Nine and ninety ways to spike your pension

What happened in a Sacramento courthouse last month may not have been a tsunami, but it was as close to a seismic shift in pension reform matters as one could hope for.

Chris Klein caused the earthquake.

No, not Chris Klein the actor of “American Pie” fame.

No, not Chris Klein, the former professional soccer player, who now runs the LA Galaxy.

It was Judge Christopher Klein, who is presiding over the city of Stockton’s Chapter 9 (the municipal version of Chapter 11) proceedings.

Judge Christopher Klein, who hasn’t even ruled on the matter before him, made it clear that municipalities’ pension debt represented a contract like any other, calling into question what CalPERS, the state’s pension behemoth, would have us all believe is the “sacrosanct” nature of public pensions.

Klein’s remarks don’t mean that existing pensions should be impaired.  That will hopefully not be necessary.  But the CalPERS mantra that they are inviolate would no longer seem to be valid, and in theory that should create an atmosphere which would encourage sustainability in all things related to public pensions – hopefully, an eventual shift to defined-contribution pensions.

But don’t bet on it.

In the case of Vallejo, which went through a painful municipal bankruptcy proceeding, in addition to another city on the verge of bankruptcy, the self-entitled attitude of some of the unions is simply astounding.  I’ve heard from people directly involved in the negotiations how unconcerned the unions were in the case of Vallejo.  I’ve heard from people directly involved how the public employee unions flippantly told a city manager whose municipality was in a precarious position, “Go into bankruptcy.  We’ll get ours, even if you have to sell city hall to developers.”

Clearly CalPERS is going to fight this ruling which isn’t even a ruling yet to the end of the line.  But Judge Klein hit the nail on the head when he rhetorically asked: “Is CalPERS a state unto itself?”

Clearly, it thinks it is.  And the self-entitlement and arrogance which marks the public employee union attitude in the cases of Vallejo and the other city is only egged on by CalPERS.  As the Hungarians say, “The fish stinks from the head.”  And there’s a lot at CalPERS that stinks, including board members and top executives plagued by felonious bribery, corruption, ethics and sexual harassment violations.

Much of the problem and chutzpah is systemic, and is connected with undue public employee union influence in electing public officials – from the state Capitol right on down to the municipal level.

Of course, should Judge Klein’s ruling be seen as a real obstacle for further pension spiking, CalPERS and the unions are likely to look for legislation which would ban municipalities from declaring bankruptcy (which, of course, would also benefit the Wall St. bondholders).

To be clear, this whole issue isn’t about Wall St. vs. the unions, as the public employee unions would have us believe.  CalPERS and Wall St. are joined at the hip, and any and all risk is on the backs of the taxpayers.  If anything, this “all about me” attitude pits Wall St., CalPERS and the public employee unions against the rest of us, namely, the normal-Joe taxpayers, the Little Guys and Gals, in many cases struggling to make ends meet.

When the CalPERS Board recently voted to “legitimize” 99 ways to spike pensions it all became so clear.  The 99 ways include such ridiculous methods of increasing pension benefits as counting bonuses such as “longevity pay,” “training pay, ” “physical fitness pay,”  “college degree pay,” “notary pay,” “motorcycle pay” and even “holiday pay” towards pensions.  The bald-faced greed and shamelessness behind the PERS decision brings to mind a classic hit from the 70’s with PERS-appropriate lyrics. Unfortunately, it doesn’t seem as if I’m going to be able to get the song – or the new lyrics – out of my head anytime soon.

 

Nine and ninety ways to spike your pension

(with apologies to Paul Simon)

PERS said, the problem’s inside your head,

And at the core.
The answer is easy if you
Want to clean the store.
We’d like to help you in your struggle
To grab more.

There’s nine and ninety ways
To spike your pension.

PERS said as much as it’s our habit
To intrude.
Furthermore, we hope our meaning
Won’t be lost or misconstrued.
But we’ll repeat ourselves
And allow you to collude:
There’s nine and ninety ways

To spike your pension.

Nine and ninety ways

To spike your pension.

[CHORUS:]
You just learn how to train, Jane.
Be physically fit, Kit.
Have a college degree, Lee,
To get a big hike.
With a government job, Rob,
You don’t need to go hobnob.
You just sit on a bike, Mike.

And get a big spike.

PERS said it grieves us so
To see you in such pain.
We wish there was something we could do
To make you whole again.
I said I appreciate that
And would you please explain
About the nine and ninety ways.

PERS said why don’t we all
Just sleep on it tonight
And we believe in the morning
You’ll begin to see the light.
And then I got billed
And I realized PERS probably was right:
There must be nine and ninety ways
To spike your pension.

Nine and ninety ways

To spike your pension.

You just learn how to train, Jane.
Be physically fit, Kit.
Have a college degree, Lee,
To get a big hike.
With a government job, Rob,
You don’t need to go hobnob.
You just sit on a bike, Mike.

And get a big spike.

John Mirisch currently serves on the City Council of Beverly Hills. As mayor, he created the Sunshine Task Force to work toward a more open, transparent and participatory local government.

LAUSD Turmoil Continues Despite Superintendent Resignation

John Deasy’s recent resignation as the superintendent of the Los Angeles Unified School District ends three years of controversy. But a cloud of chalk dust remains over the mammoth district’s future.

Deasy conceded his policies sowed sharp disagreements. And a conciliatory statement by the LAUSD School Board acknowledged “academic achievement rose substantially despite severe economic hardships, and the students of the district have benefitted greatly from Dr. Deasy’s guidance.”

The LAUSD Board of Education tapped his predecessor, Ramon Cortines, 82, as an interim replacement, giving it time to find a longer-term leader who could take the troubled LAUSD in a new direction.

