CA Lobbyists Celebrate Successful 2014

It’s got a bad reputation, even in some parts of Washington, D.C. But lobbying is a way of life in California, where the practice shows no signs of letting up.

In a string of news events and reports, the many faces of lobbying have resurfaced as the political year winds down.

And Silicon Valley, forging its way deeper into politics, has pushed lobbying to the fore with its efforts to advance special objectives at the state and federal levels.

According to figures tallied by the Sacramento Bee, California lobbying firms were off to a great start in the first half of the year, posting big numbers. Over that time, they pulled in $92.6 million, 7 percent better than last year’s January-to-June cycle; plus interest groups shelled out some $141.5 million on lobbying, exceeding last year’s outlay.

Responsible for the uptick were squabbles over legislation involving online poker, health warnings on soft drinks and — a big new entrant — ridesharing services like Uber and Lyft.

Alone, Uber’s employment of lobbying became a major story in the second half of the year. To spearhead lobbying operations, Uber hired former Obama campaign strategist David Plouffe, a man with an insuperable Rolodex for a company seeking favorable outcomes from Democratic-controlled states.

According to the Washington Post, over the past two years Uber “hired private lobbyists in at least 50 U.S. cities and states, employing multiple firms in some places. … The records show that the company has hired at least 161 individuals to lobby on its behalf, on top of its own rapidly expanding policy office.”

That meant major outlays between summer and winter. In Sacramento, the Post noted, Uber paid “$475,000 from July to November to lobby California lawmakers.”

Silicon Valley struggles

Although Uber and its peer tech companies are sometimes portrayed as unstoppable goliaths, their headway in political circles has come at a cost, and not always with results as transformative as their disruption-friendly CEOs would wish. Uber itself has faced a fresh wave of bad publicity in recent months, with the company facing an outright ban on some Uber services in France and other European countries.

What’s more, even broadly shared political interests among Silicon Valley’s leading firms have encountered opposition, with lobbying unable to deliver results. Companies have pushed hard, as the Peninsula Press observed, to increase the number of so-called H-1B visas, which would trigger an influx of highly-skilled immigrants well trained in tech.

The Press quoted Emily Lam, the vice president of the Silicon Valley Leadership Group, a public policy trade organization that counts many of tech’s biggest companies among its members:

“We’ve been lobbying for this for over 10 years, and it’s not happened, so there is a lot of frustration. The tide is turning where this isn’t going to be the place where people want to be because it’s so difficult to get a visa, and we want to have the best and brightest here.”

Through the revolving door

One group that has found success in lobbying is former California members of Congress from both parties who have taken up lobbying, a new McClatchy report has highlighted.

Some retired representatives even see their work as a continuation of their time in Congress. Former Rep. John Doolittle, R-Calif., was tapped to curry legislative favor for the Water Resources Development Act, which was sponsored by Sen. Barbara Boxer, D-Calif. The act improved rivers and harbors and increased water conservation.

Flush with experience and close contacts with the representatives and senators closest to the issue, Doolittle got a bill through both houses of Congress within three years.

“In this hyperpartisan era, it was quite frankly a major accomplishment,” he told McClatchy. “It was a very satisfying continuation of my public service.”

This article was originally published by CalWatchdog.com

Is It Time To Garnish The IRS’ Pay?

The IRS has abused its power and misused its resources, so it deserves the budget cuts it got in the 2015 spending bill, a leading anti-tax group argues.

“If the IRS wants to see an increase in its budget, it probably should stop harassing conservatives,” Americans for Tax reform spokesman told The Daily Caller News Foundation. ”They used their resources in a completely inappropriate and political way that has basically ruined the reputation of the agency on the Hill.”

Congress cut the IRS budget by $346 million in the 2015 spending bill, reported Politico, and the agency has absorbed about $1 billion in cuts since 2010. It’s one of the only agencies whose budget was cut this year.

“[The cuts] are a logical response to the stewardship they’ve had with the resources they’ve been given,” Kartch told TheDCNF. “They’ve been given certain resources to implement the mission of the agency, and they’ve used them to harass Tea Party organizations. They’ve used them to harass conservative taxpayers. They’ve basically politicized the entire Cincinnati office for several years.”

Commissioner John Koskinen has already announced a hiring freeze and suspension of overtime hours, and said Thursday the most recent cuts could shut the agency down temporarily.

“People call it furloughs,” Koskinen said, according to Politico. “I view it as: Are we going to have to shut the place down? And at this point, that will be the last thing we do … but there is no way we can say right now that that wont happen.”

