Do You Want Fries With That Shakedown?

California’s government has outdone itself with AB 257, a controversial sop to unions that will hurt the poor and raise prices in the fast-food industry.

There’s a joke circulating in California that goes like this: What’s the difference between the Titanic and the state of California? Answer: The Titanic went down with its lights on.

You don’t have to live here to get the dark humor, though it helps. Governor Gavin Newsom led the effort to eliminate oil drilling and ban the sale of new gas-powered vehicles beginning in 2035 — and simultaneously begged us not to run the AC or charge electric vehicles during California’s annual sizzling farewell to summer.

So, few of us were surprised when, on Labor Day 2022, the governor signed Assembly Bill 257, which promises to rescue the poor but will in fact immiserate them. The law was set to go into effect today but has been put on hold by a judge, for now.

Called the FAST Recovery Act, the new law will do for unions what decades of organizing could not accomplish in the dynamic fast-food business. It neatly eliminates the hard work of organizing unwilling workers by declaring them wards of a state commission comprising 13 political appointees who will govern work and wages in California’s fast-food businesses.

In California, political appointees like those proposed in AB 257 are manufactured by the legislature’s Democratic supermajority. That veto-proof majority, in turn, is curated by union leaders — people who raise in excess of $1 billion annually through union dues and spend much of that cash to finance the campaigns of candidates who, once in office, return the favor by doing what the unions tell them to do — things like passage of AB 257.

The smart money says California’s elected officials will hustle to appoint union-friendly commissioners who will quickly impose on fast-food operators a $23 hourly wage, more costly benefits, and molecular regulation of work rules.

In an industry that operates on razor-thin margins, this will have two immediate predictable outcomes. On the worker side, higher wages, richer benefits, and more cumbersome labor laws will lead to job cuts as franchise operators seek to curb their skyrocketing labor costs. In some places, restaurant owners will rapidly automate; ATM-like ordering kiosks will replace actual people — primarily immigrants and other minority people who, by way of the fast-food business model, are just beginning their ascent on the American economic ladder. Other business owners may simply sell off to larger enterprises whose high volumes will allow them to cope with slimmer margins. That will make it harder for workers to rise into positions of management and ownership.

On the customer side, as some franchisees simply close permanently, we’ll see the expansion of what progressives have called “food deserts” in poor communities already underserved by grocery chains. Customer service in the remaining stores will decline and prices will rise.

So, in a kind of grim partnership, poor customers and rising workers, immigrants and the native-born, will suffer together. This is the iron law of California progressivism: Claim that new laws will help the poor. When the actual effect turns out to be catastrophic for the poor, blame capitalism/markets/billionaires/racism, and expand government control of the business. Rinse, repeat, and promote as a national — even global — model for equity. And if Californians have anything to say about it, AB 257 will be coming to you, no matter where you live in the United States.

The most eye-popping criticism of AB 257 came from California’s own Department of Finance. In June, the department recommended that legislators vote against the bill. Its analysis concludes with language that can be applied to much of California’s regulatory empire, and is worth quoting in its entirety:

Finance is opposed to this bill because it creates significant ongoing costs at DIR [the state Department of Industrial Relations]. Additionally, it creates a sector-specific rule-making body within DIR, which could lead to a fragmented regulatory and legal environment for employers and raise long-term costs across industries. Finally, it is not clear that this bill will accomplish its goal, as it attempts to address delayed enforcement by creating stricter standards for certain sectors, which could exacerbate existing delays.

“Not clear”? In California, it’s absolutely clear that AB 257 — now law — will not accomplish its goal.

Where is such a bad idea conceived? Partly in academia, where professors celebrate as progress the imposition of a failing European model of government–labor–business “cooperation.” Writing in Fortune, Thomas Kochan exulted that, with AB 257, “California has a unique opportunity to launch a path-breaking high-road business and employment strategy for owners and workers in its fast food industry.” He hopes that its success will spread “across the nation.”

(Note to Dr. Kochan: You’re professor emeritus at MIT’s much-honored Sloan School of Management. I just live and work in California. But please, never, ever use any form of the infinitive “to break” and “California” in the same sentence. It’s what people in your school’s psych department call a Freudian slip.)

In California, the engine running AB 257 is organized labor, particularly the Service Employees International Union (SEIU) and its national “Fight for $15” activist wing.

SEIU has struggled lately. In part that’s because the Supreme Court’s 2018 decision in Janus v. AFSCME made government-union membership voluntary. Nearly 30 percent of government workers eligible to join SEIU and other unions have responded by hitting the eject button. The hundreds of dollars those workers save on annual union dues means lost revenue to the unions hoping to represent them. (Disclosure: California Policy Center, where I am president, has played a leading role in helping workers leave their unions.)

