California Supreme Court Strikes Down Vergara Appeal

560px-School-education-learning-1750587-hHere’s an axiom of California politics. When it’s the teachers union against everyone – that’s right, everyone else – the teachers union wins. Yesterday’s decision by the California Supreme Court to not hear the Vergara case is just the latest example.

Prior to losing on appeal, which brought the case to the attention of the State Supreme Court, the original Vergara ruling upheld the argument of the plaintiff, which was that union supported work rules have a disproportionate negative effect on poor and minority students. As reported in the Los Angeles Times in June 2014:

“Los Angeles Superior Court Judge Rolf M. Treu tentatively ruled Tuesday that key job protections for California teachers violated students’ rights to equal educational opportunity. Treu struck down state laws that grant teachers tenure after two years, require seniority-based layoffs and govern the process to dismiss teachers. He ruled that those laws disproportionately harmed poor and minority students… [writing:]

‘All sides to this litigation agree that competent teachers are a critical, if not the most important, component of success of a child’s in-school educational experience. All sides also agree that grossly ineffective teachers substantially undermine the ability of that child to succeed in school. Evidence has been elicited in this trial of the specific effect of grossly ineffective teachers on students. The evidence is compelling. Indeed, it shocks the conscience.’”

And the evidence was indeed compelling. Watch these closing arguments in the case, and note that the plaintiff’s attorney used the testimony of the expert witnesses called by the defense attorneys to support his arguments!

But it isn’t just the union’s hand-picked experts who are against the teachers unions, when they reveal under cross-examination that union work rules indeed harm students, and disproportionately harm low-income and minority students. It’s every interest group, every stakeholder. Why, for example, would a teacher want to work in an environment where you come in and you care about students and you’re talented and you work very hard to get through to all of your students and get good educational results, and in the classroom right next to you somebody just shows up every day and doesn’t do anything? They make as much money as you do, and if they stick around, they get increases every year just like you will. If they are incompetent, they will not be fired. And if there’s a layoff, if they’ve been on the job one year longer than you, they’ll stay and you’ll go.

No wonder there’s a teacher shortage. Consider these statistics that measure teacher sentiments regarding the work rules that were challenged by the Vergara plaintiffs:

  • Teacher effectiveness should be a factor in granting tenure:
    72% of teachers agree, 93% of principals agree.
  • Students’ interests would be better served if it were easier to dismiss ineffective teachers:
    62% of teachers agree, 89% of principals agree.
  • Students’ interests would be better served if layoff decisions took teacher effectiveness into account:
    67% of teachers agree, 83% of principals agree.

Then there’s the social agenda of the teachers union. Their social agenda, in essence, is to indoctrinate California’s students – most of whom are people of color, and millions of whom are members of recent immigrant families – into believing they live in a racist, sexist nation, where they are condemned to lives of discrimination and thwarted achievement, when precisely the opposite is the reality. In reality, America is the most tolerant nation in world history, rejecting sexism and racism, and has provided opportunities to people of all backgrounds in measures that dwarf all other nations and cultures. But not according to the teachers union.

But this is California, and what the teachers union wants, the teachers union gets.

One small encouraging sign is the fact that two of the three dissenting attorneys are Brown appointees. The fight is bipartisan. It’s disappointing that judges appointed by Wilson and Schwarzenegger ruled against the plaintiffs, and it is possible that part of their motivation was judicial restraint, i.e., to not legislate from the bench.

Which leaves the legislature to change these rules that are destroying public education in California – jobs for life after two years, nearly impossible to fire incompetents, and seniority over merit in layoffs. Virtually any honest legislator in Sacramento will admit, off the record, that they don’t agree with the agenda of the teachers union. Plenty of retired democrats, including Gloria Romero, former Senate Majority Leader, and Antonio Villaraigosa, former Mayor of Los Angeles, have leveled withering criticism at the teachers union. But active politicians are targeted for political destruction if they stand up to the union machine, and they toe the line.

Parents, students, judges, legislators, and teachers themselves are all subordinates of the teachers union. It will take an extraordinary combination of bipartisan cooperation and raw political courage to change the status quo. But let’s be clear – the teachers union has won again, and everyone, everyone, was on the other side.

Ed Ring is the president of the California Policy Center.

High Speed Rail On Track to Incur Billions in Cost Overruns

high speed rail trainHigh-speed rail continues to be an expensive, sick joke for California. Under the current plan, it is no longer “high-speed” and projected costs, which seem to change almost daily, appear to be doubling.

