“I drove my Chevy to the levee but the levee was dry,” go the famous lyrics to singer Don McClean’s 1971 hit song, “American Pie.”

The California Dream of home ownership and speculative riches in land development died in 2008 in Natomas, the last undeveloped area of Sacramento.  It died not due to the concurrent bursting of the Mortgage Bubble. It died because the Federal government banned new constructionin 2008 until the region’s flood control levees could be further improved.

The levee was dry in Natomas not due to drought, or the economic depression, but to a shortage of pork barrel funding. The levees were dry because the tax levies were dry.

On May 15, 2013, U.S. Sen. Barbara Boxer, D-Calif., head of the Environment and Public Works Committee, cut a bipartisan deal to authorize $1.1 billion in Federal funding to fix the Natomas levees as part of a $12.5 billion package of public works projects around the U.S.  Boxer was able to get bipartisan sponsorship for her bill, S. 601, the Water Resources Development Act of 2013, from Senator David Vitter, R-Louisiana.

How funding died for Water Resources Development Act

The Water Resources Development Act was initially authorized in 1974 as a bi-annual appropriation of funding. But WRDA funding died between 1976 to 1986 when the U.S. House of Representatives, the Senate, and the White House could not agree about local cost sharing and environmental mitigation policies.

In 1986, 300 new funding projects were approved.  But for the first time, local sponsors had to pay a portion of the costs. This flood of projects created such a backlog that the U.S. Army Corps of Engineers still cannot handle them all.  The 2013 WRDA contains provision for a BRAC (military Base Realignment And Closure)-like commission to reduce the backlog of uncompleted projects. However, this new bill is likely to not reduce the backlog but increase it.

The WRDA funding “music died” again from 2008 to 2013, when the U.S. Senate refused to pass a federal budget and the Water Resources Development Act languished. 

Fishing for funding in a pork barrel

The Water Resources Development Act is what is commonly known as a political pork barrel of funding for huge water resource development, navigational, flood protection and environmental projects. Pork barrel projects typically contain funding for political “earmarks” and subsidies for projects that would otherwise be uneconomic on a “user-pays” basis.  By spreading costs over a large base of federal taxpayers, uneconomic projects can be made to look economic.

The 2013 WRDA cut out obvious earmarks of $2 million to repair the roof of the Smithsonian museum damaged from Hurricane Sandy and $7.3 billion to repair the New York transportation system damaged by Sandy. In both state and federal pork barrel legislation, the titles to large public works spending bills and bond issues often contain the word “water” as a way to sell it to voters.

The Boxer-Vitter bill comes along just as California is releasing its plans and environmental studies to “conserve” the Sacramento Delta. The Bay-Delta Conservation Plan is meant to re-engineer the huge Delta.  The hodge-podge of levees, dams, canals, sloughs, sunken island farms and tributary rivers have historically evolved has made the Delta politically unworkable. The Delta is still a vibrant eco-system for predator striped bass and ugly bottom feeder catfish. But it is not considered a politically correct ecosystem for pretty and tiny fish that can be sold to the public as “endangered” —  salmon, smelt, etc.

Illegitimacy of Northern Cal water opposition

Boxer’s bill could not come along at a worse time for Northern California water and environmental interests. This is because the bill takes the mask off of Northern California’s claim that the State’s new Delta Plan is a merely “water grab” by Southern California money interests that will harm fish.  Northerners claim that Southern California cities should eliminate all swimming pools and lawns before they get any more “Northern California water.” But this claim loses its political legitimacy if mostly what are behind the Natomas levee project are real estate, tourist and commercial fishing interests.

California has already spent $618 million on improvements to the Natomas levees from Proposition 1E and Proposition 84, both approved by voters in 2006, to be eligible for matching funds from the U.S. government.

To qualify Natomas for federal flood control funding, the U.S. Army Corps of Engineers and the Federal Emergency Management Agency downgraded the ratings of the Natomas levees. And of course there would be no flood hazard if the undeveloped portions of Natomas were left as is.

The state has completed 18 miles of levees and the U.S. Army Corps of Engineers has to complete 24-miles of levees.  U.S. Senator Dianne Feinstein, D-Calif., had also been seeking nearly $1 billion in funding for Natomas flood control improvements. Feinstein also advocated prohibiting vegetation on or near levees. But that would cost $7 billion to clear vegetation from 2,100 miles of levees, not including ongoing clearing costs.

Drove my Chevy to the tax levy

Rep. Doris Matsui, D-Calif., has been unable for some time to lift a levee repair bill out of the House because of Republican opposition.

So S.601, the Water Infrastructure Finance and Innovation Act of 2013, by Boxer, had to be initiated in the Democratic-controlled Senate through Boxer’s powerful committee. But the Senate Democrats had to buy off Republican opposition with promises of pork barrel funding.

Now that federal government revenues are increasing and the deficit is declining, there is political momentum to reopen the spending floodgates and breach the levees erected against pork barrel funding.

Boxer’s bill now proceeds to the House, where it faces stiff resistance from tax-fighting organizations, pro-business associations, and environmental organizations that oppose its fast-tracking provisions. California Real estate interests, environmental organizations, the building and construction industry, and unions in Central California are anticipated to favor the bill to complete the Natomas flood control improvements.

(Wayne Lusvardi is an investigative reporter for CalWatchdog.)

If the definition of insanity is “doing the same thing over and over again but expecting different results,” Democratic legislators upset with Gov. Jerry Brown’s relatively parsimonious revised state budget seem bound to test that rule.