Deasy’s rocky tenure culminated in dual controversies — his emphasis on quantifying education improvement through testing and his strong personal push to increase the use of technology in the classroom. In the first case, critics said, Deasy contributed to a climate of stress and inadequacy for teachers unprepared to meet higher testing goals. In the second, critics blasted Deasy for overreaching with a rushed and ineffective $1.3 billion program to give iPads to all the district’s 650,000 students.

Testing trouble

Deasy’s reforms upset the L.A. status quo on a number of levels. As the Los Angeles Times observed, Deasy made waves with “a teacher evaluation system, stricter bars for gaining tenure, a classroom breakfast program and a stronger embrace of alternatives to turn around struggling schools — including charter schools and the complete replacement of staff.” Though most of these measures threatened to take control away from teachers unions, Deasy’s desire to hold teachers accountable through student testing drew the most ire.

Among administrators, Deasy wasn’t alone in taking that approach. Its prominence in the Common Core system, which is being implemented in California and many other states, led a growing number of unionized teachers to speak out in opposition.

Previous to his work with the Los Angeles schools, Deasy served as deputy director of education at the Bill and Melinda Gates Foundation. Common Core has been closely associated with Bill Gates, who almost single-handedly fueled the initiative with millions in funding and closed-door lobbying.

With that background, few were surprised when the testing reforms Deasy advanced were “fought by teacher unions and some community activists,” who opposed “so-called corporate reform because it often involves data-driven performance reviews that can affect high-stakes personnel decisions,” according to the Times.

The limits of technology

In the worst ordeal of his time as superintendent, Deasy tried to swiftly implement a plan that would make iPads a classroom standard. Although a LAUSD investigation concluded Deasy did not act unethically, his effort became an albatross amid technological failures, vendor problems and student hooliganism.

As Time reported, some students “hacked the devices — which the district had said were meant solely for academic work — to enable more general use. And when the program began, some schools did not yet have proper wifi infrastructure that would allow all their students to be online at the same [time].”

On the positive side, the hacking crisis did show LAUSD kids were more adept in the growing high-tech economy than district officials suspected.

A brewing crisis

Deasy’s departure summed up a broader trend in education reform battles playing out nationwide. It pitted traditional allies against one another, including Democrats and their teachers union backers.

Democrats’ flagging credibility on education has been exacerbated this year by election-year politics and the Vergara ruling, which held California teachers union tenure protections unconstitutionally infringe on students’ rights.

But Democrats — like many pro-corporate Republicans — turned to a small network of wealthy, successful elites to respond to the nation’s systemic education problems. GOP heavyweights like former Florida Gov. Jeb Bush and former U.S. Secretary of Education Bill Bennett lent their support to Common Core in an effort to broaden Republicans’ appeal — despite the opposition of many of their conservative allies.

And Democrats embraced the Gates and Deasy approach as a way of taking the focus off of teachers unions. Gates, the world’s richest man, is a Democrat.

Those reformers discovered, however, that the public education system could not be transformed effectively through testing or technology.

Deasy’s exit again puts LAUSD policy up for grabs, with potential reforms including the perennial proposal to break up the nation’s second most populous school district to make it more responsive to voters, parents and students.

This article was originally published on CalWatchdog.com

 

The Misleading Arguments of Those Who Fight Against Pension Reform

Weakening pensions is a choice, not an imperative. The crisis is political, not actuarial.

– Susan Greenbaum, guest editorial, Al Jazeera America, October 20, 2014

With this thesis highlighted, Greenbaum, a retired professor of anthropology at the University of South Florida, has just published a guest editorial that provides in one place a useful example of the distortions, demonizing and inversions of logic used by those who fight against pension reform. To understand why public employees, and their union leadership, remain sincere in their delusions regarding pensions, Greenbaum’s missive may serve as Exhibit A. Because she has joined a chorus that is funded not only by the billions that are spent by public employee unions on political and educational propaganda each year, but also funded by elements of those same Wall Street financial interests they routinely deride.

Let’s examine some of these misleading arguments and tactics, in no particular order:

(1) Identify key reformers, demonize them, then accuse anyone who advocates reform of being their puppets. Greenbaum identifies a lot of “demons,” i.e., opponents, who have been the victims of character assassination for years: John Arnold, a “hedge fund billionaire,” Charles and David Koch, the “conservative billionaire brothers,” and, of course “Wall Street [whose] shenanigans, not sound financial knowledge, posed the real threat to the solvency of these funds.” The fallacy here, notwithstanding the vicious and unfounded attacks that have tainted these individuals, is that whether or not pensions are financially sustainable or equitable to taxpayers has nothing to do with who some of the reformers are. And what about liberal democrats who advocate pension reform, such as San Jose mayor Chuck Reed, Chicago mayor Rahm Emanuel, former Rhode Island treasurer and gubernatorial candidate Gina Raimondo, and countless others? Are they all merely puppets? Absurd.

(2)  Assume if someone advocates pension reform, they must also want to dismantle Social Security. While there are plenty of pension reformers who have a libertarian aversion to “entitlements” such as Social Security, it is wrong to suggest all reformers feel that way. Social Security is financially sustainable because it has built in mechanisms to maintain solvency – benefits can be adjusted downwards, contributions can be adjusted upwards, the ceiling can be raised, the age of eligibility can be increased, and additional means testing can be imposed. If pensions were adjustable in this manner, so public sector workers might live according to the same rules that private sector workers do, there would not be a financial crisis facing pensions. There is no inherent connection between wanting to reform public sector pensions and wanting to eliminate Social Security. It is a red herring.

