691,000 People Moved Out of California Last Year

Does it feel like all your friends are moving out of state? It’s because they are.

We’ve got more than goodbye parties and U-Haul shortages as evidence: Newly released census data shows approximately 691,000 people moved from California to another U.S. state in 2018. About 501,000 people moved from another state into California over the same time period.

It’s the seventh year in a row that more people have left the state than moved in, reports KNTV.

Where all the California refugees going? The No. 1 destination is Texas, which may not come as a huge surprise. For starters, it’s a big state with the second-largest population after California. Jobs there are also plentiful — Texas added more jobs last year than any other state (the unemployment rate is about 3% in Texas). …

Click here to read the full article from the San Francisco Chronicle.

Pension Costs Hitting Home — Hard

Stanislaus Consolidated Fire Protection District came into being 14 years ago when four small fire departments serving farms and small towns east of Modesto merged.

The district now flirts with insolvency, a case study in how rapidly growing costs for pensions and other employee benefits are clobbering local governments.

Four years ago, Stanislaus Consolidated had 80 employees, most of them firefighters, and more than $13 million in revenues. However, as budget documents reveal, its expenses, mostly for salaries, were already beginning to outstrip income.

The district’s operational shortfall in 2015-16 was exacerbated by a new expense item, an extra $330,858 bite by the California Public Employees Retirement System, which is anxiously trying to offset its $100 billion in investment losses during the Great Recession and prevent its enormous “unfunded actuarial liability” (UAL) from growing.

Cities and fire districts throughout the state are being hammered particularly hard by CalPERS’ extra levies for UAL because their “public safety” employees — police officers and firefighters — have California’s most generous pension benefits and therefore its highest employer costs.

Even with the extra CalPERS charge in 2015-16, Stanislaus Consolidated’s retirement costs were not overwhelming, about 32% of wages and salaries for the district’s employees. But the UAL squeeze was about to get tighter.

It jumped to $397,981 the next year and $517,834 in 2017-18. The agency’s 2019-20 budget sets aside $842,404 for UAL, contributing to a financial freefall.

The district’s persistent operating deficits caused the small community of Oakdale, located just outside its boundaries, to cancel fire protection contracts worth $3.5 million a year to the district. Oakdale is now served by Modesto’s fire department.

With the loss of revenue from Oakdale, the district was compelled to slash operations, shrinking its staff to just 59. But its retirement costs continued to swell, reaching 46% of payroll this year.

Late last month, the fire district’s chief, Michael Whorton, announced the closure of one fire station, citing a $925,000 operational deficit in the current budget — a number not much higher than the budget’s $842,404 UAL payment.

“We are definitely going to open it back up,” Whorton told the Modesto Bee. “We just have to close it right now because of finances and we will open it again as soon as we can.” However, he could not say when, and if, Station 23 will be reopened.

Residents served by Station 23 are nervous about the cut, the Modesto Bee reported. “That leaves us very vulnerable,” Barbara Heckendorf said. “I don’t know where (the firefighters) are going to be coming from.”

“It’s not something that we want to do,” Whorton said, “but we have to be financially responsible for the department. We just need to get our finances in line.”

That won’t be easy. CalPERS has told the district that its mandatory UAL payment will top $1 million within two years.

Throughout California, local officials have complained loudly about the ever-rising CalPERS assessments, saying they’ll have no choice but to cut services unless local voters are willing to raise taxes.

CalPERS officials, on the other hand, contend that they also have no choice because their investments haven’t fully recovered from the last recession and they must improve their balance sheet to cope with the next downturn.

Meanwhile, CalPERS investment returns continue to fall below expectations, thus widening the gap between its assets and what it needs to cover pension promises.

In rural Stanislaus County, where wildfire is always a threat, it means having fewer fire trucks and fewer firefighters to respond when it hits.

