Increasing Water Supply Must Balance Conservation Measures

In a recent commentary, tax-fighter Jon Coupal exposed one of the hidden agendas behind Senate Constitutional Amendment 4, which was recently introduced in the California Legislature. Coupal writes: “They wish to charge those water users they perceive as ‘bad’ more per gallon than those users they perceive as ‘good.’ The beauty of ‘cost of service’ rates, however, is that they are fair for everyone: You pay for what you use.”

California’s consumers already endure tiered rates for electricity consumption, where if their electricity consumption goes beyond approved levels, they pay more per kilowatt-hour. At least with electricity, there is some rationale for tiered pricing, because when demand exceeds capacity the utility has to purchase power from the grid at the spot market rate. But in the case of water that’s a much harder case to make. Water prices are negotiated far in advance by water utilities.

The reason utilities want to charge tiered rates is so they can discourage “over-consumption” of water, in order for them to avoid running out of water during times of severe drought. What happened repeatedly over the past few years was that suppliers to many regional water districts could not meet their contracted delivery obligations. Understandably, water districts want to reduce total annual consumption so, if necessary, they can get by with, for example, only 60 percent of the amount of imported water they would otherwise be contractually entitled to.

Punitive rates for “overuse,” however, will effectively ration water, as only a tiny minority of consumers will be wealthy enough to be indifferent to prohibitively high penalties.

There is a completely different way for water districts to address this challenge. An optimal solution to California’s water supply issues should incorporate not only conservation, but also increasing supply. And to fund new supplies of water, utilities should experiment with tiered pricing that only incorporates moderate price increases. Doing this would mean a large portion of consumers will not be deterred from “overuse,” and the extra revenue they provide the utility could be used for infrastructure investment to increase supplies of water through myriad solutions – including runoff capture and enhanced aquifer storage, sewage treatment to potable standards, seawater desalination, and off-stream reservoir storage.

The following images excerpted from a spreadsheet provide a simplistic but illuminating example of how reasonable tiered pricing could, in aggregate, fund massive investment in additional supplies of water. In the first example, below, with assumptions highlighted in yellow, are water consumption profiles for a regional water utility district that engages in punitive pricing for overuse of water. As can be seen in the large yellow highlighted block to the center left, when unit costs for water are tripled for those consumers who “overuse” water, the number of “over-users” is a small 4 percent minority of all consumers, and the number of “super-users” is a minute 1 percent of all consumers. Consequently, the utility only collects $900,000 per month, barely 5 percent of its revenue from consumers, from households that are deemed to have overused water.

FINANCIAL IMPACT TO UTILITY OF PUNITIVE PRICING FOR “OVERUSE”

The next example, below, shows hypothetical consumption profiles for a regional water utility district that engages in reasonable pricing for overuse of water. Again, as can be seen in the the large yellow highlighted block to the center left, when unit costs for water are increased by 50 percent (instead of 300 percent) for those consumers who “overuse” water, the number of “over-users” is a significant 20 percent minority of all consumers, and the number of “super-users” is a substantial additional 10 percent of all consumers. Consequently, the utility collects $3,000,000 per month, 14 percent of its revenue from consumers, from households that are deemed to have overused water.

FINANCIAL IMPACT TO UTILITY OF REASONABLE PRICING FOR “OVERUSE”

This is a simplistic analysis, requiring caveats too numerous to mention. Utilities get much of their revenue from property taxes, not from consumer ratepayers, and fixed service fees still constitute most of the amount that appears on a typical household water bill. The utility’s internal cost for water, pegged here at $.20 per CCF, is actually calculated through a maddeningly complex and somewhat subjective cost-accounting exercise that takes into account the amortization of capital costs for treatment, storage and distribution facilities, operating costs, as well as actual contracted purchases from, for example, the California State Water Project. But there is a deeper debate over principles that these examples are designed to emphasize, one with profound consequences for our quality of life in the coming decades.

By implementing severe financial penalties to utility customers who “overuse” their water, electricity, or anything else, state regulators are effectively imposing rationing on all but extreme high-income households. Complying in the face of punitive rates for overuse requires consumers to submit to undesirable lifestyle adjustments including short duration, low-flow showers, low flow faucets that require long wait times for hot water to arrive through the pipes and long wait times to fill pots, remotely administered, algorithmically managed “affordable” times for washing dishes and laundry, mandated purchases of expensive new internet enabled appliances that are ridiculously difficult to simply turn on and use, require regular warranty payments because they break down so much, with annual fees imposed to update their software.