In the latest news, the nascent California high-speed rail system is running $50 million over budget for a two-mile stretch in Fresno.

Let that sink in for a moment.

$50 million, over budget, for just a two mile stretch.

Let’s see, HSR has a $50,000,000 cost over run on 2 miles of a 32 mile job. Does that mean we can expect total cost overrun of $25 million per mile times 32 miles or $800,000,000?

Better yet, let’s extrapolate that to the entire project. You know, the one sold to voters. According to High Speed Rail Authority itself, over 800 miles of track are needed. So, at $25 million of cost overruns per mile, that works out to $20,000,000,000. That’s $20 billion in cost overruns!

In just 3 years, from the original passage of Proposition 1A authorizing about $10 billion in High Speed Rail bonds, the estimated cost for high-speed rail had gone from $40 billion to $98 billion, the amount that independent expert analysis had predicted prior to the bond’s being approved.

Responding to public outrage, the High-Speed Rail Authority came up with a plan costing “only” $68 billion. The new “blended” system would combine high and low speed rail, doubling the travel times as well as ticket prices.

Fearing a voter revolt, the High-Speed Rail Authority rushed to break ground, hoping that once they dug a hole, the pet project of Gov. Brown and the majority of Sacramento lawmakers, who receive backing from construction contractors and labor unions that expect to be the primary beneficiaries of billions of dollars of public spending, would be safe from outside interference.

By beginning a first segment between Merced and Fresno, the rail authority engaged in the classic Willie Brown strategy. The former Assembly Speaker, in a moment of candor, once told the San Francisco Chronicle, “In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.”

Constant cost overruns and a lack of accountability plague California’s infrastructure projects. Perhaps, as a public service, it should be required that Brown’s words be reprinted in every ballot summary for every construction bond placed before the voters.

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.

Effort Grows to Scale Back California Gun Control Restrictions

GunGun rights groups have turned up the heat on Sacramento’s newest firearms restrictions, mounting an effort to repeal seven fresh laws through the ballot this election year.

“The group ‘Veto Gunmageddon’ needs to collect 360,000 signatures for each measure by the end of the month to get them before voters in November, KCBS San Francisco reported. An uphill battle awaits. “Lawmakers passed a dozen gun control bills in June, seven of which Brown signed into law, including legislation requiring background checks for ammunition purchases and a ban on possession of magazines that hold more than 10 rounds,” as the San Jose Mercury News observed. Those provisions, the paper added, were identical to proposals Lt. Gov. Gavin Newsom touted independently in his early-bird bid to succeed Gov. Jerry Brown in 2018.

Political powder keg

Although Democratic lawmakers irked by the redundancy have won out, analysts have speculated that Newsom could wind up benefiting most from politicking the Gunmageddon ordeal. “He will be able to say gun restrictions are under attack and that it’s more important than ever to pass my ballot measure,” Loyola Law School’s Jessica Levinson told the Mercury News.

What’s more, Newsom and his allies have already stockpiled a huge amount of cash relative to opponents of the Proposition 63 ballot measure. Prop. 63 “would ban possession of high-capacity ammunition magazines, require background checks for Californians buying bullets, create a process for getting felons to relinquish firearms and mandate reporting of lost or stolen guns,” the Los Angeles Times reported. “Newsom’s Safety for All Committee reported it has raised $3.8 million so far, compared with $467,000 raised by two committees opposing” Prop. 63.

Supreme struggles

The scramble to settle the fate of the state’s gun laws in the court of popular opinion has played out against the backdrop of a very different kind of legal battle — one where the public’s voice could count for nearly nothing. Gun activists succeeded in pursuing a controversial case to the door of the U.S. Supreme Court. Although judges recently shot down their suit against the state of California, which requires a license for concealed carry outside one’s home, the groups vowed to seek a final decision from the nation’s highest court. “The Ninth U.S. Circuit Court of Appeals in San Francisco upheld the law in June, ruling 7-4 that there is no constitutional right to carry concealed weapons in public,” the San Francisco Chronicle recalled. “Opponents sought a rehearing before the entire appeals court, but the court said […] that the request had failed to win a majority among its 28 active judges. No vote total was announced.”

“The century-old state law requires handgun owners to obtain a permit from a local law enforcement agency before they can legally pack their weapons in public. The permits are virtually unavailable to anyone except police and security guards in most metropolitan areas, but are issued in most rural and inland areas to any adult who asserts a need for self-defense and does not have a disqualifying criminal record.”

