Can CA Survive Without Oil? Two Perspectives

Gas-Pump-blue-generic+flippedA week ago, Zocalo Public Square published an article, Imagining California Without Oil Refineries, by one of its editors, Lisa Margonelli, suggesting that Californians are embracing new technology that will lead to an oil free future. She wrote that not being gasoline consumers has become part of many Californians’ identities. Meanwhile, the California Resources Corporation (CRC), a publicly traded oil and natural gas exploration and production company, produced a website also asking Californians to imagine the state without oil. The two imaginings could not have been more apart.

The Zocalo piece spoke of the history of the environmental movement in the Golden State and the fact that younger generations are limiting consumerism and supporting a new way of living that reduces — and some day would eliminate — the need for oil. The CRC imagined a day without oil and offered a list of products that would disappear. Never mind the energy that is used to power products, petroleum is raw material used in refrigerators, dishes, smartphones, coffee makers, kayaks and more.

But it was the area of economic effects that made me take notice.

Margonelli wrote that, “Technologies as diverse as Facebook, compost bins, and electric vehicles have made many Californians see themselves as participants in building an oil-free future, without much fear of the potential downsides.”

And: “Rather than being afraid, a surprising number saw an economic upside in getting oil out: In polls, 43 percent of Californians said that cutting gasoline use would create jobs, while only 13 percent said it would kill them.”

(I might note that the PPIC poll respondents don’t always have the best information. Continually when asked, they describe prisons as getting the most money from the state budget and education near the bottom when the opposite is true.)

But accepting for the moment that there would be a rush of new jobs with technology and alternative energy what might be lost if we shut down the oil business?

The CRC made the following assertions:

The industry directly employs 184,100 Californians from diverse backgrounds and all levels of the socio-economic spectrum, which translates into $23.3 billion per year in wages and salaries for oil and natural gas jobs. It offers jobs to workers of all education levels, including truck drivers, geophysicists, chemists and machinists.

The oil and natural gas sector reflects California’s diversity. Over a quarter of the statewide industry workforce is Latino … In California, the average annual oil and natural gas industry salary of $118,032 is double the $56,590 average for other private industry jobs, according to a 2015 report by the Los Angeles Economic Development Corporation (LAEDC).

In total labor income alone, the oil industry injected $40 billion annually into the state’s economy, according to the LAEDC report. These salaries filter into the local economy through the vendors who work with the oil companies and the local businesses frequented by workers… The oil industry supported 456,000 jobs in the state, or 2.1 percent of California’s employment, and generated more than $204 billion in direct economic activity.

In addition, U.S. oil and natural gas companies pay considerably more in taxes than the average manufacturing company. According to Standard & Poor’s research, in 2013 the oil and natural gas industry paid an average effective tax rate of 40.2 percent versus 22.3 percent for other S&P 500 industries such as healthcare, retail, utilities, media and pharma.

In California, nearly $22 billion in state and local taxes collected in 2013 can be attributed to the oil industry, as well as $14.8 billion in sales and excise taxes, according to the LAEDC report, all of which help fund essential services and infrastructure that Californians rely on every day.

The issue of taxes paid by oil and gas companies plays against the future imagined in the Zocalo piece. Will the new alternative energy industries produce the same kind of revenue for the state?

The end-oil commentary concluded that a young woman was driving an electric vehicle – a Leaf—“with state and federal incentives.” (The family) “even installed solar panels that feed the Leaf, making them participants in generously funded state programs…”

You wonder if we cut out the traditional energy industries with all those jobs and the billions paid by the oil and gas industry in taxes if there will be revenue available to offer generous state funded incentives to buy solar panels and electric vehicles or pay for other budget items.

Originally published by Fox and Hounds Daily

Poll: Will Voters Support Tax Proposals on 2016 Ballot?

taxesIn the shadow of my commentary yesterday on the possible tax measures on the 2016 ballot comes the Public Policy Institute of California poll that takes the standing of many of the potential tax initiatives. This snapshot in time indicates supporters of the tax increases have a lot of work to do to convince the public to vote for them.

