898 New California Laws Passed in 2016 – Most Start Jan. 1

jerry-brown-signs-lawsSACRAMENTO – California Gov. Jerry Brown signed 898 bills into law last year. Most start on Jan. 1, but others going into effect in coming years. The majority of new laws deal with minutiae that’s unlikely to affect most residents, but a number of them will have real-world consequences for broad numbers of people – on issues ranging from new driving rules to patients’ access to experimental medications.

Here’s a sampling of some of the significant new laws from last session:

Register your ammo purchases: Californian gun owners will need to deal with a variety of new gun-control limitations after the governor signed a broad package of bills – and voters approved Lt. Gov. Gavin Newsom’s gun-control initiative on Nov. 8. The most potentially far reaching effects will come from the state’s approval of Proposition 63, which has various restrictions and a roll-out of implementation dates over a few years.

Beginning July 1, 2017, the state will implement a ban on high-capacity magazines and will require owners to report any lost or stolen weapons. The much-publicized requirement that ammo buyers pass background checks won’t go into effect until Jan. 1, 2018.

Higher minimum wages and more unpaid leave: “The statewide minimum wage goes from $10 to $10.50 an hour for businesses with 26 or more employees — a rate that will rise to $15 by 2022,” as the Mercury-News explained. That wage hike comes from Senate Bill 3. “Assembly Bill 2393 gives up to 12 weeks of paid parental leave to all K-12 and community college employees, including classified workers and community college faculty,” the newspaper reported.

Restrictions on police use of asset forfeiture: Senate Bill 443 was one of the last bills from last session that the governor signed, but it is widely viewed as one of the most significant changes in state law. Before the new law went into effect, police agencies had the ability to take the cash, cars and even homes from people even if they weren’t convicted of any crime. The authorities needed simply to claim the property was used in the commission of a drug crime. California had fairly tough restrictions in place, but local and state police agencies would partner with federal authorities under the “equitable sharing” program and then they would operate under looser federal law.

As the Drug Policy Alliance explains, “Starting on January 1, 2017, California law will require a conviction prior to forfeiture in any state case where the items seized are cash under $40,000 or other property such as homes and vehicles regardless of value.” If local or state agencies work with the feds, they could only share in the proceeds if an underlying conviction were obtained. The final compromise still allows law enforcement to keep proceeds of more than $40,000 in cash only – a provision which caused major law enforcement groups to drop their opposition.

Higher fees from the DMV … and more: Two new laws boost the fees for DMV registrations by $10 and for an environmental license plate by the same amount. Another DMV-related law requires drivers to restrain children 2 years or under in a rear-facing car seat unless they weigh 40 pounds or more. Drivers will need to pay attention to a new law dealing with hand-held devices. “Driving a motor vehicle while holding and operating a handheld wireless telephone or a wireless electronic communications device will be prohibited, unless the device is mounted on a vehicle’s windshield or is mounted/affixed to a vehicle’s dashboard or center console in a manner that does not hinder the driver’s view of the road,” according to the agency.

Gaining the ‘right to try’: California became the 32nd state to pass so-called “right to try” legislation, which allows terminally ill people to try experimental drugs that have yet to pass the federal Food and Drug Administration’s full battery of tests. Supporters argued that many people die while waiting for drugs to clear that long and cumbersome process. After Senate amendments, Assembly Bill 1668 includes the caveat that “a health benefit plan, except to the extent the plan provided coverage, is not liable for any outstanding debt related to the treatment or lack of insurance for the treatment.”

Beer and wine at barbershops: Assembly Bill 1322 passed overwhelmingly in both houses of the Legislature. This bill allows beauty salons and barber shops to serve their clients limited quantities of beer or wine at no extra charge without obtaining a license or permit from the Department of Alcoholic Beverage Control,” according to the Assembly analysis. The new law still allows local governments to impose restrictions on this practice.

Rescuing Fido from a hot car: Assembly Bill 797 reduces liability for citizens who break a car window to save an animal that is closed in a hot car – provided they first try calling the authorities and the authorities haven’t responded quickly enough.

Legalizing lane-splitting: Anyone who drives on California’s vast network of freeways has noticed motorcyclists’ habit of “lane-splitting,” as they drive between the cars that occupy the lanes. The law had required motorcyclists to ride “as nearly as practical entirely within a single lane,” even though the practice has been widely accepted. Motorcyclists have long argued that this is safer than remaining in one lane and risk being hit from behind. Assembly Bill 51 “would authorize the Department of the California Highway Patrol to develop educational guidelines relating to lane splitting in a manner that would ensure the safety of the motorcyclist, drivers, and passengers, as specified,” according to the state Legislative Counsel.

Ignore those juvenile convictions: Assembly Bill 1843 “Prohibits employers from asking an applicant for employment to disclose information concerning or related to an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law, or seek or utilize any such information as a factor in determining any condition of employment,” according to the Assembly analysis. This was a contentious issue that passed on largely partisan lines (Democrats supported; Republicans opposed) given business-community concerns about their ability to screen job applicants.

You must be 21 to smoke or vape: Earlier in the year, the governor signed a package of smoking bills that, most significantly, raises the smoking age to 21. It also raised the age for vaping to 21. That last provision was particularly controversial because some argue e-cigarettes are a safer way for smokers to break their dangerous habit. Those laws went into effect in June.

Offering showers for the homeless: Assembly Bill 1995 would require community colleges that have shower facilities to allow enrolled homeless students to use those showers.

More bathroom choices for the transgendered: California passed a law, Assembly Bill 1772, that requires all businesses and public agencies with single-toilet bathrooms to make them available to people of all genders – a bill viewed more as a symbolic measure offered in the thick of the national debate over bathrooms for transgendered people.