This article was originally published by CalMatters.org

Dirty Tricks Used to Increase Your Taxes

Perhaps California’s political structure hasn’t quite devolved into the kind of despotic regime like we see in North Korea or Venezuela, but that doesn’t mean we’re not headed in that direction. As reported last week in this column, the attack on Proposition 13 is now in full gear as proponents of the infamous “split roll” initiative are on the streets collecting signatures for their new $12 billion property tax increase on Californians.

The measure, entitled the California Schools and Local Communities Funding Act of 2020, would remove one of Proposition 13’s most important protections, the limitation on annual increases in taxable value, from commercial properties. Proponents of the measure have made it clear that their ultimate objective is the full dismantling of Prop. 13, even for homeowners. Taxpayers and businesses are ready for a tough battle, but there remains an open question about what happens when the other side cheats. Two things happened lately that reflect the tax-and-spend lobby’s “win at any cost” mindset.

First, with an assist from a politically biased politician serving in the Attorney General’s office, proponents were able to secure a one-sided title and summary to the signature petitions.

The title and summary that Xavier Becerra issued on Oct. 17 begins by emphasizing higher funding for education, a main selling point that is popular among voters. This title differs from the original version of a similar measure that highlighted the tax implication for commercial property — something a recent poll suggests would be rejected by voters.

To read the entire column, please click here.

Apple pledges $2.5 billion to fight California housing crisis

(Reuters) – Apple Inc on Monday said it would commit $2.5 billion to easing a housing shortage that has driven up prices across California, with most of the money dedicated to funds that will be run either with or by the state government.

One billion dollars will go to a jointly run fund with state officials aimed at jumpstarting delayed or stalled affordable housing projects. Another $1 billion will go to a state-run fund to provide first-time home buyer financial assistance to teachers, nurses and first responders such as police and firefighters, among others.

In an interview with Reuters, Apple Chief Executive Tim Cook said the company felt a “profound responsibility” to improve California’s housing crisis. Apple’s current headquarters – a ring of gleaming metal and glass nicknamed the “spaceship” in Cupertino, California – sits less than five miles from the suburban family home where co-founders Steve Jobs and Steve Wozniak assembled the first Apple computers in the 1970s. …

Click here to read the full article from Reuters.com

California Power Outages — A Look Into The Future

California’s Great Blackout of 2019 has begun as the lights keep going out for millions across the state’s northern stretches. What should be the past now seems to be the future.

Pacific Gas and Electric began shutting down power early the morning of Oct. 9, when electricity was cut to more than 140,000 customers in Sonoma, Napa, Solano, and Marin counties. Those outages and the ones that followed were ordered because there was a high risk of wildfires. By Tuesday, weeks later, the media were reporting that nearly 2 million Northern California residents were expecting to be hit by the fourth planned blackout of the month,

PG&E is hoping to avoid a repeat of last year, in which electrical transmission lines owned and operated by the utility sparked the Camp Fire, which killed 85 civilians, burned more than 150,000 acres and nearly 15,000 homes, and injured several firefighters. It was the deadliest, most destructive fire in California history.

PG&E labeled the disruption a “public safety power shutoff.” The utility industry calls it “de-energization,” a sort of euphemism that sounds less serious than “blackout.” It’s not a word that should be used in the 21st century in California. But there it is.

This state has long considered itself a model of progress, always pressing forward. Yet California now chooses darkness. And rather than being a rare exception, these autumn blackouts are more likely a preview of coming long night.

A modern state with a modern economy, a state not fighting typhus and other Medieval diseases in its streets, would have resolved the problem before the blackouts began. But California’s system for delivering electricity is primarily managed by utilities that are lumbering, inflexible bureaucracies operating government-protected monopolies.

The entire blame can’t be placed on a utility, though. PG&E might have provided the spark that started the Camp Fire, but government supplies the fuel for forest fires that turn into raging wildfires, burning everything in their path. Federal environmental policy, driven by activists, has “continuously thwarted” the use of “scientific management techniques — including logging, prescribed burns, and thinning — to treat forest fuel loads” in preventing fires, says Hoover Institution researcher Terry Anderson. The eco-groups would rather “let nature take her course.”