We don’t have to live this way. California’s residential households consume less than 6 percent of the water diverted and used in California for environmental, agricultural, and commercial purposes, yet by far they pay the most to maintain and upgrade this infrastructure. Indoor water overuse is a myth, as all indoor water is either being completely recycled by the sewage treatment utility, or should be. Raising rates causes consumers to under-use water, despite most of a utility’s costs being for the operations infrastructure, creating a vicious cycle of rate increases to maintain sustainable revenues. And when consumer water use is crammed down further and further, the overall system of water infrastructure is progressively downsized until there is not enough resiliency and overcapacity in the system to absorb a major disruption such as an earthquake, a dam failure, or acts of terrorism.

The conventional wisdom in California as expressed in policies enforced by an overwhelming majority of Democrats in the state Legislature is that we must live in “an era of limits.” But this motto, originally coined in the 1970’s by Governor Jerry Brown, is in direct conflict with the spirit and culture of Californians, as exemplified by the dreams they offer the world from Hollywood and the miraculous innovations they offer the world from Silicon Valley. The idea that California’s legislators cannot enact policies designed to increase supplies of water and energy enough to make life easier on the citizens they serve is absurd, and must be challenged.

Ed Ring is the vice president of policy research for the California Policy Center.

Is it time to abandon the Bear Flag?

Californias-state-flagThe Bear Flag, which first appeared as the symbol of the short-lived Bear Flag Republic in 1846, was made the official flag of California in 1911. The flag displays a California grizzly bear which, in a bit of irony, is extinct in California with the last sighting taking place in 1922.

Without any disrespect to what was a magnificent animal, perhaps it is time for a new emblem that more accurately reflects the current state of the state. Let’s consider the Oroville Dam as a more appropriate symbol. It’s large, not functioning well, parts are crumbling and it is putting the lives and property of thousands of Californians in jeopardy. To top it off, for over a dozen years, officials have been ignoring warnings that the now eroding emergency spillway was vulnerable to heavy rains.

Since the dam came on line in the late 1960s, and especially beginning with the first terms of Gov. Jerry Brown, California has shifted from a state that prioritized infrastructure improvement to one that focuses on entitlement programs, public employee compensation and environmental policies that stifle economic growth.

To read the entire column, please click here.

Sen. Hertzberg Targets Homeowners With Higher Water and Sewer Rates

Storm_DrainIt’s no secret that tax-and-spend interests have hated Proposition 13 since its adoption by the voters in 1978. Immediately after passage, Prop. 13 was the target of numerous lawsuits and legislative proposals seeking to create loopholes that would allow government to grab more tax dollars from California citizens.

These constant attacks compelled taxpayer advocates to go back to the voters with multiple initiatives to preserve the letter and spirit of Prop. 13. These included Prop. 62 in 1986 (voter approval for local taxes); Prop. 218 (closing loopholes for local fees and so-called “benefit assessments”); and Prop. 26 (requiring “fees” to have some nexus to the benefits conferred on the fee payers).

However, the latest tax-grabber to treat homeowners as ATMs is state Senator Bob Hertzberg, D-Van Nuys. If he gets his way, Californians will be spending a lot more on water and sewer service. He seeks to do away with the critical “cost of service” requirements for water rates as well as treat “stormwater runoff” (the rain that runs down street gutters) the same as “sewer service,” opening the door to virtually unlimited — and unvoted — sewer rates.

To read the entire column, please click here.

California: Time for a Major Change in Course

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

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

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

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

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

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

This piece was originally published by HJTA.org

Taxes, Fees, Charges and Assessments: What Difference Does It Make?

TaxesWhat’s the difference between a tax and fee? There is no easy answer and the political class likes it that way. In fact, they would prefer that the public remain confused to the point of apathy.

The political class, of course, consists of elected officials, bureaucrats and their special interest allies who are to the Capitol what insider traders are to Wall Street. Working in lockstep, their approach to increasing the take from taxpayers was best outlined by Jean Baptiste Colbert, Minister of Finance under Louis XIV of France: The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.

But taxpayers are not defenseless because Proposition 13 – later strengthened by Proposition 218, the Right to Vote on Taxes Act – provides effective weapons against an insatiable government ever in search of more revenue. These include voter approval requirements. At the state level, new or higher taxes require a two-thirds vote of each house and, at the local level, voter or property owner approval requirements allow those who have to pay a government exaction (no matter what it is called) an opportunity to say no.