The new Legislature will be back in full swing after the new year.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This piece as originally published by CalWatchdog.com

Sacramento and S.F. Push for Police Reform at Local Level

Police tapeSACRAMENTO – The presidential campaign focused some attention on the long-simmering debate over policing and the appropriate uses of force, but as is typical with national campaigns, the nuances got lost amid ideologically charged soundbites such as “law and order” and “Black Lives Matter.”

Some advocates for police reform worry about what a new Trump administration will mean for these discussions given the president-elect’s expectedly different approach toward the matter than President Obama’s Department of Justice. But others argue the election will send reform back to where it really belongs: at the local level.

Two northern California cities, Sacramento and San Francisco, are good examples of the latter. They are currently plowing ahead with major oversight and accountability proposals for their police departments – the result of local policing scandals that have little to do with national political changes. Sacramento takes up the matter at a City Council meeting on Tuesday.

The Sacramento reforms were prompted by a video of two police officers in pursuit of a mentally ill homeless man, Joseph Mann, who was armed with a knife and acting erratically. As the Sacramento Bee reported, the video sequence shows “the officers gunned their vehicle toward Mann, backed up, turned and then drove toward him again, based on dash-cam video released by police. They stopped the car, ran toward Mann on foot and shot him 14 times.” One officer is recorded saying “f— this guy” shortly before they shot him.

The killing raised questions not only about the appropriate use of force in such situations, but about the city’s willingness to provide the public information about what transpired. Top city officials – the police chief, city attorney and city manager – didn’t release the video of the event until after the Bee acquired the footage from a private citizen. The shooting led to community protests and has been a source of strife – and council debate – ever since.

In September, the newspaper’s Editorial Board published this pointed editorial: “The city could have been upfront with Mann’s family about how many times he was shot and how long the investigation into the shooting would take. Instead, his brother, backed by enough activists to fill City Hall, had go before the City Council to beg for information. The city could have been clear about what training officers receive to handle people who are mentally ill. Instead, police still haven’t responded to a Public Records Act request for a copy of the department’s policy.”

Reformers argue that the proposed policy doesn’t go far enough, although backers argue that it is about as far as it can go given state law. Specifically, the measure would transfer power of the civilian oversight committee from the city manager’s office to the mayor and City Council – thus providing a more independent level of oversight given that the city manager also oversees the police department. Council members are at least beholden to voters.

The city’s proposal also does the following: “This resolution requires the city manager to ensure that all police officers of the Sacramento Police Department abide by council specified guidelines with regards to use of force. Key components of the resolution include the timely release of video after an officer involved incident occurs and the immediate notification of family members after an officer involved shooting.” That attempts to deal with the public-records issue.

Civilian-oversight commissions are still limited by the state Supreme Court’s Copley decision. In that 2006 case, the San Diego Union-Tribune tried to gain access to a disciplinary hearing regarding a deputy sheriff who was appealing his termination. As the newspaper reported, “The court ruled that police disciplinary hearings are closed — and the public has no right to learn about allegations of police misconduct, even when they are aired in a civil service commission.” Legislative efforts to roll back parts of the decision have repeatedly been stymied by police union lobbying.

In San Francisco, officials have been reacting to controversy following three officer-involved shootings and a scandal involving racist text messages that were allegedly sent by police officers. As the San Francisco Chronicle reported in April, “The messages are loaded with slurs and ugly stereotypes, and include one from an officer responding to a photo of a blackened Thanksgiving turkey. ‘Is that a Ferguson turkey?’ the officer asks, referring to the city in Missouri that saw widespread protests after police fatally shot an unarmed African American man in 2014.”

National politics plays a bigger role in the San Francisco case. That’s because the federal Department of Justice’s Community Oriented Policing Services department published a study last month looking at San Francisco’s police department. The mayor and former police chief had asked the department to review police practices following these scandals.

As the report’s summary explained, “Although the COPS Office found a department that is committed to making changes and working with the community, it also found a department with outdated use of force policies that fail the officers and the community and inadequate data collection that prevents leadership from understanding officer activities and ensure organizational accountability. The department lacked accountability measures to ensure that the department is being open and transparent while holding officers accountable.”

San Francisco officials have vowed to implement the 479 recommendations made in the Justice Department report. “We will continue to implement the recommendations for reform which will be built on the most current policing policies and practices, fostering an environment of trust and strong relationships with our communities,” said acting Police Chief Toney Chaplin.

In Sacramento, Mayor-elect Darrell Steinberg, who is inaugurated on Dec. 13, told the Bee “the public certainly has a right to know whether a particular officer who has been accused of misconduct continues to serve in the role of police officer. … There ought to be a clear presumption of openness and the burden ought to be on the city attorney and police to demonstrate in a compelling way why anything is not public.” There’s concern that a federal lawsuit by Mann’s relatives will allow the city to shut down public access to information about the shooting.

This much is clear: Whatever changes a new administration makes at the Department of Justice, local officials throughout California are on the front lines of the police-reform movement.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This piece was originally published by CalWatchdog.com

Bipartisan Support for Occupational Licensing Reform

occupational-licensing-2SACRAMENTO – One of the rare issues where politicians on the left and right increasingly agree involves occupational-licensing requirements – the oftentimes cumbersome government-approval processes that many workers must go through to become certified to work legally in their profession. Both sides have come to recognize that excessive rules limit employment opportunities for the poor, quash economic development and force people into the underground economy.