A rush to bear arms

Californians have been loading up on firearms this year. At their current pace, Golden Staters will cross the million gun threshold by January. “The soaring gun sale totals — which show 554,203 firearms sales through late July — come in the wake of mass shootings in Orlando and Dallas, followed by calls for gun control legislation,” Southern California Public Radio noted, citing new data obtained from the Dealer Record of Sales, a gun tracking system run by the state’s Department of Justice. “The system shows gun sales on track to surpass 2015 nearly everywhere in the state,” the station added, although “the percentage of households in the U.S. with guns in them has been falling for decades.”

This piece was originally published by CalWatchdog.com

State Tax Increase, Due to Expire in 2018, Might Live On

brown prop 30 california budgetIn 2012, Californians adopted Proposition 30, a “temporary” tax that, according to the governor, state legislators and teachers’ unions, would save the state’s education system by giving it an influx of at least $6 billion. The initiative jacked up income taxes on people earning more than $250,000 through 2018, and increased sales tax on everyone, through the end of this year. Now, the Golden State’s teachers’ unions, along with the Service Employees International Union, are looking to keep the higher income tax in place through 2030. (The sales tax increase will expire as scheduled.) California voters will decide on the tax extension in November, when the California Children’s Education and Health Care Protection Act of 2016, or Prop. 55, appears on the ballot.

It’s no surprise that the teachers’ unions would want to keep the higher tax — and the additional revenues it brings — in place. Earlier this year, California Teachers Association president Eric Heins claimed that Prop. 30 generated revenues that “continue paying back schools from the years of devastating cuts — especially those serving our most at-risk students.” But there was never any devastation. During the recession, spending dipped for K-12 schools and community colleges, but the decrease was hardly devastating. And since the end of the recession, California’s education spending has increased more than 40 percent.

All the extra money has brought paltry results. The work of the late Andrew Coulson shows that between 1972 and 2012, California’s education spending (adjusting for inflation) doubled, but students’ SAT scores actually went down. Things have gotten worse since 2012. In fourth-grade math, California ranks at the bottom nationally, just one point above New Mexico, Alabama and Washington, D.C., according to November 2015 data from the National Assessment of Educational Progress, known as “the nation’s report card.” In fourth-grade reading, only New Mexico and D.C. fared worse.

A recent study on the relationship between spending and achievement, conducted in Michigan, found no statistically significant correlation between how much a state’s public schools spend and how well students perform. Mackinac Center education policy director Ben DeGrow, who coauthored the study, said, “Of the 28 measurements of academic achievement studied, we find only one category showed a statistically significant correlation between spending and achievement, and the gains were nominal at best.” He added, “Spending may matter in some cases, but given the way public schools currently spend their resources, it is highly unlikely that merely increasing funding will generate any meaningful boost to student achievement.”

And yet, the unions look to be in strong position to win their tax-hike extension. A Public Policy Institute of California poll in April found that 64 percent of Californians support it. Among likely voters, 62 percent favor it. More than six in 10 voters believe that the state should spend more on education. And after insisting that the tax would be temporary, Governor Jerry Brown is having second thoughts. In his May budget revision report, he said, “The emerging shortfall is in large part — but  not entirely — due to the expiration of the temporary taxes imposed under Proposition 30.”

Does the average voter know how much California already spends on education? Apparently not. A recent Education Next poll asked respondents to estimate per-pupil expenditures in their local school district. On average, the respondents guessed $6,307 — but their school districts spent nearly double that, or $12,440 per pupil in 2012, when expenditures for transportation, capital expenses, and debt service are included.

The CTA has already sunk $10 million into the Prop. 55 campaign, with more to come. The Million Voters Project, an effort funded by many left-wing philanthropists, is working hard to pass it. Supporters insist that the tax falls only on the wealthy, whom they claim don’t pay their “fair share.” A look at the numbers tells a different story. A report issued by the Congressional Budget Office in 2012 shows that the top 1 percent of income earners across the nation paid 39 percent of federal individual income taxes in 2009, while earning 13 percent of the income. Hence, it’s clear that the rich are already paying considerably more than their “fair share.” At what point will California’s perennially overtaxed realize that their bottom line will be much healthier in, say, Texas?

American Federation of Teachers president Randi Weingarten and other union leaders continue to believe that we can spend our way to academic success. All the data show otherwise. With a debt of more than $1 trillion and counting, along with some of the highest tax rates in the country, California can ill afford more spending. The state’s residents have to stop falling for myths about meager education dollars. Voting “No” on Prop. 55 would be a good place to start.

