Another legislative attack on transparency

Just two weeks ago, this column exposed the abject lack of transparency in the state budget process. But the way the Legislature enacts its spending plan is just one of many ways Sacramento politicians attack transparency.

In recent years, taxpayer advocacy groups have pushed for greater disclosures in local bond and tax measures. These efforts received bipartisan support as they were simply good government bills. Assembly Bill 809 and AB 195 were authored by Assemblyman Jay Obernolte in 2015 and 2016.  Taken together, these bills require that the tax rate, duration and amount of revenue to be raised by a tax or bond measure must be revealed on the 75-word ballot label, as opposed to being buried deep in the pages of the sample ballot booklet. This places the most critical information about a tax proposal in a place where voters will actually see it.

But tax-and-spend interests, mostly public-sector labor organizations, have never liked transparency and now, with their influence in the legislature greater than ever, seek to keep voters in the dark on local fiscal measures on the ballot. Senate Bill 268 by Sen. Scott Wiener, D-San Francisco, would undermine the previous bipartisan legislation to the detriment of voters. SB268 upends the HJTA-backed, common-sense legislation by stating that for local bond measures, as well as certain taxes, the critical information will be moved off the ballot label and into the sample ballot. For such measures, the ballot label would include a statement reading, “See voter guide for information.” That’s more annoying than helpful to voters.

Adding insult to injury, SB268 is being advanced through the infamous “gut-and-amend” process whereby bills are stripped of all content and new language is inserted in order to bypass public and media oversight.

To read the entire column, please click here.

California’s budget process has devolved into a bad joke

Let’s face it. California’s budget process has devolved into a bad joke. The record amount of spending coupled with massive expenditures for wasteful, pork-barrel projects is bad enough. But the more insidious problem is the lack of budget transparency. This is not the way it is supposed to be.

As usual, Sacramento politicians are patting themselves on the back for passing an “on time” budget. True, the main budget bill was passed on June 13, two days before the constitutional deadline. But citizens would be mistaken to believe that the passage of the budget bill completes the budget process.

Ever since 2010, it has become common to enact politically motivated legislation as so-called budget “trailer bills” as a means to avoid meaningful analysis and public hearings.

What happened in 2010 that caused the budget process to be corrupted was the passage of Proposition 25, entitled the “On-Time Budget Act of 2010.”

Voters were told three things about Prop. 25: Budgets would be passed on time; it would increase budget transparency; and that legislators would forfeit their pay if the budget was not passed on time. All three were lies. Moreover, because the primary goal of Prop. 25 was to reduce the vote threshold for passage of the budget bill from two-thirds to a simple majority, it deprives the minority party of any meaningful input.

To read the entire column, please click here.

Healthcare tax for citizens, free healthcare for noncitizens

If there was any question whatsoever as to whether California has gone completely off the rails, proposals in the new state budget should remove all doubt.  Perhaps the most egregious of these involve changes in state law as they relate to health care.

As of this writing, those proposals have yet to be adopted by both houses of the legislature – which is constitutionally required to pass the budget bill by June 15th every year – but statements by legislative leaders have caused a great deal of angst among the taxpayer public.

First among the inexplicable ideas is the proposal to force citizen and legal immigrant taxpayers to pay a new healthcare tax in order to subsidize healthcare for California residents who are living in the country illegally. Yes, you read that right.  The tax that Gov. Gavin Newsom wants to impose is a penalty on all those who don’t comply with the “individual mandate.” If this sounds familiar, it should. The individual mandate was a key component of Obamacare at the federal level until the penalty was repealed by the Republican-led Congress in 2017.

If it passes, California would be one of only four states imposing a tax on those who won’t or can’t obtain the kind of health insurance coverage the government requires. The state-imposed mandate would parallel the federal mandate which, in 2016, amounted to $695 per adult or 2.5 percent of yearly household income, whichever was higher. The tax is projected by Newsom to generate about $1 billion over three years.

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Senate Constitutional Amendment 5 – Horrible for California Homeowners

Senate Constitutional Amendment 5 (SCA 5), is set for legislative hearing this Tuesday. It deserves a quick defeat. Advanced by Sen. Ben Allen, D-Los Angeles, and Sen. Jerry Hill, D-San Mateo, SCA 5 would lower the current two-thirds vote requirement to pass local school district parcel taxes to 55% percent.

Here are the reasons SCA 5 is horrible for California homeowners.