Advocates for reform don’t argue against training and regulations per se, but they recognize that it’s unnecessary to, say, force African-style hair braiders to spend thousands of dollars and go through hundreds of hours of traditional barbershop training when the hair treatment they provide has nothing to do with the certification they receive. There’s broad understanding that people within existing professions often impose unnecessary barriers to entry as a way to reduce competition and artificially inflate wages. Defenders of the system say the rules are needed, however, to protect health and safety.

California’s independent state oversight agency, the Little Hoover Commission, this month released a report on licensing barriers that could serve as a blueprint for the state Legislature when it returns to session in January. In his letter to the governor and Legislature, the commission’s chairman, Pedro Nava, made it clear what licensing is all about:

One out of every five Californians must receive permission from the government to work. For millions of Californians, that means contending with the hurdles of becoming licensed. Sixty years ago the number needing licenses nationally was one in 20. … What was once a tool for consumer protection, particularly in the healing arts professions, is now a vehicle to promote a multitude of other goals.”

Some of those goals are reasonable and well-intentioned: professionalizing industries, guaranteeing a level of quality and so forth. But they also “have had a larger impact of preventing Californians from working, particularly harder-to-employ groups such as former offenders and those trained or educated outside of California, including veterans, military spouses and foreign-trained workers,” Nava explained. Furthermore, the standards are not always equal. He pointed to manicurists, who need 400 hours of education, whereas tattoo artists are required to register and conform to some minimal requirements, take a single class and pay $25.

According to the report, California actually has a lower percentage of licensed people than other states. That 20 percent figure places it in 30th place. One-third of Iowans have a license and nearly 31 percent of workers in Nevada have one, also. But California’s rules are more onerous than other states “in the amount of licensing it requires for occupations traditionally entered into by people of modest means,” according to the report. For these types of professions (pest control, manicurist, etc.), the required rate of licensure is a whopping 61 percent.

The commission held hearings this year to review the state’s occupational-licensing system. The commission found the licensing requirements to be “obvious to many” when it comes to health-care professions such as nursing. But it also heard testimony from those in “seemingly less-intuitive industries to speak about health and safety considerations.” It quoted a representative from the cosmetology industry, who defended the licensing requirements because “many of the procedures cosmetologists do can result in irreparable damage.” These include skin peels and the use of strong hair chemicals. But critics “say that there is a spectrum of activities to manage health and safety risks and that licensing should be considered the nuclear option.”

One alternative would be private certification. In those situations, a private authority (think of automotive mechanic organizations) sets standards. People are free to follow them or not – but being certified by that body confers a sense of legitimacy that consumers can consider when choosing to patronize a business. The commission quoted an attorney with the reform-oriented Institute for Justice, who noted: “Outside of driving, he said, eating out is one of the most harmful activities the average consumer will do on a regular basis. But the state doesn’t license food handlers.” That certainly puts the concept in perspective.

Critics argue that licensing unnecessarily raises prices. It also quashes innovation. The commission used the example of a barber who found a need for mobile barbershops, but state regulations only allow barbers to operate out of a permanent location. “Eventually he gave up on his idea even though he had data indicating demand for that service.” More is lost there than just a job. A person had to give up his entrepreneurial dream. Furthermore, the commission noted that excessive regulations inhibit mobility, given that a person trained in one state would have to go through enormous training again to operate in another state.

“Occupational licensing regulations are made in the name of protecting the public interest,” according to the commission. “The reality, witnesses told the commission, is that occupation regulation often amounts to rent-seeking. Briefly defined, rent-seeking is an attempt to influence the political, social or other environment to achieve an economic gain for oneself without contributing to productivity.”

That’s an economic way of saying that people who already work in an industry often band together and lobby to keep new competitors out of that industry. The commission refers to it as “gatekeeping.” And it’s really tough on poorer people trying to get their foot on the economic ladder.

The commission offered a variety of recommendations for the state government: collecting more demographic data on license applications; seeking federal grants to review the current licensing requirements; requiring reciprocity for license holders from other states; seeking sunset provisions on licensing regulations; creating a research institute to study new licensing laws; improving training for veterans; and creating apprenticeship rules that would allow people to work while they address their licensing requirements.

As mentioned above, the commission argues that the current situation poses particular burdens on former offenders, who “typically must demonstrate that their convictions were not substantially related to the duties of the occupation.” The commission pointed to those who reported “some arbitrariness in licensing authorities’ decisions.” Military spouses face problems as they follow their partners to other states, where their licenses don’t always transfer. Veterans and foreign-trained workers often have the requisite skills, but need to go through the entire licensing process anyway. The Legislature has in the past few years passed several bills designed to help veterans and military spouses, but the problem still exists for them, too.

Reformers call for wide-ranging changes. The last real attempt at this came in 2004, when then-Gov. Arnold Schwarzenegger introduced the California Performance Review. “Facing insurmountable hurdles, Governor Schwarzenegger withdrew the plan from consideration a month later,” according to Nava. But times are different now.

There’s rarely much bipartisanship in the state Legislature, but there are occasional promising signs. This year, legislators approved – and the governor signed into law – a measure that would reform the way police departments take private property without a conviction (asset forfeiture). Legislators from both parties saw that the burden fell heavily on poor Californians and that the process seemed to violate constitutional rights.

Likewise, liberals recognize that excessive licensing regulations harm opportunities for poor people and conservatives often see the rules as an affront to a market-based economy. The time may be ripe for reform and perhaps Little Hoover’s suggestions will lead the way.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

This piece was originally published by CalWatchdog.com

Will Local Officials Finally Get the Tools They Need to Prevent Pension Tsunami?

pensionSACRAMENTO – A decision by four Marin County public-employee associations to appeal a pension-related case to the California Supreme Court could ultimately determine whether localities have the tools needed to rein in escalating pension debt. At issue is how far officials can go to reduce some benefits for current employees after a state appeals court has chipped away at a legal “rule” long favored by the state’s unions.