But the way the questions were asked must be considered when weighing the results.

The idea of extending Proposition 30 is becoming more practical than theoretical with the submission of two separate ballot measures to achieve that goal. One measure, filed chiefly by the California Teachers Association, would extend Prop. 30 for 12 years. The second measure filed by the California Hospitals Association, a health care union and a children’s advocacy group, would make the Prop. 30 taxes permanent.

The voters appear divided on extending Prop. 30 with 49% in favor of extension and 46% opposed. However, those favoring the extension drop to 32% if the taxes are made permanent.

One odd result from the poll was the great support for the Prop. 30 extension in the San Francisco Bay Area (63%) and much less support in the Central Valley (50%); odd, because this tax is centered on the wealthy, those with incomes of $250,000 and more. There are many more high-end taxpayers in the Bay Area than the Central Valley.

However, the way the question was asked may have something to do with this disparity. The question described the Proposition 30 tax that exists today. Poll respondents were asked if the taxes on incomes over $250,000 and the quarter cent sales tax should be extended. But, the quarter cent sales tax portion of the Prop. 30 tax measure is not included in either of the extension plans that were filed.

Could Central Valley voters have focused on the sales tax piece and would their answers be different if they knew the extension only affected high-end income taxpayers?

Once again, PPIC asked about splitting the property tax roll under Proposition 13 treating commercial property differently than residential property by taxing commercial property according to current market value. Likely voters approved of the idea by 55% with 39% opposed.

But as stated here many times before, this basic question doesn’t inform potential voters of consequences related to this issue. There was no effort to deal with either the potential positives or negatives of changing the property tax system. Those issues will certainly be aired during an expensive campaign over a split roll and undoubtedly would lead to different results than the poll currently reflects.

Two other taxes that are being discussed received quite different results. An oil extraction tax found 49% support with likely voters; a cigarette tax was supported by 66% of likely voters.

There could be a lot of money spent in a campaign opposed to these taxes and a fair amount of change in support. However, looking at all the tax measures at this moment in time, if the old rule were applied that an initiative needs to have at least 60% support in early polls to have a fighting chance at passing, then only the cigarette tax looks possible at this time.

Of course, if the ballot is full of tax proposals the old rules may not apply.

Originally published by Fox and Hounds Daily

Why is California voter participation so demonstrably low?

VotedSure, it’s been more than half a year since California’s last statewide election. But Californians’ remarkable failure to participate still deserves some attention today as we start focusing on the 2016 elections. In last November’s midterm Congressional election, the largest state in the nation had about the lowest voter participation of any state in the country. Hardly more than 42 percent of California’s registered voters bothered to mail-in their ballots in the conveniently provided pre-addressed envelopes, or even show up at the polls. This dismal voter participation was even worse than voter disinterest in one of the state’s other previous bad showings in 2002 when just over 50 percent of participants elected Gray Davis, the Democrat, over the GOP’s Bill Simon. In neighboring Oregon, voter participation in the November 2014 election at 69.5 percent was more than half again by percentage the level of participation of California voters in the same election.

Why is California voter participation so demonstrably low? Some pundits have offered that last year’s election was not a presidential election when voter interest would be higher and that popular Governor Jerry Brown, who was on the ballot, was destined to cruise to a big victory over feeble Republican opponent Neel Kashkari anyway, thus lessening voter interest. Democrats have a big political registration edge in the state, control every statewide elective office, and have near two-thirds control of both Houses of the state Legislature. And even with low voter turnout, the state bucked the national trend in which the GOP picked up seats in Congress, and Californians who did vote actually expanded the number of Democratic Congressional seats in Washington, D.C., from California by two (though improving GOP representation in the state Legislature just above the critical 33 percent needed to thwart tax-increases).

Yet a recent Public Policy Institute of California (PPIC) poll reveals that more Californians, by 46 percent to 45 percent, think their state is headed in the the wrong direction rather than the right direction.