No sooner had Brown released his May budget revise Tuesday morning than Democrats were complaining that the governor’s plan just didn’t have enough spending.

They didn’t use those exact words, of course, since these are politicians. They each praised the governor for balancing the budget and agreed this is no time for unnecessary spending.

It just happens, however, that each legislator has pet projects that are not only necessary but also key to the future of California and its people.

For state Senate President Pro Tem Darrell Steinberg, it’s mental health programs and dental care for the poor. For Assembly Speaker John Perez, it’s college scholarships for middle-income students and increased court funding. State Sen. Mark Leno wants to “invest in other areas that are critical to our economic growth and social welfare” while state Sen. Leland Yee says, “It is time to undo the damage done to California’s most vulnerable citizens.”

You get the picture.

But here are two words for those Democrats upset with Brown’s budget: Gray Davis.

Heck, let’s make it four words: Arnold Schwarzenegger.

When Davis took office back in 1999, California was in the middle of the dot-com boom, which sent state revenue soaring. The governor and the Democrat-led Legislature, convinced the party would never end, started expensive new programs, boosted pay and pensions and signed off on budget hikes of 15 percent or so.

When the boom went bust, state finances were quickly awash in deficits and red ink and Davis got recalled.

Now Perez and other Democrats are complaining that Brown’s budget and its revenue forecasts are just too pessimistic and suggesting they will be using other, more spending-friendly numbers expected from the Legislative Analyst’s Office when it comes time to negotiate with the governor.

While the Davis years might as well be in the far, fuzzy past when dinosaurs walked the earth in these days of term limits, there are still plenty of legislators who were there when Schwarzenegger was proclaiming himself an eternal optimist.

It showed in his budgets, which too-often depended on a federal money fairy to arrive in Sacramento and sprinkle cash on a deserving California.

You may remember how that worked out.

Pessimism is a good thing when it’s time to draw up a budget. It’s unfailing optimism that gets legislators – and the state – in trouble.

It wouldn’t be a surprise if Brown and his finance team were cherry-picking the budget numbers and trying to cast the gloomiest light possible on California’s future finances. After all, the governor has been in and around state politics for his entire life and knows the unrelenting pressure to spend every available dollar on the unquestioned needs of the state.

“There’s a reason why this budget was always in deficit: Because there’s a lot of needs out there and there’s very articulate advocates,” Brown said at a news conference Tuesday. “And I’m trying to find the right balance between spending and holding the line.”

With the economy healing but not healthy, there’s every chance that the unexpected boost in revenues was a one-off that won’t be repeated next year. And Davis showed the disaster that comes when long-term obligations have to be paid with short-term – and fast disappearing — money.

That’s why one of Brown’s biggest new expenditure in the revised budget is $1 billion to help school districts prepare for implementing the new “common core” standards by buying new books, training teachers and providing the technology needed to improve and refocus education in the state.

It’s a one-time grant made with possibly one-time money.

But programs, even restored ones, have a life span that all too often outlives – and outgrows — the money to pay for them. And Brown has argued that it doesn’t make sense to bring back something like dental care for Medi-Cal clients if you just have to pull it away if the economy turns sour in a year or two.

“This is not the time to break out the champagne,” the governor said. “Anybody who thinks there’s spare change around hasn’t read the budget.”

Democrats are likely to test Brown’s resolve on issue after issue between now and the June 15 budget deadline and it will be interesting to see just how much of his plan the governor can hang onto.

One plus about a pessimistic outlook, though, is that any surprises are happy ones. And Californians are way overdue for a run of good news.

(John Wildermuth is a longtime writer on California politics. Originally posted on Fox and Hounds.)

The Senate Governance and Finance Committee on Wednesday passed six constitutional amendments to make it easier for local voters to pass various tax increases on property owners.

“California didn’t knowingly vote for centralized power,” said Sen. Lois Wolk, D-Davis, speaking about the passage of Proposition 13 in 1978, as she opened the committee hearing on the bills. Wolk, the committee chairwoman, echoed longtime critics of Prop. 13 that it reduced the ability of local governments to increase taxes, requiring the state government to step in and fund programs.

She said Prop. 13 has been around for more than 30 years, but it was time to change the law which has held property taxes in check since 1978. “Voters today ought to have a say,” she said.

Prop. 13 limited property taxes to 1 percent of the property’s assessed value, plus annual increases of up to 2 percent. When a property changes ownership, the new owner pays 1 percent of the newly assessed value.

Despite that, California by no means is a low-property tax state; it’s ranked 14th highest nationally, according to Jon Coupal, President of the Howard Jarvis Taxpayers Association.

Parcel taxes

Senate Constitutional Amendment 3 by Sen. Mark Leno, D-San Francisco, would lower the threshold for school district per-parcel property taxes from two-thirds to 55 percent. “SCA 3 provides parents, teachers and school districts with more local control and much needed flexibility in raising local education funding,” Leno said at the hearing. “The current two-thirds vote requirements for passage of local parcel tax allows a relatively small minority of voters to block a local education funding proposal that may have support of more than a majority of voters.”

All of the support for Leno’s bill came from other government agencies, associations, schools or public employee unions.

However, Leno did not address the influx of $7 billion in new tax revenue from Proposition 30, passed by voters in November, and sold as the fix-all to dwindling state education funds. Prop. 30 increased the income tax on individuals with income of $250,000 or more, and upped the sales tax on everybody in the state.

“We live in a state with the highest marginal tax rate, the highest sales tax, and we are not a low property tax state,” HJTA’s President Jon Coupal told the committee.