In August, a California appeals court ruled against the Marin County Employees’ Association in its case challenging a 2012 state law reining in pension-spiking abuses – i.e., those various end-of-career enhancements (unused leave, bonuses, etc.) that public employees use to gin up their final salary and their lifetime retirement pay.

One of the few areas of widespread agreement at the Capitol on public-employee pensions involves spiking. Gov. Jerry Brown signed into law the Public Employees’ Pension Reform Act of 2013, known as PEPRA, to reduce escalating pension liabilities. Most of its provisions applied to new hires only. The governor also signed related legislation, Assembly Bill 187. Its goal was to “exclude from the definition of compensation earnable any compensation determined … to have been paid to enhance a member’s retirement benefit.”

This limitation on pension spiking was implemented by the Marin County Employees’ Retirement Association to help the county reduce its pension debt. As the court explained, “Reaction to the change in policy was almost immediate.” Five public-employee associations filed suit, claiming that a ban on these spiking conditions reduced promised levels of pay to their members. They argued this was an impairment of their “vested rights.” Vesting confers ownership rights.

Even though the dollars at issue are relatively minimal, the case has become a major flashpoint. California courts have long abided by something known as the “California Rule.” It’s not a law or even a rule, actually. It refers to a series of court rulings concluding that once a pension benefit is granted to public employees by a legislative body (board of supervisors, city council, state legislature), it can never be reduced – even going forward.

In the private sector, for instance, courts allow employers to reduce pension benefits, starting tomorrow. Employees could be paid everything promised to the point of the benefit change, but they can have certain benefits removed or reduced in the future. That’s seen as reasonable given they haven’t earned them yet. It’s different in the public sector.

In California (and a number of other states that follow a similar rule), these benefits can never be reduced. The problem, from a public-finance point of view, is that reducing benefits for new hires only won’t address the bulk of the debt problem until those employees start retiring in 25 or 30 years. Fixing the current debt problem requires dealing with current employees.

Ironically, almost all of the benefit increases public agencies have granted to union members since the 1999 passage of Senate Bill 400 have been done “retroactively.” In other words, the courts have allowed public agencies to give a boost in pensions to public employees for years they previously have worked – but they won’t allow those same agencies to reduce future benefits for years that have yet to be worked. This is politically controversial, but there’s little debate that such a rule has been followed by the courts.

“Public employees earn a vested right to their pension benefits immediately upon acceptance of employment and … such benefits cannot be reduced without a comparable advantage being provided,” according to the plaintiffs, as quoted in the appeals court decision. “A corollary of this approach is that public employees are also entitled to any increase in benefits conferred during their employment, beyond the benefit in place when they began.” In this view, compensation is a one-way ratchet.

This understanding has largely undermined every major reform proposed in California. For instance, the courts gutted the city of San Jose’s voter-approved 2012 pension-reform initiative because it rolled back future benefits for current employees. And the“California Rule” has been the obstacle that has stopped reformers from coming up with other similar approaches.

In this case, Justice James Richman ruled, “(W)hile a public employee does have a ‘vested right’ to a pension, that right is only to a ‘reasonable’ pension – not an immutable entitlement to the most optimal formula of calculating that pension. And the Legislature may, prior to the employee’s retirement, alter the formula, thereby reducing the anticipated pension. So long as the Legislature’s modifications do not deprive the employee of a ‘reasonable’ pension, there is no constitutional violation. Here, the Legislature did not forbid the employer from providing the specified items to an employee as compensation, only the purely prospective inclusion of those items in the computation of the employee’s pension.”

The judge pointed to conclusions from California’s watchdog agency, the Little Hoover Commission, pointing to uncontrollable unfunded pension liabilities. As the commission explained, “To provide immediate savings of the scope needed, state and local governments must have the flexibility to alter future, unaccrued retirement benefits for current workers.” The commission pointed to spiking as a particular problem. This report, he wrote, is part of what motivated the state Legislature and governor to implement reform.

Furthermore, the judge pointed to previous cases acknowledging that government entities have the right to “make reasonable modifications and changes in the pensions system ‘to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system and carry out its beneficent policy.’” This echoes what myriad pension reformers have argued: agencies are not stuck watching their systems go over the cliff. They have the right and duty to make adjustments to assure their future solvency.

If the California Supreme Court sides with the unions, then local governments will have fewer options left to gain control of their pension debts. If the court agrees with Judge Richman, then pension reform could be a brand new ballgame – although it’s unclear whether the court might toss the California Rule entirely or simply allow localities to change some of the benefits within the framework of that rule.

The court has 60 days to decide whether to consider the matter, according to reports. Unions and reformers will no doubt be watching the court’s decision closely.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This piece was originally published by CalWatchdog.com

How Will New Laws, Signed By Gov. Brown, Affect Your Life?

Jerry Brown state of the stateSACRAMENTO – The 2016 legislative season is officially over, with Gov. Jerry Brown having signed 900 bills while vetoing 159 by Friday’s deadline. Some of the recently signed bills are far-reaching and will have a noticeable effect on Californians’ lives. Here’s a small sampling of some of the measures that will soon be law.

A new government-run retirement program: On Thursday, Gov. Brown signed Senate Bill 1234, which gives legislative approval to the state’s continuing efforts to create a new government-run retirement program for private-sector employees. Once it is up and running, private employers (with five or more employees) will be required to offer this program, whereby 3 percent of each employees’ earnings will be deducted and invested by a state-selected investment group – possibly, the California Public Employees’ Retirement System (CalPERS).