However, to protect themselves, taxpayers must be knowledgeable, alert and ready to fearlessly protect and exercise their rights.

Therefore, while most taxpayers don’t have a law degree, here are some basics about the difference between a “tax” and a “fee.” There are very few legal limitations on “taxes.” About the only way a tax could be unconstitutional is if it impaired a fundamental right (a “poll” tax on the right to vote) or if it singled out some group for discriminatory purposes. But fees are different. A fee is a charge for something that confers a benefit to the fee-payer that is not available to those who do not pay the fee. A classic example is a charge for entering a state campground.

Until the passage of Proposition 26 in 2010, the Legislature could approve fees with a simple majority vote. But in 2011, the Legislature approved, with a simple majority, charging 850,000 rural homeowners an annual “fire fee” of $150. The “fee” was not accompanied by any additional benefit or service, clearly making it a tax requiring a two-thirds vote of the Legislature. This issue is currently being litigated by taxpayers, but it is a classic example of the dishonest ends to which tax raisers are willing to go to wring ever more money from taxpayers.

Moreover, the political class has a habit of pursuing taxes that are not apparent to the general public. Almost any tax on business fits into this category. As Howard Jarvis liked to say, businesses do not pay taxes, “we do.”

As part of Obamacare, the federal government imposed a tax scheme designed to stop employers from offering top quality health plans. Backers of the Affordable Care Act included a 40 percent tax on providers of what were derisively described as “Cadillac” plans. As these plans disappear, the uninformed will assume that it is their employer who is responsible, when, in fact, it is government.

Here, in California, a major hidden tax is cap-and-trade legislation, not approved with a two-thirds vote, that compels companies to buy carbon credits. Of course, these costs are passed on and drivers feel the impact every time they fill up with gasoline that costs, by the most conservative estimates, an additional 12 cents per gallon with more increases on the horizon. Unaware of the impact of cap-and-trade, many motorists may mistakenly assume that the high cost of gas is entirely due to the petroleum companies.

This is why taxpayers are closely watching a case just argued before the Sacramento appeals court, where opponents argue that cap-and-trade charges amount to an unconstitutional tax. The court is expected to render a decision within 90 days but, regardless of the outcome, the loser is likely to appeal to the California Supreme Court.

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

This piece was originally published by HJTA.org

Will Taxpayers Be Mugged by Sacramento?

TaxesGovernor Brown has just released his spending proposal for 2017-18 and taxpayers should not be blamed if they feel like they are walking down a dark alley in a high-crime neighborhood.

While the governor’s proposed budget has been described as austere, it still represents a spending boost of 5 percent, a rate of increase only slightly smaller than last year’s 6 percent. Because the state is in the process of rewarding its employees with generous pay increases and covering an expanding requirement to fund their pensions — pensions that are currently subsidized by six percent of the general fund budget — more spending does not represent an increase in the quantity or quality of services for average Californians.

The Brown budget contains no major program increases except for transportation. But the kicker is that this would be contingent on higher taxes on gasoline and car registration. So, while state workers will be kept snug and comfortable, if commuters want those pot holes repaired, they must pay extra.

However, the governor’s budget should not be regarded as anything more than a place holder, as the ability to fund it is threatened from all directions. The new administration in Washington, as well as a majority of both houses of Congress, have made it clear that Obamacare is on the verge of elimination. There can be little doubt that federal funding for California’s massive expansion of Medicaid is in jeopardy. Because, to paraphrase Ronald Reagan, a government program is the nearest thing to eternal life we’ll ever see on this earth, no one will be surprised when Sacramento looks to average taxpayers to make up the nearly $16 billion-dollar difference.

Then there is uncertain tax revenue. The extension of the nation’s highest income tax rates renders California highly vulnerable to economic fluctuations. Although growth had been tepid, we have experienced 90 months of economic expansion and financial experts warn us to be prepared for the next downturn.

As if these threats were not enough, Brown will have to contend with elements in his own party who believe in the axiom of former Senate leader, David Roberti, “When you’ve got it, spend it,” to which they would add the corollary, “If you don’t have it, spend it anyway.”