Coupal said SCA 3 is a direct assault on Prop. 13 because it makes it easier to increase property taxes above Prop. 13′s cap of 1 percent.

In a recent poll by the HJTA, more than 53 percent of voters oppose the parcel property tax vote change, and only 35 percent support it. Approximately 11 percent were undecided.

“Moreover, a majority of those against don’t just oppose the change — they oppose it strongly. The intensity of opposition to lowering the voting threshold was nearly double what it was for those in support,” the HJTA reported. “Forty percent of voters ‘definitely’ oppose the idea of lowering the vote requirement, while just 21 percent say they would definitely support the change.”

The HJTA also found that opposition to changing the voting threshold was broad-based: 68 percent of Republicans oppose it, along with nearly 53 percent of Decline-to-State voters, while 44 percent of Democrats also oppose it. Fifty percent of Democrat women also oppose the change.

“This poll mirrors what we’ve been hearing from our members who are Democrats, Republicans and Independents. They oppose any further money grab from politicians — whether from Sacramento or the local level — and they oppose it strongly,” said Coupal. “Prop. 13 was established to protect homeowners from outrageous property tax increases, and that includes parcel taxes, which local politicians now want to expand to pay for their local spending.”

“The tax-and-spend lobby has been emboldened by the passage of Prop. 30 and it’s clear that the $50 billion tax hike didn’t sate their thirst for more money,” said Coupal.

In the survey, the question was posed to voters: “Proposition 13 limits California property taxes to one percent of the taxable value of property. Parcel taxes are property taxes above the regular one percent tax and, under Proposition 13, these parcel taxes require a two-thirds vote of local voters to be passed into law. Do you support or oppose lowering the vote requirement for local parcel taxes from two-thirds to 55 percent?”

Taxes, taxes, taxes

In addition to Leno’s SCA 3, HJTA lists the following bills as major threats to property owners. As with SCA 3, the bills were passed by the Senate Governance and Finance Committee Wednesday:

• SCA 4, Sen. Carol Liu, D-La Canada, and SCA 8, Sen. Ellen Corbett, D-San Leandro: “Lowers the threshold for the imposition, extension or increase of local transportation special taxes from the Proposition 13-mandated two-thirds vote to 55%. Most transportation special tax increases consist of very regressive sales tax hikes. These add to the burden of California taxpayers who already pay the highest state sales tax in the nation.”
• SCA 7, Sen. Lois Wolk, D-Davis: “Lowers the threshold from two-thirds to 55% in order to approve a bond to fund public library facilities. Lowering the threshold for school facilities to 55% has already resulted in billions of dollars of additional property tax payments that otherwise would not have been approved by voters.”
• Senate Constitutional Amendment 9, Sen. Ellen Corbett, D—San Leandro: Lowers the threshold from two-thirds to 55% to increase special taxes to fund community and economic development projects.
• SCA 11, Sen. Loni Hancock, D-Berkeley: “Lowers the threshold to 55% to allow for voters representing ANY local government entity to approve a special tax for ANY purpose. This is far and away the broadest application, and thus the most egregious, of these constitutional amendments.”

(Katy Grimes is a longtime political analyst, writer and journalist, and CalWatchdog’s news reporter. Originally posted on CalWatchdog.)

As if plucked right out of the silly book, “There Oughta Be A Law,” San Francisco Assemblyman Tom Ammiano has been pushing a bill through the Legislature which has the potential of turning all schools into beta test sites for social experiments.

AB 1266 would require a student to be permitted to use the male or female bathrooms and locker rooms in public schools, based on the student’s gender self-identification.

Lawmakers who support this bill claim they are protecting civil rights by creating laws for transgender persons. However, the bathroom is usually a place where there is an expectation of privacy. So the question becomes: Whose civil rights are being protected and whose are being trampled?

Sponsored by the National Center for Lesbian Rights, Equality California, Transgender Law Center and Gay Straight Alliance Network, AB 1266 would also require students be allowed to participate in sports and programs as the gender with which they identify.

While the Los Angeles Unified School District and San Francisco schools have already adopted “Transgender and gender variant students, ensuring equity and nondiscrimination” policies, the LAUSD acknowledged Ammiano’s “legislation cannot anticipate every situation that might occur with respect to transgender and gender variant students.”

Is there a real need for this bill?

In the bill analysis, Ammiano said:

“AB 1266 clarifies California’s student nondiscrimination laws by specifying that all students in K-12 schools must be permitted to participate in school programs, activities, and facilities in accordance with the student’s gender identity. This bill is needed to ensure that transgender students are protected and have the same opportunities to participate and succeed as all other students.

“Although current California law already protects students from discrimination in education based on sex and gender identity, many school districts do not understand and are not presently in compliance with their obligations to treat transgender students the same as all other students in the specific areas addressed by this bill. As a result, some school districts are excluding transgender students from sex-segregated programs, activities and facilities.”

The requirement Ammiano makes of schools to treat transgender students the same as all other students is perplexing. That is exactly what most schools are doing. It’s only when parents and special interest groups sue that these issues escalate.

Washington State problems

Washington State passed such a law in 2006, and has run into a big problem.

“Parents in Washington state became outraged last year when their young daughters, who participate in their local swim club, discovered a male sitting naked in the sauna ‘displaying male genitalia,’” the Christian News Net reported last fall. However, police and school representatives of Evergreen State College alike said there wasn’t anything they could do about the situation because of state law.

The transgender “student” is 45 years old.