(3)  ”Public sector pension plans would be financially healthy if they had not been invested in risky derivatives, especially mortgages.” This is a clever inversion of logic. Because if pension funds had not been riding the economic bubble, making risky investments, heedless of historical norms, then public employee unions would never have been mislead by these fund managers to demand and get unsustainable enhancements – usually granted retroactively – to their pension benefit formulas. The precarious solvency of pension funds today is entirely dependent on asset bubbles. Most of these funds still have significant positions in private equity investments, which are opaque and highly volatile, and despite recent moves by some major pension funds to vacate hedge fund investments, they still comprise significant portions of pension fund portfolios. What Greenbaum either doesn’t understand or willfully ignores is a crucial fact: if pension funds did not make risky investments, they would have to bring their rate-of-return projections down to earth, and their supposed solvency would vaporize overnight.

(4)  ”Weakening pensions is a choice, not an imperative. The crisis is political, not actuarial.”This really depends on how you define “weakening.” If you weaken the benefits, you strengthen the solvency. The fundamental contradiction in Greenbaum’s logic is simple: If you don’t want pension funds to be entities whose actions are just like those firms located on the proverbial, parasitic “Wall Street,” then they have to make conservative, low risk investments. But if you make low risk investments, you blow up the funds unless you also “weaken” the benefit formulas.

To drive this point home with irrefutable calculations, refer to a recent California Policy Center study “Estimating America’s Total Unfunded State and Local Government Pension Liability,” where the impact of making lower risk investments that yield lower rates of return is calculated. If, for example, state and local public employee pension funds in the United States were to lower their rate-of-return to a decidedly non-”Wall Street,” low-risk rate of return of 4.33% (the July 2014 Citibank Pension Liability Index Rate), and invest their $3.6 trillion in assets accordingly, their aggregate unfunded liability would triple from today’s estimated $1.26 trillion to $3.79 trillion. The required annual contribution (normal plus unfunded) would rise from today’s $186 billion to $586 billion. The alternative? Lower benefits.

Those who fight against pension reform willfully ignore additional key points. They continue to claim public sector pension benefits average only around $25,000 per year, ignoring the fact that pension benefits for people who spent 30 years or more earning a pension, i.e., full career retirees, currently earn pensions that average well over $60,000 per year. Public safety unions still spread the falsehood that their retirees die prematurely, when, for example, CalPERS own actuarial data proves that even firefighters retire today with a life-expectancy virtually identical to the general population.

Propagandists who oppose urgently needed reform should recognize that pension reform is bipartisan, it is a financial imperative, and it is a moral imperative. They need to recognize that the sooner defined benefits are adjusted downwards, the less severe these adjustments are going to be. They need to understand that for many reformers, converting everyone to individual 401K plans is a last resort being forced on them by political, legal and financial realities, not an ulterior motive. They need to stop demonizing their opponents, and they need to stop stereotyping every critic of pensions as people who want to destroy retirement security, including Social Security, for ordinary Americans. And if they wish to defend Social Security, then they should also be willing to apply to pension formulas the tools built into Social Security – including its progressive formulas whereby highly compensated workers receive proportionally less in retirement than low income workers. Ideally, they should support requiring all public workers to participate in Social Security, so that all Americans earn – at least to the extent it is taxpayer funded – retirement entitlements according to the same set of formulas and incentives.

 *   *   *

Ed Ring is the executive director of the California Policy Center

This article originally appeared on the CPC website UnionWatch.org.

Michelle Steel’s Chance

After the 2012 presidential election, politicians, pundits and pollsters were obsessing over the staggering 71 percent of the Hispanic vote that President Obama received. What many ignored was the fact that there was an even more incredible figure about a racial group that had, until recently, voted Republican. That group is Asian Americans, giving Obama 73 percent of their vote on Election Day.

In Orange County, Republicans are trying to change that. One of those Republicans trying to change this status quo is Michelle Steel, currently the highest-ranking Republican constitutional officer in California and candidate for Orange County’s Second Supervisorial District.

Born in South Korea, Steel came to the United States and received degrees from Pepperdine and USC. While studying at Pepperdine, she met Shawn Steel while taking tennis lessons at the Ambassador Hotel. He noticed her because “she looked like she could really hit that ball and slam it well.” Soon after that first encounter at the tennis courts, they started dating.  Her now-husband, Shawn Steel is a former Chairman of the California Republican Party and currently serves as California’s Republican National Committeeman. Married in 1981, they settled in Palos Verdes and, then, Orange County with their two children, Cheyenne and Siobhan.

While in college, Steel worked at her mother’s clothing store. She had to support her mother, who didn’t speak English. And because her parents were hard-working small business owners, Steel has “always been about family values, smaller government and not accepting government handouts. I’m a first generation immigrant, and as a first generation immigrant, I had to be a Republican.” These conservative values would be put into great effect as CA government policies often attempt to abuse small business owners.

Steel’s mother encountered these abusive policies and regulations when she owned her clothing shop. The Board of Equalization accused her of cheating the state out of her taxes, and knowing that it would be impossible for her to fight the government and win, Steel explained, “My mom paid the taxes she didn’t owe, along with the penalty and interest on top of it.” Seeing this direct abuse by the government, Steel became actively interested in politics. “I can’t just sit at home and be a housewife. I wanted to be a bridge” between the people and their representatives in government.

At first, Shawn tried to keep her from going into politics, attempting to protect her. But he could not hold back her desire to help small business owners and implement the conservative values her experiences have instilled in her.

Her first political position was an appointment by then-mayor of Los Angeles, Richard Riordan, to the Los Angeles Fire Commission. And in the years following, she secured positions on multiple national boards including the President’s Advisory Commission on Asian Americans and Pacific Islanders.

After she was elected to the Board of Equalization, which is the state agency in charge of taxation, she saved California taxpayers $42 million in 2007 alone. Last year, she returned over $200 million back to the taxpayers through her efforts at BOE. Representing more than 8 million people — a quarter of California’s population — she has stood in defense of the taxpayer when it comes to pocketbook issues and has tried to save the people of California from abusive taxation by the government. Her experience on the BOE would be a worthy asset to her as supervisor because, as Steel points out, she “works with taxpayers. I work with them individually. Looking at the budget, I know how to save.”