Employees can opt out. The details are not yet certain, but the goal is to invest the money in a low-risk investment tied to the Treasury bond. Supporters say the law protects taxpayers from incurring more than minimal costs, but critics insist the program could grow and change in ensuing years – and that there’s no way of creating a massive new government program without imposing risks on the state budget.

The idea, which is being pitched in other states too, grew out of union activism. Several years ago, when publicity over unfunded public-pension liabilities began creating pressure for pension reform, union allies wanted to come up with a “positive” rebuttal to all those news stories about six-figure pensions and pension-spiking gimmicks. This idea is designed help private workers.

Putting limits on ‘policing for profit’: One of the most controversial policing strategies in recent years has been “civil asset forfeiture.” Born out of the nation’s drug war in the 1980s, forfeiture was designed to help police agencies crack down on drug kingpins by allowing departments to grab the cash, cars and properties gained through their illegal activities. But like many government programs, asset forfeiture morphed into something its creators never envisioned.

Two of the men who helped create the program in the U.S. Department of Justice, John Yoder and Brad Cates, wrote an op-ed in The Washington Post in 2014 pointing to the corruption engendered by this process: “Law enforcement agents and prosecutors began using seized cash and property to fund their operations, supplanting general tax revenue, and this led to the most extreme abuses: law enforcement efforts based upon what cash and property they could seize to fund themselves, rather than on an even-handed effort to enforce the law.”

Basically, police agencies came to depend on the revenue and they distorted their law-enforcement priorities based on the chance to grab more cash. There’s no due process here, given that police agencies file suit against the property itself, alleging it was involved in a drug crime. No conviction is necessary. California had previously passed reforms that mostly required a conviction, but police agencies got around that by partnering with the feds (and operating under looser federal standards) and then splitting the seized property.

Senate Bill 443 was killed last year after lobbying efforts by police chiefs and other law-enforcement agencies. But a fairly recent amendment – allowing cops to still take large amounts of cash without a conviction, but limiting smaller amounts of cash and property takings – eliminated most opposition from law enforcement. The new law is meaningful, and one of the more substantive compromises to take place in Sacramento this year.

Giving the terminally ill the right to try: One of the more significant “freedom” battles this year was over the so-called “right to try” – i.e., the ability of terminally ill patients to try experimental drug treatments that have yet to gain final approval from the Food and Drug Administration. Similar measures have been approved by 31 other states.

The Goldwater Institute, a Phoenix-based free-market think tank, has been championing these measures across the country. As Goldwater explains: “The FDA … often stands between the patients and the treatments that may alleviate their symptoms or provide a cure. To access these treatments, patients must either go through a lengthy FDA exemption process or wait for the treatments to receive FDA approval, which can take a decade or more and cost hundreds of millions of dollars.”

The California law, Assembly Bill 1668, passed overwhelmingly. According to the official bill analysis, it authorizes drug manufacturers to make investigational treatment available “to a patient with a serious or immediately life-threatening disease, when that patient has considered all other treatment options currently approved by the FDA, has been unable to participate in a relevant clinical trial, and for whom the investigational drug has been recommended by the patient’s primary physician and a consulting physician.”

Allowing felons to vote: One of the more controversial new laws, Assembly Bill 2466 by Assemblywoman Shirley Weber, D-San Diego, allows felons who are serving their sentence in county jails to vote. The measure was opposed by law-enforcement groups, but Weber argued it would stop discrimination in voting and make it less likely that prisoners would commit new offenses.

“Civic participation can be a critical component of re-entry and has been linked to reduced recidivism,” Weber said, according to a Los Angeles Times report. For me, this bill is not about second chances, but about maintaining the integrity of elections,” said Sen. Pat Bates, R-Laguna Niguel, in a statement. “Close elections, especially at the local level, could now turn on a handful of ballots cast by people in jail. This new law is bad for democracy and will further erode trust in government.”

Putting self-driving cars on the road: Autonomous vehicle technology has been advancing rapidly, and California is, not surprisingly, ground zero for the development of this important new technology. Gov. Brown signed a bill Thursday “that for the first time allows testing on public roads of self-driving vehicles with no steering wheels, brake pedals or accelerators,” according to a San Jose Mercury News article. “A human driver as backup is not required, but the vehicles will be limited to speeds of less than 35 mph.”

Assembly Bill 1592 itself is rather modest. It provides two spots for such testing – in a San Ramon business park and at the former Concord Naval Weapons Station. And Friday, the California Department of Motor Vehicles released new regulations that are far friendlier toward self-driving cars than the DMV’s previous regulations. So while the new law itself isn’t particularly significant, the state’s new legislative and regulatory approach certainly is. If that approach continues, we’ll be seeing rapid expansion of autonomous vehicles here.

Greenlighting granny flats: The governor’s signing of Senate Bill 1069 shows increasing bipartisan understanding of the state’s skyrocketing home prices. The bill would relax standards for creating ADUs (accessory dwelling units), better known as granny flats.

“Eliminating barriers to ADU construction is a common-sense, cost-effective approach that will permit homeowners to share empty rooms in their homes and property, add incomes to meet family budgets, and make good use of the property in the Bay Area and across California while easing the housing crisis,” according to the bill analysis’ summary of the author’s arguments.The bill embraces a regulatory approach that could be tried with other types of housing.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

This piece was originally published by CalWatchdog.com

High-Visibility Tobacco Tax Initiative Receiving Lots of Attention, Money

SmokingSACRAMENTO – There’s broad agreement that the 17 initiatives on the statewide ballot on November 8 cover some of the most significant public-policy issues to come before voters in more than a decade. For instance, voters will have a chance to legalize marijuana, outlaw the death penalty, put an end to the state’s virtual ban on bilingual education, approve a broad gun-control package and reduce prison sentences for some non-violent felons.

