Did Sacramento break the law in transportation tax rush?

los-angeles-freewaysDid lawmakers break the law when they passed Senate Bill 1, the transportation tax increase?

There’s a quaint provision in the California Constitution that reads, “A person who seeks to influence the vote or action of a member of the Legislature in the member’s legislative capacity by bribery, promise of reward, intimidation, or other dishonest means, or a member of the Legislature so influenced, is guilty of a felony.”

By the time Gov. Jerry Brown finished twisting arms and greasing palms to pass a massive transportation tax hike, that antique language was on the curb like a broken grandfather clock waiting for a bulky-item pickup.

Brown and legislative leaders promised a billion dollars for specific local projects in the districts of wavering lawmakers, and one termed-out Republican senator made a deal for a law to protect people in his profession — civil engineering, not the profession you’re thinking of — from liability in construction lawsuits.

It’s not easy to prove a quid pro quo, Latin meaning “something for something.” People don’t typically leave a written record that says, “I’ll vote for this if you vote for that.”

But one thing is different this time. In November, California voters passed Proposition 54, a measure aimed at guaranteeing transparency in state lawmaking. Prop. 54 says bills must be in print and online in their final form 72 hours before the Legislature votes on them.

The transportation tax increase, SB1, was posted online on April 3. If the Legislature was going to meet its self-imposed deadline to pass the bill on April 6, not one word of it could be changed before the vote.

So all the wheeling, dealing, greasing, and “promise of reward” had to go into a separate bill.

And it did.

SB132 contains a billion dollars of “that” which was negotiated in exchange for a vote on “this.”

Not only is it in writing, there are many statements on the record from lawmakers that their vote for the transportation tax was explicitly tied to a promise from the governor and legislative leaders that the “thats” would be delivered.

Are the deals spelled out in SB132 a violation of the law under Proposition 54? They are effectively amendments to SB1 that were written into a different bill. If that’s legal, then the 72-hour requirement that voters just added to the state constitution has already been thrown to the curb with the rest of the grandfather clocks.

Before the truck comes to pick up the garbage, we should retrieve that language about bribery and reward and see if it applies to outgoing Sen. Anthony Cannella’s deal to condition his vote for SB1 on the passage of SB496, a bill Cannella authored to protect “design professionals,” including civil engineers, from lawsuits stemming from future work. “Anthony is a civil engineer,” Cannella’s official bio states.

Maybe you’re thinking it won’t pass. He was ahead of you. Language was added to the billion-dollar spending bill, SB132, to make it “operative” only if SB496 is enacted.

In addition to the billion dollars of “reward” written into SB132 on April 6, the bill was amended on April 5 to add $1 billion for “augmented employee compensation.”

Yes, another $1 billion of “compensation increases and increases in benefits” for state workers was slipped in while everyone was wondering where the state spent all our transportation taxes.

Talk about being taken for a ride.

Susan Shelley is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

Democrats eye post-election transportation session

As reported by Politico:

SACRAMENTO — After a year of stalled negotiations on a multi-billion dollar transportation plan, Democratic legislative leaders are privately discussing reconvening the state Legislature after the Nov. 8 election to take up road funding in a special session, legislative sources said.

In a lobbying effort supported by Assembly Speaker Anthony Rendon and Senate President Pro Tem Kevin de León, state Sen. Jim Beall and Assemblyman Jim Frazier, chairman of the chamber’s Transportation Committee, have reached out to colleagues in recent days to seek support for a transportation bill.

Frazier and Beall helped craft a $7.4 billion transportation proposal this year that would have included a 17-cent-per-gallon increase in the gas tax, though that measure would likely be amended before lawmakers take it up. Gov. Jerry Brown, who previously called for a smaller, $3.6 billion transportation package, remains resistant to the lawmakers’ more expensive proposal, sources said. …

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Special Transportation Session Stuck in Legislative Gridlock

road_blockMuch like much of the state’s traffic, the legislative special session on transportation/infrastructure is stuck in gridlock. Democratic legislators have a plan to provide $7.5 billion a year in new tax revenue. The governor’s plan also includes tax increases. Republicans want to use current tax revenue more efficiently, cap and trade funds for roads or direct some of the road related monies like truck weight fees directly into road improvements. Neither side budges.