That rush to the union’s exits has created a cash crisis at SEIU. The union responded by pushing AB 257 with the expectation that the Fast Food Council will move rapidly to recommend universal membership in SEIU as the only solution to low pay and dangerous work conditions.

About those work conditions: Many media reports banging the drum for AB 257 relied on a UCLA Labor Center study that claimed to discover that working at your favorite burger joint is like cobalt mining. Vox cited UCLA’s finding that “43 percent of workers experienced workplace injury or illness, nearly half experienced verbal abuse, and a quarter said they were retaliated against by their managers for reporting workplace issues.” So did the Los Angeles Times, the San Francisco ChronicleCalMatters, and the Sacramento Bee.

Reporters were so eager to amplify a story about industrial “wage theft,” “workplace injuries,” and medieval exploitation that none took the time to examine UCLA’s study. In fact, recently published internal UCLA documents reveal that “the study was part of a larger advocacy strategy by the SEIU and its Fight for $15 campaign.” Specifically, the documents show that UCLA’s “independent” researchers outsourced the labor of recruiting and surveying fast-food workers to SEIU. When the study was released, enthusiastic reporters asked to interview the aggrieved workers. Then, UCLA’s documents show, “those labor groups even took efforts to obscure” the snuggly relationship between researchers and union activists.

You might be tempted to say that because the UCLA study was junk — corrupt, in fact — we may never know how truly grim things are in the fast-food business. But we do know: You are in fact safer working in a fast-food restaurant than in most other industries.

Newsom’s signature on AB 257 was still wet when SEIU unleashed its national media campaign promoting the California law as the solution to labor problems everywhere. “This is LANDMARK labor legislation that presents a way forward for fast food workers in this country,” SEIU said over and over. Using the hashtags #UnionsForAll and #AB257, union activists in TexasFloridaMissouri, and beyond posted photos of workers spontaneously celebrating California’s win as their own. Were they moved by the spirit of international labor, roused by their own personal experience? They were not. Their messages were crafted and amplified by one of California’s largest unions.

Let’s summarize: AB 257 will likely kill the jobs of immigrant and poor men and women who want to work in the fast-food industry — because this work, however difficult, is better than the alternatives. It imposes what union organizers could not achieve through voluntary association. It will raise food prices and limit food options in already struggling neighborhoods. It is opposed by the very regulatory body that is supposed to supervise its implementation. Its passage relied in part on a corrupt “study” by a major state university working with the union that will benefit from the new law.

It’s now likely that AB 257 will be opposed at the ballot box. As soon as Newsom signed the bill, an association representing fast-food businesses began gathering signatures for a statewide ballot proposition to repeal it. On December 9, the California secretary of state’s office declared that the association had submitted more than the minimum number of signatures to qualify the measure for the November 2024 ballot. Under California law, that should have postponed implementation of AB 257. Instead, the state’s Department of Industrial Relations announced it would dispense with a century of case law and impose the law on January 1. On December 29, the association announced it will sue the state to uphold its own laws. One day later, on December 30, a state judge cut the baby in half: The state can begin considering appointments to the commission, but it can’t change wages or work rules.

Click here to read the full article in the National Review

CalPERS retirees elect longtime SEIU president to represent them on pension board

Former California union boss Yvonne Walker won election for a seat representing retired public employees on the 13-member CalPERS Board of Administration for the next five years, according to voting results announced Thursday in Sacramento. “I am honored to have the trust, confidence and support of my fellow CalPERS retirees,” said the 63-year-old Walker. “I am ready to get to work to ensure all CalPERS retirees receive the secure retirement benefits they earned for years of hard work serving the people of California. I look forward to working with my fellow board members so that CalPERS continues to lead in showing how defined benefit pension systems can thrive.” As a member of the board, Walker will be responsible for setting policies for retirement and health benefits on behalf of California public employers and their active and retired employees. This body oversees the asset allocation of the pension fund’s estimated $449 billion investment portfolio. Walker, who led Local 1000 of the Service Employees International Union 2008 through 2021, secured the seat with 56.9% of the vote in a runoff election that pitted her against Randall Cheek, the legislative director of the Retired Public Employees Association, a volunteer position.

Walker and Cheek had worked together at SEIU 1000 for a number of years when he was a lobbyist for the union. Cheek, who’s now retired, said Wednesday that he had driven and flown all around the state — making stops in Santa Cruz, Hemet, Placerville and more — as he fought to overcome Walker’s name recognition and sizable campaign chest. “I appreciate a good campaign,” said Cheek, who said he planned to congratulate Walker on her win. “I’m thankful that I got the opportunity to run and to meet all kinds of people and go up and down the state and talk to retirees.” Cheek had won endorsements from the Peace Officers Research Association of California, Retired Public Employees Association of California and a number of other groups. He said he would continue to advocate for greater transparency at the California Public Employees’ Retirement System.