Lawmaker’s Word Games Could Send Your Money Down the Storm Drain

StormwaterYou might remember that about three years ago, the L.A. County Board of Supervisors proposed a new tax on property owners to pay for stormwater capture and cleanup.

There was supposed to be a mail-only election to approve the stormwater parcel tax, but it never happened.

Homeowners, businesses and school districts opposed the tax. Then there was public outrage over a deceptive mailing that so resembled junk mail that many people threw it away, not realizing the junky-looking flyer was their official notification of the proposed tax, or that it contained a form they needed to protest the tax hike.

People were just enraged, and the county supervisors dropped the matter. They didn’t even mail out the ballots.

Ever since Proposition 13 was passed overwhelmingly by fed-up taxpayers in 1978, local governments have been looking for ways around its ironclad requirement that new taxes must be approved by two-thirds of voters.

Some local governments renamed their new taxes “fees.” Voters tried to put a stop to that in 1996 by passing Proposition 218, the “Right to Vote on Taxes Act.” Then some local governments overcharged for services and used the extra money for other expenses. Voters fought back in 2010 by passing Proposition 26, the “Stop Hidden Taxes Initiative.”

But now in Sacramento, there’s a new deception in the works. It ought to be called the “Dictionary Gambit.”

A bill by Sen. Bob Hertzberg, D-Sherman Oaks, would simply change the definition of “sewer service” so stormwater is included in it. That would allow local governments to charge property owners for stormwater management projects without voter approval.

The bill, SB 1298, is on the verge of passing in the state Assembly. It’s possible that in a matter of days it could be on its way to Gov. Jerry Brown for his signature.

The city of Glendora has already written a letter to the governor asking him to veto the bill if it reaches his desk.

“We oppose SB 1298 because we strongly believe it violates the intent of Prop 218,” wrote Glendora mayor Gene Murabito, speaking for a unanimous City Council. “Citizens clearly voted to have the right to vote on taxes, charges, fees and assessments.”

California voters almost had a chance to vote on a proposal like Hertzberg’s bill. In December, groups representing cities, counties and water agencies filed a ballot initiative that would have amended the state constitution to allow new fees for stormwater management to be imposed without a vote of the people.

Guess what happened to it.

“The proponents of the initiative declined to move forward after doing polling research,” says the official Assembly analysis of SB 1298. But “this bill seeks to address with a majority vote bill” what the proposed constitutional amendment could only have accomplished with the approval of the voters.

Why is this even legal?

Certainly stormwater management is important for the environment and for the local water supply. It’s also expensive. One estimate put the cost at $20 billion over the next 20 years for L.A. County and the cities within it. …

In April, the L.A. County supervisors discussed paying for stormwater projects by asking developers to pay extra fees, or by asking voters to approve a new tax.

But if SB 1298 is signed into law, they won’t have to ask. Billions of dollars for stormwater management projects will be magically redefined into fees for sewer service. Property owners will have no choice but to pay those fees or sell their property. Taxpayers will have no opportunity to vote on it.

According to Hertzberg’s statement in the Assembly analysis of the bill, SB 1298 adds “missing definitions and direction on the interpretation of Proposition 218 while maintaining transparency and accountability.”

That’s not the way Glendora’s Murabito sees it. As he explained in his letter to Brown, “Proposition 218 was adopted by the voters of the state and any carve-out of services or areas from its oversight can only be done by the voters themselves and not through legislative process.”

That’s a definition of the principle of government by consent of the governed.

If you don’t consent to the redefining of billion-dollar stormwater projects as “sewer service,” this would be a good time to call your state representatives and the governor to let them know. The governor’s office can be reached by phone at 916-445-2841 or by fax at 916-558-3160, or look up your representatives at findyourrep.legislature.ca.gov.

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Let’s Pump the Brakes on Cap-and-Trade

cap-and-trade-mindscanner-sstockIn 2006, elected officials gave the California Air Resources Board virtually unchecked authority to implement AB32, which aims to reduce carbon emissions to 1990 levels by the year 2020. The legislation, including the controversial cap-and-trade program, expires in four years.

Some lawmakers have already introduced legislation, such as SB32, to extend CARB’s authority. However, instead of rushing to renew this controversial and expensive program, we should slow down and come up with a more affordable solution that benefits all of California.

Cap-and-trade limits carbon emissions by energy producers and raises money through the sale of carbon credits. It’s supposed to fight global warming by making it more expensive to use carbon-based fuels. But that’s not the only thing it does.

It turns out the program has made life more expensive for Californians as well.