Child transgender cases

There is also the case of the first grade transgender girl whose parents allowed their six-year-old son to “come out” as a girl. The parents then filed a complaint with the Colorado Office of Civil Rights alleging a violation of the state’s anti-discrimination law because the elementary school didn’t allow the child to use the girls’ restroom. The school tried to accommodate the girl by allowing her to use the bathroom in the school office, but that wasn’t enough for the parents. With the help of The Transgender Legal Defense & Education Fund, the parents sued, and their child’s intensely personal story has been made very public.

Yet research suggests that many children gradually become “comfortable with their natal gender,” an American Psychiatric Association task force reported in 2011. But the goal of any treatment should be to help the child adjust to its reality, the APA says.

The transgender condition was added to the APA diagnosis manual in 1980. In the newest edition of the manual, the condition has been renamed Gender Dysphoria.

But many parents and students feel this very small group is being moved to the front of the civil rights line.

The Pacific Justice Institute is opposed to Ammiano’s bill, and is fighting hard to kill it. “Foremost among the bill’s many shortcomings is its complete disregard for the privacy of the vast majority of students who are not transgender or gender-questioning,” PJI said. “These students (and their parents) have reasonable expectations that they will not be forced to share intimate spaces with members of the opposite biological and anatomical gender. There are no safeguards whatsoever in the legislation that would allow responsible adults, including coaches, teachers, chaparones, school administrators and others to act in the best interests of all students.”

If AB 1266 is passed and signed into law, girls will be forced to use bathrooms, locker rooms and showers with anatomical males, and boys with anatomical females, because the transgender persons self-identify as a member of the opposite sex.

Legal issues

In the private sector, employers are required to make “reasonable accommodations” for persons of all legally protected categories. One reasonable accommodation for a transgender employee would be exactly what the school offered the Colorado first grader — allowing someone to use a private bathroom instead of the common facilities.

Protecting the privacy interests of minor students more than adults was supported in Doe vs. Clenchy, Maine Superior Court, 2012. The court ruled that a school district did not 
act discriminatorily by assigning a third grade male-to-female transgender student to use a faculty restroom rather than the female student restrooms.

Several federal and state courts have recognized the significant concerns of opposite sex entry into restrooms and other similarly sensitive, usually private facilities. In Etsitty vs. 
Utah Transit Authority, 10th Circuit Court of Appeals, 2007, a male-to-female transsexual was terminated by the Utah Transit Authority for entering women’s public restrooms while on the job because 
the UTA feared liability from patrons. In 
the ensuing unlawful gender discrimination suit, the 10th Circuit ruled in favor of the UTA, stating that requiring employees to use restrooms that match their biological gender is not discriminatory.

In Goins v. West Group, Minnesota Superior Court, 2001, a male-to-female transgender resigned from and then sued 
West Group after not being allowed to use the women’s restroom. The Court held that West Group’s policy of requiring employees to use the restroom assigned to their biological gender, rather than their self-image gender, was not discriminatory, stating that “the traditional and accepted practice in the employment setting is to provide restroom facilities that reflect the cultural preference for restroom designation based on biological gender.”

These legal cases support the common sense understanding that biological and anatomical gender still matter in certain intimate contexts.

Another concern is the insistence that gender should be entirely self-identified and divorced from anatomy.

The bill analysis claimed there was no fiscal component or issue with AB 1266. But if it is passed, expect to see public schools being forced to completely remodel bathrooms and locker room facilities to comply. Doing so also would deplete scarce school funds.

Ammiano’s bill establishes no standard to determine the veracity of a pupil’s claim to a particular gender identity. Without establishing any standard, the determination will be left to the pupil who may claim any gender identity at any time for any reason.

(Katy Grimes is a longtime political analyst, writer and journalist, and CalWatchdog’s news reporter. Originally posted on CalWatchdog.)

When the Internal Revenue Service admits to violations of law by targeting limited government advocate organizations, you know that the non-divulged crimes are much worse. The discloser in the mainstream media is a pleasant astonishment. The usual pattern of protecting “Big Government” is still intact, while the noise and agency diversion on the abuses of the IRS avoid the fundamental problem with federal taxation, based upon a system of deductions, exemptions, incentives and grants. The extortion and intimidation in the enforcement of the tax code is the entrusted role assigned to the IRS by the political hacks that administer the social engineering experiment that is fundamentally changing America.

The politicalization of the system is premeditated. The revelation that Obama governance resulted in IRS scrutiny went beyond Tea Party, targeting of conservative groups broader than thought, should not be shocking. The sycophants in federal employment have a deranged hostility towards any voice that defends and promotes constitutional federalism. Foxnews reports:

“The internal IG timeline shows a unit in the agency was looking at Tea Party and “patriot” groups dating back to early 2010. But it shows that list of criteria drastically expanding by the time a June 2011 briefing was held. It then included groups focused on government spending, government debt, taxes, and education on ways to “make America a better place to live.” It even flagged groups whose file included criticism of “how the country is being run.”

By early 2012, the criteria were updated to include organizations involved in “limiting/expanding government,” education on the Constitution and Bill of Rights, and social economic reform.”

The game of citing partisan hypocrisy in describing respective “enemy lists” avoids the necessary task of replacing the taxation labyrinth, designed to select winners and losers. Every administration uses the bureaucracy to punish political foes and most presidencies intentionally engage in illegal retribution, but all share the virtual immunity from prosecution for their misdeeds. What can we reasonably expect from this Obama scandal? It certainly has the hallmark of being a far more severe constitutional violation than those committed in the heyday of the LBJ, Nixon and Clinton outlaws.