Walker succeeds former trustee Henry Jones who resigned halfway through his fourth four-year term last year after a cancer diagnosis. Consequently, Walker will serve a five-year that will begin once the ballot results are approved by the California Secretary of State. Walkers said that, at the campaign stops she made, she heard from retirees who were concerned about the high cost of health care and rate hikes on long-term care policies. She was endorsed by SEIU, the California School Employees Association, and the California Faculty Association, among others. Walker led some major initiatives as SEIU Local 1000’s president, coordinating with other unions to shepherd through proposals for a $15 minimum wage and housing affordability. Three other CalPERS board members have affiliations with SEIU. Board President Theresa Taylor was elected SEIU 1000’s vice president/secretary-treasurer in 2015 and oversaw its $62 million budget through June 2018. Ramón Rubalcava, a legislative appointee, has worked more than 30 years for SEIU Local 721 as a benefits director, serving public-sector workers in Southern California. And, Mulissa Willette heads up SEIU 521, which represents more than 53,000 workers.

Click here to read the full article at the Sacramento Bee

Restaurant Groups Submit Over 1 Million Signatures For Fast Food Labor Referendum

623,000 Valid Signatures Needed To Become Proposition in 2024

A group of restaurants and restaurant trade groups submitted over 1 million signatures to the California Secretary of State’s office on Monday, likely enough to place a measure on the ballot over the fate of AB 257, a bill to create new labor union style of council to set minimum health, safety and employment standards across the California fast food industry.

The fight over Assembly Bill 257,  authored by Assemblyman Chris Holden (D-Pasadena) , began in February when Holden initially introduced the bill. Over the next several months, proponents and opponents of the bill fought in the Assembly and Senate over it. The bill, also known as the FAST Act, was subsequently pared down, eventually settling on creating a Fast Food Council of 10 members comprised of worker’s delegates, employer’s representatives and state officials that would set minimum wages, working conditions, and set hours for fast food employees in the state.

Many proponents, such as labor unions, zeroed in on the notion that wages could rise to as high as $22 an hour under the law, while many restaurant and franchise groups greatly opposed AB 257, noting that restaurants would be hit unfairly hard by the bill, with many being more likely to close due to the industry still recovering from the COVID-19 pandemic and recent economic troubles. Increased prices due to supply chain delays and an industry-wide worker shortage were also held up as big issues that were left unresolved by the bill being passed.

Despite this, AB 257 passed the legislature in late August, with Governor Gavin Newsom signing he bill into law in early September. However, the victory was short lived, as a coalition of restaurants, formed Save Local Restaurants, and immediately filed for a referendum over the bill. While bill proponents initially dismissed the referendum effort as nothing more than restaurants angry over the bill being passed, job losses and higher costs in fast food restaurants became an effect of the bill and quickly changed voters minds in the last several months.

According to the Secretary of State’s office, the group needed to get around 623,000 signatures by December 5th in order to make the November 2024 ballot and put a temporary halt on the bill while the matter is settled at the ballot box. On Monday, Save Local Restaurants announced that over 1 million signatures had been gathered. Some signatures are expected to be uncountable due to the voter not being registered, or being a double signature, or other reasons. Even with this, Save Local Restaurants noted in a press release that they are confident that it will be on the November 2024 ballot.

“The FAST Act would have an enormous impact on Californians, and clearly voters want a say in whether it should stand,” said Save Local Restaurants. “The measure would establish an unelected council to control labor policy in the counter-service restaurant industry, cause food prices to increase by as much as 20% during a period of decades-high inflation, and harm thousands of small family-, minority-, and women-owned businesses across the state. Given less than one-third of Californians support AB 257, it is no surprise that over one million Californians have voiced their concerns with the legislation. The Save Local Restaurants coalition is committed to helping ensure this bad law will not go into effect and voters have their voices heard.”

A possible end for AB 257

Opponents quickly challenged the signatures on Monday, with the Service Employees International Union (SEIU) alleging that some signatures were obtained fraudulently by having petitioners pay voters to sign the petition. While the Secretary of State could neither confirm nor deny that an investigation  into that  was currently ongoing, they also noted that counting signatures would begin soon.

“Both sides were really passionate about this,” explained James Kramer, a Baltimore-based proposition tracker, to the Globe on Monday. “Fast food workers and unions, they really want this to go through because they want more of a say and they want to set some of the standards themselves. Fast food companies and local managers, they are very worried that this will lead to higher costs and having to fire people. But the voters? California is interesting because as liberal as many think the state is, there is a fair track record of voters just shutting down anything like this when they get a chance. They stopped sportsbook betting this year, they’ve stopped affirmative action several times in the past, and those people for this law know this. No voter, especially those being hurt economically right now, wants to hear of higher prices in anything, and that’s what this law does essentially.”