Since being given the authority, CARB has implemented a steady stream of costly regulations, such as the “hidden gas tax.” Experts agree that this hidden tax costs California drivers at least 10 cents more in added cost per gallon of gasoline. They also acknowledge CARB’s “low-carbon fuel standard” could add another 13 cents per gallon by 2020.

Motorists might be open to paying these costs if the money actually went towards repairing our crumbling roads. Instead it seems the cap-and-trade program has become a multi-billion dollar slush fund for politicians’ pet projects.

Perhaps intentionally, CARB still hasn’t come up with a systematic way to determine if cap-and-trade dollars are really doing anything to help lower emissions levels.

There is little consensus on what constitutes a “green project.” When pushed for answers, CARB officials deflect. This obscurity allows the governor to direct cap-and-trade funds towards his $71 billion high-speed rail project, which is actually increasing the state’s carbon emissions.

Some cap-and-trade funds were supposed to go towards programs for low-income communities that want to invest in renewable energy. Because CARB is largely free to do as it wishes, there’s no real way of knowing if these grants are reaching their intended targets. That’s a kick in a gut to the less fortunate who supported AB32.

Like you, I want breathable air and clean parks for our children and grandchildren. But do CARB’s unelected bureaucrats really need this much power? Government mandates can be very expensive and inevitably the costs are passed down to consumers. Not everyone can afford a Tesla.

Why can’t we use cap-and-trade funds to solve real problems like emission-causing traffic congestion? Think about it: What pollutes more, a car that reaches its destination quickly or one that’s stuck idling on a freeway for an extra 20 minutes?

A state appeals court has already put the future of cap-and-trade in doubt. And many questions remain, such as how to spend the billions collected and whether or not the program is really an illegal tax. Some doubt CARB has the right to collect the money at all.

There’s also a fierce debate over whether or not regulators can extend the program without the Legislature’s permission. The Legislature’s chief counsel doesn’t think so.

California is already a leader on climate change, and our current law doesn’t expire until 2020. Perhaps we should leave lawmaking to our elected officials, not abdicate power to unelected regulators. Rather than rush an extension, let’s invite the public to join the discussion. Californians deserve clean air, but they also deserve affordable energy—and to know how their dollars are being spent.

George Runner is an elected member of the California State Board of Equalization.

Local Corruption Plagues Los Angeles County

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

California doesn’t have nearly the reputation of, say, New Jersey or Maryland when it comes to a history of public corruption. Studies that measure corruption with metrics tend to give most corrupt honors to less populated, poorer southern states like Louisiana and Mississippi or big, relatively wealthy Midwest and Eastern states like Illinois and Pennsylvania.

But when it comes to the most corrupt counties, few if any can top the recent run that Los Angeles County is on — specifically, the cities and agencies in south and central L.A. County.

The latest example came last week when Luis Aguinaga resigned as mayor of South El Monte after admitting to taking bribes for seven years from a contractor paid by the city for engineering and construction services.

A Nexis search of stories by the Southern California News Group, the Los Angeles Times and Southern California Public Radio shows Aguinaga has plenty of corrupt company in neighboring communities.

Bell

In 2010, a  Los Angeles Times investigation found that the city was being run like a criminal enterprise to the benefit of city officials and City Council members who received huge salaries and relied on illegal taxes and deceptive accounting. Former City Manager Robert Rizzo was found guilty of 69 corruption charges. Five City Council members also were convicted over city schemes.

Carson

Mayor Al Robles is now under siege from Los Angeles County prosecutors for simultaneously serving on the board of the Water Replenishment District of Southern California and as Carson mayor. He faced a county grand jury rebuke over the water board’s move to pay his legal bills. He has also faced years of campaign finance allegations over his water board and Carson election campaigns.

Central Basin Municipal Water District

Political and legal fallout continues from a scandal involving an alleged $2.75 million slush fund created by the district to pay politically connected consultants such as former Assemblyman Tom Calderon, D-Montebello. Central Basin board member Art Chacon was allowed to collect car allowance and mileage reimbursements from the district from 2006 to 2014, an eight-year span in which he didn’t have a driver’s license. To avoid a potentially huge payout at trial, in 2014, the district settled sexual harassment allegations made by a female contractor against district Director Robert Apodaca for $670,000.

City of Commerce

In 2012, Councilman Robert Fierro resigned after he pleaded guilty to a felony conspiracy charge related to his attempts to dupe investigators looking into the financing of his 2005 campaign. In 2010, Councilman Hugo Argumedo resigned after he pleaded guilty to obstruction of justice. Argumedo concocted evidence to help an attorney sue his city for allegedly unpaid legal fees.