The cuts come as the IRS prepares to take on new responsibilities implementing Obamacare, and in the face of a mandatory government-wide pay raise Koskinen said will cost $250 million.

Kartch accused Koskinen of trying to extort Congress by purposely absorbing the cuts in a politically painful manner. In addition to the shutdown, Koskinen has warned taxpayers refunds could be delayed this year.

“They have a mandate to implement [the cuts], but the resources that they allocate is up to them,” Kartch said.

But Alan Viard, a budget and tax policy analyst at the American Enterprise Institute, said across-the-board cuts won’t fix the problem and are likely to hurt taxpayers.

“I’m very concerned about what the IRS did on the 501c4 applications by the tea party groups, and so it’s quite proper to try to stop that type of abuse or make sure it doesn’t happen again,” Viard told TheDCNF. “But just cutting the agencies overall funding is really not a good way to do that.”

Viard suggests a more targeted approach, such as clarifying 501C4 laws or reassigning certain responsibilities to other agencies, rather than the easier option of spending cuts.

“It really backfires by harming ordinary taxpayers who still have to comply with the complicated tax code Congress has imposed upon us,” he added. “Having given us this complicated tax system, I think it behooves Congress to try to give the IRS the resources to administer that system.”

This piece was originally published by the Daily Caller News Foundation

Prison Time For ‘Environmental Crimes’ Has Doubled In 4 Years

In 2014, the Environmental Protection Agency charged 187 defendants with environmental crimes and sentenced offenders to a combined 155 years of jail time. That’s more than double the amount of jail time eco-offenders were sentenced to in 2010, according agency data.

The EPA, however, charged significantly fewer people for environmental crimes in 2014 compared to 2010, reflecting the agency’s strategy of going after larger, more lucrative criminal and civil cases.

“By taking on large, high impact enforcement cases, EPA is helping to level the playing field for companies that play by the rules, while maximizing our ability to protect the communities we serve across the country,” Cynthia Giles, head of the EPA’s Office of Enforcement and Compliance Assurance, said in a statement.

EPA data shows the agency raked forced companies and other offenders to pay $9.7 billion in actions and to pay for “equipment to control pollution and clean up contaminated sites” as well as $163 million in civil penalties and criminal fines. The agency also got offenders to pay $453.7 million to clean up Superfund sites.

EPA enforcement actions resulted in 141 million pound reduction in of air pollutants and a 337 million pound reduction in water pollutants, according to agency data. Enforcement actions also cleaned up 856 million cubic yards of contaminated aquifers.

“Despite challenges posed by budget cuts and a government shutdown, we secured major settlements in key industry sectors and brought criminal violators to justice,” Giles said. “This work resulted in critical investments in advanced technologies and innovative approaches to reduce pollution and improve compliance.”

But probably EPA’s most startling statistic is its more than doubling of prison sentencing for environmental criminals in the last four years. In 2010, the EPA successfully charged 289 defendants, garnering 72 years in prison sentences.

Jail time for offenders has now doubled to 155 years among a successfully convicted group of only 187 defendants.

So who were some of the top environmental criminals of 2014?

Mark Kamholz, the environment control manager at the Tonawanda Coke Corporation, was convicted of violating the Clean Air Act and other federal laws and sentenced to one year in prison, 100 hours of community service and a $20,000 fine.

All this for “releasing coke oven gas containing benzene into the air through an unreported pressure relief valve” and because a coke-quenching tower did not have federally mandated pollution control technology, says EPA. Kamholz order another employee to conceal the fact a pressure valve was releasing pollutants into the air.

The Tonawanda Coke Corporation was hit with fines as well. The company was forced to pay a $12.5 million penalty and pay $12.2 million in community service payments for violating federal environmental laws. The EPA says this is “one of the largest fines ever levied in an air pollution case involving a federal criminal trial.”

Ohio waste disposal company owner Benedict Lupo was sentenced to two years in prison and a $25,000 fine for ordering his employees to dump waste from hydraulic fracturing operations into a tributary of the Mahoning River. Lupo illegally dumped fracking waste into the tributary 30 times in 2012 and 2013, having his employees dump the waste at night when nobody else was around.

Robert Lewis, a hazardous waste transporter, was sentenced to 10 months in federal prison for illegally storing hazardous waste in a self-storage facility in Macon, Georgia. He also illegally stored waste in Rex, Georgia and at his home in Albany.

And finally, Benjamin Pass, the owner of a recycling business, was sentenced to 42 months in prison and forced to pay $21 million in fines for “mishandling of used oil contaminated with polychlorinated biphenyls (PCB) that led to widespread contamination and millions of dollars in clean-up costs.” Pass also fined $539,000 for not paying incomes between 2002 and 2011.

