding the state’s priorities.

Laplsey wrote, “California is one of the highest taxed states in the nation and, even after passing even more taxes through Prop 55 last November, the state is effectively out of money. We have record general fund and special fund revenues, but it has been decades since infrastructure investment was a priority in our state budget.”

While pledging to support the Brown Administration’s efforts to secure infrastructure dollars from Washington, Lapsley wrote, “we need an honest rational discussion in the Legislature on how to pay for state salaries, pensions and pension debt, health care, dams, flood control, roads, transit, schools and other infrastructure needs while expediting solutions through real regulatory reform that apply to all economically important projects, and not just the politically favored few.”

California’s infrastructure, as California Chamber of Commerce president Allan Zaremberg noted in a release tied to the governor’s press conference, “is a key component of maintaining and improving California’s economy for everyone’s benefit.”

Simply put, infrastructure improvements must be a priority of state spending because the improvements benefit all Californians economically and on safety issues.

Lapsley rightly points out infrastructure has been a low priority for California lawmakers for some time. That has to change.

The change will have to include discussing spending on all other programs in this high tax state. We must consider the spending on pensions and salaries and debt and all the issues Lapsley raised if we are to focus attention on the paramount needs of infrastructure. In the end, improving infrastructure would advance the economy, which in turn would benefit all the other areas funded by the state budget.

Editor of Fox & Hounds and President of the Small Business Action Committee.

This piece was originally published by Fox and Hounds Daily

Boycott the Oscars? Why Not Boycott Everything!?

oscarsThe focus of the political world will be on California Sunday when several political speeches are bound to take over the Oscars. According to one account, the Oscars broadcast, which lost viewers last year, could rebound over the expectation of hearing these political speeches. Or there could be a boycott of the broadcast in anticipation of speeches blasting President Donald Trump.

That would be in line with the current political strategy that seems to be capturing activists of all political stripes in this divided country: Boycott everything!

When Under Armour CEO Kevin Plank praised Trump’s business agenda, social media exploded with a hashtag to boycott the company.

With Elon Musk agreeing to serve on Trump’s business advisory committee, customers reportedly canceled auto orders.

Boycott campaigns were aimed at retailers such as New Balance, Macy’s and L.L. Bean because company officials said kind words about Trump’s business or trade policies.

Of course, there was the blowup over Nordstrom’s dumping Ivanka Trump’s fashion line which saw counter campaigns to either support or boycott Nordstrom’s over its decision.

The boycott strategy could also find itself in state law if Senator Ricardo Lara gets his way. Lara’s Senate Bill 30 would prohibit the state government from doing business with any individual or organization that assists in construction of a federal border wall along the California-Mexico border. Consider this a state sanctioned boycott.

I’ve tackled the issue of boycott before: In the free speech universe, boycotts themselves are a form of free speech, an individual expressing an opinion by choosing not to buy (or the obverse — to buy to support a business’ decision). On the other hand, boycotts can have a chilling effect on free speech by discouraging expression by business owners and others.

Of course, California business is not unfamiliar with boycotts. The boycott against grape growers organized by the United Farm Workers is well remembered. More recently, some Southern Baptists organized a boycott against Disney.

Boycotts to make political points have been encouraged by Martin Luther King, Mahatma Gandhi and President Jimmy Carter during the 1980 Moscow Olympics. A petition signed by supposedly 700,000 people called for a boycott against Target stores after the retailer announced transgender people are welcome to use the restrooms that they identify with the most.

What if all these boycotts were successful beyond the imaginings of their supporters? Some businesses would be shut down. Some voices would lack an audience.

But a major goal of boycotts is shut off debate and that is a dangerous thing. Our great civic divide would deepen because people are not talking to each other.

I still believe in the marketplace of ideas. Discerning good ideas from bad takes debate and discussion. Cutting off and threatening to cut off people or institutions that want to voice their opinion ill serves democracy.

ditor of Fox & Hounds and President of the Small Business Action Committee.

This piece was originally published by Fox and Hounds Daily

What Will the California Propositions Cost You?

MoneyAll statewide ballot measures receive an analysis from the Department of Finance and the Legislative Analyst’s Office as to the fiscal effects of the initiatives. That got me wondering what it would cost Californians if in the unlikely event an unrestrained electorate decided to vote Yes on all 17 measures.

Truth be told, it is more likely that the voters reject a larger share of the ballot measures. In fact, throughout the state’s history, two out of three initiatives that make the ballot fail. Still it is interesting to know what we could be facing if the unusual happens. After all, the Cubs won the World Series, so you never know if something unexpected happens. Maybe voters will vote yes on all. It wouldn’t be unprecedented. On the 1911 special election ballot, 22 out of 23 measures passed.

In trying to calculate the cost of ballot measures, even the experts at Finance and LAO have trouble. You’ll find the words “uncertain” and “unknown” and “depends” scattered about the fiscal effect sections attached to many of the propositions.

Some measures are easy to tabulate. The Proposition 51 school bond will cost $17.6 billion to pay the principal and interest, or $500 million a year for 35 years. The legislative transparency initiative, Proposition 54 will require a couple of million start up money for recording equipment and an on-going additional million for staff and storage of videos.

The tax measures can also be tagged with numbers, although Proposition 55’s take calculated between $4 and $9 billion depends on the economy. Proposition 56’s tobacco tax is expected to bring in $1.3 to $1.6 billion at first. However, a drop off is predicted when consumers react negatively to the additional tax on smoking products.

The marijuana legalization measure, Proposition 64, comes with a tax and the fiscal effect could be a billion dollars to the state and more to local governments that apply a local tax to cannabis. There are also regulatory and health service costs associated with legalizing marijuana along with the potential for cost savings with fewer incarcerations.