Cudahy

In 2012, City Manager Angel Perales, Mayor David Silva and Councilman Osvaldo Conde were arrested by the FBI after being caught seeking bribes from the owner of a marijuana dispensary. In 2014, then-state Controller John Chiang released a scathing report about city finances that found city credit cards were used improperly for meals, travel and entertainment; pay raises were awarded without explanation or justification; and that employees regularly received paid leave that they were not entitled to get.

Lynwood

In 2012, former City Council members Louis Byrd and Fernando Pedroza were convicted of illegally boosting their pay — by $330,000 and $160,000, respectively — by taking stipends for working on city commissions without any responsibilities, a crime with parallels to what happened in Bell. There were also reports that city officials used city credit cards to pay for entertainment, including “a $1,500 night out at a Guadalajara strip club, where dancers allegedly performed sexual favors” for two city officials, the Los Angeles Times reported. In 2007, Mayor Paul H. Richards II received a 16-year sentence for a long-running embezzlement scheme.

Maywood

County prosecutor are now investigating alleged illegal collusion to get around state open-government laws that may be related to questionable zoning changes made without proper scrutiny. There are also reports that the FBI is investigating possible bribery in the awarding of city contracts.

Montebello

In 2011, state Controller John Chiang issued a report showing that officials had improperly spent more than $31 million, helping prompt a city budget crisis. Redevelopment funds were used for many non-government purposes, including meals in Las Vegas.

South Gate

Former city councilman, city manager, mayor and treasurer Albert Robles was sentenced to 10 years in federal prison in 2005 for public corruption, money laundering and bribery. Though several of the convictions were thrown out in 2013, Robles’ sentence was not reduced because of the seriousness of the bribery counts that remained.

Vernon

The tax-rich industrial city which long controlled who voted in the city by controlling who stayed in its very limited housing was nearly disbanded by the Legislature in 2011 after Donal O’Callaghan became the third city administrator since 2006 to face criminal charges. Mayor Leonis Malburg and his wife Dominica were convicted of voter fraud and conspiracy in 2009. The Malburgs lied for years about living in Vernon while actually residing at a Hancock Park mansion.

This piece was originally published by CalWatchdog.com

Average “Full Career” CalPERS Retirement Package Worth $70,000 Per Year

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

“‘What makes the ‘$100,000 Club’ some magic number denoting abuse other than the claims of anti-pension zealots?’ said Dave Low, chairman of Californians for Retirement Security, a coalition of 1.6 million public workers and retirees.”

This quote from a government union spokesperson, and others, were dutifully collected as part of Orange County Register reporter Teri Sforza’s eminently balanced reporting on the latest pension data, in her August 8th article entitled “The ‘100K Club’ – public retirees with pensions over $100,000 – are a growing group.”

In the article, Sforza’s team evaluated data released by Transparent California on 2015 CalPERS pensions, and reported the number of pensioners receiving $100,000 or more per year was 3.5% of total retirees, up from 2.9% in 2013. That truly does seem like a low percentage, but it ignores two key factors, (1) the total retiree pool includes people who only worked a few years and barely vested a pension, and (2) the total retiree pool includes people who worked many decades, sometimes 30 or 40 years or more, but they only worked part-time during their lengthy careers.

So if you restrict your pool of participants to those who worked a full career, and retired within the last 10 years, what percentage of those retirees would belong to the $100,000 club? As it turns out, there are 75,279 CalSTRS retirees who worked more than 25 years and less than 35 years, retiring after 2006. And as it turns out, 9,763 of them, or 13%, are receiving pensions in excess of $100,000 per year.

Moreover, CalSTRS doesn’t report the value of retirement health benefits and other retirement benefits, which almost certainly exceed $10,000 per year. If you make this reasonable assumption, you now have 14,901 CalPERS retirees, or 19% of our 75,279 pool of full career retirees, receiving a retirement package worth over $100,000 per year. Worth noting – we didn’t have the data necessary to screen the part-timers out of this pool. If we did, the numbers would be higher.

So if you use the appropriate denominator, the “$100 Club” isn’t 3.5% of the pie, it’s 19%, but so what? It’s still not a very big slice. Here’s where the flip-side of “full career pension” comes into play. Most people don’t work 25-35 years in public service. But most of them do vest their pension benefits, which can be vested in as little as five years. What happens when someone quits after five years, and only goes on to collect, say, a $20,000 per year pension? Someone else is hired, they work five years, and they also qualify to eventually collect a $20,000 per year pension. Then someone else, and then someone else – until you have three or four (or more) people who are all going to receive a $20,000 per year pension – for a job that one person could have performed if they’d stayed with the agency for a full career.