While living trees feed the flames, dead trees are high-octane fuel, and there might be nearly 150 million of them in California, says the U.S. Forest Service. Removing them from areas near homes and other structures, including power lines and equipment, reduces risk. But it isn’t easy. Not only do environmentalists oppose their removal, especially in the deep timber, in some instances, government permits are necessary, and on occasion, only a licensed contractor can legally do the job.

With California being “a place that nature built to burn,” according to university professor and fire historian Steven J. Pyne, there’s no avoiding a tomorrow filled with fires if man refuses to harness his environment.

The first two blackouts alone could cost the state’s economy $3 billion, says a Stanford professor, as business and commerce have had to take forced holidays. Students have missed school. Virtue-signalers have had to park their dead electric vehicles. It’s been weeks of people stumbling around in dark homes, few daring to open their refrigerators for fear of spoiling the groceries. Dining by candlelight has been by necessity, not in hope of romance. And only for those who have gas ovens (which have been outlawed in several California cities) and kept manual can openers in their kitchen drawers.

And let’s not forget at least one person died.

California is, both literally and figuratively, entering its own Dark Age. Decades of Blue State policies have fundamentally altered the trajectory of the state. Businesses and residents have been fleeing the slow-motion wreck for years and will continue to do so. No longer is California the land of opportunity, it is a purgatory of high taxes, unaffordable housing, an outrageously steep cost of living, crumbling roads and bridges, soul-grinding traffic, and catastrophic homelessness.

Each of these is a man-made disaster created by public policy that limits and directs rather than frees and stimulates.

Entrepreneurship, once both the heart and backbone of the state, has become increasingly under regulatory assault. Rabid pursuit of green policies promises a Third World energy future. The transport of water over long distances, solved by the ancient Romans more than 2,000 years ago, and before them the Egyptians, baffles today’s policymakers. One party controls both the legislative and executive levers and behaves more like a ruler than a representative.

Far from advancements, these are regressions toward a less-enlightened time. California is falling into the shadows.

This article was originally published by the Pacific Research Institute.

Another High-Profile Company Driven Out of San Francisco By High Taxes

Less than a year after losing by far its biggest-grossing company to Texas – the pharmaceutical giant McKesson Corp. – San Francisco is losing another high-profile firm. Stripe, a financial software company that is the second-highest valued start-up in the U.S., is moving to South San Francisco.

Both McKesson and Stripe were unhappy with Measure C, the “homeless tax” approved by San Francisco voters last November that requires companies based in the city, which have more than $50 million in annual revenue, to pay a levy based on their gross receipts. McKesson moved to Irving, a suburb of Dallas, which has no such tax and much lower overall corporate taxes. While South San Francisco is not as cheap as Irving, it doesn’t have anything akin to San Francisco’s tax, which has helped the city attract many tech firms, in particular biotech giant Genentech.

“Unfortunately, Stripe choosing to leave town is not an anomaly,” Alex Tourk, spokesman for the sf.citi tech trade group, told the San Francisco Chronicle. He said the business community needed to “work together [to] … establish a fair and equitable tax system that we can all rely on.”

But as the fight over Measure C reflected, there is a huge split among San Francisco tech firms. Marc Benioff – the billionaire chief executive of Salesforce, the city’s largest employer – and company employees provided millions in funding to the pro-C campaign. Benioff has disparaged tech firms which balked at the measure and appears open to even more tax measures to deal with San Francisco’s homeless crisis.

“This is a humanitarian emergency and it demands an emergency response,” Benioff wrote last year in an op-ed in The New York Times.