This article was originally published by the Daily Caller News Foundation

Coal Ban Would Boost Tax Cost of Pensions

California public pensions already have a big problem with adequate funding. The nonpartisan state Legislative Analyst pegs the pensions’ unfunded liabilities at $340 billion.

It should be obvious what the investment strategy should be for the California Public Employees System, the California State Teachers Retirement System and other mammoth funds: maximize fund values through the most prudent and profitable investments.

Because if investments are not prudent and profitable, then the lower fund values will have to be made up by either increasing the cost to taxpayers, who ultimately are on the hook for the funds’ payouts to retirees; or by cutting retiree benefits.

That’s the background for new state Senate President Pro Tem Kevin De Leon’s proposal to ban coal from retirement investment portfolios. According to the Bee, De Leon said, “Coal is a dirty fossil fuel. I think that our values should reflect, you know, who we are as the state of California.”

But if coal is the best return on CalPERS and CalSTRS investment dollars; and these funds are forced to invest in something else; then the funds’ return on investment will be lower than it could have been. Which brings up the scenario above: taxpayers will have to pay more, or retirement benefits will have to be cut — or both.

Do state employees and retirees see this?

This article was originally published on CalWatchdog.com

Report: Unions Avoid The Minimum Wage

Unions love raising the minimum wage, so long as they are exempt.

A new report, “Labor’s Minimum Wage Exemption,” by the U.S. Chamber of Commerce found many labor unions are exempt from the various local minimum wage laws they support for everyone else.

“Not all minimum wage increases come in the same form,” the report notes. “Some local ordinances in particular include an exemption for employers that enter into a collective bargaining agreement with a union.”

The report explains that these sort of “escape clauses” are often designed to encourage unionization because they make membership a low cost alternative for employers. This, explains the report, raises questions about who these minimum wage laws are actually meant to help.

The report cites the experience of one union after the city of Los Angeles included an exemption for unions when they raised the minimum wage for the hotel industry.

“Local 11’s membership increased from 13,626 in 2007 to 20,896 in 2013,10 while its revenue increased from approximately $7.5 million per year to nearly $12.7 million,” the report details.

The same thing happened for UNITE-HERE Local 2 when San Francisco passed a minimum wage ordinance with a union exemption in late 2003.

Another notable example is when the city of SeaTac, Washington passed a living wage ballot initiative in 2013, known as Proposition 1. At the time the initiative established the highest minimum wage rate in the country of $15 per hour with an annual adjustment for inflation.

Proposition 1 also included an exemption for unions. The report explained, “Supporters of Proposition 1 spent more than $1.7 million, with union spending accounting for 98.4% of that amount.”

San Francisco’s move to raise its minimum wage to $10.55 per hour, which gained national attention, also included an exemption for unions.

According to the report, minimum wage laws passed in Oakland, San Jose, Long Beach, Milwaukee County and Chicago all included an exemption for unions.

“Many advocates for a higher minimum wage portray it as a means of improving the lives of workers, putting more money into the economy, and increasing growth,” the report concluded. “So, it is surprising that some minimum wage ordinances include an exemption that potentially undermines all three goals.”

This article was originally published by the Daily Caller News Foundation

CA Senate Oversight Committee Scrapped by de Leon

In a curious action, new state California Senate President Pro Tem Kevin de Leon, D-Los Angeles, has scrapped the government oversight office created by his predecessor, former Sen. Darrell Steinberg, D-Sacramento. The move has swiftly earned de Leon a fresh round of criticism.

Steinberg himself was not shaken up about the news. He expressed confidence that similar work would be done in some other way, according to the Sacramento Bee. “I have every confidence that Kevin is committed to oversight, but there are many ways to do it,” he said. “This is the way I chose to do it and I’m sure he will have his way.” Steinberg’s oversight office was funded directly through the office of the president pro tem.

Personal priorities

That was an expense de Leon clearly did not wish to maintain, despite his willingness to throw a lavish party this October for his swearing in as president pro tem. Many critics, the Los Angeles Times reported, found the bash an “inappropriate extravagance at a time when the state Senate is struggling to shake off the taint of corruption scandals and regain public trust.” Earlier this year, three Democratic state senators were indicted on federal corruption charges.

The celebration’s $50,000 tab was not covered by de Leon himself. Instead, the California Latino Legislative Caucus Foundation, which recently attracted five-figure donations from AT&T and Chevron, footed the bill.