This contrasts with her opponent, Assemblyman Allan Mansoor, who Steel claims “has always been about public offices and never really worked in the private sector.” Because of her prior experience, Steel knows “how the private sector is trying to survive” under the weight of California’s massive amount of taxes and regulation. Assemblyman Mansoor, who has held elective office for the past 12 years, “was the one who raised taxes” on his fellow Californians according to Steel.

As the country’s highest-ranking Korean American elected official and the highest-ranking Republican woman in California, Steel knows how to reach out to both women and minorities, two groups with which Republicans need to make serious inroads. “The Republican Party is changing. We need to learn how to relay our message because we are not really good at that,” as exhibited in recent elections. Her endorsements from countless Republican officials, conservative organizations, and community leaders demonstrate the confidence people have in her and what she is capable of accomplishing for her constituents.

Steel’s life story, her conservative beliefs, and her appeal to both women and minorities represent a bright light in, what could be, a fading future for the Republican Party. Hopefully, voters will see that and elect Michelle Steel, the taxpayer’s advocate, as Orange County Supervisor.

Tyler Warman is a junior attending Hillsdale College, where he studies politics and classical education. Tyler can be reached at twarman@hillsdale.edu.

Voters beware: Dubious “taxpayers association” reaches new low for slate mailers

Dana Point Mayor Lisa Bartlett is no friend of taxpayers.

In 2009, the Orange County Republican voted to create a special tax on local businesses to fund a tourism marketing campaign for her city. Earlier this year, she voted to raise development fees in Dana Point and sided with public employee unions on contracting out government projects.

So, when Bartlett launched her campaign for Orange County Supervisor, it didn’t take long for the Orange County Republican Party and the Howard Jarvis Taxpayers Association to rally behind her opponent, Robert Ming.Mailer-California-Republican-Taxpayers-Association-300x336

“We believe you will be an excellent representative for taxpayers and look forward to working with you in the years ahead,” Kris Vosburgh of the Howard Jarvis Taxpayers Association Political Action Committee said in a press release endorsing Ming for the 5th Supervisorial District.

Nevertheless, some Republican voters will head to the polls next month and cast their ballot for Bartlett– under the misguided belief that she’s the anti-tax candidate who is endorsed by the local Republican Party.

It’s not their fault. Conservative Republican voters in Orange County received a recent Bartlett campaign mailer touting the endorsement of the “California Republican Taxpayers Association.” It even included an official-looking seal, modeled after the California Republican Party’s logo. (Pictured above)

There’s just one problem: the California Republican Taxpayers Association isn’t a real organization.

In 2006, Steven Greenhut, the state’s preeminent California political journalist, couldn’t find any documentation to support the organization’s existence.

“I found no evidence of the group ever being mentioned in a US newspaper at any time in a search of the Nexis database,” wrote Greenhut, then with the Orange County Register.

Pay-to-Play Slate Mailers

Every election cycle, political slate mailers inundate voters with mailers touting a list of endorsed candidates under the guise of various issues, community groups and political ideologies.

“Slate mailers are as much a part of the election season as red, white and blue bunting,” Brad Racino of iNewsSource wrote of the slate mailer business in 2012. “It can be confusing. It can be deceptive. It’s been part of the California political landscape for decades and it is perfectly legal.”

Measure F GilroySlate mailers aren’t a new campaign tactic, and they’re appropriately protected as a form of political speech. But, this cycle, the California Republican Taxpayers Association has reached a new low in the slate mailer business, and potentially, run afoul of state law.

An investigation into the self-described “Republican taxpayer” group shows repeated support for tax measures, a violation of the state’s slate mailer disclaimer law, potential violations of the state’s campaign finance disclosure laws and the blatant misuse of the California Republican Party’s protected copyright.

California Republican Taxpayers Association backs tax increases

Since January 1, the California Republican Taxpayers Association has collected $366,085 from dozens of political campaigns. On its website, it assures the public that the candidates and campaigns that pay for space on the mailer comply with its low-tax, Republican ideology.

“Only those candidates who hold firm the values of small government, less regulation and less taxes are represented on our voter guide,” the California Republican Taxpayers Association promises on its website.

Yet, from Gilroy to Stanton, the California Republican Taxpayers Association is urging voters to support tax increases and school bond measures.

For the low price of $237, the “taxpayer” group sold its support for Measure F, a half-cent sales tax increase in Gilroy. Just a few hundred miles away in Atascadero, the California Republican Taxpayers Association accepted $356 to support Measure F-14, which would raise the city’s sales tax by half a percent.

Perhaps the most egregious example of the group selling its endorsement is Measure GG in Stanton. The controversial measure would allow the city to impose an additional 1 percent sales tax. It’s opposed by both the Orange County Republican Party and the trusted Orange County Lincoln Club.

Hesperia Measure M“Enough is enough,” the OC Lincoln Club writes in its voter guide. “Taxes should not be raised on working class consumers just to pay for the bloated compensation packages of the public employees who are supposed to serve them.”

The California Republican Taxpayers Association happily supports raising taxes on working families for the bargain-basement endorsement price of $175.

Support for School Bond Measures

In addition to tax increases, the phony taxpayer group has endorsed multiple school and construction bond measures, which are frequently opposed by the state GOP and legitimate taxpayer groups.

This November, Manteca voters will consider Measure G, a $159 million school bond on behalf of the Manteca Unified School District. According to state disclosure reports, a $608 payment secured the phony group’s endorsement.

It’s a similar story in Hesperia, where voters are considering Measure M, a $207 million bond measure to improve school district facilities. Support from the California Republican Taxpayers Association — bought for $582.