Now be forewarned, that the IRS is charged with overseeing compliance under Obamacare. Giving a mandate for expansion under this current cloud of criminality is the height of arrogance. Notwithstanding, the irreversible loss in credibility, the wholesale revamping of the method of taxation should be examined and a trustworthy replacement adopted. However, before reviewing one such alteration, it must be pointed out, that collecting taxes to finance governmental operations is not the primary purpose of the current system.

Perpetual trillion dollar deficits demonstrate that raising revenue to pay for federal programs lacks the ability to balance budgets. The principal function of the Internal Revenue Service is to facilitate the tax avoidance practices of corporatist transnational conglomerates. The retaliatory mission against working class citizens is ostensibly a disciplinary process to maintain control over the finances of producing contributors. Inhibiting upward mobility for the populace, while accelerating elite’s wealth accumulation, is the destructive result of the tax code.

The Hill offers a solution in the article, House GOP seeks to abolish IRS, replace income tax with consumption tax.

“The FairTax Act, from Rep. Rob Woodall (R-Ga.), would abolish the 16th Amendment, which was ratified 100 years ago this February. That amendment gives Congress the power to impose income taxes without having to spend the revenues evenly among the states.

Woodall’s bill, H.R. 25, would replace the current tax system with a 23 percent consumption tax on all new goods and services. He said Thursday that this change would eliminate the need for a complicated tax code, and would be the kind of tax reform that helps reinvigorate the economy.”

The merits or criticism of a consumption tax and certainly any final amount of the levy certainly deserves a vigorous national debate. However, the need for eliminating the byzantine complexity and inherent inequity in the present punitive tax collection system should be unanimous.

Obviously, the prospect that the establishment ruling class would allow the slaughter of their cash-cow is zero. The entire existence of the Tea Party movement grew out of a desire to restore the principle of no taxation without representation. Yet, the efforts out of the authoritarian globalists are to ramp up even more draconian measures to monitor and intrude into every financial affair of normal people.

The only prudent political response to this intolerable obliteration of our eternal right to the pursuit of happiness is to require a return to the pre income tax system of revenue collection. Just listen to the screams, from those progressive socialists, who demand that the State must use their penalizing power to force egalitarian redistribution upon every wealth creator or economic producer.

The calculated fear factor imbedded into the Internal Revenue Service goes well beyond targeting just conservative groups. Every self-respecting American shares a vested interest in restoring a constitutional government. As it stands now, the prospect of achieving even a reasonable prospect of legitimate authorities is incompatible as long as the IRS is allowed to run amok over the masses who are attempting to petition and redress their government.

USA Today reports, Obama calls purported IRS targeting “outrageous”, from the latest Obama presidential press conference.

“Obama says first learned about the IRS controversy from news reports. He called the purported targeting of conservative groups by IRS personnel “outrageous and there is no place for it.” The IRS has to have “absolute integrity, ” Obama adds.

“You don’t want the IRS ever being perceived to be biased,” Obama said.

The president adds that his administration will get to the bottom of what happened at the IRS. “I have no patience for it. I will not tolerate it.”

How can anyone believe that Obama has clean hands or that some faction within the Internal Revenue Service was operating without his knowledge? Well Mr. President, prove the meaning in your words and put forth the political capital to pass the H.R. 25 legislation.

(James Hall is the publisher of Breaking All the Rules, a site committed to defending genuine “paleo” conservative populism.)

There have been many forecasts of possible rolling blackouts in California this summer due to a shortage of power from the shutdown of the San Onofre nuclear power plant and the instability of a green power grid due to hourly weather fluctuations.

Photo courtesy of lydiashiningbrightly, flickr

But the most likely scenario for California for the summer of 2013 is electricity price shock, especially for those moderate-income households that run air conditioners during the hot days in the Central Valley of California.

The consequence of a cleaner, greener energy system might be that renters and those with older houses cannot afford to run air conditioners or other modern household conveniences in California during hot summer months.  There will be affordable energy for the very poor who get subsidies, and for the wealthy who have installed solar panels.

Everyone else will have to use the more primitive and less effective technology of swamp coolers, shift to fans, or just plain sweat it out during the summer months as the price paid for green power, clean skies and a politically rigged rate structure.  Parts of California may regress to a pre-modern state, while wealthier areas won’t feel the heat at all.  And those on fixed incomes and welfare won’t feel it much either due to the California Alternate Rates for Energy plan.

Electricity rates that have ramped up to 50 cents per kilowatt-hour for Pacific Gas & Electric customers in the top rate tier in 2010. That mainly was caused by rate subsidies given low-income customers after the California Energy Crisis of 2001.

Overall, California wholesale electricity prices have declined due to a shift to cheap natural gas.  But those in the higher tiers of electricity usage didn’t benefit from that during hot summer months.

And because of such deep subsidies to those in the lowest rate tiers, there is no benefit from conservation.  The lower-income customer and higher-income solar-powered homeowner can run their air conditioners all day and the renters and older homeowners can’t afford to. The wealthy that can afford to live along the coast won’t feel the heat as much and neither will the wealthy “inlanders,” who will pay huge electricity bills during summer months.

Renters and those with older homes that are not suitable for solar panels have been politically selected to pay for most of the rate shock.  Old houses were made to breathe and insulating them for solar power can result in air moisture and mold buildup.

How energy pricing and usage system works in California 

Electricity usage rates are approved every three years in California for customers living in areas served by regulated electric utilities, Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. Each regulated utility has tiered rates depending on how much power is used in order to conserve power.