De Leon’s approach to spending was recently on display in his shakeup of the state Senate staff. “Last month, de León laid off 39 employees, including staff who wrote bill analyses, did research and performed secretarial duties,” the Bee reported. A shoeshiner, paid a yearly wage of $13,000 “to provide information to Capitol visitors,” also was let go. Staff costs for Steinberg’s oversight office ran to about $380,000 yearly.

De Leon’s choice to trim budgetary costs by reducing staff, however, has not attracted much attention or scorn. The same cannot be said for his elimination of the Senate’s government oversight office.

Blowback

Steinberg’s oversight office produced a high volume of reports that made a substantial impact. As the Bee reported:

“Investigations found that a lack of scrutiny allowed sex offenders to treat drug addicts at state rehab clinics; that California’s mortgage lender foreclosed on homeowners who were current on their loans; that redevelopment agencies spent money without adequate accountability; and that tax breaks had cost the state $6.3 billion more than anticipated. Other reports made recommendations for curbing fraud in the home health care system and found that an illogical bureaucracy made it hard for regulators to detect fraud in state child care programs. The findings were frequently used as the basis for Senate oversight hearings and also led to new legislation.”

The office’s track record has led some political observers to raise eyebrows and pen editorials calling de Leon’s judgment into question. De Leon’s handling of the issue has left Democrats vulnerable to criticism for trying to return to business as usual following this year’s spate of humiliating scandals, as recent editorial in the Los Angeles Daily News suggested:

“In a further testament to ethical tone-deafness, Senate Democrats have chosen to revive their annual Pro Tem Cup, the golf event and major party fundraiser at Torrey Pines that has charged special-interest representatives up to $65,000 to trade strokes with lawmakers. The event was canceled this year because it wouldn’t have looked so good with Senate Democrats Leland Yee, Ron Calderon and Rod Wright facing ethics charges.”

In another coincidence of timing, cops in de Leon’s district have been handed a new oversight body. In the wake of serious ethics charges of their own, the Los Angeles County Sheriff’s Department was put under civilian oversight by the Board of Supervisors, as the Times reported.

And in a second coincidence, the de Leon controversy has unfolded at the same time as a similar one in the federal government, although this time it’s Republicans mainly involved.

Rep. Jason Chaffetz, R-Utah, revealed he’ll take a less pugnacious approach to the House Oversight Committee than the chairman he is replacing, Rep. Darrell Issa, R-Calif.

In 2012, Issa’s actions led to the House of Representatives holding Attorney Gen. Eric Holder in contempt of Congress over the Fast and Furious weapons scandal.

This article was originally published by CalWatchdog.com

California Business Needs to Go Small or Go Home

NO ESCAPE FROM THE TAX VICE-Here’s the bitter reality for business in much of California: there’s no cavalry riding to rescue you from the state’s regulatory and tax vise. The voters in California have spoken, and with a definitive, distinctive twist, turned against any suggestion of reform and confirmed the continued domination of the state by public employee unions, environmental activists and their crony capitalist allies.

You are on your own, Southern California businesses, and can count on very little help, and, likely, much mischief, from Sacramento and various lower orders of government. To find a way out of stubbornly high unemployment and anemic income growth, the Southland will need to find a novel way to restart its economic engine based almost entirely on its grass-roots business, its creative savvy and entrepreneurial culture.

This shift poses a great challenge, both for California’s interior counties and parts of the coastal region. Unlike Silicon Valley and its hip twin, San Francisco, no one is investing much in the Southland. Among the nation’s largest metropolitan areas, the Los Angeles region has become a corporate stepchild, trailing in new office construction not only to world-beaters like Houston, but also New York, the Bay Area and even slower-growing Philadelphia or Chicago. In fact, although the second largest metro area in the country, LA-Orange County does not even make the top 10 regions for new building.

Nor can we expect much in the way of residential housing growth, particularly single-family homes, as the state’s planners continue their jihad against anything smacking of suburban expansion.

Traditional industries like aerospace, manufacturing and logistics face enormous regulatory barriers, ruinous taxation levels and huge energy price increases that will slow any potential growth, and could lead to yet more departures by existing large firms. Virtually all the region’s former major established aerospace companies have relocated their headquarters elsewhere, which hurts efforts to get them to expand or maintain facilities here.

Despite all this, the Southland is not without considerable assets. Perhaps most promising is the region’s status as the nation’s No. 1 producer of engineers – almost 3,000 annually. This raw material is now being somewhat squandered, with as many as 70 percent of graduates leaving the area to find work.

But there’s no reason for unmitigated despair; overall, Los Angeles-Orange has increased its ranks of new educated workers ages 25-34 since 2011 as much as ballyhooed New York, San Francisco and much more than Portland, Ore. For its part, the Inland Empire ranked fourth among 52 large metropolitan areas in terms of increased presence of bachelor’s degree-holders in this age group, adding almost 19,000 college-educated people since 2011.