Click here to read the full article in the California Globe

California Union Alleges That Fast-Food Effort to Block New Labor Law is ‘Willfully Misleading Voters’

California’s largest union on Thursday lodged a complaint with state officials alleging that a fast-food industry coalition violated state election rules in its campaign to block a landmark labor law from going into effect.

The complaint by Service Employees International Union California, which was filed both with California’s secretary of state and its attorney general’s office Thursday, focuses on a referendum filed in September seeking to repeal AB 257, which Gov. Gavin Newsom signed into law on Labor Day. The union sponsored the legislation, known as the Fast Recovery Act, to boost protections for fast-food workers. 

The union alleges that in a sprint to qualify the referendum for the November 2024 ballot, business trade groups, fast-food corporations and franchisees are backing a vigorous and costly voter signature-gathering process that is “willfully misleading voters.” Hired petition circulators for the referendum, according to the complaint, have approached voters and asked them to sign the petition under the false pretense that the effort seeks to raise the minimum wage for fast-food workers.

Instead, the referendum effort would allow voters to decide whether to overturn the Fast Recovery Act, which creates a first-of-its-kind council of workers, company representatives and state officials with the authority to raise the minimum wage for franchise restaurant workers as high as $22 next year.

The council has a mandate to set minimum industry standards on wages, working hours and other conditions for fast-food workers statewide. It’s a model that could transform the way workers negotiate standards with their employers not just in California but across the U.S.

Throughout the legislative process, fast-food corporations and franchisees argued it unfairly singled out their industry, and would burden operations with higher labor costs and cause food prices to skyrocket.

Save Local Restaurants, the coalition pushing to overturn the law, said in a statement that it “has been vigilant in maintaining compliance with California’s election laws” and added that it finds the complaint “frivolous.”

“This is another brazen attempt by the SEIU to force a law on Californians that they do not want and that they cannot afford,” said the coalition, which is spearheaded by the International Franchise Assn. and the National Restaurant Assn. 

The coalition said, in line with past critiques, that the new law would raise food prices and ultimately “cost thousands of jobs, and force the closure of local businesses.”

The coalition said it has collected “nearly a million” signatures thus far: “We are on track to collect hundreds of thousands of signatures above what is legally required due to the voters’ overwhelming opposition to this misguided law.”

It’s standard practice to collect more than the minimum number of signatures because some signatures may be deemed invalid.

The complaint alleges several instances of petition signature gatherers misrepresenting the issue. One contracted circulator in Los Angeles repeatedly said the petition “was for the minimum wage to go up,” while another in Stockton, Calif., asked for a signature on a “petition that will raise the minimum wage for fast food workers to 22 bucks an hour,” according to the complaint.

Click here to read the full article in the LA Times

S.F. is Spending $1.7 Million on One Public Toilet: ‘What are They Making it Out of — Gold?’

 Celebration for S.F.’s $1.7 million toilet canceled after backlash: “The cost is insane.”

San Francisco politicians will gather at the Noe Valley Town Square Wednesday afternoon to congratulate themselves for securing state money for a long-desired toilet in the northeast corner of the charming plaza.

Another public toilet in a city with far too few of them is excellent. But the details of this particular commode? They’re mind-boggling, maddening and encapsulate so much of what’s wrong with our city government.

The toilet — just one loo in 150 square feet of space — is projected to cost $1.7 million, about the same as a single-family home in this wildly overpriced city. And it won’t be ready for use until 2025.

Assemblymember Matt Haney (D-San Francisco) secured the $1.7 million from the state for the toilet after hearing “loud and clear” from the community that families needed a bathroom. The plumbing is already there, added when the plaza was constructed six years ago, but there was never money for the actual bathroom. Until Haney stepped in.

The former San Francisco supervisor said the Recreation and Parks Department told him the going rate for one public bathroom was $1.7 million so he secured the full amount, not questioning the pricetag.

“They told me $1.7 million, and I got $1.7 million,” Haney explained. “I didn’t have the option of bringing home less of the bacon when it comes to building a toilet. A half a toilet or a toilet-maybe-someday is not much use to anyone.”

True, but instead we have a toilet-maybe-in-more-than-two-years that could have paid to house a family instead. So why is a public bathroom so insanely expensive, and why does it take so long to build? A joint statement from Rec and Park and the Department of Public Works, which will work together to build this extravagant bathroom, pointed to several reasons.

For one thing, the cost to build anything in San Francisco is exorbitant. The city is the most expensive in the world to build in — even topping Tokyo, Hong Kong and New York City. We’re No. 1! Even for places to go No. 1.