Could this gridlock be altered by the results of November’s elections?

If the Democrats secure the two-thirds majority that would allow them to raise taxes without Republican support, then its game over, right? The Democrats will pass a tax increase and the governor will sign it.

Not necessarily.

While many Democrats are happy to blame the Republicans for the gridlock over the special session because the GOP won’t okay taxes, the scolding Democrats conveniently overlook a good portion of their own caucus, which is wary of raising gasoline taxes on constituents.

Recall that the piece dropped from the controversial SB 350 last year had to do with cutting gasoline use, which in turn would have increased gas prices, something Democrats particularly representing poorer or inner valley areas of the state did not want to do. Raising gas taxes will also add to the cost of gasoline.

Given the demands of voters to relieve gridlock on roads, the advocacy of the business community to spark the economy with a better transportation system, and the support of labor forces to get good construction jobs, you would think a compromise would be attainable.

But environmentalists and public unions don’t want to give on CEQA reform or restructuring CalTrans as some Republicans have suggested, and Republican legislators are concerned about a backlash if they raise taxes.

In the meantime, there are discussions about the possibility of a ballot initiative backed by the business community modeled after the school-funding plan, Proposition 98, which would dedicate money to transportation infrastructure and the roads.

If nothing comes out of the special session soon, other forces could attempt to deal with this crucial issue.

Originally published by Fox and Hounds Daily

Judge Rejects Uber Settlement, Saying It Lowballs California Labor Claims

As reported by Forbes.com:

A federal judge has thrown out a proposed $100 million settlement negotiated by a Boston lawyer on behalf of more than 200,000 Uber drivers in California and Massachusetts, saying it places too low a value on potentially costly claims drivers could bring under California labor laws.

U.S. District Judge Edward Chen, who has consistently ruled in favor of attorney Shannon Liss-Riordan over Uber’s fierce objections, rejected the settlement because it allocated only $1 million for claims under California’s Private Attorneys General Act, a law that allows employees to sue for civil penalties on behalf of the state. The California Labor and Workforce Development Agency estimated the value of those claims to be $1 billion if a court determined Uber drivers were employees and not independent contractors, as Uber maintains.

The judge also dismissed as meaningless an unusual provision in the settlement that would increase it from $84 million to $100 million if Uber held a successful initial public offering, saying he couldn’t consider that part of the deal since he had no assurance it would happen. (Uber, which has a private market value of $28-$60 billion based on recent venture capital rounds, told the judge “it would not be proper” to respond to his questions about an IPO.)

The settlement came on the eve of the first trial, and Chen’s rejection puts …

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Gas tax hike of 17 cents per gallon part of new transportation funding plan

As reported by the Los Angeles Times:

Two Democratic lawmakers unveiled a $7.4-billion transportation plan late Wednesday, the latest effort to break through a yearlong logjam over the state’s funding woes.

The plan, highlighted by an increase of 17 cents per gallon in the gas tax, comes from Assemblyman Jim Frazier (D-Oakley) and Sen. Jim Beall (D-San Jose) in an attempt to unify the disparate proposals the pair had previously introduced in their respective houses.

The combined plan is more than double Gov. Jerry Brown’s $3.6-billion proposal, which calls for a 6-cent gas tax hike.

“We need to be able to have a big plan to be able to be effective and catch back up,” Frazier said.