There’s also a case to be made for Southern California as an emerging tech hub. As venture capitalist Mark Shuster points out, the region ranks third, just behind the Bay Area and New York, for its percentage of the nation’s tech startups, and is now the fastest-growing. The overall tech base, which includes aerospace, is still the largest in the country, with more than 360,000 employees. As tech moves from basic infrastructure to application, Shuster argues, the Southland’s time may come.

Despite producing MySpace, the region may have lost out in the social media wars, but shifts in tech trends could turn out to be far more advantageous. This relative optimism is remarkable given the losses in so many key engineering-driven industries over recent decades, from electronics and energy to aerospace.

Southern California’s technology community could well benefit from such things as growing demand for content among tech firms, as well as attempts to reboot space exploration. Indeed, investor Peter Thiel recently suggested that the region’s technology industry is the most “underestimated” in the nation.

“I’d definitely be short New York and long LA,” Thiel told the Los Angeles Times, citing both commercial space pioneer SpaceX and Oculus, the Irvine-based maker of virtual-reality headsets.

The case for a grass-roots rebound of tech in Southern California depends heavily on one key asset – the presence of the nation’s largest community of people in the arts. Roughly half of these workers are self-employed, according to the economic forecasting firm EMSI.

The Silicon Valley may be ideal as a place to nurture digitial technologies, but “nerds” as a whole are not cultural mavens or trend-seekers. They are better at transmitting messages than putting something worthwhile in them. In contrast, Southern California excels in filling messages with product.

The large existing base of television, movie and commercial producers has nurtured skills that are sought worldwide. Yet at the same time, with the studio system clearly in decline, as large productions go elsewhere, digital players such as Netflix, Amazon, Apple, as well as Los Angeles-based Hulu, have become more important. Indeed, when my Chapman students, many of them film majors, discuss their futures, it is increasingly these intermediaries, not the studios, that they identify as critical to a successful career.

This suggests a very different picture of the Southland’s industry than the one normally associated with large companies, studios and deep concentrations of talent. In the future, more production will be done by individuals, sometimes working out of their homes, scattered across the region. According to Kauffman Foundation research, the LA area already has the second-most entrepreneurs per 100 people in the U.S., just slightly behind the Bay Area. By necessity, Southern California’s economy will become more entrepreneurial and grass-roots; even as we have been losing large companies, our percentage growth in self-employed is among the highest in the country.

Not surprisingly, this activity appears concentrated not in the traditional bailiwicks in the San Fernando Valley, or in the hyped Downtown-adjacent areas, but along the coastal strip from Santa Monica to Irvine that some promoters have christened “the tech coast.” This epitomizes the growing role of young individuals and startups – as opposed to veteran engineers – in shaping the Southland’s emerging tech economy.

This pattern, however, is not just restrictive to digital entertainment. Southern California’s network of tested aerospace engineers – which, at 5,000 people, is second only to Seattle’s – is one reason why companies like SpaceX have located here. In an economy that relies more and more on individual expertise, this is a critical advantage.

One powerful caveat: We are not likely to see much blue-collar spinoffs of tech here, due largely to high land, regulatory and energy costs. Space X, for example, may have its key brain power in Southern California, but has chosen to construct its spaceport in lower-cost, business-friendly Texas. Another aerospace firm, Firefly Systems, this year decamped entirely for Texas, moving its headquarters to the Austin area and rocket engine facilities to rural Burnett County.

This pattern suggests that many of our emerging firms may remain somewhat limited in scope and largely focused on high-end functions, which reduces the positive impact for the region’s struggling local middle class and working class.

But the new grass-roots economy does not apply only to tech. Los Angeles has seen a huge rise in the number of people working from home, a percentage that since 1980 has more than tripled even as transit’s ridership share has dropped. Small, home-based businesses are common not only in such fields as real estate, but also in business consulting and even trade.

These home-based businesses, and small ones tucked into strip malls or small industrial centers – for example, in food processing – represent the last, best hope for a revived Southland economy. Our corporate community seems destined to continue shrinking, but this does not necessarily mean that the overall economy has to follow suit. Unable to rely on local officials to make things better, our best chance lies with relying on the entrepreneurial spirit and creativity of our people – the very thing that made us such an economic beacon in decades past.

This article was originally puslibhed on City Watch L.A.

(Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study,The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA. This piece was posted most recently at newgeography.com.)