One reason for low voter turnout, and even for failures of the GOP to have made more gains in California in the November 2014 election, could be a failure to give voters a really good reason to turnout and feel their vote will be counted and make a difference. There are after all plenty of GOP and middle-of-the-road, independent voters in the state, as the same PPIC poll says 65 percent of CA voters are center/right, with conservatives, at 35 percent, having the plurality. An earnest young political consultant might conclude these voters just need to be contacted and given a good reason to get fired-up to change the results of many elections in the state.

One election where better voter turnout, perhaps by more focus on core GOP voters who sat on the sidelines and who didn’t get inspired enough to vote might have made a difference was the 52nd Congressional District race in conservative San Diego County. Just four years ago this seat was represented in Congress by Republican Brian Bilbray. But a Democrat won the seat in 2012 and the Republican challenger in 2014 was Carl DeMaio, a former member of the San Diego city council who had lost a close race for Mayor of San Diego. Unfortunately, DeMaio’s campaign became embroiled in a sexual harassment scandal, some key aspects of which were found to have been manufactured against him. Scott Peters, the incumbent Democrat who was thought to be vulnerable in the GOP sweep in other states, ended up winning the election with 51.6 percent, to DeMaio’s 48.4 percent.

Yet a key factor in DeMaio’s loss was low voter turnout. At 49 percent, according to the California Target Book, some observers believe that if DeMaio’s campaign could have brought out the same level of base voter participation as even the lopsided victory of fellow Republican, Majority Leader Kevin McCarthy of Bakersfield, (about 56 percent), if the campaign not seen the scandal in the press, and had the campaign perhaps redirected resources to simply inspire baseline Republicans to do their public duty and come out to vote in larger numbers, the result could have been quite different, a GOP victory. According to the Target Book’s analysis, voter turnout in the 49th Congressional District where Darrell Issa cruised to a lop-sided 60 percent victory was 47 percent. One need not have a political science degree to understand that voter turnout in the 52nd race was not remarkably different given all the political spending and emphasis of Republicans to win the race; and that many GOP voters had to just pass on making a vote in the race. This observer believes that the problem was a failure to give more focus on peer-to-peer direct-voter contact with core Republicans, and this issue might have repeated itself in several of the other close Congressional races the GOP lost in California in 2014. Hard-core Republican voters were just not given a compelling or convincing reason to vote in the numbers needed to win the races, and especially in the 52nd, which was a winable seat.

Even with comparatively lower registrations in California for Republicans than Democrats, the GOP has great opportunity to win elections in the state and bring reform in the current generally apathetic low voter turn-out environment. A few victories could help Republicans grow in numbers. Voters are truly unhappy with the direction liberal Democratic leaders are taking the state, and if the GOP can better seize on ideas, candidates, strategies and tactics that really motivate conservative and middle-of-the-road voters to return their millions of empty ballot, they can win. Will they?

This article is cross-posted by the Flash Report

Government fails to earn respect of Californians

Nine out of 10 Californians believe state government wastes their tax dollars. Two-thirds believe state government is run for the benefit of a few special interests and state officials cannot be trusted to do the right thing.

Those results from a Public Policy Institute of California survey are similar to the dissatisfaction with and distrust of state government that Californians expressed 10 years ago. The reason for that disaffection and what should be done about it was the focus of the Jan. 22 meeting of the state watchdog agency the Little Hoover Commission.

The findings in the survey of 1,704 adults conducted from Nov. 10-17 (with a sampling error of 3.7 percent):

  • “Do you think the people in state government waste a lot of the money we pay in taxes, waste some of it, or don’t waste very much of it?” 54 percent – waste a lot, 35 percent – waste some of it, 8 percent – don’t waste very much of it. Seventy-eight percent of Republicans, 60 percent of independents and 46 percent of Democrats believe state government wastes a lot.
  • “Would you say the state government is pretty much run by a few big interests looking out for themselves, or that it is run for the benefit of all of the people?” 67 percent – run by a few big interests, 28 percent – run for the benefit of all of the people.
  • “How much of the time do you think you can trust the state government in Sacramento to do what is right?” 61 percent – only some of the time, 25 percent – most of the time, 7 percent – just about always, 5 percent – none of the time.