Like everywhere, construction costs have risen 20% to 30% in the past couple of years due to global supply chain issues and the rising costs of fuel, labor and materials. But like always, there’s a certain preciousness to the process in San Francisco. (Just look at the years-long, ongoing quest to design and manufacture bespoke city trash cans.)

“It’s important to note that public projects and their overall cost estimates don’t just reflect the price of erecting structures,” the statement said. “They include planning, drawing, permits, reviews and public outreach.”

For a toilet? Apparently so.

An architect will draw plans for the bathroom that the city will share with the community for feedback. It will also head to the Arts Commission’s Civic Design Review committee comprised of two architects, a landscape architect and two other design professionals who, under city charter, “conduct a multi-phase review” of all city projects on public land — ranging from buildings to bathrooms to historic plaques, fences and lamps.

The web-page describing that process states the point is to ensure “that each project’s design is appropriate to its context in the urban environment, and that structures of the highest design quality reflect their civic stature.”

Sorry, kid. I know you’ve got to go, but have you considered the context of the urban environment?

The project will then head to the Rec and Park Commission and to the Board of Supervisors. According to the city’s statement, it will also be subject to review under the California Environmental Quality Act. Then, the city will put the project up for bid.

“Once we start the project, we’ll have a clearer timeline, but we expect to be able to complete the project in 2025,” the statement read.

The city said the $1.7 million estimate “is extremely rough” and budgets “for the worst-case scenario due to the onerous demands and unpredictable costs levied by PG&E,” the possibility code requirements could change during the project and in case other unexpected circumstances come up.

The city is in a legal battle with Pacific Gas and Electric Co. over the city’s claim that the utility has slowed projects and forced them to be more expensive unless they obtain electricity directly from the utility instead of the city’s Public Utilities Commission.

The bathroom will be built by unions whose workers will “earn a living wage and benefits, including paid sick time, leave and training.”

“While this isn’t the cheapest way to build, it reflects San Francisco’s values,” the statement read.

I’m a union member myself, and of course the majority of our public projects should be union built. But does a $1.7 million single bathroom really reflect San Francisco’s values? I don’t think so.

The supervisors in 2019 approved a Project Labor Agreement between the city and unions that requires union labor for all “covered projects” — but this bathroom isn’t one of them because it’s not worth $10 million and it didn’t come from bond funding.

There are other, much cheaper options. I e-mailed Tom Hardiman, executive director of the Modular Building Institute in Charlottesville, Virginia, and asked him to guess what San Francisco was spending to build one toilet in 150 square feet of space.

“I’m going to guess high, I think, and say $200,000,” he wrote back.

I seemed to nearly give him a heart attack by telling him the actual figure in a subsequent phone call.

“This is to build one public restroom?” he asked incredulously. “What are they making it out of — gold and fine Italian marble? It would be comical if it wasn’t so tragically flawed.”

He then said he’d do some research and found a cheaper option within minutes. He said Chad Kaufman, CEO of Public Restroom Company, just delivered and installed seven modular bathrooms in Los Angeles for the same price San Francisco will spend to build one. These are not Porta Potties, but instead have concrete walls with stucco exteriors and nice fixtures with plumbing.

“There will be some onsite labor which absolutely can be union,” Hardiman said, pointing to crane operators, laborers and plumbers.

And, he said, they could be delivered in eight months.

Phil Ginsburg, director of the Recreation and Parks Department, said many park systems around the country use pre-fabricated restrooms, which are much cheaper — and he hopes San Francisco becomes more politically open to them too. The department has occasionally used them in the past — including at the Redwood Grove playground in McLaren Park — and it’s unclear why one seems off the table for Noe Valley.

Click here to read the full article in the San Francisco Chronicle

Gov. Newsom Pays Unions Back for Recall Rescue

California: ‘Bloated, sleepy and sloppy state bureaucracy that has festered in mediocrity’

California Governor Gavin Newsom was spared the indignity of being recalled by voters in fall of 2021 by California’s powerful and gilded labor unions, which spent more than $25 million in the recall, according to CalMatters. “That’s more money than Hollywood, California’s tech industry, local Indian tribes, and state real estate players spent in the recall race combined,” the Federalist reported.

The Governor apparently did not forget his end of the ostensible deal, rewarding labor with promises of hundreds of thousands of new members (Fast food workers), as well as signing legislation providing tax credits for the union dues of members.

“The new budget passed by lawmakers in mid-June and signed by Governor Newsom two weeks later will take California’s existing tax deduction for union dues payments and turn it into a tax credit capped at 33% of dues paid,” Patrick Gleason, Vice President of State Affairs at Americans for Tax Reform, said in Forbes. “Changing the deduction to a credit makes the union tax break more generous and benefits those who don’t itemize or have a tax liability.”

Moves like this should show American voters exactly who Gavin Newsom would show his loyalty should he run for President.