After 2014 Successes, CA GOP Leaders Seek Second Term

Two years ago, Jim Brulte chastised his party for losing seats to laziness.

“There were three Assembly seats that were lost because we got lazy,” Brulte said shortly after taking the helm as chairman of the California Republican Party in March 2013. “Leaders lead by example, and we have to be in the precincts working, standing shoulder to shoulder with our volunteers.”

Now that’s he reclaimed those legislative seats lost to laziness, Brulte is asking state party delegates to reelect him to a second two-year term as leader of the state’s rebuilding minority party.

“We can build upon our successes this year,” Brulte wrote to party delegates, according to a letter obtained by the Los Angeles Times. “Working together we showed what our party could achieve. We need to build upon that success … because our state, our counties and our cities are too important to leave to those who do not share our philosophy.”

The 2014 election marked the first time in 20 years Republicans defeated a Democratic incumbent. The state party prevented a Democratic supermajority in both houses of the state Legislature as it made inroads with solidly Democratic regions of the state. For years, Republicans have been without any state or federal elected officials in the Bay Area. That changed in November with Catharine Baker’s win in the 16th Assembly District.

CA GOP vice chair “relieved” at news

CA Republican Party Vice Chair Harmeet Dhillon, who also announced plans to seek another term on the board of directors, said Monday she was “relieved” that Brulte was interested in keeping the job.

Jim Brulte“He has turned this party around, and it has been a privilege to be one of the many people on his team,” Dhillon wrote on her Facebook page. “We worked hard and applied a disciplined focus to achieve the goals we accomplished last month. But California needs more. We need a vibrant two-party system and a marketplace of ideas. We need lower taxes, less regulation, innovation, job growth, a respect for life and a respect for the rule of law, starting with the Constitution and the Bill of Rights. We need freedom from government. We are far from these goals.”

A first-generation immigrant, Dhillon has served as one of the party’s main advocates in its effort to court non-traditional GOP voters. She’ll finally have some help with the recent election of four Asian-American Republican women to state and local offices in Orange County.

CA GOP finances up, registration down

When Brulte and Dhillon took over the helm, the state party was deep in debt. Now, as of Dec. 1, according to state campaign finance disclosure reports, the California Republican Party has $1.48 million in cash on hand. This year, state Republicans have raised $19.2 million — more than double the amount in 2012.

In addition to stronger finances, the party has made a serious effort to broaden its appeal. State delegates, who have traditionally felt excluded from the party, described this year’s spring convention as a “blockbuster” step forward in terms of inclusiveness. Once relegated to the margins, the California Log Cabin Republicans, the nation’s largest organization of gay and lesbian Republicans, hosted a hospitality suite that was packed the entire night.  Other changes included an ASL interpreter on hand for deaf and hard-of-hearing delegates.

“We’re pushing the party outside of its comfort zone,” Brulte said of the shift in tone. “And we’re already seeing the benefits.”

But there’s still work to be done, especially in the area of voter registration. For yet another year, Republicans saw their voter registration numbers dwindle to just 28.2 percent. Republicans have watched their share of the electorate consistently decline from 35.6 percent in 1998, according to Capitol Weekly.

Will 2015 Spring Convention avoid party drama?

With the party’s two top leaders seeking reelection, state Republicans hope to enjoy a low-key spring convention and avoid the negative headlines that plagued its most recent gathering in Los Angeles. Coverage of the party’s September convention focused on internal emails by party leaders that were leaked to the press.

Those emails included Brulte’s blunt criticism of Fresno Mayor Ashley Swearengin, the GOP nominee for state controller who failed to endorse Neel Kashkari’s campaign for governor. Swearengin lost anyway to Democrat Betty Yee, 54 percent to 46 percent.

capitolFront

Brulte, a former minority leader in both the California State Senate and Assembly, was elected chairman of the California Republican Party with 90 percent of the vote in 2013. But don’t expect either Brulte or Dhillon to rest on their laurels.

“In the coming days and weeks I will be reaching out to state party delegates and volunteer groups, seeking their support in the quest to continue this service,” Dhillon said.

The Spring 2015 Organizing Convention will be held from Feb. 27 to March 1 in Sacramento.

This article was originally published on CalWatchdog.com

Stockton and Detroit Exit Bankruptcy Leaving Pension Systems As-Is

The landscape for public employee pensions shifted in 2014 as federal judges gave credence to the idea that pension benefits may be cut in bankruptcy. This challenges the long held idea that pension benefits are impervious to cuts and most observers are wondering just how significant this shift will be going forward.