Chairman of the Assembly Budget Committee, Phil Ting, has already made it clear that he does not want to budget assuming the worst, that the Legislature must continue “investing in California,” a budgetary approach akin to Admiral David Farragut’s at the battle of Mobile Bay, “Damn the torpedoes, full speed ahead.” While Farragut was successful, is it appropriate to put California taxpayers at dire risk through imprudent spending?

In May, the governor will issue a revised budget, no doubt with major changes, in advance of the June 15 deadline for final passage. If revenue is down, taxpayers may be treated to the spectacle of a cage match between those committed to spending, backed by their special interest allies, and those who advocate a slightly more cautious approach.

In Sacramento, fiscal sanity is relative. Ironically, our eccentric governor who thinks nothing of lavishing nearly $100 billion on a bullet train, may be the dwindling middle class’s best hope to fend off major increases to their already staggering tax burden.

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

This article was originally published by HJTA.org

California Democrats Behaving Like Confederates

For fiscal conservatives and free market advocates, the national elections in 2008 and 2012 brought no small measure of disappointment. In its eight-year run, the Obama administration imposed a host of new taxes – including several as part of the failed “Affordable Care Act” – and, just as egregious, nearly doubling the national debt from $10 trillion to over $20 trillion.

Those who advocate for lower taxes, property rights and less burdensome regulation understood and begrudgingly accepted that “elections have consequences.” (As President Obama was known to brag.) So it is now with amusement – if not outright schadenfreude – we are watching progressives across the nation, and especially here in California, melt down in shock and disbelief.

Particularly frustrating for progressives is their growing realization that many of the policies and actions of the last eight years that they jammed down the throats of conservatives and center right citizens from “fly-over” country are now coming back to haunt them. For example, former Democrat Senator Harry Reid from Nevada changed longstanding Senate rules regarding how many votes it would take to stop the filibuster of a presidential appointee. Progressives imposed that rule to pack the United States Court of Appeal for District of Columbia Circuit, a powerful court because it reviews most legal challenges over federal regulations. The “Reid Rule” will now be used by the Trump administration to fill his cabinet quickly over the objections and efforts to obstruct by Democrats and, more importantly, to seat a replacement on the U.S. Supreme Court for the late Justice Antonin Scalia.

Another example of their being hoisted on their own petard was discussed recently by California political analyst Tony Quinn who noted that the federal courts struck down most of Arizona’s efforts to enforce border security. The U.S. Supreme Court noted that, in the area of immigration, federal laws pre-empt conflicting and even complimentary state laws. That throws into doubt any efforts by California and other left-leaning states to enforce any so-called “sanctuary” policies.

confederate-flagBut all this hasn’t stopped California’s top Democratic leadership from posturing (mostly for the cameras) about how they will “stand up” to the federal government to protect “California’s values,” whatever that means. Apparently, Gov. Brown and newly elected legislative leaders have mistaken Sutter’s Fort in Sacramento with Fort Sumter in South Carolina which heard the first shots fired in the Civil War. They need to be reminded that things didn’t work out so well for the Confederacy back then and if, by taking on the federal government, they think they will get a better outcome, they’re probably wrong.

The latest evidence that Democratic leadership has lost its moorings with reality is the hiring of Eric Holder, the disgraced and corrupt former U.S. Attorney General in order to “push back” against both the Trump Administration and the Republican controlled Congress. (Holder advocated for international criminal Mark Rich, and was admittedly running guns to Mexico as part of the “Fast and Furious” scandal).

The hiring of Holder is an insult to all California taxpayers. First, California has a multitude of lobbyists in Washington, D.C. (all at taxpayer expense) to represent the actual interests of the state. Second, the action was clearly a provocation intended to generate a response from Washington. But California should be careful what it wishes for. The Congress of the United States has the power of the purse and California would do well to work collaboratively with those upon whom they rely for billions of federal dollars.

Near the close of the Civil War, President Lincoln gave his famous second inaugural address in which he implored Americans to show “malice toward none, with charity for all.” Let us hope that the petulant, foolish posturing of California’s political leadership receive as much grace from the federal government in the coming years.

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

This piece was originally published by HJTA.org

Pay Hikes Result in a Happy New Year for State Workers

Money

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

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

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

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

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

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

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

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

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

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

This piece was originally published by HJTA.org

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

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

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

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

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

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

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

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

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

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

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

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

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

This piece was originally published by the HJTA.org

Legislature Tries to Dodge Prop. 54 Transparency Requirements

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

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

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

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

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

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

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

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

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

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

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

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

This piece was originally published by Fox and Hounds Daily