Last summer, Brown called a special session of the Legislature to highlight the $130-billion backlog in state and local road repairs, as well as the billions more in other transportation budget deficits. But lawmakers have made little progress, especially with gas tax hikes — which would require a bipartisan supermajority vote — on the table. …

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The Good, Bad and Ugly – Impending Bills Impact Small Business

http://www.dreamstime.com/-image21552155As the Legislature reconvenes this week for its final month of business for the 2015-2016 legislative session, NFIB California reflected on victories and challenges ahead per the “The Good, The Bad, & The Ugly” bill list. Bills included in this list represent those which will have the greatest impact, either negative or positive, to our 22,000 small businesses across California.

As we enter these final four weeks of the legislative session, NFIB is prepared to hit the ground running to ensure the voice and interests of our 22,000 small business members, and their hundreds of thousands of employees, are heard regarding our remaining priority issues.

NFIB was proud to help stop a handful of ugly bills such as SB 878 (Leyva), the Predictive Scheduling Mandate, and SB 1161 (Allen), the ‘California Climate Science Truth and Accountability Act’ so far this year. However, several bad bills remain alive and we are prepared to put forth every effort to protect small business in these final weeks.

Environmental mandates, transportation taxes, protected family leave, and agricultural workers’ mandates are some of our top policy concerns as the legislature wraps up this two-year session. Given the current lack of transparency in the legislature, it is impossible to know every issue that will be brought up since bills can, and will, be gutted-and-amended without notice to the public.

AB 2757 (Gonzalez), which mandates overtime pay for agricultural employees, is a perfect example: this bill died on the Assembly Floor months ago, but has resurfaced in the form of AB 1066 without full committee scrutiny.

In the first half of the legislative session, we witnessed how swiftly the Legislature can ram through devastating public policy with the enactment of Senate Bill 3 (Leno), which increased the state minimum wage to $15 per hour. Therefore, our 22,000 members will be highly engaged and informed on these policy issues with a regularly updated ‘The Good, The Bad, & The Ugly’ bill list.

Currently, the list includes 39 bills total (23 active): 14 good (5 active); 7 bad (6 active); and 18 ugly (12 active). This list reflects proposals from the 2015-2016 legislative session, and as new bills are introduced or morphed into substantively new bills, this list will be updated. You can always find the current version at http://www.nfib.com/ca/gbu.

CA Executive Director, National Federation of Independent Business.

This piece was originally published by Fox and Hounds Daily

Legislature Returns to Action in August: What to Watch For

CA-legislatureAugust is sure to be a busy month in Sacramento, as legislators fight to get their priorities passed before the legislative session ends on August 31.

While a large number of bills will be debated, there are four things to watch for:

Environment

With the political backing of new polling, Senate Bill 32 — which would extend and increase the state’s greenhouse gas emission reduction goals — is sure to reappear.

Not only is it a legacy project for the termed-out Sen. Fran Pavley, D-Agoura Hills — who authored the 2006 measure that this bill would extend — but it is backed by both Democratic leaders, Speaker Anthony Rendon and Senate President Pro Tempore Kevin de Leon.

“A clear majority of Californians strongly support our state’s climate policies and expect their elected leaders to build on our progress battling climate change and air pollution while making investments in clean energy across our state,” de Leon said in a statement on Wednesday. “This is why the Legislature should extend our climate targets in statute by passing Senate Bill 32.”

Republicans are opposed to the measure, which leaves the power to a handful of moderate, pro-business Democrats. The bill passed the Senate in 2015, but was defeated on the Assembly floor and then granted reconsideration.

An interesting data point: 15 Assembly members didn’t vote — which is a way of voting “no” without any accountability.

Transportation

The Legislature has been in a special session on transportation since last summer to come up with a funding plan to fix the state’s crumbling roads — but with little headway. Gov. Jerry Brown estimates there are almost $6 billion worth of unfunded repairs throughout the state each year.

The dispute is largely between Democrats who have proposed additional revenues (taxes) and Republicans who believe new taxes aren’t necessary as the money already exists but has been redirected to stop budget shortfalls in other areas.