But customers in cooler climate zones have lower usage base baselines while those in hotter climate zones have higher usage baselines.  By allowing more use of electricity in hotter areas at relatively lower rates, those most affected by hot weather can afford to run their air conditioners more hours each month.

The way the tiered usage system works can be seen in the table below. PG&E customers living in hot Merced in the summer months are allowed to use twice as much power at the same rate as those who live in cooler San Francisco.

How California Sets Rates for Customers of Regulated Electric Power Companies

Connected get solar panels, the unnconnected get swamp coolers

There isn’t much that policy makers are doing to lessen rate shock for the most affected.  Installing older technology like evaporative “swamp” coolers in older homes could reduce peak month power bills by 80 to 90 percent. At least with a rooftop swamp cooler a homeowner gets both clean, fresh air and low C02 emissions.

But California public policy more promotes contrived solar jobs programs and energy cost shifting onto renters and older homeowners, than helping them to reduce rate shock. And renters in older apartment buildings will mostly be left to bake for the summer of 2013 unless they can install cheaper window air conditioners and isolate themselves in one room.

(Wayne Lusvardi is a reporter for CalWatchdog. Originally posted on Calwatchdog.)

Gov. Jerry Brown’s May Revision to his January budget certainly was a happier occasion than for any budget in a decade. Thanks to money pouring in from the tax increases, especially $7 billion from Proposition 30, he’s projecting balanced budgets well into the future.

But it’s a good question whether the happy news will last. At his press conference, the governor repeatedly warned that the economy is not too strong; and that problems could cause future budget difficulties. Yet he’s budgeting a “rainy day fund” surplus of just $850 million for fiscal year 2012-13, which ends on June 30; and only double that, $1.7 billion for fiscal year 2013-14, which begins July 1.

Yet as we saw with the dot-com bust of 2000, and the breaking of the real-estate bubble in 2007, revenues quickly can drop $15 billion in one year. With economic recessions or depressions hitting about every four to six years, the last striking in 2007, we’re overdue for a new slump.

In his press conference in Sacramento announcing his budget, and in a conference call shortly after in which I participated, he celebrated that he was able to pass Prop. 30; and that it’s now bringing in the expected revenues. With the economy now growing and the sun still shining on California’s golden coast, he might get his way for a while.

Wealthy exodus?

But a new study shows that he might not get his way. The study is by W. Erik Bruvold and John Nienstedt for the National University System Institute for Policy Research. It found:

• “When surveyed in March 2013, a substantial percentage of residents in California’s most affluent communities were seriously considering (12%) or somewhat considering (13%) moving out of state as a response to recent increases in the state’s income tax rates.
• “To reduce the incremental burden of the new income tax increases, 75% of individuals surveyed were planning on taking at least one of the following actions: — increasing their level of philanthropic contributions, increasing their tax deductions, using more tax-free financial instruments such as municipal government bonds, and reducing their overall earnings.
• “[T]he strongest predictive variable for considering moving out of state is whether the respondent knows someone who made a similar move. This finding suggests that California could experience a snowball effect if the negative attitudes associated with the tax increase directly translates into even a relatively small number of out migrations.”

During last fall’s campaign for Prop. 30, Brown cited a study by two Stanford sociologists, not economists, showing that rich people would not leave because of the tax increase. I criticized the study at the time here, here and here.

We’ll soon find out who is right. But a downturn could lead wealthy people to find ways to avoid that hefty 13.3 percent top state income tax rate, finding refuge — taking their investments and business with them — in Nevada, Texas and Washington State, all of which have zero percent state income taxes.

Unfunded liabilities

In the conference call, a reporter asked about the $4.5 billion a year the California Teachers’ Retirement System insists is needed to keep its fund solvent. “This is a problem. I recognize it,” the governor replied. “But we’re not going to get to it this year.”

That means the yearly amount needed to fix the system will grow ever higher. It’s like not paying your credit card bill for a year. The amount doesn’t stay the same, but goes up because of interest and possible penalties.

And on Page 6 of the budget document, we read:

“California still needs to address other liabilities that have been created over many decades. For example, beginning in 2015-16, the state will begin to pay hundreds of millions of dollars more to the California Public Employees’ Retirement System to help pay down the $38.5 billion unfunded liability for state employees’ pensions.”

But as Dan Walters wrote Tuesday, when pension and other unfunded liabilities are tallied, the real number is $1 trillion. This is a fiscal time bomb that the governor just is not addressing — not even the $4.5 billion a year part of it from CalSTRS.

So again, despite the rhetoric, the governor just is kicking the can down the road — just not quite as far as under Gov. Arnold Schwarzenegger and Gov. Gray Davis.

Even a small blip into recession will collapse his budget projections.

(John Seiler is the managing editor for CalWatchdog. Originally posted on CalWatchdog.)

In a bunker somewhere in Sacramento, a secret committee meeting of state power brokers is taking place. Let’s listen in as the chairman addresses the members:

“Welcome to this week’s meeting of the ‘Don’t Leave Them With Two Nickels to Rub Together Committee’ It is good to see that the public employee union bosses, who represent the highest paid government workers in all 50 states, are in attendance. They are the heart and soul of our movement. Then of course, we must acknowledge those newspaper editors from some major papers, who work so hard to help our cause of increasing the tax burden on average Californians. Special mention and thanks must go to the representatives of the Los Angeles Times, a publication whose institutionalized hostility to Proposition 13 is legendary — it hardly seems like it has been 35 years since Howard Jarvis labeled your paper ‘the enemy of the people.’ Also, I want to give a shout out to the several leftist professors from taxpayer-supported universities who have joined us today. And lest I forget, our special interest enablers in the private sector, most of whom profit directly from government spending, are here today to lend their support.”