But two months before the election, one of the highest-visibility measures also is fairly narrow in scope. Proposition 56 would raise California’s relatively low tobacco tax (relative to other states) by $2 a cigarette pack – and increase taxes by an equivalent amount on all other tobacco products (cigars, chewing tobacco, etc.). It also would significantly increase taxes on electronic cigarettes and vaping products. It has high visibility right now because of a series of advertisements opponents are running on radio stations across the state.

Supporters pitch the measure as a means primarily to boost public health. “An increase in the tobacco tax is an appropriate way to decrease tobacco use and mitigate the costs of health care treatment and improve existing programs providing for quality health care and access to health care services for families and children. It will save lives and save state and local government money in the future,” according to the initiative’s findings.

Gov. Jerry Brown recently signed into law a package of anti-tobacco bills that, among other things, raise the smoking age to 21. Studies of addiction show that teens who begin smoking are more likely to continue this dangerous habit throughout their lives. Backers of this initiative argue that raising the prices of cigarettes is another main way to dissuade people from smoking. And they point to the costs to the health system imposed by smokers.

But the measure’s opponents are focused increasingly on the spending aspects of the proposal. According to the official ballot argument against the measure, “Prop. 56 allocates just 13 percent of new tobacco tax money to treat smokers or stop kids from starting. If we are going to tax smokers another $1.4 billion per year, more should be dedicated to treating them and keeping kids from starting. Instead, most of the $1.4 billion in new taxes goes to health insurance companies and other wealthy special interests, instead of where it is needed.”

An analysis by the non-partisan Legislative Analyst’s Office confirms that only a small percentage of the estimated $1.4 billion in new revenues are earmarked to such programs. The main priority of the new funds, based on the LAO analysis, is to “replace revenues lost due to lower consumption resulting from the excise tax increase.” That reinforces the odd conundrum faced by California and other states. They use tax and regulatory policies to promote public health by reducing smoking, but then struggle to find funds to pay for ongoing programs as the number of smokers – and therefore the number of tobacco-taxpayers – keeps falling.

The initiative then earmarks some funds to law enforcement, to University of California physician training, to the state auditor and to administration. But 82 percent of the remaining funds go to “increasing the level of payment” for health care related to Medi-Cal, the state’s health-care program for low-income people. Prop. 56 opponents therefore argue it’s designed mainly to benefit health-insurance companies and other interest groups – and includes few limits on how they spend the money they receive.

Furthermore, the initiative bypasses educational-funding requirements under Proposition 98, the 1988 initiative that now requires approximately 43 percent of state general-fund revenues to be directed to the public-school system. As the LAOexplained, “Proposition 56 amends the state Constitution to exempt the measure’s revenues and spending from the state’s constitutional spending limit. (This constitutional exemption is similar to ones already in place for prior, voter-approved increases in tobacco taxes.) This measure also exempts revenues from minimum funding requirements for education required under Proposition 98.”

It’s not unusual for a major tax hike measure to ignite controversies over how the new revenues will be spent. But there’s a serious question about whether this initiative will meet its health-improvement goals given the way the tax hammers a common product used by people to quit smoking.

In a research paper co-authored with my R Street Institute colleague Cameron Smith, we note the measure boosts excise taxes on vaping by 320 percent. The key, stated goal of the tobacco tax increase is to dissuade people from buying cigarettes. By the same logic then, the massive boost in taxes on e-cigarettes seems designed to dissuade people from using them.

Yet as Public Health England explained: “The comprehensive review of the evidence finds that almost all of the 2.6 million adults using e-cigarettes in Great Britain are current or ex-smokers, most of whom are using the devices to help them quit smoking or to prevent them going back to cigarettes.” That government health agency urges public-health officials to promote vaping as a way to improve public health. Some U.S. studies come to similar conclusions.

Proposition 56 backers argue that vaping hasn’t been proven safe and the devices haven’t been around long enough to know long-term health effects. They also fear teens will begin vaping and then move on to combustible cigarettes, which everyone agrees are dangerous. And they point to a recent University of Southern California study suggesting teens who vape are six times more likely to begin smoking cigarettes than teens who don’t vape.

In reality, the study seems mainly to reflect “the difference between teens inclined to experiment and teens not so inclined,” according to a public-health expert we quoted. Furthermore, the e-cigarette industry doesn’t claim vaping is safe – they say it is a safer alternative to cigarette smoking. Research suggests they are about 95 percent safer.

California has the second-lowest smoking rate in the nation at around 12 percent. Only Utah has a lower percentage of smokers. So Proposition 56 doesn’t effect a broad swath of the public – but it is a contentious measure given questions about where the tax dollars will go and about its heavy-handed treatment toward vaping. Compared to many of the other initiatives on the ballot, this one might seem simple, but it’s about far more than whether the state government should boost taxes on a pack of cigarettes by two dollars.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

This piece was originally published by CalWatchdog.com

CalPERS Could Get Hands on Billions in Private-Sector Retirement Funds

Calpers headquarters is seen in Sacramento, California, October 21, 2009. REUTERS/Max Whittaker

Instead of addressing the estimated $600 billion in unfunded liabilities in California’s beleaguered public-employee pension system, Democrats in Sacramento have instead decided to “solve” a growing pension crisis in the private sector. In 2012, Governor Jerry Brown signed a measure that created an investment board and authorized a “feasibility study” of various options for a state-backed private-pension system. That study came out last month, and the legislature is now vetting bills that would put its recommendations into action.