Uber moving entire departments to Dallas

But will more tax hikes be accepted by Uber, one of the city’s most prominent and famous start-ups? Uber was neutral on Measure C. And in a move with parallels to the actions of McKesson before it moved out, Uber announced in August that it was setting up a “second headquarters” with 3,000 employees in Dallas after being wooed for years by city leaders, who provided $36 million in incentives and tax credits.

“Dallas became the first city in Texas where the Uber app was available in 2012, and since then Texas has been a hub of innovation for our platform,” Dara Khosrowshahi, CEO of Uber, said in the company’s announcement. “Uber is excited to bring this major investment to Texas and to increase our commitment to the city of Dallas.”

Yet Uber officials said that too much should not be read into its decision and that San Francisco would remain its headquarters. Uber said there was no change in its plan to move into 500,000 square feet of new office space at the huge, high-tech new Chase Center next year.

Nevertheless, the Dallas Business Times reported that Uber was moving entire departments to Dallas, including the Uber Eats team, and its legal, human resources, recruiting, finance and business development units.

That’s similar to what McKesson did before it confirmed it was leaving San Francisco permanently.

Uber has an even stronger motive to leave than McKesson or Stripe, which are considered healthy companies. Uber lost $5.2 billion in the second quarter of 2019, the company announced in August. Its stock price is down about one-third since then, and analysts are mixed about its future.

This article was originally published by CalWatchdog.com

California is Burning: Who Will Pay?

The price for California’s plague of wildfires could be political or could be monetary, but political history dictates that someone pays a price for disaster.

Anger and frustration is palpable around the state over endless fires threatening lives and property. The people of California know that something has gone wrong and want answers. The trouble is there are so many villains, depending who you ask.

For some, utilities are corrupt and more concerned about profits than keeping up maintenance on the electric grid. For others politicians are to blame for demanding so much from the utilities that they have lost focus on important upgrades. Still others point to the weakness of humans against the power of nature but add that we are suffering nature’s revenge for damaging the climate.

How does this get sorted out to satisfy the body politic?

Governor Gavin Newsom says he owns the problem putting a target on himself to do something about a complex problem. If he manages to establish a vision for confronting the crisis, even if it means no next-day solution, he could avoid the people’s wrath.

PG&E, with its battered reputation, has little chance of escaping blame. Suggestions to redirect the utilities efforts away from alternative energy spending and putting that money into grid fixes has its own critics.

Meanwhile, the tragedy grows as people are forced from their homes and property is destroyed.

And the property loss is not exclusively homes. Businesses like the Gold Rush era Soda Rock Winery building in Northern California and cultural institutions like the Ronald Regan Presidential Library in Simi Valley have been either destroyed or were put in grave danger.

I was privileged to be at the official opening of the Reagan Library in Simi Valley in 1991. (Way in the back, standing room section, but able to see the five presidents attending the event.) I spent much time there researching a chapter for my book on California’s tax revolt. So I watched with more than general interest the fight to save the library from the Easy Fire.

At the Library I got to handle hand written radio scripts composed by Reagan himself. (Access to the yellow legal pads had to be cleared by Mrs. Reagan, I was told.) I thought about those historical documents susceptible to lose if the fire invaded the library. It only brought home, however, all the valuable documents, precious photos, personal and professional items and all things meaningful lost by so many Californians to the ravages of these fires.

Political nature says someone must pay for these on-going catastrophes.

This article was originally published by Fox and Hounds Daily.

Vote on Impeachment Inquiry Continues Witch Hunt

The House of Representatives voted 232-196 on Thursday to approve a resolution formalizing the impeachment inquiry into President Trump. The vote was nearly on party lines, with two Democrats voting against the resolution.

Trump victory spokesperson Samantha Zager argues that the vote goes to show that the impeachment witch hunt has been a sham from the beginning, and Democrats have thrown all precedent, due process and transparency out the window in their fanatical quest to take down President Trump.