This is a critical point to understand. The significance of “full career” pensions is this: The taxpayer will fund pensions at that level of generosity, even if the benefit is split among multiple partial career participants – people who presumably worked elsewhere (where they also saved for retirement) during the majority of their careers. Should you expect a $100,000 per year pension if you only worked for five years? Of course not. But that’s what taxpayers are funding – whether it goes to one person, or to five people who worked a few years each to collectively fill one person’s full-career position in government.

This is why, when you are considering whether or not pensions are fair and affordable, the full career average pension is the only relevant measure. So what is the full career average?

For CalPERS in 2015, participants with between 25 and 34 years of work who retired in the last ten years, on average, received a pension of $60,277.  Add to that the value of their retirement health benefits and other retirement benefits and the average was probably closer to $70,000 per year.

Just for comparison, for Orange County (OCERS) retirees in 2015, participants with between 25 and 34 years of work who retired in the last ten years, on average, received a pension of $73,628.  Add to that the value of their retirement health benefits and other retirement benefits – information which OCERS also refuses to provide – and the average was probably over $80,000 per year. As for the OCERS “$100,000 Club”? Within the pool of full career retirees as described, and accounting for retirement health benefits, 31% of them were members. Nearly one in three.

Public sector spokespersons frequently point out that public employees don’t get Social Security. Actually, about half of them do get Social Security, but never mind that detail. Because the maximum Social Security benefit, which one must wait until they are 68 years old to receive, is a whopping $31,668 per year.

Calling critics of this double standard “anti-pension zealots” is lazy rhetoric. The problem with defined benefits is not that they exist. The problem is that we have set up a system where public employees operate under a set of retirement benefit formulas and incentives that are roughly four times better than what private sector workers can expect. Yet these private sector workers pay the taxes to fund these pensions and bail them out when the investment returns falter.

Ed Ring is the president of the California Policy Center.

State Revenue Falling Behind Estimates Thanks to Excessive Taxation

Betty YeeState Controller Betty Yee’s just-released July Cash Report shows state personal income tax revenue falling behind estimates by 6.9 percent, or $323 million lower than projections. While some will argue that one month does not make a trend, these figures are significant because they represent revenue in the first month of the new state budget, a budget that is based on much higher income estimates.

Should these below projection income tax revenues really be a surprise to anyone with even a minimal understanding of basic economics? Economists tell us that if you want less of something, tax it more, and California has the highest marginal income tax rates in all 50 states.

When upper income individuals were slammed with tax rates on steroids as a result of Proposition 30, approved by voters in 2012, they had little immediate choice but to pay, and the tax revenue poured in. (It should be noted that the tax, approved in November, was retroactive for the entirety of 2012 so there was an almost instantaneous infusion of cash into state coffers.) Still, many compelled to pay these higher taxes took some comfort in knowing the exorbitant tax rates were scheduled to end in 2018.

However, lawmakers viewed this extra revenue as the new normal and they partied on in Sacramento with ever higher state budgets — they have increased spending by 42 percent in the last five years and there is no end to the spending spree in sight.

While the Sacramento politicians are loath to give up this additional cash next year as scheduled, the report from the Controller’s Office shows that the negative consequences of higher taxes, like proverbial chickens, are coming home to roost.

Most high income individuals are savvy and, given time, those penalized with a confiscatory level of taxation will respond by using legal methods that allow them to keep more of their own money. I personally know a veterinarian who cut his salary while retaining the unpaid wages in the business, a small animal hospital, he owns.

Sadly, over time, other successful individuals have packed up and left the state. This helps to explain the exodus of businesses, and the jobs they create, to other areas of the country with a more attractive tax climate.

A recently released study by Spectrum Locations Solutions estimates that over the last seven years, 9,000 business have either divested in California, or, while maintaining their headquarters here, have chosen to expand elsewhere.

“Gov. Jerry Brown’s office routinely denies that business departures is a serious issue,” says Joseph Vranich, a site selection consultant, who prepared the report. Brown’s denials are consistent with State Senate and Assembly leaders who see no down side to ever higher taxes.

Of course those businesses leaving the state are not just fleeing higher income taxes, high taxes in almost every other category are a factor, as are the costs of suffocating regulations.