The plans under consideration would mandate participation in the new state-run retirement system for firms with five or more workers, though the workers themselves could opt out. Employers that don’t comply would face fines and other penalties. They would automatically deduct 3 percent to 5 percent of each employee’s earnings (the exact percentage is not yet determined) and deposit the money in an IRA, likely managed by the California Public Employees’ Retirement System (CalPERS)—the same union-controlled government entity that uses its investment muscle to promote liberal causes. Unlike the public-employee pension plans (or even Social Security), however, the envisioned private-pension system is a 401(k)-style, defined-contribution plan. It could not accumulate unfunded liabilities, at least in its current design.

After winning assurances that firms won’t be liable for any losses, the state’s business community has stayed mostly neutral on the scheme. A state senate analysis in support of the bill points to a genuine problem. “Today, due to inadequate retirement savings, nearly 50 percent of middle-income California workers will face living in or near poverty during their senior years,” it says. Social Security is inadequate, and more than 7 million private-sector workers “do not have access to a retirement savings plan through their jobs.”

The obvious rebuttals: workers do have access to such plans in the private sector, and it’s not the government’s job to create such a program. Low-income earners might not be thrilled to see their paychecks decline by 5 percent if the new proposal takes effect. Additionally, employers would face unexpected costs and red tape. The plan would almost certainly lead private employers with their own pension programs to dump their workers onto the new state system. And a government-administered pension system would likely crowd out private companies that manage and sell 401(k) investments.

The state’s public-sector unions backed Brown’s bill. As it turns out, union-friendly politicians hatched the private-sector pension plan a few years ago as a way to deflect attention from the public system’s massive unfunded liabilities. The idea was to give private-sector workers some modest benefit as a way to dampen public support for pension reforms.

Union members’ pensions are enormous. Public-safety officials in California typically receive the “3 percent at 50” formula, which means they (and their spouses) are guaranteed 3 percent of their income multiplied by the number of years worked, available at age 50, which translates to 90 percent of their final years’ pay after 30 years. And that’s before myriad pension-spiking gimmicks. Other public employees often receive formulas that guarantee 80 percent or more of their final pay, which is quite generous. The state’s $100,000 Pension Club is expanding rapidly for precisely that reason. Recently, the San Jose Mercury News reported on Alameda County’s top bureaucrat retiring with a $500,000 annual pension.

Should California go ahead and put the new system into place, and see positive results, expect political pressure to build to expand it into a bigger program—one that could eventually put taxpayers on the hook. Would you trust this crowd to solve any pension crisis?

Phony cost estimates unlikely to stop bullet train’s momentum

Photo courtesy of Jon Curnow, flickr

Photo courtesy of Jon Curnow, flickr

San Francisco’s colorful former mayor Willie Brown caused a stir three years ago by writing some disturbing truths about major government infrastructure projects. The city’s Transbay Terminal project—billed as a future “Grand Central Station of the West”—was running $300 million over budget. Brown argued that no one should be shocked by such overruns, and that “we always knew” the estimate was artificially low. “In the world of civic projects, the first budget is really just a down payment,” he wrote. “If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.”

Brown’s column was—and still is—widely quoted because California officials are busy advancing the largest infrastructure project ever built by the state. The California High Speed Rail project, energized by a statewide ballot initiative in 2008 that provided initial bond funding of $9.95 billion, seems to be exactly the kind of project Brown had in mind.

In terms of pricing and design, the current project bears little resemblance to the detailed promises made in Proposition 1A. The original price tag was less than $40 billion but quickly ballooned to $118 billion. Governor Jerry Brown ratcheted the number down to $64 billion—not that any number really means anything at this point. To get these proposed costs down, rail backers had to void one of the project’s core promises: that the train would connect Los Angeles to San Francisco (via the San Joaquin Valley) in two hours and 40 minutes. The updated plan requires “bullet” trains to share commuter tracks in the two main congested metropolitan areas, slowing travel time significantly.

The latest draft business plan, released last month, offers a reality check for anyone who thinks that the $64 billion price tag is even close to accurate. The rail authority had planned to break ground in Fresno and build tracks to the Los Angeles basin, but getting from the valley into Southern California means going over or under the Tehachapi Mountains, a large and geologically complex barrier. “[P]roject engineers are now analyzing solutions critics say could break the project’s budget or, just as bad, add too much travel time,” the Bakersfield Californian reported in 2014. “None of this is a deal-breaker, a spokeswoman for the California High-Speed Rail Authority said. She declined to go into details but insisted the agency will present a refined route over the Tehachapis.”

Instead of a refined route, the authority has decided to skip Southern California for now, and first take the much easier—and less costly—route to San Jose. Opponents have pinned their hopes on a legal challenge. But the same Sacramento Superior Court judge who previously found that the project had violated funding-related terms of Prop. 1A (but was later overruled) gave the project the green light in early March.

Willie Brown would understand. The goal is to get started and worry about the costs and details later. If Californians really knew the cost, nothing would get built. Unfortunately, when financial and other commandments are nothing more than suggestions, anything can get built. And the public can’t do much about it.

Carl’s Jr. Latest Company to Ditch California

After the 2013 death of the founder of Carl’s Jr. — the ubiquitous California fast-food restaurant chain — the Orange County Register published an obituary that captured the one-time spirit of the state: “Carl Karcher, the Ohio farm boy with an eighth-grade education who turned his $326 investment in a hot dog stand into a multimillion-dollar fast food empire, died Friday afternoon. He was 90.” For decades, this was a place where anyone could earn a fortune.