This fall, city leaders watched as federal judges approved debt-cutting bankruptcy plans in Stockton and Detroit, ending two of the largest municipal bankruptcy cases in U.S. history. Many speculated both cities could do more to ease their fiscal problems by making significant cuts and structural changes to public pensions. However, both judges demurred and moved forward with plans that eased a portion of the cities’ financial obligations, but largely protected pensions. The failure to significantly address public pension debt and make structural changes to the pension systems in both Stockton and Detroit does not bode well for the economic future of either city post-bankruptcy. It also presents an interesting conundrum for other cities in dire fiscal distress that bear significant pension costs and unfunded liabilities. Are more cities to follow the path to pension cuts in bankruptcy?

In Detroit, the nation’s largest municipal bankruptcy case ended on November 7, fifteen months after it began. The restructuring plan approved by Judge Steven Rhodes slashed $7 billion in debts with bondholders receiving between 14 and 74 cents on the dollar back from the city. Public pensioners did not see cuts as deep, thanks in part to the likes of Van Gogh and Renoir. Detroit’s so-called “grand bargain” transferred ownership of part of the Detroit Institute of Arts collection from the city to the nonprofit running the museum for $816 million. The money, to be paid out over 20 years, comes from state taxpayers and privately-donated funds raised to offset deeper pension cuts. Pensioners in Detroit’s general retirement system are taking a 4.5 percent cut to their monthly pension check, will no longer receive cost-of-living adjustments, and will see a reduction in medical benefits. Some members who received excess annuity payments from the city will also be required to pay them back. Police and firefighter pensioners will only see a reduction in cost-of-living adjustments from 2.25 percent to 1 percent annually.

The pension cuts, which have been called “modest” by both the Wall Street Journal and NPR are exactly that. Detroit’s unfunded pension benefits are still a risk to the city’s fiscal health. And the system still relies on unrealistic rates of return when calculating required pension system contributions—the General Retirement System assumes a 7.9 percent annual return and the Police and Fire Retirement System assumes 8.0 percent, even though the city has only been earning an average of 5.89 percent for the general system and 5.5 percent for the police and fire system over the last 10 years, from 2004 to 2013.

In Stockton, even less was done to address the city’s pension problems despite a golden opportunity to make significant reforms. On October 1, Judge Christopher Klein ruled that the city could reduce its payments to CalPERS and exit its contract with the pension administrator if the city wanted. It was in his purview to cut the pensions if he saw that as the city’s best course of action. But the city chose not to modify its pension benefits or leave CalPERS. On October 30, the fourth largest U.S. municipal bankruptcy case was settled when Judge Klein approved Stockton’s bankruptcy plan, leaving existing pension benefits intact. The city agreed to pay most bond creditors between 50 to 100 cents on the dollar. Investment firm and Stockton creditor Franklin Templeton received only $4.3 million back from a $36 million loan (or 12 cents on the dollar).

Judge Klein noted the reason he left public pensions untouched was because public workers had already suffered other cutbacks, including having their salaries and healthcare benefits reduced, and because redoing current employee pensions would not be a simple task. Franklin Templeton disagrees and is appealing the judge-approved plan at the Ninth Circuit Court for further remedies.

The so-called “California Rule,” which means pension benefits cannot be reduced for current employees, was once thought to be ironclad, but Judge Klein’s ruling opens up the possibility for a future bankrupt California city to challenge it by choosing to cut pensions or leave CalPERS entirely if the city ends up in bankruptcy. Some thought that San Bernardino, another city battling with CalPERS, may take this route. Yet after Klein’s October 31 ruling on Stockton, San Bernardino decided to pay full fare despite the fact that they had previously tried to reduce their payments to CalPERS. Like San Bernardino, Stockton missed an opportunity to shrink its $29 million annual pension costs that have led to both reduced services for the citizens of Stockton and a new sales tax.

Granted, though there are not a lot of cities currently positioned to challenge the California Rule, Moody’s Investors Services points out that Judge Klein’s October 1 ruling allowing cities to cut pensions may give cities more negotiating power with public sector unions. In reality, reducing pension benefits is likely only an option for larger cities where pension obligations and general fund costs make it reasonable to wager tens of millions of dollars on the litigious process so that they can reduce their pension liabilities in the hundreds of millions or billions of dollars. Los Angeles and Chicago, anyone?

Both Stockton and Detroit are still saddled with billions in unfunded pension debt even after exiting bankruptcy. The bankruptcy plans that both cities presented and got approved did nothing to even chip away at existing pension debt. It is unlikely that either city will be able to contain the pension debt that devours their budgets unless structural changes are made to the current defined benefit pension systems they have in place. Other formerly bankrupt cities, like Vallejo, California, have struggled post-bankruptcy because of pension debt and the same type of budgetary problems affecting Stockton and Detroit.