“Democrats like Josh Harder, TJ Cox, Gil Cisneros, Katie Porter, Harley Rouda, and Mike Levin chose to side with Nancy Pelosi, Adam Schiff and the socialist squad over their constituents, and have officially committed political malpractice. Americans will remember how these Democrats chose to pursue division and investigation over progress and promises” said Zager.

Background information:

  • This resolution is deeply flawed and gives Democrats on the Intelligence Committee – led by Adam Schiff – ultimate power, breaking with precedent.
  • Before their resolution 110 Members were allowed to participate in the investigation. Now, only 22 Members will be allowed to participate, meaning hundreds of millions of Americans won’t have their Representative involved in this partisan process.
  • Despite Democrats’ attacks, RNC internal polling conducted weekly from 10/1 to 10/24 shows support for President Trump has increased by 3 points since Pelosi announced this charade.
  • In target states, voters oppose Democrats’ efforts to remove President Trump from office by a 14-point margin, and 70% believe this is “all politics.”
  • Independent voters nationally oppose Democrats’ efforts to remove President Trump from office by a 13-point margin.

State Auditor: California’s 12 Largest Cities at Financial Risk

Photo courtesy of channone, flickr

According to a new website run by California State Auditor Elaine Howle and her staff, the dozen most populated cities in California all have significant fiscal problems and will be forced into major adjustments in coming years.

Eleven of the cities – Los Angeles, San Diego, San Jose, San Francisco, Fresno, Sacramento, Long Beach, Bakersfield, Anaheim, Santa Ana and Riverside – face what Howle classified as moderate risk. One – Oakland – was seen as a high risk.

All 12 of the cities face considerable stress from the rising cost of pensions. Several – especially Los Angeles – also have vast unfunded health care obligations for their retirees. 

Howle’s findings were depicted as surprising in a Sacramento Bee analysis, which focused on the health of the state economy and the low unemployment rate. But government finance experts have long warned that California’s cities – which have seen the cost of post-employment benefits roughly triple over the last 30 years – are in a far worse position to deal with pension bills that the state and counties. That’s because total employee compensation takes up a much bigger chunk of city budgets.

Howle warns cities to prepare for recession

At a news conference introducing the website, Howle said a primary goal was making sure that both local officials and residents of each city would use her office’s analysis to prepare for a possible economic downturn. Even a mild recession is likely to reduce revenue that cities get from sales and hotel taxes and from development permitting.

“If some of these [cities’] costs continue to go up and these cities aren’t prepared for them, they will have to cut services in order to pay pensions, to pay for benefits, to pay for the debts that some of the cities have taken on,” Howle said, according to the Sacramento Bee. She specifically said nearly half the cities will struggle to meet their steadily increasing payments to CalPERS.

Rankings on the website are based on the 2016-17 fiscal year, with a focus on each city’s pension obligations, pension funding, pension costs, anticipated future pension costs, retiree health care expenses, debt burden, liquidity, general fund reserves and revenue trends.

Overall, 18 cities were said to be at high risk overall, 236 at moderate risk and 217 cities at low risk. Compton – which has not produced an audited overview of its finances in five years – was judged to be in the worst shape, followed by Atwater and Blythe. 

The other cities listed at being high-risk: Lindsay, Calexico, San Fernando, El Cerrito, San Gabriel, Maywood, Monrovia, Vernon, Richmond, Ione, Del Ray Oaks, Maryville, West Covina and La Habra.

Among the cities found to be in the best shape: Rancho Cucamonga, Chino Hills, Poway, Indian Wells, Rancho Mirage, La Quinta and Mountain View.

The fact that 2-year-old information was being presented by the auditor as a snapshot of cities’ current fiscal health prompted criticism from the League of California Cities.

“It doesn’t tell the story of now, and so we’re not really clear on how helpful this dashboard is to the public, to the cities or basically anybody,” Jill Oviatt, director of communications and marketing for the league, told the Bee. She likened Howle’s rankings to “a data dump that’s void of context and analysis.”