Carl's_Jr._DentonEarlier this week, Carl’s Jr.’s parent company (CKE Restaurants) announced it would relocate from Ventura County to Nashville, Tennessee. The company issued a bland statement. It is “re-franchising” many of its company-owned locations. “As such, early next year we will be consolidating our Carpinteria and St. Louis corporate offices in Nashville, which is centrally located and is one of the markets where we have retained company-owned restaurants.”

In 2011, I reported on a California Chamber of Commerce event, where CKE Chief Executive Officer Andrew Puzder “complained about the permitting process here, where it takes eight months to two years to open a new restaurant compared to an average of 1 1/2 months in Texas.” Then there are all those lawsuits, and work rules that force companies to pay overtime based on daily, rather than weekly, hours. He was mulling a move to Texas then.

Granted, CKE is moving its headquarters, not its restaurants. But the point is well-taken. There is a cottage industry here that denies industrial-era work rules and a maddening regulatory process make any difference to business owners. The idea that there’s a business exodus is just right-wing nonsense, they insist, and they point to research purportedly showing that businesses aren’t really leaving.

Not many big brick-and-mortar businesses shut down and rebuild elsewhere. But companies do shift operations, build their new plants in other states, or just never get started. Corporate types don’t like to blame state officials publicly — that invites pushback. But at one business-closing press event I attended in a Los Angeles area industrial park, departing owners compared notes about the best places to move outside of California.

However much CEOs would rather live in Malibu than Fort Worth, Texas, they’re not usually apt to actually build a manufacturing plant in Los Angeles or Santa Barbara, despite what liberal economists and reporters might argue.

One widely discussed 2014 article suggested that higher tax rates are, the harder we all will work. “Some research into tax rates indicates that high rates have the opposite effect: People may work harder, trying to make more money to achieve a desired after-tax income and may slough off if tax rates are lowered,” wrote David Cay Johnston in the Sacramento Bee. Work makes us free, I suppose.

“California proves every day that conservative economic theories are s[–]t. Every. Single. Day,” wrote the left-wing Daily Kos, noting that California grows even though it ranks at the bottom of business-climate surveys. I give Kos credit for using a word often ignored: despite. California remains a global economic leader “despite its high cost of living, taxes and regulations,” he added. But imagine the growth if it had a sane economic policy.

That high cost of living, by the way, is largely the result of government land-use restrictions that artificially drive up the cost of developable land. It’s also why California has the highest poverty rate in the nation under the U.S. Census Bureau’s new formula. You’d think folks who claim to care about the poor might think more deeply about this.

A recent study found about 10,000 California businesses “disinvested” in the state over seven years, meaning they moved, closed down, or shifted jobs out of state. Business researcher Joseph Vranich relied on public records. His report includes a long list of companies and what happened to them. He only included “disinvestments” clearly tied to the business climate.

Officials react as Gov. Jerry Brown did when former Texas Gov. Rick Perry ran an ad campaign luring businesses to the Lone Star State. “It’s not a serious story, guys,” Brown said during a speech. “It’s not a burp. It’s barely a fart.” Vranich’s report was a response to Brown’s “business czar,” who in 2012 said: “[T]here is no data anywhere where you can find numbers of companies that have either entered or left this state. It’s just not kept … so there is no justification for the statement that there is this mass exodus from the state of California.”

The resulting data was voluminous. But it was barely a burp in the state Capitol. Currently, the only point of contention is between the Democratic governor and the Democratic Legislature. They both want to spend more on programs, but the former wants to be sure to have enough cash when there’s an eventual recession. The November election is likely to see union-backed voter initiatives to raise taxes and spend more. How can they hurt, given we’ll all be good oxen and pull harder?

This week, legislators are introducing a bill to allow independent contractors to collectively bargain (through a new type of association) with Uber and other companies in the sharing economy. Brown and legislators often point to Silicon Valley’s enduring growth as evidence that California remains an economic hub. Yet this looks like a direct assault on the Golden State’s golden-egg-laying goose, not that state leaders will get it.

They can argue high taxes, regulation, and unionization are good for the economy. But if you were an Ohio farm boy today with $300 in your pocket, would you try to make your fortune in California or, say, Tennessee?

Steven Greenhut is a senior fellow and Western region director for the R Street Institute. He is based in Sacramento.

This piece was originally published by The American Spectator

Poverty plan offers a wealth of bad ideas

As reported by the San Diego Union-Tribune:

— As legislators return to the Capitol in January, there’s little question the issue of poverty will be high on the agenda. Legislative Democrats have been dismayed that the governor held the line on new social-welfare spending last session and are eager to step up public funding for new and existing programs. And news reports suggest a major new anti-poverty initiative, backed by some charitable organizations, already is garnering serious donations.

Expect poverty to be “big” this year. Even legislative Republicans haven’t resisted too much. They’ve generally been OK with new spending proposals – provided they’re funded without raising taxes. We’ll have to wait and see any specifics from legislators, but we already know the details of the so-called “Lifting Children and Families Out of Poverty Act.” It’s likely to spark a spirited debate during the November 2016 election season given the size of the tax increase it would impose on property owners.

That initiative is one of several possible tax-hike intiatives on the ballot, and proponents appear ready to start collecting signatures. It would impose what supporters call “a sensible and fair surcharge on properties with values of over $3 million” that keeps “all Proposition 13 property tax protections against reassessments … in place.”

The resulting cash flow – between …

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