“As you know, our number one target continues to be Proposition 13 and its protections for taxpayers. Although we have been successful in making California number one in state sales tax, gasoline tax, and in income tax rates, we rank only 15th in property taxes. This, I know you all agree, is an outrage. California, must always strive to be number one.”

“Of course, we are aware that Proposition 13, which limits annual increases in property tax bills, and requires that voters have the final say on new local taxes, is very popular with the public at large. Surveys show that it is at least as popular as it was when it received almost two-thirds of the vote in 1978.”

“However, we have a clever plan to increase the tax burden on all taxpayers, but especially homeowners, without ever having to admit that we support higher taxes. Our objective is to reduce the two-thirds vote needed to approve new per parcel taxes, taxes that can be used for any purpose and are imposed over and above the regular property tax. We also want to make it easier to raise sales taxes that everyone pays, to support our favorite projects.”

“Our strategy is to promote the lowering of the vote required to approve new taxes by saying we are just trying to make voting on tax increases more democratic. This way, we can appear to have clean hands, while making it much easier to increase the tax burden on average folks.”

“This week, a number of our favorite bills will be heard by our friends in the Senate Governance and Finance Committee. These bills would make it easier to approve new property taxes for school facilities, new bonds for libraries – paid for through higher property taxes — new sales taxes to fund community and economic development projects, and new sales taxes for transportation projects. And you will be pleased to learn that we have many more bills like these in the pipeline.”

“On a final note, as we move forward with our agenda, let’s remember, the best way to get more out of taxpayers is to make voters think someone else will be paying the higher taxes. Look at Proposition 30 as a template for further success. We were able to convince many voters that the burden would be borne by the wealthy, although it also increased sales taxes on everyone. So, let’s stay focused on divisive taxes, like parcel taxes, that appear to impact only property owners, even though renters, too, will pay through higher rents. And as we work to undermine Proposition 13, let’s remember to keep repeating our talking points.”

“When we attack the two-thirds vote, tell the folks that we are not trying to raise their taxes, ‘We are just making the process more democratic.’ And when new taxes appear on the ballot, focus on gaining the support of those who are unlikely, or who believe they are unlikely, to have to pay. Just say, ‘The tax burden will fall on someone else who should be paying their fair share.’ Finally, if voters remain unconvinced, say, ‘It’s for the children.’”

“This week’s meeting of the ‘Don’t Leave Them With Two Nickels to Rub Together Committee’ is adjourned. Let’s go out and redouble our efforts to undermine the taxpayer protections provided by Proposition 13.”

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

Later today at 10 a.m., Gov. Jerry Brown will release the May Revise to his January budget proposal for fiscal year 2013-14, which begins on July 1. These are the base numbers the Legislature will work with as it hashes out a budget before (and maybe after) the June 15 constitutional deadline for passage.

The main surprise is an unexpected extra $4.5 billion in tax revenues. Look for two things: How the budget plans to spend the windfall. Second, what, if anything, will be done with pension reform.

Previous surpluses led to spending profligacy, which in turn brought on deep budget cuts when the economy crashed, bringing down revenues. The most flagrant example was Gov. Gray Davis’ first two budgets, for FY 1999-2000 and 2000-01. Each boosted spending a shocking 15 percent. When the dot-com recession hit in 2000, the deficits of early years returned with a vengeance, forcing cuts.

In 2003, Davis arbitrarily imposed an increase in the car tax. As then-state Sen. Tom McClintock pointed out at the time, the tax increase was unconstitutional because only the Legislature can increase taxes.

The car tax increase was a major factor in Davis’ recall in Oct. 2003. He was replaced by Gov. Arnold Schwarzenegger, who kept a campaign promise to revoke Davis’ car-tax increase. Since then, many Democrats and columnists have insisted that getting rid of this added car tax, saving taxpayers about $3 billion a year, has been a big factor in the state’s fiscal problems. In fact, the Davis car tax really was unconstitutional. If Arnold had not gotten rid of it, McClintock was readying both a constitutional court challenge and, if that failed, a repeal initiative to be put on the June 2004 ballot; it would have passed.

Spendthrift Arnold

But Arnold himself didn’t learn the lesson of Davis’ demise. After holding the line on spending for a couple of years, during the phony economic boom of the mid-2000s, Arnold went on his own spending binge. General-fund spending rose 15 percent in FY 2005-06, then another 10 percent in FY 2006-07.

I remember well the budget battle in 2006-07. The Legislature passed a budget spending $100 billion in the general fund. Arnold responded that there was no way he would be the first governor to sign a budget breaking the $100 billion figure, that spending must be cut. He then submitted a modified budget “under” $100 billion that actually was for $101 billion.

That’s right. He “cut” the budget by adding $1 billion in spending. The Legislature griped about mean old Arnold insisting on “cuts,” then quickly passed the budget increases, which he signed into law.

Thanks to Ian Halperin’s biography, “The Governator,” we now know that, following the defeat of his 2005 Reform Slate of initiatives, Arnold lost interest in his job and basically mailed in his last five years of governing. So he just didn’t care about budgets. Hey, the economy was booming. The sun was shining. Spending too much is a lot more fun than being a skinflint and fighting tooth-and-nail with the Legislature over every taxpayer penny. What could go wrong?