First, SCA 5 is a direct attack on Proposition 13. Prop. 13 limits the base property tax, called the ad valorem tax, to one percent. To ensure that local governments didn’t heap additional taxes on homeowners, Prop. 13 requires a two-thirds vote for additional “special taxes” of which parcel taxes are a particularly insidious variety. SCA 5 specifically repeals that two-thirds constitutional protection currently in Article XIIIA of the California Constitution.

Second, lowering the two-thirds vote is unnecessary. With appropriate justification, the threshold can clearly be reached. According to the website California City Finance, a review of school district parcel taxes since 2012 showed that in November elections, 52 of 69, or 75% percent, were approved. Just last November, 11 out of 14 passed, an extraordinary success rate. Clearly, the two-thirds vote is not difficult to attain if a school district justifies its needs.

Third, lowering the two-thirds vote would open the door to a flood of new property tax levies.

To read the entire column, please click here.

Give the FPPC the Power to Fight Illegal Spending

In recent years, taxpayers throughout California have registered numerous complaints about government entities using taxpayer dollars for political advocacy, a practice that is illegal under both state and federal law. Because progress in stopping these violations has been slow, taxpayers will be pleased to hear that the Fair Political Practices Commission sent a request to the California Legislature that it “consider legislation amending the Political Reform Act to authorize the Commission to bring administrative and civil actions against public agencies and public officials for spending public funds on campaign activity.”

Taking up that challenge is Assemblywoman Cristina Garcia, D-Bell Gardens — co-author of this column — who has introduced Assembly Bill 1306, which is in the Assembly Appropriations Committee. Taxpayers hope that this commonsense, non-partisan proposal becomes law.

Here’s the background. The free speech clauses of the federal and state constitutions prohibit the use of governmentally compelled monetary contributions (including taxes) to support or oppose political campaigns because, as noted in Smith v. UC Regents, “Such contributions are a form of speech, and compelled speech offends the First Amendment.”

Moreover, as determined in Stanson v. Mott, “use of the public treasury to mount an election campaign which attempts to influence the resolution of issues which our Constitution leaves to the ‘free election’ of the people … presents a serious threat to the integrity of the electoral process.”

While taxpayer organizations have been successful in several lawsuits challenging these illegal expenditures, they haven’t fully deterred lawbreaking by the state or local governments, for two separate reasons.

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Is California really a low property tax state?

To hear progressives tell it, California’s property tax is way too low and needs to be increased to fund the critical needs of schools and local governments.  But the notion that Proposition 13 – enacted 40 years ago – has somehow “starved” local governments is nothing more than urban myth.  In virtually every year since 1978, the growth in property tax revenue has exceeded the combined growth in inflation and population.

While the consistent growth in property tax revenue is indisputable, that has not deterred Proposition 13’s detractors from arguing that, relative to other states, property owners in California aren’t paying their “fair share.”  Eschewing for the moment what constitutes “fair,” a part of the debate involves whether California is a high or low property tax state. And it is here that the saying “lies, damn lies and statistics” comes into full play. The reality is that there are many ways to measure tax burden and most can be manipulated to support some desired narrative.

Those who argue that California’s property tax burden is too high might be tempted to point out that California collects far more property taxes than any other state.  That is true, but it is also intellectually dishonest.  Our size and population is what generates the tax revenue and aggregate dollars collected simply do not reflect a fair measure of tax burden.

One measure, certainly more accurate than total dollars collected, is per capita property tax collections.  This is simply aggregate property tax revenue collected divided by population – a relatively easy calculation. Using this metric, it is clear that California is not a low property tax state.  The authoritative Tax Foundation ranks California 17th highest among the fifty states, which puts us almost in the top third in burden.

To read the entire column, please click here.

LAUSD’s Punishing Parcel Tax Proposal


LAUSD school busAmerica’s most dysfunctional school district has stepped in it again. The Los Angeles Unified School District (LAUSD), apparently coming to the shocking realization that there was no way they could pay for the horrible deal they just cut with the unions, has hurriedly placed on the ballot for June a new property tax that leaves no Los Angeles taxpayer unscathed.

That grassroots taxpayer interests would be opposed to the new levy is no surprise. But several business organizations, usually more tolerant of higher government spending — particularly for education — have had enough. Groups as diverse as the Howard Jarvis Taxpayers Association, the Los Angeles Chamber of Commerce, the Valley Industry and Commerce Association (VICA) and the L.A. County Business Federation (BizFed) have all announced their opposition. None of these organizations is anti-education. In fact, all are pro-education as long as there is demonstrable improvement in the education product we are all paying for. On this score, LAUSD falls way short.