Rumor has it that Democrats will propose what could be a massive package including new revenue, like a gas tax hike, sometime next month — although, since there’s a special session, it could be introduced after the regular session ends.

Republicans are unlikely to budge, but it may not matter what they want. Republicans are in danger of ceding a supermajority to the Democrats in November. If that happens, Democrats would be able to approve new revenues without Republican support.

Of course, the required two-thirds majority wouldn’t leave much room for defections from moderate Democrats.

Overtime for farmworkers

While farmworkers do get overtime, it has a much higher threshold than other professions. A revived bill would, over time, bring the threshold in line with other professions. You may remember that this bill was defeated in June, but it has been repackaged into another bill.

Proponents argue that farmworkers shouldn’t be exempt from the same overtime and break rules as everyone else. Opponents say farmers can’t afford it, and that an industry dependent on weather and external price setting can’t be regulated the same as other professions.

It’s unclear what would be different when the next vote comes that would make business-friendly Democrats, who sided with Republicans to defeat the measure, change their votes. Election year pressure may sway some vulnerable incumbents.

Of course, the measure was only three votes shy of passage, so proponents may target the seven Assembly members who simply didn’t vote, six of whom are Democrats.

Housing

It’s widely reported that the state faces an affordable housing crisis, particularly in urban centers.

Gov. Jerry Brown has been trying to increase affordable housing supply with a plan to reduce regulatory barriers for developers trying to build low-income housing. His ideas have not been embraced by the Legislature and he faces opposition largely fromunions and environmentalists.

Meanwhile, Sen. Jim Beall, D-San Jose, still has hopes of putting a $3 billion, low-income housing bond on the November ballot.

Engaging in Transportation Reform Head On

california roads infrastructureLast week’s column presented the case for strong opposition to any new transportation taxes in California. But on Thursday, the Executive Director of Transportation California, Will Kempton, published a response in Fox and Hounds, a California political blog run by Joel Fox, which repeated the need for higher taxes.

Will Kempton is a respected transportation expert who agrees with the central premise of my original column. That is, that California’s transportation crisis can no longer be ignored. California has a transportation and road repair maintenance backlog that some estimate will total $58 billion over the next ten years. It is also true that, thanks to alternative vehicles and more fuel efficient cars (and never mind the infamous “gas tax swap”) that fuel tax revenues have become more volatile year-over-year.

So, now that we’ve agreed on the need, how do we deal with it? Mr. Kempton argues that we have no choice but to raise taxes. Not only do we disagree, but it is abundantly clear that practically all of this backlog can be funded using existing General Fund resources. Consider:

  • Nearly $1 billion a year of truck weight fees are being diverted from road repair to paying off transportation bond debt. Total: $10 billion over ten years.
  • Nearly $9 billion in bonds for high speed rail can be diverted for road construction. (And if voter approval is deemed necessary, that measure passes in a heartbeat).
  • Currently, California spends only 20 percent of its $10 billion General Fund transportation budget on road maintenance. Especially with General Fund revenue at record levels, a boost to 50 percent does not seem excessive: Total: $30 billion over ten years.
  • Currently, $500 million in $3 billion worth of cap-and-trade funding goes to road maintenance. Doubling that amount adds $5 billion over ten years.

The grand total of these reforms is $54 billion over ten years. Granted, not all of these things can be done overnight and the first two items will likely require statewide voter approval. But the Legislature still has plenty of time to qualify a constitutional amendment for the November ballot. And obviously, placing a greater General Fund emphasis on transportation projects will require that we figure out how to prioritize our resources better in the face of a record $122 billion budget.