In Orange County, the local Republican Party has aggressively opposed new school bonds, including Fullerton’s Measure I and Orange Unified Measure K. But, proponents of both measures needn’t fear the party. They purchased support from the California Republican Taxpayers Association: $1,120 for Measure I and $1,525 for Measure K.

Green, Democratic candidates buy support from “GOP” group

Michael FeinsteinIt’s the same story in local candidate races across the state.

In the City of Lake Forest, Scott Voigts and Andrew Hamilton have been endorsed by the OC GOP, while Tom Cagley paid $822 for the phony endorsement.

In Newport Beach, the OC GOP has backedDiane Dixon, Duffy Duffield, Scott Peotter and Kevin Muldoon, not Rush Hill who paid $1,412 for the phony endorsement.

In Brea, Steve Vargas and Cecilia Hupp are both endorsed by local Republicans for city council; opponent Mike Kim paid $460 for the California Republican Taxpayers Association’s endorsement.

In the City of Laguna Niguel, Elaine Gennawey and John Jennings have the endorsement of the OC GOP, while Matt Clements and Fred Minegar paid $600 for the deceptive endorsement.

Some endorsements are particularly egregious cases of deception. In Santa Monica, Michael Feinstein, a spokesman and co-founder of the Green Party of California, is listed as the choice of the “California Republican Taxpayers Association.”

The California Republican Taxpayers Association is willing to endorse Democrats, too, such as Gila Jones, a candidate for the Capistrano Unified School District. Jones, a registered Democrat, has been endorsed by the Democratic Party of Orange County. In 2010, Jones was theDemocratic nominee for the 38th Senate District against GOP State Senator Mark Wyland. Yet, GOP voters will see her listed as the choice of the California Republican Taxpayers Association thanks to her $340 check to the group. Her opponent, Ellen Addonizio, has been endorsed by the OC GOP.

The misleading endorsements have drawn the ire of the Howard Jarvis Taxpayers Association, the state’s leading grassroots taxpayer group.

“In the current election cycle, a group we’ve never heard of before is selling its endorsement in favor of local tax hikes and left leaning candidates,” Jon Coupal, president of the state’s preeminent anti-tax group, wrote in his weekly commentary at the Flash Report. “The so-called “California Republican Taxpayers Association” has no bona fides as a legitimate taxpayer association.”

Failure to comply with slate mailer law

The First Amendment appropriately protects slate mailers as a form of political speech and association. Courts have repeatedly thrown out attempts by state and local governments to limit slate mailers. Consequently, slate mailers operate in the Wild West of campaign finance laws.

But, the California Republican Taxpayers Association has somehow managed to run afoul of the few laws governing slate mailers. One of the few state laws governing slate mailers still on the books is a mandatory disclaimer. According to the California Government Code, slate mailers must include a specific 80-word disclaimer, which reads:

NOTICE TO VOTERS

THIS DOCUMENT WAS PREPARED BY (name of slate mailer organization or committee formed to support or oppose one or more ballot measures), NOT AN OFFICIAL POLITICAL PARTY ORGANIZATION. Appearance in this mailer does not necessarily imply endorsement of others appearing in this mailer, nor does it imply endorsement of, or opposition to, any issues set forth in this mailer. Appearance is paid for and authorized by each candidate and ballot measure which is designated by an *.

Multiple slate mailer samples published on the California Republican Taxpayers Association’s website show a substantially shorter disclaimer– just 52 words. One sample from the June 2014 primary reads:

THIS DOCUMENT WAS PREPARED BY CALIFORNIA REPUBLICAN TAXPAYERS’ ASSOCIATION VOTER GUIDE, NOT AN OFFICIAL PARTY ORGANIZATION. Appearance in this mailer does not necessarily imply endorsement of other candidates or ballot measurers (sic) in this mailer. Appearance is paid for and authorized by each candidate and ballot measure which is designated by an *.

The organization’s substantially shorter disclaimer – with 35 percent fewer words – makes it smaller on the page, and thus, is less likely to be noticed. According to the organization, these mailers are “carefully constructed” to persuade voters.

“The carefully constructed Voter Guide strategy maximizes your exposure to those people most likely to vote,” the slate mailer claims on its website, “and presents you as the best Republican Taxpayer-approved candidate for your race.”

In other words, there’s no need to obtain the party’s endorsement, because, the slate mailer “presents you as the best Republican Taxpayer-approved candidate for your race.”

Late filings with FPPC

Although the California Republican Taxpayers Association’s voter guide is “carefully constructed,” it’s less careful with its compliance with state campaign finance disclosure laws.

The state’s campaign finance disclosure system, Cal Access, shows the slate mailer organization has repeatedly filed late disclosure reports. The organization’s 2014 semi-annual disclosure report, which is required to be submitted by July 31, was posted on the state’s website on August 14.

FPPC Violation Late FilingSimilarly, the pre-election report, which was due on October 6, wasn’t posted on the state’s disclosure website until October 14.

CA GOP retains right to use “Republican”

Just like business trademarks or corporate brands, political parties consider their name a precious commodity. The California Republican Party’s bylaws reserve the common law right to control the use of the “Republican” brand in California.

“The Committee retains the common law right to control and authorize the use of the party name ‘Republican’ in connection with official political activity within the State of California, in particular any use that in any way implies, states or misrepresents an affiliation or relationship with, or endorsement by, the California Republican Party,” the bylaws state.

The California Republican Taxpayers Association isn’t chartered by the state party and thus does not have permission from the California Republican Party to use the words “California Republican” in their title and seal.

In a recent mailer, Bartlett’s supervisorial campaign, created an official-looking seal in an effort to convince voters she has the party’s endorsement. The OC GOP has backed her opponent Ming. Bartlett’s campaign offers a unique glimpse into the organization.