But for those paying the ultra-high income tax rates, no relief is in sight. California government employee unions, who represent the highest paid public workers in all 50 states, are fielding a ballot measure – Proposition 55 – that will extend the Proposition 30 tax increases for another 13 years.

There is little doubt that just the threat of extending these hyper income taxes, will spur more high earners, to depart. If Proposition 55 passes this November, there will be consequences for the California taxpayers who remain. When Sacramento runs out of higher income individuals to tax, they are certain to shift their attention to those of more modest means.

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

This piece was originally published by HJTA.org

Olympic Medalists Shouldn’t Be Excused From Paying Taxes

OlympicsLast week Democrats in Sacramento killed a bill by conservative Assemblyman Brian Jones (R-Santee) that would have exempted Olympic medal winners from paying state taxes on their winnings.

The U.S. Olympic Committee gives out bonuses to medal winners — $25,000 for gold medals, $15,000 for silver and $10,000 for bronze. Your first reaction might be frustration that something to help out our athletic champions was stopped. But let me explain why it is actually good that Jones’ bill did not advance.

While I am glad Jones introduced this bill, as it draws attention to California’s absurd tax rates, we are well past the point where we simply can’t afford any more preferential treatment in our tax codes, federal and state. Period.

Video: For Michael Phelps, 28 medals should be enough

The more narrow the group of people benefitting from treatment that is different than everyone else, the worse public policy it is — and the more immoral it is. I say “immoral” deliberately, because it is not right for government to apply rules and policies differently for different groups and categories of people, especially small groups and narrow categories. It is an insult, an affront to the notion of everyone being created equal under the eyes of God and people being treated equally by their government.

In this case, while the achievements of Olympians are amazing, they are still Americans, and some are Californians. Their heavy tax burden should be alleviated by lowering everyone’s tax burden, not by giving medalists a “carve out” — using government policies to create winners and losers. It’s worth noting they are already winners, American heroes, without special tax treatment.

So called “targeted tax cuts” or narrow tax credits might sound great. Hey, if anyone can be freed from some level of taxation isn’t that a win? And in California, with a liberal legislature guaranteeing that no broad tax relief is on the horizon, should we not push for any tax relief, no matter how narrow?

No. Actually, hell no!

Whether it is saying that an individual consumer product (such as tampons), a type of business (such as just forfilm-making), a type of activity (like just for manufacturing) or for just a particular area in California (enterprise zones), or just for moving to California (Can you say Tesla?) — all of this special treatment in tax policies has a terrible effect on our system of governance.

This pattern of gaming the system for the benefit of only a few has created a culture of corruption that has become so prevalent in our federal and state capitols. Those who benefit or want to benefit from special, narrow, favorable treatment hire well-connected lobbyists (often these are former politicians, advancing the idea that bellying up to the give-away bar means a lucrative payday for modestly paid legislators when they retire). It means big campaign contributions, or big independent expenditures to help those who go along, and to punish those who do not. It means big donations to causes near and dear to the political elite. I could go on.

Of course the inherent big losers in this process are we, the average people. Not only do we typically see little to no benefit from this narrowly targeted tax-code and spending favoritism, but it stands to reason that we are the ones actually footing the bills for the costs associated with all of this mess. Nothing happens for free. When government picks a winner, it creates a loser. Call it a rule of political physics.

I should add that as this system becomes more entrenched, and the number of those who benefit from special treatment grows, a great loss and injury occurs to those of us who would like to see broad reforms — such as across-the-board tax cuts or a move to a flat tax. Every interest that has carved out their “30 pieces of silver” through twisting the current system to its financial benefit now has a vested interest in maintaining the status quo. After all, it is very likely a that a company’s tax burden goes up even with lower tax rates if its industry-specific tax credits go away, or whatever the carve out happens to be. Many narrow interests pay little or no taxes at all.

This growing system of corruption rivals ideological liberalism as an impediment to meaningful tax reform. It may be worse as it causes many who believe in tax cuts to hesitate or even create impediments lest the goodies, favors and money stop befitting them!

And so we come back to Michael Phelps (of Baltimore, Maryland, another high-tax jurisdiction). No one has earned more Olympic Gold than he. He is looking at hundreds of thousands of dollars in bonuses from just the Rio Games alone. But are his victories more worthy of government favor than than the hard work of a police officer, or a soldier? How about an emergency room doctor? Or perhaps an elementary school teacher? Of course not.

It is broad tax relief that would make us all gold medal winners.

ublisher of the FlashReport

Originally published at Breitbart News and FlashReport.