Ballotpedia explains the tax credit:

“Once implemented, the tax credit would be the first of its kind in the U.S. Union dues are currently tax-deductible in California and some other states. (A tax deduction lowers a person’s taxable income before calculating taxes, while a tax credit reduces the amount of tax a person is responsible for paying.)

Gov. Gavin Newsom (D) signed SB 154, the Budget Act of 2022, on June 27. On June 30, Newsom signed SB 189, one of several bills “providing for appropriations related to” the budget act. SB 189 says, “Contingent upon future legislation, including future budget appropriations, and subject to a determination in the spring of 2024 that General Fund money over the multiyear forecasts is available to support ongoing augmentations and actions, the following actions will be prioritized: (1) Implement a tax credit under the Personal Income Tax Law to offset a portion of costs associated with union membership.”

The Federalist reported:

Max Nelson, the director of labor policy at the free-market conservative think tank Freedom Foundation, described the legislation as a “bold” mechanism to expand union membership and empower state-sponsored speech. “Taxpayers are being compelled by the force of state law to pay people to pay unions,” Nelson said.

“Big labor groups may also claim the benefits for themselves, where raising dues to cover the difference offered by the tax credit would enrich union leadership who dictate organizations’ political contributions,”

“We’re kind of into some new frontiers here, which will be interesting for both the courts to grapple with and the states,” Nelson told The Federalist, where Democrats have now embraced a measure to directly fund their own allies who, in turn, will “plow money into progressive electoral politics.”

Patrick Gleason continued:

“The first half of 2022 was a mixed bag for California taxpayers who don’t want the state to inflict more costs upon households and the economy. … Many Californians, however, are unlikely to appreciate the fact that Governor Newsom and state legislators created a new tax credit that is unavailable to 84% of Golden State workers. For all the talk about equity & equality coming from the state’s most powerful politicians, California’s new budget takes the state tax code’s already unequal treatment of workers and worsens it.”

But perhaps Lance Christensen, candidate for State Superintendent of Instruction best reminded us in September 2021 right before the Newsom recall election, what really is at stake in the Golden State besides labor union payoffs:

“California still faces substantial, long-term financing troubles. While Gov. Newsom boasts of the biggest state budget in history, the titanic funds undergirding the budget are one-time revenues that will tank once the Federal Reserve stops printing money and Congress avoids propping up spendthrift programs.”

“If a new governor is elected this month, that person will have one year to whip into shape a bloated, sleepy and sloppy state bureaucracy that has festered in mediocrity for years. And if the Legislature or entrenched bureaucracy is going to resist, the governor should plan for a one-hour presser every day to name names and let the people know why things aren’t changing.”

Click here to read the full article in the California Globe

San Diego makes legally risky move to steer contracts to women and people of color

The move, which takes on Proposition 209, was fueled by a study that found such businesses didn’t get their fair share of contracts

San Diego will take the legally risky step of giving preferential treatment to women- and minority-owned businesses when awarding city contracts, a move that appears to be in direct conflict with a voter-approved state proposition that sought to ban affirmative action.

Despite advice from City Attorney Mara Elliott warning against creating such programs, the City Council voted 9-0 this week to establish legally defensible policies that aim to help businesses owned by women and people of color get their fair share of billions of dollars that San Diego awards in city contracts.

Councilmembers said they are aware of the legal risk, and of the failures of other cities like San Jose to successfully create preferences that aren’t struck down by courts for violating Proposition 209, the measure outlawing such preferences that state voters approved in 1996.

But councilmembers said aggressive action is needed to make San Diego a more equitable city, despite the potential legal risks.

Their move is being fueled by a disparity study released last summer that showed businesses owned by women and minorities — particularly Black people and Native Americans — don’t get their fair share of city contracts.

Businesses owned by White women and people of color received only 19 percent of $2.2 billion in city contracts awarded during a five-year period analyzed in the study, compared to the 31 percent the study says they should have landed.

“I don’t think you can look at the data, see the disparities and not think there was intent there — unless you think there was something wrong with the folks who were left behind,” Council President Sean Elo-Rivera said.

Establishing intent will be key to San Diego’s efforts, because Elliott has said preferences can only be legal under Proposition 209 if there is a compelling government interest to them, such as reversing clear evidence of intentional discrimination.

City staff and the authors of the disparity study say there is no evidence that San Diego’s inequitable awarding of contracts is the result of intentional discrimination, but council members disagree.

Councilmember Raul Campillo said many courts have ruled that substantial disparities are evidence of discrimination.

“We have to ask ourselves, ‘How can the data be so skewed?’” he said.

Campillo said the spirit of Proposition 209 is an equal playing field for contracts, but the city’s track record shows the playing field has been unequal.

“A reasonable inference, and in my mind the only reasonable inference, is that Proposition 209 is being violated as we speak,” he said, contending the city is obligated to change a process that has hurt women and people of color. “I think we all know we need to take this further.”