Let’s be honest. It is really the word “prioritize” that is at issue here. Some of these reforms will be easier to implement than others, but unless we engage them head on, which hasn’t happened in the Legislature, how can we ever hope to solve this problem? Taxpayers should refuse to accept the incessant call for higher taxes when relatively simple reforms that could add tens of billions of dollars of funding to our roads, without raising taxes, are ignored. How can we discuss a punitive and regressive gas tax increase when common-sense legislation by State Senator John Moorlach to privatize a small portion of CalTrans projects, or to  establish a pilot project to have county transportation agencies assume projects from CalTrans, are quickly rejected in their first policy committee?

We agree with Kempton that the status quo is no longer acceptable. But there are a myriad of fiscal and policy changes that are viable and should be discussed and implemented. And until legislative Democrats, the transportation community, labor and environmentalists are willing to even come to the table, why should the burden be on California motorists to pay higher taxes?

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

This piece was originally published by HJTA.org

Government Waste Negates Justification for Transportation Tax Hike

LA-Freeway-Xchange-110-105A personal digression: My father was head of the Iowa Department of Transportation (then called the Iowa Highway Commission) in the late ’60s and early ’70s before he was appointed by President Ford to serve as Deputy Federal Highway Administrator. (Of course, he lost that job when Jimmy Carter became president, but he continued to work in the private sector for a transportation think tank.) When I was in high school, I remember him coming home from an ASHTO conference. That organization, the Association of State Highway and Transportation Officials, was a pretty well respected group and still is. He was complaining bitterly about what was going on in California. I don’t recall his exact words, but the gist of it was that the new head of California’s transportation agency, called CalTrans, had been taken over by a certifiably crazy person (with no background in transportation policy) by the name of Adriana Gianturco. According to my father, in the 1950s and ’60s, California had the best transportation agency in the entire world. But all that changed with the election of a new, anti-growth, small-is-beautiful governor by the name of Jerry Brown.

Now, fast forward 40 years. Gov. Brown, version 2.0, proposes a budget that assumes a big increase in transportation taxes and fees. The California Legislature shouldn’t just say no, it should say hell no.

Where to start? First, let’s take judicial notice of the fact that California is already a high tax state with the highest income tax rate and the highest state sales tax in America. But more relevant for the issue at hand, we also have the highest fuel costs in the nation. This is because of both the 4th highest excise tax on fuel and the fact that refineries are burdened with additional costs to comply with California’s environmental regulations.

The high cost to drive in California might be understandable if we were getting value for our tax dollars. But we aren’t. A big problem is that Caltrans is dysfunctional, plain and simple. It has never fully recovered from the days when the agency was effectively destroyed by Gianturco. A report by the California State Auditor just a couple of months ago concluded that a primary responsibility of Caltrans – maintenance of our highways – is not being executed in a manner that is even close to being efficient or competent. Senator John Moorlach, the only CPA currently serving in the California legislature, reacted saying that “This audit reinforces the fact that our bad roads are not a result of a lack of funding. They’re a result of a lack of competence at Caltrans.” Moreover, a report by the Legislative Analyst concluded that Caltrans is overstaffed by 3,500 employees costing California taxpayers over a half billion dollars a year. All this compels the obvious question: Why, for goodness sake, do we want to give these people even more money?

Another unneeded and costly practice consists of project labor agreements for transportation construction projects. These pro-union policies shut out otherwise competent companies from bidding on projects resulting in California taxpayers shelling out as high as 25% more than they should for building highways and bridges.

Finally, California’s environmental requirements are legendary for their inefficiency while also doing little for the environment. Exhibit A in this foolishness is Gov. Brown’s incomprehensible pursuit of the ill-fated high speed rail project. Not only has the project failed to live up to any of the promises made to voters, it is currently being kept alive only by virtue of the state’s diversion of “cap and trade” funds which are supposed to be expended on projects that reduce greenhouse gas emissions. But in the Kafkaesque world of California transportation policies, the LAO has concluded that the construction of the HSR project actually produces a net increase in emissions, at least for the foreseeable future.