Lisa Bartlett 12kThis year, Bartlett’s campaign consultants, Venture Strategic, Inc., have paid the California Republican Taxpayers Association $12,006 in fees. Jeff Corless, the managing partner of Venture Strategic, Inc., also serves as a partner of Frontline Strategies. In the first quarter of 2014, according to state campaign finance disclosure forms, the California Republican Taxpayers Association PAC paid Frontline Strategies $15,000 in consulting fees.

Abel Maldonado praises deceptive slate mailer

Despite the money transfers between companies and political campaigns, the organization boasts high-profile supporters, including a prominent California Republican.

“There is no other voter guide I value more than California Republican Taxpayers Association Voter Guide,” former Lieutenant Governor Abel Maldonado states on the organization’s website.

In June 2006, Maldonado was prominently featured on the slate mailer during his contested Republican primary for state controller. A fitting endorsement — during his time in the state legislature, Maldonado voted for billions of dollars in higher taxes.

This article was originally published on CalNewsroom.com

Astounding number of tax increases on November ballots

When voters go to the polls November 4, they will decide the fate of a large number of school bonds, parcel taxes, sales taxes, utility users’ taxes and other measures that will impact their family budgets.

Despite the improving state economy that is increasing government revenue under existing tax rates, 53 jurisdictions are seeking sales tax increases, 40 are asking voters to approve parcel taxes, and school districts have placed 113 school bond measures on the ballot. If all of the school bonds are approved, taxpayers will have to repay more than $11.7 billion in new bond debt, plus interest.

While an overwhelming number of tax and bond measures have the support of local newspapers, as is historically the case, several of the measures on the November ballot have drawn opposition from newspaper editorial boards.

For example, the Santa Rosa Press Democrat, which often supports tax increases, urged readers to reject Measure N, a utility users’ tax increase that the newspaper said would “fuel a growing chasm between richly funded public safety agencies and all other city services.” The newspaper said a previous ballot measure set a guarantee for police and fire spending that has hamstrung the city because the measure “didn’t account for an historic recession or the skyrocketing cost of retirement benefits.”

As is often the case, many local governments are using taxpayer-funded resources to campaign for tax measures. The Albany Unified School District’s website, for example, has a “news and announcements” section that describes a parcel tax measure as the “Preserve Funding for Albany Schools Act of 2014,” and states that “concerned parents, educators, and community members are joining together to support a replacement parcel tax.”

CalTax’s table summarizes the local tax and bond measures on the ballot in every county where such a measure will go before voters:  www.caltax.org/homepage/101714_elections.html

This article was originally published on Fox and Hounds Daily.

Two Nov. 4 races critical for maintaining Prop. 13

It’s late October and that means there are a lot of people out there wearing masks. But this isn’t about Halloween. This is about all the fake taxpayer interests – organizations and candidates – who are trying to gain an advantage in the upcoming election by portraying themselves as defenders of homeowners and Proposition 13.

At some level, we at Howard Jarvis Taxpayers Association ought to be pleased that others are attempting to use our name and the Prop. 13 label. This fakery, if nothing else, is an acknowledgment that taxpayer issues are very important to voters – even in a left leaning state like California. After all, isn’t imitation the sincerest form of flattery?

Perhaps.  But we should not – and will not – countenance deception.

Exhibit A in the “fake” category is in the hotly contested state senate race in Orange County between Janet Nguyen and former Assemblyman Jose Solorio.  Nguyen is a solid pro-taxpayer candidate and Solorio is a typical liberal politician who would, if given the chance, repeal Prop. 13 in a heartbeat.  The problem for Solorio is that this district is in Orange County whose voters are more conservative and hostile to higher taxes.

That is why Solorio has enlisted the services of none other than Governor Jerry Brown himself to do both radio and television ads in a flailing effort to convince voters that, no – he really does like Proposition 13.  But recent polling suggests that Orange County voters aren’t fooled and that HJTA’s strong endorsement of Janet Nguyen is far more powerful than the Governor’s push for Solorio.  (The fact that Solorio consistently received “Fs” on HJTA’s legislative report card while he was in the Assembly makes his attempt at deception particularly difficult.)

This contest is critical for the preservation of Proposition 13.  It is the most high stakes race in the entire state because if Janet Nguyen wins, this will prevent the tax-and-spend California Legislature from passing tax increases at will and placing anti-Proposition 13 constitutional amendments on the ballot.

In addition, it’s not just candidates who attempt to hold themselves out as pro-taxpayer just to fool voters.  In the current election cycle, a group we’ve never heard of before is selling its endorsement in favor of local tax hikes and left leaning candidates.  The so-called “California Republican Taxpayers Association” has no bona fides as a legitimate taxpayer association.  Moreover, its use of the word “Republican” has party officials incensed and strongly considering litigation for trademark infringement.

Finally, the most unusual attempt at deception we’ve seen this election is a mail piece from Democrat Sharon Quirk-Silva who is running against pro-taxpayer Republican Young Kim.  Like the Nguyen-Solorio race, this is a battle being fought in mostly conservative Orange County. And, like Solorio, it is hard for Quirk-Silva to hide her anti-Prop 13 animus.  So what is her strategy?  Simple – she puts her name beside Howard Jarvis Taxpayers Association in a mail piece which simply notes that both she and HJTA support Proposition 2 – a mostly meaningless initiative on the November ballot.  (Prop. 2 is a marginal improvement to the state’s existing “rainy day” fund law so we support it.  Note, however, it is not the hard spending limit we would prefer).

By putting her name next to HJTA, is Quirk-Silva attempting to associate herself with the “gold standard” of California taxpayer groups Apparently so.  But this plan could easily backfire by giving Young Kim an opening to inform voters that it is she who has the endorsement of the HJTA Political Action Committee.