Councilmember Monica Montgomery Steppe, who has spearheaded the effort to establish preferences in partnership with Campillo, said San Diego must take the legal risk.

“The evidence is here,” she said. “I believe we owe it to the people to fight for what I believe is right.”

Click here to read the full article in the San Diego Union Tribune

California Governor Gavin Newsom Signs New Budget Creating Nation’s First Tax Credit For Union Dues

In the most populous state in the U.S., California, leading politicians often talk about equity, equality, and their efforts to achieve both. Yet a tax break included in the new California state budget signed by Governor Gavin Newsom (D) on June 27 will exacerbate existing inequality in state taxation, critics contend.

California is one of only a handful of states where union dues are tax deductible for state income tax purposes. As part of the new state budget recently signed by Newsom, California lawmakers have made that targeted tax break even more valuable.

The new budget passed by lawmakers in mid-June and signed by Governor Newsom two weeks later will take California’s existing tax deduction for union dues payments and turn it into a tax credit capped at 33% of dues paid. Changing the deduction to a credit makes the union tax break more generous and benefits those who don’t itemize or have a tax liability.

“While union dues are currently tax deductible, union workers are more likely to not itemize their deductions and therefore do not get the same tax benefit for their dues that higher paid professions are more likely to get for their professional association dues,” notes the budget floor report. The creation of this new tax credit was praised by union leaders. In a statement released shortly after Governor Newsom signed the new budget, Amber Baur, executive director for The United Food and Commercial Workers (UFCW) Western States Council, thanked Newsom and state legislators for “allowing workers to level the playing field that tries to keep them at the bottom.”

This enhanced tax break for union members in the new California budget was dubbed the “Workers Tax Fairness Credit.” But critics claim fairness is an ironic word to use since the credit is not available to the vast majority of workers.

“In California, it’s ‘government of the unions, by the unions, for the unions,’” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. The union dues tax credit in the new budget boosts a tax break most workers can’t utilize because only 15.9% of the state’s workforce is unionized, according to the Bureau of Labor Statistics.

The enactment of the nation’s first state tax credit for union dues payments comes a few months after Democrats in Congress attempted to enact an above-the-line federal tax deduction for union dues payments that would be available even to taxpayers who do not itemize. Critics of that proposal, which was included in the Build Back Better spending package passed by the House of Representatives in 2021, point out it was targeted to benefit a small minority of workers who disproportionately donate to Democratic campaigns, as is the case for California’s new union dues tax credit.

“In effect, they’ve forced the 90% of workers in America who aren’t in a union to subsidize the dues of those who are,” said Representative Kevin Brady (R-Texas), House Ways and Means Committee ranking member, of the union dues deduction that congressional Democrats proposed but have thus far been unable to enact.

“By making union dues tax deductible, Democrats are essentially making it more financially viable for people to contribute to organizations that help elect Democrats,” wrote Dominic Pino, a National Review Institute fellow, about the federal union dues deduction. The same argument could apply to the union dues tax credit in the new California budget. Pino and others who make this assertion can point to political spending data from Open Secrets, which shows 90% of union donations to federal campaigns during the 2020 election cycle were directed to Democrats.

Click here to read the full article in Forbes.com

Scofflaw School Districts Resisted Sharing Pay Details With State Controller

They are some of the largest and most prestigious public school districts in the county — and, indeed, in the entire state of California.

But just try to figure out how much their workers actually make.

Six of Orange County’s K-12 districts (there are 28) have not sent detailed pay data to the state controller’s office for its easy-access, apples-to-apples publicpay.ca.gov database, as they were asked to do back in … drum roll please … 2014.

The holdouts were the esteemed Irvine Unified, Saddleback Valley Unified, Orange Unified, La Habra City, Westminster and Lowell Joint school districts. Two more — Anaheim Elementary and Huntington Beach City — were also missing from the 2020 database.

We asked why.

Irvine Unified “continues to provide the public information about district salaries through the Orange County Department of Education, Transparent California and on IUSD’s website,” said spokeswoman Annie Brown.

Good luck trying to decipher anything meaningful out of the mind-numbing salary schedules listed on the official sites! And kudos to Transparent California — a private organization that arduously maintains a public pay database via a gazillion public records requests — but then, why not give the controller’s office what it asked for eight years ago, so all school districts could be easily compared side-by-side on an official, public site?

“In the interest of further transparency, (Irvine Unified) is also in the process of working on the technology to provide data to the State Controller’s voluntary system, which has specific reporting and formatting requirements that do not always align with individual school district systems,” Brown said.

Eight years, hopefully, has been enough to accomplish that. A bill is pending in the Legislature would make K-12 reporting to the controller’s centralized database mandatory.