The results were similar for all three questions across regional and demographic groups and similar to a survey conducted a decade ago. But they are slightly better than an even worse skepticism of state government in an October 2010 survey.

Federal and state governments

State officials can take minor consolation that Californians are even more skeptical about the federal government. On the other hand, Californians are less distrustful of local government, particularly in the area of wasting tax dollars, according to a May 2011 PPIC survey.

“In summary, negative perceptions about the effectiveness, responsiveness and efficiency of state government are pretty consistent over time and widely held in the public today,” PPIC President/CEO Mark Baldassare told the commission. He listed four implications of the results:

  • “Californians will continue to value the citizens’ initiative process as they seek to have a say in the major decisions made by their state government.
  • “Many Californians will be skeptical about the need for higher taxes and more state revenues, given their feelings about waste.
  • “Proposals to move authority and control to the local level from the state level are the kinds of proposals that will resonate with Californians today.
  • “Last but not least, civic disengagement will continue to be a problem. The kind of civic disengagement that we saw in the record low turnout in last year’s election. And we may not have seen the lowest of low turnouts yet, given the disengagement Californians feel from state government today.”

Only 30.9 percent of California adults voted in the Nov. 2014 general election and just 18.4 percent in the June primary, according to Baldassare, who said in his blog: “Millions of Californians who could register to vote did not, and millions of Californians who could vote opted out. These numbers clearly point to a California public that is disconnected from their state government today.”

Hopeful

But Baldassare, perhaps anticipating the PPIC survey released this week showing increased optimism that the state is heading in the right direction, closed his remarks on a more hopeful note.

“In the wake of a growing improvement in our economy and fiscal situation, which has led to higher approval ratings of the governor and Legislature than we’ve seen for several years, and also at a time when we’ve just gone through a series of major legislative and fiscal reforms that the voters have approved in recent elections, the public is signaling their support for those reforms as well as efforts to move some activities from the state to the local level through both the local control of school funding and our corrections realignment,” he said.

Asked to explain the reasons for residents’ disconnection with government, Baldassare said part of it is a general skepticism of all institutions, particularly by independent voters. He added it’s also due to Californians’ unsatisfactory experiences dealing with state government. “They do have real experiences which confirm these broadly held beliefs,” he said. “That’s where you have control.”

The question of what the state can do to win the confidence of residents became the focus of the rest of the 2½-hour hearing.

“We should focus on the things which state government can directly affect,” said Commissioner David Beier. “To me that’s the building of trust through the delivery of governmental services. One of my business school colleagues said, ‘Building trust is a question of two things: intention and competence.’ I don’t think anybody has any question about the intention of state officials to deliver high quality services and positive outcomes.

“The question is one of competence. And it’s not a question of the qualification to deliver high quality goods and services. There are better, smarter ways to deliver service. And if we can identify the top agencies and the frequency of interaction with citizens, I think we can affect at least that component of government trust.”

DangerfieldNo respect

A big part of the problem is that the message Californians receive from state government, whether via the Internet or waiting in line at the DMV, is that state officials don’t respect them, according to Cyd Harrell, a user experience expert with Code for America, which specializes in government technology.

“Design sounds like icing on the cake or making things pretty,” she said. “But at the core, design is creating an effect on purpose. People compare the best the private sector has to offer in the same space, the five-inch screen, where it gets Facebook, Amazon or an online game. When the government experience doesn’t live up to the level of experience of the other institutions they interact with, there’s an assumption that the effect is being created on purpose.

“That’s part of where that distrust in government comes from. There’s an assumption that if I have difficulty reading it or difficulty filling out a form or it doesn’t speak in a language that I easily understand, then that’s an effect the government intends, or at least is comfortable creating as part of the design.