These examples are but a few of the often silly efforts at attempting to trick voters into believing that anti-taxpayer interests are not what they really are.  Voters need to be aware of this treachery.  Fortunately, most know who to trust.  And it sure as heck isn’t the candidates and groups who are “Jarvis Jesters.”

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.

Covered CA caught in Prop. 45 crossfire

On Proposition 45, some Democrats are feeling as if they got a transfusion of the wrong blood type. The initiative would give the state insurance commissioner the power to approve changes in health-insurance policies, including those by Covered California, this state’s implementation of Obamacare.

Normally Democrats back more regulation, and plenty support Prop. 45. But it would affect not only private health insurance companies, but Covered California as well. Yet Covered California’s smooth success, unimpeded by state second opinions, is crucial to Obamacare’s national success.

Few have admitted it, but the roots of the conflict ultimately stretched back to the very nature of Covered California’s successful establishment. At a time when other state exchanges, such as Oregon’s, were failing in a way that imperiled Obamacare’s implementation, the success of Covered California had become all-important. Without enough signups, insurers whose products were mandated for purchase under Obamacare couldn’t deliver rates the public would accept.

As a result, Covered California became a crash effort to tap California’s substantial population for exchange signups. Enrollees without adequate paperwork or identification were provisionally allowed into the program. No-bid contracts went out to close associates of Covered California officials, who knew how to leap regulatory hurdles quietly and quickly. Once the publishable number of signups rose high enough, and Obamacare stabilized, the administrative cleanup could begin. A central part of that effort would include revisiting rates negotiated with insurers.

A political curveball

But if passed, Prop. 45 would scramble such planning. Incumbent Insurance Commissioner Dave Jones holds a strong interest in supporting Prop. 45, which would give him new powers if he’s re-elected. He’s running against Republican Ted Gaines, a state senator from Roseville. Gaines opposes Prop. 45 and has challenged Jones to a debate on it.

Embracing Prop. 45 was an apparently safe bet for Jones, who had powerful Democrats in his corner, including both of California’s Democratic U.S. senators, Dianne Feinstein and Barbara Boxer.

Insurance companies, to no one’s surprise, were opposed. The dynamic had all the makings of a predictable election-season matchup if there had been no Covered California.

The current train wreck could have been predicted by observers thinking a few steps ahead. The unsettled scope of Covered California’s regulatory authority teed up a classic bureaucratic turf war of the kind routinely on display in Washington, D.C.

For Covered California officials, it was essential to ensure  they could pursue their organization’s agenda unimpeded. That meant establishing direct negotiations with insurance companies themselves — without interference by state-level bureaucrats.

Adding to the administrative jockeying were the implications of the state health exchange itself. Though nominally a market in health care merely established by California through federal law, the exchange inherently politicized the cost of health insurance.

In a free market, for insurance, rates are set by company calculations. In a state-supervised exchange, by contrast, rates become subject to price manipulation based on the imperatives of keeping the exchange economically viable and politically palatable.

Shifting battle lines

From the outset, Prop. 45 threatened to complicate the ability of Covered California officials to independently pursue those imperatives. As the Sacramento Bee reported this summer, at least some influential exchange officials explicitly argued against Prop. 45 on the basis of politics. Diana Dooley, an HHS official who also chairs the board of Covered California, warned against the measure’s provision allowing challenges to rates Covered California negotiated.

For Dooley and her allies, the nightmare scenario involved activist conservatives using the challenge system to undermine trust in Covered California and reduce its efficacy.

But objections to rate-setting without adequate insurance commission oversight have been raised most frequently by Consumer Watchdog, the frequent opponent of large corporations that sponsored Prop. 45 to begin with. Because Covered California officials failed to imagine that anti-corporate sentiment would turn Californians against their plans, they walked into an election-year morass.

The predicament has left opponents of Prop. 45 falling back on a familiar strategy: advocating for additional time before Obamacare is judged wanting. In an editorial dismissing Prop. 45, the Los Angeles Times argued, “Covered California should be given the chance to fulfill its mission to the best of its ability before the state adds another layer of complexity to an already complex process.”

For his part, Jones is remaining adamant in favoring an initiative that would increase his office’s powers. He wrote on his Facebook page, “Vote YES on Prop 45 and make health insurers justify their rates!”

But the split within his own party, combined with plentiful insurance-company ads against the measure, could thwart his wishes.

This piece was originally published on CalWatchdog.com.

Hurray for Hollywood Tax Credits?

Is California’s political establishment trying to crush the Golden State’s economy and punish Hollywood movie moguls? That’s one interpretation of Governor Jerry Brown’s decision to sign a $330 million movie tax credit into law, but only if you take seriously the argument that tax increases—as opposed to tax credits—have driven the so-called California Renaissance. Recall how Brown, legislative leaders, and prominent columnists lauded voters’ approval of Proposition 30, which significantly raised sales and income taxes two years ago. The best businesses, they said, don’t mind California’s high tax burden so long as the weather stays nice. But if that’s so, then why the giveaway to Tinsel Town?

The Film and Television Job Creation and Retention Act more than triples the current $100 million-a-year movie tax credit for five years beginning in fiscal year 2015–16. The new law allows studios to use the credits for television pilots and eliminates a lottery system for selecting beneficiaries. It also removes the existing credit’s cap of $75 million on production budgets, according to a state senate analysis.