The Great Recession hit in 2007-09, and hit California harder than most other states. Arnold, and successor Gov. Jerry Brown, responded with needed spending cuts but unnecessary tax increases. Even now, despite obviously better times for the California economy, state unemployment was 9.4 percent in March, well above the national rate of 7.6 percent.

Restoring cuts

Despite the halting recovery, Democrats are seeking to “restore” the cuts made during the recession. The Fresno Bee reported:

“Senate President Pro Tem Darrell Steinberg touts restoring Medi-Cal dental benefits and boosting mental health programs as two personal priorities.

“‘There is no shame, in fact there’s pride, in fighting to restore cuts to those who have suffered the most during the budget crisis — the poor, the elderly and the disabled,’ Steinberg said.

“‘But we can only restore programs if there is money,’ he added. ‘And we don’t know whether or not there will be new money.’

“State finance department spokesman H.D. Palmer, representing the Brown administration, said the governor’s basic tenet has been that past cuts must be retained to help pay down debt and ensure future budget stability.

“The notion of a $4.5 billion windfall is illusory because much of it may not be available for more than one year and, besides, the vast majority of it must go to public schools and community colleges under Proposition 98, Palmer said.

“‘I can understand that a lot of people are looking at the current revenue numbers and jumping to the conclusion that that’s money with no strings attached,’ Palmer said. ‘That’s not the case.’”

So, the question is: Will the restored funding rise as high as the profligate, unsustainable levels of 2005-07? Or will the restored funding rise only to the more reasonable, sustainable levels of 2003-04?

Pensions

And of course, a major factor remains what to do with the state’s pension funds. As Dan Walters just reminded us, unfunded pension liabilities run as high as $500 billion; and all unfunded liabilities could be as high as $1 trillion. The pension spiking Gov. Davis signed into law from 1999-01 still is haunting the state. The California State Teachers’ Retirement System just demanded another $4.5 billion a year from the general fund for 40 years to keep its system solvent.

Last September’s pension “reform” was like putting a Band-Aid on a gaping wound. It did accomplish its goal of helping voters push the Yes lever on Proposition 30, the $6 billion tax increase. The money was advertised as going to school children; but now will just go to pensions.

The actuarial realities dictate that one day the Legislature will have to deal with the pension shortfall. It’s unlikely this will be the year. We’ll find out tomorrow.

(John Seiler is the managing editor for CalWatchdog. Originally posted on CalWatchdog.)

On December 14^th, 2012, five months after the midnight massacre in Aurora, Colorado, Adam Lanza burst into an elementary school in Newtown, Connecticut, killing 28 including himself.  The details of this tragedy –the second-most deadly shooting in American history–  are well known though they have yet to lose their emotional charge.

Gun control advocates have attempted to turn the sentiments of horror and disgust produced by these events into support for stricter regulation.  Legislators, pundits and even the President have made emotional pleas for tighter restrictions on firearms.  Despite a recent setback, where a Senate proposal to extend firearm background checks fell six votes short of law, the fight for gun control rages on.

The most recent battle over the Second Amendment takes place in California in the form of Assembly Bill 48, currently in Assembly Appropriations and will be heard on Wednesday, May 15^th.  Authored by Assemblywoman Nancy Skinner, D-Berkeley, the bill contains the following key provisions, as summarized by the Firearms Policy Coalition:

“Summary: Ban on magazine parts; requires ammunition transfers to be conducted by FFL; requires law enforcement reporting for ammunition transactions.

• Expands the definition of “large-capacity magazine” to include disassembled parts even if the parts only “appear” to hold more than 10 rounds.
• Requires all ammunition sales to be done through an “authorized firearms dealer”.
• Requires all ammunition sales to be reported to the Department of Justice.
• “Large” ammunition purchases would cause an “alert” to be sent to the police.
• Criminalizes mere possession of repair parts for magazines.
• Allows off-duty peace officers to stockpile personal ammunition.
• Requires the state to track tens of millions of ammo transactions and millions of consumers.”

Skinner, in an interview with the New York Daily News, claims that this bill could have prevented the deadly Aurora shooting and other similar rampages.  This forms the basis of one of the most popular arguments of gun-control advocates: increased gun regulation can prevent violent crime.  The question is raised: “Is it not worth sacrificing a little in order to prevent the premature termination of innocent lives?”

If giving up range shooting on the weekend and jumping through additional hoops before purchasing a gun were all it took to stop men like Adam Lanza and James Homes, no American would be likely to stand in the way of increased restrictions.  But are yet more laws really the answer to a problem which has plagued man since the beginning of time?

Despite Connecticut gun control laws, which made it illegal for him to own or use guns, Adam Lanza obtained weapons legally purchased by his mother and used them to carry out his plans.  Though Connecticut has some of the strictest gun control laws in the nation, they failed to prevent the Newtown shooting.

A 2003 study by the center for Disease Control Task Force found insufficient evidence for the claim that increased gun regulation decreases violent crime.  The same conclusion was drawn by a 2004 study by National Academy of Sciences, which measured over 80 gun control laws.

Though states have eased up on regulations and the number of guns owned nationally has risen over the past several decades, the percentage of deaths from guns has actually decreased since the 1970s.  Contrary to popular thought, the statistical trend in the US fails to prove a correlation between decreased gun violence and more stringent gun control.

AB 48 relies upon the assumption that rigid gun control is the answer, but evidence calls this assumption into question.  Assemblywoman Skinner and other proponents of gun regulation claim that tracking transactions, limiting arms sales and banning magazine parts can prevent the tragedies of mass shootings, but is this really the answer America needs?

(Katie Hillery is a contributing editor for California Political Review.)