“In the private sector, we have companies competing to offer people the best experience for their money. Government is different, naturally. If I don’t like the experience of interacting with the government when registering my car or seeing if I’m eligible for benefits, I can’t exactly take my business elsewhere. So in some ways that can be seen as a free pass [for government officials]: ‘Don’t worry about it, where else can they go?’

“But I truly think there’s a moral imperative. Government needs to serve all of the people. It needs to offer them experiences that respect their time and dignity and their abilities, whatever those may be.”

Currently, few government agencies practice what Harrell calls human-centered design. But she said it’s not that expensive to implement. It just takes commitment from top government officials to want to do it. “So the critical thing, in my opinion, is a mind shift,” she said.

Worst enemy

Other experts at the meeting agreed that government is often its own worst enemy when it comes to working smarter and better. Bob Stone, a performance adviser for the city of Los Angeles, provided an example of the Los Angeles Fire Department’s procedure for providing two replacement pieces of uniform for each firefighter annually.

“If you were to be awarded two pieces of clothing, most people would go to the Internet, Amazon or Wal-Mart and they would buy it,” said Stone. “What the city does: the firefighter fills out a form, gets a supervisor to approve it, gets a station chief to endorse it. It’s sent to the battalion chief across town, he endorses it, sends it to the procurement office. They gather up all these things and put in an order with the supplier. A big box of supplies comes into the central yard. We pay somebody to unpack the boxes, and these go to Van Nuys and these to San Pedro, send these to West Los Angeles. That’s the way we do things.

“It’s crazy. It was a sensible way to do things in the 1950s. What they are doing, and they are going to start hopefully in the next month, they are going to give the supplier a list of fire department members who have this entitlement. And they are going to tell each of these people, ‘You’re entitled to two pieces of clothing that we’ll pay for. Go to the supplier’s website, they know who you are, identify yourself and order what you want. If you want more than two, you can buy whatever you want, you just have to pay for it. We’ll pay for the first two.’

“And this happened because we told the people that were working there, ‘Don’t do anything crazy on purpose. We do enough things crazy by accident. If you’re doing something dumb, stop it and do something smart.’ So they did this. And I’m hopeful that there are going to be thousands of examples like this.”

The Little Hoover Commission plans to submit its recommendations to the state in a report, probably later this year.

Originally published by CalWatchdog.com

Brown Key to 2016 Tax Measures

With the 2014 election finally over, attention is turned to possible tax measures on the 2016 ballot. I previously wrote about groups looking to raise taxes on commercial property, oil extraction, cigarettes, and extending or making permanent the income tax piece of Proposition 30. Marc Lifsher covered similar ground in the Los Angeles Times over the weekend. The Public Policy Institute of California released a poll last night that asked voters about some of the possible tax increases they could face on the ballot.

The key to which major tax measures will advance to the ballot very well could be Governor Jerry Brown.

It may not seem unusual for proponents of tax increase proposals to want a popular, re-elected governor to support their agenda. However, the key to getting Brown on board is not so much for his endorsement but for his influence with certain powerful political players.

During the Proposition 30 campaign, Brown was effective in neutralizing opposition from the business community. While some business leaders grumbled about the tax, and the board of the state Chamber of Commerce had extensive debate over whether to oppose the measure, in the end the business community, particularly big business, generally withheld opposition to Prop 30.

Supporters of proposed tax ballot measures would like to see the same script in 2016.

In the most recent election season, the governor emphasized the Proposition 30 taxes were temporary. He also warned against taking on Proposition 13 and its property tax protections. While Prop 13 was not tested in the new PPIC poll, Prop 30 extension received support from 52% of likely voters while 43% opposed.

Pro-tax advocates will have to convince the governor they have a winning measure. Then they will push the governor to use his influence with the business community to hold fire on whichever measure – or measures – moves forward. This is particularly true with the major tax issues, less so with so called sin taxes on proscribed goods or services such as the tax on cigarettes.

There is also the issue of a major overhaul of the tax system that has support from some reformers. More on this tomorrow.

Any group considering pushing a tax increase in 2016 will have to consider how the governor plans to use his influence on the issue.

This article was originally published on Fox and Hounds Daily