The California Teachers Association opposed the bill for self-interested reasons: the union doesn’t want any money potentially taken away from public schools, which currently eat up more than 40 percent of the state’s general fund. Despite the CTA’s opposition, the legislation enjoyed broad bipartisan support. Republicans usually argue that tax credits are much less important than a more favorable overall tax climate, but they agreed to these special credits, just as they supported tax credits for a proposed Tesla electric-car battery plant, which wound up going to Nevada. More unusual was the support from the otherwise tax-credit-averse Democrats. “This legislation will keep the cameras rolling in California and strengthen our position as the entertainment capital of the world,” claimed Kevin de Leon, a Los Angeles Democrat and new leader of the state senate. Governor Brown, who had criticized the credit in the past, said at the bill signing that SB 1839 “helps thousands of Californians—from stage hands and set designers to electricians and delivery drivers.” At least Democrats are tacitly recognizing the value of lower taxes—even if only for a handpicked industry that happens to support them.

But politicians’ assertions notwithstanding, the nonpartisan Legislative Analyst’s Office in April released a report questioning the effectiveness of the existing tax credit. The LAO argued that studies promoting the credit’s economic benefit “vastly overstate” its advantages: “A return of $0.65 in state tax (excluding unemployment insurance) revenue for each $1 in tax credits may or may not be a good return compared with other state programs. However, it is incomplete—and, arguably, not accurate—to claim that the tax credit program pays for itself.”

Tax-credit supporters point to the loss of 16,000 California film-industry jobs over an eight-year period and blame other states, such as New York, for offering large subsidies that are supposedly stealing away movie productions. Just because other states lavish subsidies on movie companies doesn’t make it a great economic idea. “The state government in New York has dished out well over $2.5 billion in film industry tax incentives since their program began in 2004,” noted Christopher Thornberg, founder of Beacon Economics in Los Angeles. “And for that payout, New York has ‘stolen’ a total of roughly 10,000 jobs from California . . . Do that math! New York has paid $250,000 for each new job.”

The LAO pointed out another flaw in the case for Hollywood giveaways: “Other industries—such as manufacturing or software development—also could become the target of aggressive state subsidies. If this were to occur, would California also provide subsidies to retain these businesses? Doing so could be prohibitively expensive. Instead of approaching economic policy on an industry-by-industry basis, the Legislature may take actions that encourage all businesses to stay or relocate to California, such as broad-based tax reductions or regulatory changes.”

Unfortunately, a political party addicted to taxing and regulating happens to control California’s legislature. It’s funny how Democrats can rationalize tax hikes on the one hand and tax credits on the other. Pulitzer Prize-winning writer David Cay Johnston mocked claims that higher taxes destroy jobs: “Some research into tax rates indicates that high tax rates have the opposite effect: People may work harder, trying to make more money to achieve a desired after-tax income and may slough off if tax rates are lowered.” In other words, high tax rates aren’t detrimental to the California economy—they may even be the cause of its recent growth.

Johnston’s pro-tax argument is popular in Sacramento. Recently, Senator Hannah-Beth Jackson, a Santa Barbara Democrat, argued in support of a bill that would base corporate tax rates on CEO compensation—with higher rates imposed on companies that pay executives more. Yet Jackson joined her colleagues (only two voted no in both houses) in supporting the Hollywood tax credits.

Tellingly, policymakers have been unwilling to consider less costly ways to encourage film production in the state. None of the discussions surrounding SB 1839, for instance, pointed to the pernicious effect of Hollywood’s union-dominated work rules. Think of the TMZ, or Thirty-Mile Zone, the radius the various movie and TV unions use to determine per diem rates and driving distances for crew members. Nor did any of the bill’s sponsors have a word to say about the creative accounting Hollywood studios employ to show profits and losses.

So even as they peddle the fiction that California is booming because of high tax rates, legislators feel compelled to subsidize one of the state’s signature industries. Maybe they should have raised taxes on Hollywood instead. After all, it would be good for the economy: the higher taxes would make the studios work harder.

Nanny of the week: More gun control in Chicago?

Chicago is home to some of the toughest gun control rules in the country.

It’s also home to some of the most frequent gun violence in the country.

But officials in the Windy City are not giving up hope just yet — surely, one more go at tougher gun laws is all the city needs to tip the scales in the other direction and turn Chicago into a modern day Miranda, free from any and all violent thoughts or actions.

That’s why there will be not one, but two gun control issues on voters’ ballots in Cook County on Nov. 4. The first would impose stricter background checks for legal gun purchases — “legal” being the key word there, as we’ll get to in a moment — and the second would ban assault weapons.

Gov. Pat Quinn, who is also facing re-election this November, is pushing for similar laws at the state level in Illinois, though he hasn’t had much success getting the Legislature to embrace those ideas.

Quinn has tried to turn gun control into a campaign issue against Republican opponent Bruce Rauner.

As the Chicago Sun-Times noted, “Recently, Quinn’s campaign released a new online video juxtaposing TV news reports on Chicago gun violence with footage of Rauner stating he believes gun owners should be free to use assault weapons for “target practice … on their property as they choose fit.

That makes complete sense, because even though I’m no expert on gun violence in Chicago, I’m guessing legal gun owners practicing on their own property are probably responsible for a sizable portion — maybe 85 percent, I’m sure — of the 415 murders reported last year.

What? You disagree?

Politicians in Chicago, Cook County, Illinois and everywhere else can add as many layers of regulations for legal gun owners as they can dream up, but criminals who are going to use guns to commit crimes are probably not too concerned with staying inside the boundary of gun control laws.

But the nannies just keep on pushing. Democrats on the Cook County Board of Commissioners voted unanimously to put the gun control measures on the ballot.

Luckily, this is one time where voters can have the final say over the nannies. Polls indicate the measures are headed for defeat in November, perhaps because voters have realized additional rules don’t make anyone safer from those who have no regard for the rules.

For their efforts, the Cook County Board of Commissioners is this week’s winner. The board members’ prize is a landslide defeat in November and a plaque with that famous quote from Albert Einstein: “Insanity is doing the same thing over and over, and expecting a different result.”

This article was originally published on Watchdog.org