No one disputes the dire need for improvements in California’s transportation infrastructure. But imposing draconian taxes and higher registration fees that serve only to punish the middle class while wasting billions on projects that don’t help getting Californians get to work or school cannot and should not be tolerated. Legislators who present themselves to voters as fiscally responsible need to understand that a vote for higher transportation taxes will engender a very angry response from their constituents.

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

This piecd was originally published by the Howard Jarvis Taxpayers Association

New Sales Tax Hike for Transit Doesn’t Add Up for Taxpayers

http://www.dreamstime.com/-image18514272Math is a funny thing.

Take averaging, for example. Mark Twain observed that if you have one foot in a bucket of ice and one foot in a bucket of boiling water, on average you’re pretty comfortable.

Similarly, consider subtraction. Somehow, government officials have calculated that subtracting money from your wallet for taxes actually puts more money in your pocket.

That’s the conclusion of a recent study of the economic effects of Measure R, the 2008 increase in the L.A. County sales tax of one-half of one percent to fund transportation projects.

The Los Angeles County Economic Development Corporation determined that over its 30-year lifespan, the Measure R sales tax will create $80.7 billion in economic output while costing each resident just $25 a year in higher taxes.

The Society of American Magicians prohibits them from revealing how this trick is done, but they can’t stop me from exposing the secret.

It’s done with mirrors. A typical dollar spent by the Los Angeles County Metropolitan Transportation Authority (Metro) is counted three times: once when Metro hands it to a contractor, once when the contractor hands it to a union construction worker, and once when the worker spends it on rent, food, car payments or entertainment. They call these reflections the “direct,” “indirect” and “induced” effects of spending.

This “multiplier effect” would work if the money spent by Metro was earned by Metro. But it’s not. It’s earned by you, and then taken from you with a higher sales tax.

The study uses another trick, division, to determine that this higher tax costs each resident only $25 per year. Using multiplication instead, the 30-year cost of Measure R comes out to $3,000 for a family of four.

Figured another way, if the 10 million residents of L.A. County didn’t have to pay that $25 per year in extra taxes, they would have an extra $250 million annually, $7.5 billion over 30 years, to spend on whatever they personally find useful. Add the multiplier effect to those numbers, without government middlemen, for a true picture of what’s lost to higher taxes.

Now Metro wants taxpayers to cough up another $120 billion for more transit projects. The money would come from adding more years to the 30-year Measure R tax and hiking the sales tax by another half-cent per dollar, raising L.A. County’s sales tax rate to 9.5 percent for 40 years.

The transit agency would then borrow against the future sales tax revenues to start spending the $120 billion immediately.

Just how much is $120 billion?

It’s enough to pay for the repairs and deferred maintenance of every freeway in California for the next 10 years, twice.

It’s enough to build 120 desalinization plants like the one in Carlsbad that’s supplying 7 percent of San Diego’s water.

It’s enough to pay off the student debt of everyone who was enrolled in a four-year college or university in California in 2014. Seven times.

But Metro wants to spend $120 billion on a long list of public transit projects, even though ridership on public transit is declining. Metro boardings are down 10 percent since 2006 despite $9 billion of spending on rail.

Metro CEO Philip Washington says ridership will increase when the system is fully built out. “We’re not building for today,” he said recently, “We’re building for 100 years down the road.”

A hundred years ago, a telephone looked like a black candlestick. It didn’t have GPS or a camera. It didn’t have a keypad, or a dial, or Angry Birds. It didn’t even have a ringtone unless you count the bell in the box on the wall.

If the people of 1916 had designed a communications system for “100 years down the road” and racked up $120 billion in debt to pay for it, we’d still be paying taxes for something that was long gone; and we’d be wondering why our taxes are so high, and why there’s never enough money for road repair or water projects or education.

That’s what happens when governments run up too much debt, as ours already have—local, state and federal alike.

Multiply that by your children’s future, and then by your grandchildren’s future.

And when you see Metro’s sales tax increase for transit projects on your November ballot, don’t get taken for a ride.