At the core of the broad-based opposition is the abject lack of long overdue reforms at LAUSD.

The list of reasons to oppose the tax is long.

First, taxpayers would be wasting millions of dollars on a special election.

The LAUSD Board voted unanimously to put the tax increase before the voters in a special election to be held on June 4, 2019. The cost of the special election is $12.5 million.

The tax would add hundreds of dollars to tax bills and rents and would do so in a convoluted manner. Rather than a flat tax on every parcel — which would be bad enough — the proposed tax increase would be 16 cents per square foot of building improvements on properties within the district.

That’s $160 for every 1,000 square feet. Property owners (and tenants) should be sitting down when they do the math on this one.

Seniors are ostensibly exempt from the tax, but not from rent increases.

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What Recent Pension Ruling Means for California’s Taxpayers


pension-2Last week, the California Supreme Court issued a ruling in Cal Fire Local 2881 v. CalPERS, a case involving public employee pensions. For taxpayers, the decision was a mixed bag. On the plus side, the court refused to find a contractual right to retain an option to purchase “air time,” a perk that allowed employees with at least five years of service to purchase up to five years of additional credits before they retire. Under this plan, a 20-year employee could receive a pension based on 25 years of contributions.

On the negative side, the high court left intact, for now, the so-called California Rule, which has been interpreted as an impediment to government entities seeking to reduce their pension costs. The rule, unique to California, provides that no pension benefit provided to public employees via a statute can be withdrawn without replacement of a “comparable” benefit, even as deferred compensation for services not yet provided.

The unanimous 54-page opinion by the Supreme Court resulted in a wide variance of headlines and social media posts. The Associated Press read “California’s Supreme Court upholds pension rollback.” Ironically, a conservative reform group sharply criticized the decision for failing to repeal the California rule outright while another conservative policy organization called it a “victory for taxpayers.”

So what was it?

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Legitimate Lawsuit Against Trump? Or Political Posturing?


donald-trump-2The big news last week was the lawsuit filed by California and 15 other states challenging President Trump’s declaration of an emergency related to border security and the building of a physical barrier on the southern border. The reaction was a great deal of political hyperventilating from both sides of the political spectrum.

So, after everyone has taken a breath, what should rational taxpayers think about this lawsuit and the dozens of other lawsuits filed by California against the Trump administration?

Let’s stipulate that there are times when litigation is appropriate between states and the federal government. The United States is a constitutional republic with a political structure based on federalism. Brilliantly, our founding fathers (with some intellectual help from our founding mothers, no doubt) devised a system of divided government. Not only was the federal power divided into three branches, but substantial political power was reserved to the states via the Tenth Amendment.

Controversies between the federal government and the states have been bitter and, when one considers the Civil War, they’ve been violent as well. Fortunately, modern disputes between the federal government and the states involve lawyers, not bullets.

To read the entire column, please click here.

Don’t Derail the Bullet Train Derailment


Gov. Jerry Brown, Anne GustEven before California’s High Speed Rail bond proposal appeared on the ballot in November 2008, the Howard Jarvis Taxpayers Association commissioned a study in conjunction with the Reason Foundation because of deep concerns about the project’s viability. The study, published in September 2008, just prior to the election, confirmed our worst fears. Specifically, the executive summary of the nearly 200-page document warned:

“The CHSRA plans as currently proposed are likely to have very little relationship to what would eventually be built due to questionable ridership projections and cost assumptions, overly optimistic projections of ridership diversion from other modes of transport, insufficient attention to potential speed restrictions and safety issues and discounting of potential community or political opposition. Further, the system’s environmental benefits have been grossly exaggerated, especially with respect to reduction of greenhouse gas emissions that have been associated with climate change.”

In the ensuing decade, it became increasingly clear that every negative prediction about the project came to be realized. Even initial advocates of the project, including a former chairman of the High Speed Rail Authority, turned against the costly boondoggle.

The capstone of criticism came at the end of 2018 when California’s own state auditor issued a scathing report excoriating the project’s mismanagement, waste and lack of transparency. To understand just how damning the HSR audit was, just consider the subtitle: “Flawed Decision Making and Poor Contract Management Have Contributed to Billions in Cost Overruns and Delays in the System’s Construction.”

To read the entire column, please click here.