Proposition 61 dedicated to placing a spending cap on drug costs is specifically designed to save the state money. But hold on a second, say the fiscal watchdogs. Uncertainty is a watchword here. According to the fiscal analysis, “drug manufacturers would likely take actions that mitigate the impact of the measure.” The fiscal effects of this measure were officially summed up as “unknown.”

Also, pretty much unknown is the fiscal effect of Propositions 52 and 53. Prop. 52, the hospital fees for Medi-Cal matched by Federal money received its “uncertain” designation because there was no telling if the legislature would continue this fee on its own. Prop. 53, requiring a vote on revenue bonds, also was labeled “unknown” because not many projects would qualify as needing $2 billion in revenue bonds. If that were the case, the analysis suggested there would be ways around the $2 billion standard by breaking projects into smaller parts.

Increased court and law enforcement costs could run into the tens of millions of dollars under the new gun and ammo regulations offered by Proposition 63.

Elimination of the death penalty could reduce costs to the state about $150 million. However, one of those “depends” is applied to Proposition 62 — the dollars could be higher or lower depending on a number of factors such as whether the change in law would affect the murder rate and the need for prison construction.

Meanwhile, the counter measure to allow death penalty cases to limit appeals, Prop. 66, also got an “uncertain” price tag depending on how the state dealt with issues such as availability of attorneys, complexity of legal challenges and more.

Gov. Brown’s Proposition 57 parole changes could see net state savings by reducing the state’s prison population. However, county costs are projected to increase because more former prisoners will be supervised on parole and other factors, an estimated few million dollars increase annually.

The condom regulations of Proposition 60 would likely reduce tax revenue according to analysts because the adult film industry might pack up and leave the state. If not, new fees required of film producers would likely cover enforcement costs.

The referendum on banning plastic bags would have little effect on revenues, while its companion measure, Proposition 65 would increase state revenues by diverting the cost of carry out backs from grocers to a state fund.

The last two measures to discuss were not initiatives but put on the ballot by legislators. Proposition 58 would make changes to the English immersion education laws and Proposition 59 would advise elected officials to work to overturn the Citizens United court case. Here the legislators earn kudos for having little the fiscal effects. The English-only reform fiscal effect is considered minor. The prize goes to Prop 59 in which the fiscal effect summary reads in full: “This measure would have no direct fiscal effect on state and local governments.” No uncertainties here.

My intention was to go through the fiscal effect calculations and come up with a number after additions and subtractions if all the measures passed to see what taxpayers could be on the hook for or what state and local governments would take in. However, given all the “uncertainties,” “unknowns” and “it depends,” it is impossible to calculate.

Knowing the fiscal effects of the ballot measures seem to fall in line with Congresswoman Nancy Pelosi’s oft quoted line about the Affordable Care Act: “We have to pass the bill so you can find out what is in it.”

Or in this instance—what it costs.

This piece was originally published by Fox and Hounds Daily

New State Controlled Pension System – Will Taxpayers Have to Bail It Out?

retirement_road_signGov. Jerry Brown signed Senate Bill 1234 to establish a state supervised retirement fund called Secure Choice for private workers. One wonders if at some future time this action will be remembered much like Gov. Gray Davis’s signature on SB 400 of 1999, which put taxpayers on edge by driving public pensions into deep debt.

The bill Davis signed expanded public employee pension benefits putting in place an investment scheme that has not met the demands of pension liabilities. Many of the local taxes on November ballots will see revenue used to satisfy pension obligations, with local pensions increased along the lines of SB 400. SB 1234 by Senate Pro Tem Kevin de Leon has no provision for taxpayer involvement. However, skeptics believe, with good reason, that because of the state’s involvement, taxpayers will be backstop if the system falters.

Brown’s signature ended a four-year quest to establish a private worker retirement fund. There is no argument workers must save more for retirement. The question is should government oversee such a venture. SB 1234 would require employers to take a small percentage out of worker’s checks and deposit into a retirement fund unless the worker opts out. It is estimated than 7 million California workers would be covered by the plan.

The business community objected to the legislation until some late amendments were added to shield employers from liability and administrative burdens while making it clear that the employer is not the sponsor of the retirement plan. The California Chamber of Commerce and some local chambers pulled opposition and, in the end, stood neutral on the measure. Business will still have the obligation of enrolling workers into the system.

Still, taxpayers should be wary considering the history of promises made about the public pension system that expanded under SB 400. Supporters of that bill declared public pensions would be easily funded by investment revenue, even with employees taking retirement at earlier ages. It has not played out that way, with the state looking at billions in public employee pension debt.

As State Senator and financial expert, John Moorlach, commented after the governor signed SB 1234, “You can anticipate that this ‘secure’ investment has the potential to morph into a massive boondoggle.”

While a couple of other states are looking at a similar private worker retirement system, it should be noted that the drive for state controlled private sector pension programs might have a political connection to public pensions.

The term “pension envy” has been used to describe private workers distaste for the public employees superior benefit packages. Private workers have to save for their own retirement while funding the guaranteed public pensions through their taxes. While the creation of a system to establish a private worker fund would help those private workers in retirement, public unions hope to establish a connection between private workers and public pensions, making voters more sympathetic to the public workers if reformers attempt to reel in public pensions.

As I wrote on this site when SB 1234 first surfaced four years ago, “With the glare of the spotlight on public retirement debt, public unions want to change the focus and talk about private employees retirement.”

Thanks to the governor’s signature, Secure Choice is now in place. It will probably take a couple of years to get started. We’ll see a decade from now if echoes of the SB 400 criticism attaches to SB 1234.

This piece was originally published by Fox and Hounds Daily