This article was originally published by CalWatchdog.com

Trump’s Executive Order Strengthens Medicare in Face of ‘Medicare-for-All’ Threat

Earlier this month, President Trump signed an executive order designed to defend Medicare against the threat of “Medicare-for-all.” Speaking to a crowd in The Villages, Florida, the president promised that his order would “strengthen, protect, and defend Medicare for all of our senior citizens.”

This order couldn’t come at a better time. As Democratic presidential candidate Sen. Elizabeth Warren rises in the polls, “Medicare-for-all” is becoming the Democratic Party’s official stance on healthcare reform.

But “Medicare-for-all” would end Medicare as we know it and make it harder for seniors to get care. President Trump’s order, by contrast, would improve the program for those who need it most.

The executive order lays bare what “Medicare-for-all” would mean for seniors. By enrolling everyone in the same government-run insurance plan, “Medicare-for-all” would destroy traditional Medicare. Seniors would lose the privileged place they currently occupy in the healthcare system. As the order states, this is unfair to those who have contributed to Medicare “throughout their lives” and expect to receive quality health benefits in old age.

By contrast, the president proposes strengthening the program, particularly by shoring up Medicare Advantage. Private insurers administer these plans, which combine the hospital and doctor benefits covered by Medicare Parts A and B. Many Advantage plans also include prescription drug coverage.

Medicare Advantage enrollment has nearly doubled over the past decade. One-third of all Medicare beneficiaries are covered by Advantage plans this year. The Congressional Budget Office predicts that nearly half of all Medicare enrollees will be in these plans by 2029.

Medicare Advantage is popular because it delivers high-quality care at low cost to beneficiaries. There are several reasons for this. Every year, the government determines what it will pay to cover Medicare Advantage enrollees in a given area. Insurers who provide coverage for less than that amount get back the difference in the form of a government rebate. Insurers also get bonus payments for receiving high-quality ratings.

As a result, insurers are incentivized to keep beneficiaries happy. They do so not just by keeping a lid on costs for enrollees but by offering benefits not covered by traditional Medicare. Nearly 70 percent of Medicare Advantage plans provide dental benefits; close to 80 percent include vision care. Over 70 percent offer some type of fitness benefit.

The president’s executive order would further empower Medicare Advantage plans to provide top-tier benefits to seniors. For instance, the plan directs the Secretary of Health and Human Services to find ways that plans can incorporate telemedicine — that is, care delivered remotely with the help of technology.

That’s great news. Telemedicine can give seniors access to far-away specialists they wouldn’t otherwise be able to see. It can also allow seniors to receive care from the comfort of their own homes.

And telemedicine is proven to improve patient health while containing costs. One Maryland hospital’s telemedicine program reduced hospitalizations for chronic disease patients by 90 percent; it’s cut the cost of care for these patients in half since 2016.

Traditional Medicare beneficiaries would also benefit from the Trump executive order. An entire section is devoted to reducing regulations so doctors can spend more time with patients. Right now, nearly one-third of doctors spend just 15 minutes with each patient they see, in large part because they have to spend so much time on paperwork and administrative tasks to comply with Medicare’s rules. Slashing red tape will allow doctors to focus on actually delivering care.

The executive order also contains a variety of provisions designed to increase competition in Medicare. One section directs various federal agencies to research how to “inject market pricing” into traditional Medicare so that prices throughout the benefit would “more closely reflect the prices” paid in Medicare Advantage. Elsewhere, the order calls for rules that would provide beneficiaries with price and quality information to help them shop for the best-value plans and providers.

Taken together, these provisions could make traditional Medicare look a lot more like Medicare Advantage. That’s good news for beneficiaries — average Medicare Advantage premiums have been declining since 2015, dropping to just $29 a month this year.

Protecting Medicare for seniors will require more competition, not more government control. Kudos to President Trump for realizing that the future of this program lies with Medicare Advantage, not “Medicare-for-all.”

This article was originally published by the Pacific Research Institute.