This is only the first couple of rounds of a long bout, as we learned from the lengthy reform processes in San Diego and San Jose. Pension systems like CalPERS have deep pockets and one can sympathize with the city manager or attorney who decides not to go for the option of challenging the increasing costs of pensioners even though legal precedence is tilting in their favor. No doubt, without substantive reform that provides for an affordable and secure retirement system for both the retirees and taxpayers, that pays down the debts sooner rather than later and requires that these jurisdictions pay their full pension costs, Detroit and Stockton will likely be back before a judge begging for more protection. Just ask Vallejo.

Lance Christensen is Director of the Pension Reform Project at the Reason Foundation, and Victor Nava is a Policy Analyst at the Reason Foundation.

Low Turnout In 2014, High Initiative Count In 2016

Elections have consequences. Ironically, California’s abysmal election turnout this November has teed up a veritable flood of ballot initiatives for 2016. Because the signature threshold for qualifying initiatives is pegged to the number of Californians who cast votes in the previous election, activists with a losing track record are angling for a breakout opportunity just around the political bend.

Only a third of those eligible to cast ballots did so on Nov. 4. “Of those who registered to vote, little better than four in every 10 – about 42 percent – actually voted, either in person or by mail,” according to the California Secretary of State. Even more important, the total votes cast for governor, which determines the numerical hurdle signature-gatherers must clear to get their initiative on the ballot, hit a quarter-century low. The San Francisco Chronicle reported:

“In California, the number of signatures required to qualify a measure for the ballot is a percentage of the total votes cast for governor. Since the 42 percent turnout on Nov. 4 meant only about 7.3 million people bothered to take a side in Gov. Jerry Brown’s landslide win over Republican Neel Kashkari, the bar for qualifying ballot measures in 2016 will be at the lowest level in at least 25 years.

“The change isn’t a tiny one. Since the last governor’s election in 2010, it has taken 504,760 valid signatures to put a standard initiative on the ballot and 807,615 signatures for a constitutional amendment. Once the November election is certified Friday, those numbers will drop to about 366,000 and 586,000, respectively.”

A host of initiative hopefuls has already begun to plan for a big 2016, including public employee unions and taxpayers rights’ groups. But attention will focus most strongly around two high-profile efforts that have failed in the past, but enjoy the support of powerful backers: marijuana legalization and the breakup of California into six smaller states.

Hemp hopes

As Reason magazine observed, advocates of marijuana legalization and regulation have picked up steam in recent years, thanks to voter support. Alaska, Colorado, Oregon, Washington and the District of Columbia all have given pot the green light; emboldened, activists have turned for 2016 to Maine and Massachusetts in the East and Montana, Arizona and California — the biggest prize — in the West.

Along with proposals to fly the California flag at the same height as the U.S. flag, and to require the use of condoms in pornographic video performances, the marijuana legalization initiative has already been publicly proposed, but not yet made official with the Attorney General’s office.

Pot advocates hope to use 2016’s low bar to land on the ballot in a well-publicized but cost-effective way. In 2010, voters rejected a legalization initiative; this year, advocates see themselves catching a nationwide wave in favor of looser drug laws — and capitalizing on recent changes to California criminal law that treat inmates convicted on drug charges more leniently.

Six Californias 2.0

Venture capitalist Tim Draper, meanwhile, hasn’t given up his own hopes for an up or down vote on his Six Californias proposal. That idea, ridiculed in many corners of the press but viewed favorably by those seeking to shake up dysfunctional state governance, didn’t make it onto the ballot last time around. It would break up the state into six new states.

“Draper put about $5 million of his own money into gathering some 1.13 million signatures for ‘Six Californians,’ only to have the California Secretary of State’s office rule that just 752,000 were valid,” the Chronicle reported. “That was not enough to make the 807,000 required this year to make the cut.” In an interview with the Chronicle, Draper chose his words carefully:

“’We’re going for 2016, and we have 750,000 signatures, but they say we have to start all over again,’ he said Tuesday. ‘It’s a kind of Catch 22.’

“Asked if he will re-launch the signature-gathering process in light of the new 2016 lower bar, Draper said, ‘We want Six Californias to happen. We’ll see.’

“’This is a mission critical for the state,’ he said. ‘I live here and so does most of my family,’ and more than ever, he said, ‘we’re saying wait a second: we can make this change.’”

That’s an attitude typical of those who struggle to land initiatives on the statewide ballot. For them all, 2016 offers a once-in-a-generation chance to do so.

This article was originally published by CalWatchdog.com