Saddleback Valley’s Robert Craven, assistant superintendent of business services, said his district has been working to complete its data file for the controller and it should be uploaded by the time this story publishes (though it will take the controller’s office time to compile and publish the data for all the districts).

Huntington Beach City School District’s spokeswoman said it has provided data to the controller every year except last year, due to staff transitions in the administrative department. This year’s report has been successfully submitted.

Anaheim Elementary said that it has submitted data each year, but a glitch apparently kept it out of the controller’s most recent update. It’s working to fix that.

The other districts didn’t respond to requests for explanation, but, shortly after the controller asked for this data back in 2014, a teacher’s union rep told us that the request was insulting, intrusive and sends the message that teachers are overpaid.

“I don’t see anything to gain by people knowing if a teacher is on the top of the salary scale or a beginning teacher,” the union rep said. “If that person is a good teacher, what difference does it make? We don’t go to the dentist and say, ‘Can I see how much you make? Can I see your W2 before you open your mouth?’ “

We’ll note here that it’s administrators, not teachers, who seem to require the closest supervision.

Sobering factoid: O.C. districts have been far better at reporting pay data than have others across California. In O.C., only 28 % failed to submit the data last year. Statewide, it was an outrageous 74%.

Sunlight

The controller’s reporting allows us Public Citizen types to see how much each worker really, truly costs — by including not only the (often-modest) base pay public workers get, which you see in those nebulous salary schedules districts post — but everything else as well.

Overtime. Incentive pay. Deferred compensation. Vacation time cash-outs. How much each employee’s health and retirement benefits cost. Whether public agencies pick up the worker’s share of pension contributions as well as their own. And which pension formula applies to each and every worker.

Why is it important that Regular Citizens have easy access to uniform information?

Click here to read the full article in the OC Register

Money Wars: Special Interests Spend Big In California Primary

If you haven’t noticed, your mail carrier certainly has: Election season has arrived in California and with it, the regular flood of political ads from unions, corporations and other special interest groups hoping to influence your vote.

Though contributions made directly to political candidates are capped by state law, no such limits apply to “independent expenditure” committees — so long as those outside influences are, in fact, independent and don’t coordinate with the campaigns they’re trying to help. 

With early voting already underway and just two weeks to go before the June 7 primary, millions of dollars of help is now inundating California, showing up in races up and down the ballot. Perhaps you’ve driven past a curious bobble-headed billboard, had your mailbox stuffed with mailers sponsored by innocuous-sounding neighborhood groups or been puzzled by campaign ads that seem to be promoting the wrong candidate

That’s all the handwork of what California election watchers refer to simply as “I.E.”

Though independent political spending is still dwarfed in California by old-fashioned direct contributions to candidates, it can play an outsized role in competitive elections, said Ann Ravel, who has served as the top campaign finance watchdog for both the state of California and the federal government. As an unsuccessful Democratic candidate for state Senate in one of 2020’s most fiercely competitive legislative races, she knows from first-hand experience. 

“When you see it in person, it’s a lot different than when you see it as a regulator,” said Ravel, whose South Bay race against fellow Democrat Dave Cortese became a $6.2 million proxy battle between organized labor groups, housing interests and tech companies including Uber and Lyft. “I remember thinking, ‘Oh God, now I have to go to all these meetings with all these people and suck up to them?’” 

Unlike relatively small individual contributions, six-figure spending by a single interest group in a close race can be difficult for a candidate to ignore, she said. “You have to be able to compete…I think that’s the problem.”

Another common feature of independent expenditure committees, said Claremont McKenna College political science professor Jack Pitney, is that they most often play the role of bad cop, attacking candidates they want to knock off. 

“It provides a certain degree of cover to the candidate who benefits,” he said. “They can’t be accused of going negative.”

Even for seasoned politicos and election reporters, the rivers of cash can be complicated to track — and sometimes even convoluted to make sense of. For the fascinated, outraged or perplexed voter, consider this your user’s guide. 

Shades of blue

Accounting and financial oversight doesn’t always inflame political passions, but the race to become California’s next controller is shaping up to be among the most competitive statewide races. With five well-financed candidates — four of them Democrats — and no clear front-runner, it’s a remarkably open race. Just in terms of money raised by the campaigns, themselves, it’s the highest-dollar statewide race. 

The conventional wisdom is that Lanhee Chen, the lone Republican, will snag one of the two spots for the November ballot. That leaves the four Democrats fighting for the second spot.  

Enter JobsPAC, an IE committee sponsored by the California Chamber of Commerce. 

“The race for a spot in the general election is a jump ball between the four major Democratic candidates — each start with limited name ID and no statewide bully pulpit for communications,” reads a strategic memo produced by the committee earlier this month. 

Click here to read the full article in CalMatters