New Bill Would Allow Cities to Ratchet Up Sales Taxes Even Higher

LAO Sales Tax State Comparison ChartAlthough Californians already pay some of the highest sales taxes in the nation, a bill that recently passed the Assembly paves the way for the sales tax to go even higher. Assembly Bill 464 increases to 3 percent (from the current 2 percent cap) the maximum sales tax rate that can be levied by local governments.

That potential 3 percent sales tax levied by cities and counties is in addition to the statewide 7.5 percent sales tax, which could result in a combined 10.5 percent tax in some areas of the state. Tax hikes require majority voter approval for general purpose levies and two-thirds approval for special purposes.

The average state and local combined sales tax in California is 8.5 percent, according to a recent report by the Legislative Analyst’s Office. The lowest rate of 7.5 percent predominates in rural counties, while the highest rates are in urban areas. Residents in eight cities in the Bay Area and Los Angeles County are currently paying a 10 percent sales tax because their counties have received exemptions from the 2 percent cap.

“AB464 is about local control and flexibility,” said the bill’s author Assemblyman Kevin Mullin, D-San Mateo, on the Assembly floor May 14. “It gives local voters the ability to raise revenue to fund important public services, including transportation, public safety and libraries. This bill is crucial, because if just one city in a county reaches the [2 percent] cap, then the entire county is precluded from having voters raise any additional taxes, hindering key transportation projects or attempts to enhance public safety.

LAO Sales Tax Chart“As a result, a flurry of legislation has been signed into law creating individual cap exceptions across the state. AB464 reduces the need for this one-off legislation by lifting the cap statewide. Please join me in granting voters the ability to raise sufficient revenue to fund public services locally in California.”

There was no debate on the bill, which passed along party lines 45-31. It’s supported by California’s counties and their transportation commissions along with government employee unions.

The California Taxpayers Association issued an opposition “floor alert” on the bill that was signed by numerous business and local taxpayer organizations. It states that “California already has the highest sales and use tax rate in the country,” and provides three arguments against raising the cap:

  • Increases the cost of doing business. Businesses face a significant sales and use tax burden in California, and business purchases account for roughly 40 percent of all sales and use tax collected by state and local governments. California is one of the few states that requires businesses to pay sales and use tax on manufacturing and R&D equipment bought and used in the state, making California a very expensive state to operate in, particularly when the sales tax rate is 10 percent in some California cities.
  • The sales and use tax is a regressive tax that impacts California’s most vulnerable residents, making it more difficult for them to budget and purchase everyday necessities. California’s economy is improving, resulting in improved revenue collections this year. Now is the wrong time to ask taxpayers, especially those that can least afford it, to spend more of their income to pay taxes.
  • Raises the sales tax rate to 11 percent in some areas. [T]he Los Angeles Metropolitan Transit Authority imposes a 0.5 percent tax in excess of current limitations for all of Los Angeles County. This bill would authorize this district to increase its rate to 11 percent. This level of taxation is excessive, and exacerbates the problems described above.

That last argument may be in error. The bill caps the city/county-levied sales tax to 3 percent above the statewide rate, which would equal a maximum of 10.5 percent even for districts with current 0.5 percent cap exceptions.

The immediate beneficiaries of AB464 are Alameda, Contra Costa, Los Angeles and San Mateo counties, which have all reached the 2 percent limit, as well as Marin, San Diego and Sonoma counties, which are near the 2 percent limit, according to the Assembly’s legislative analysis.

California’s sales tax brought in $48 billion in 2013–14. About half of it goes to the state government’s general fund, making it the second largest general fund source after the income tax, which accounts for two-thirds. One percent of the sales tax goes to cities’ and counties’ general funds; the rest is aimed at specific programs such as public safety and transportation.

LAO Sales Tax Increase Chart

The statewide sales tax rate began at 2.5 percent in 1933. Although the tax rate has tripled since then and its revenue has increased at a 7.3 percent annual rate, the sales tax has actually decreased as a share of total state revenue. “In the 1950s, the sales tax accounted for the majority of General Fund revenue, while the personal income tax contributed less than one-fifth,” the LAO report said. “Since then, personal income tax revenue has grown rapidly due to growth in real incomes, the state’s progressive rate structure and increased capital gains.”

In 1969, cities and counties were granted the authorization to pass their own sales tax increases, mostly benefiting transportation improvements.

Although not nearly as volatile a revenue source as the income tax, revenue from the sales tax can vary significantly depending on the state of the economy. In 1974-75 sales tax revenue increased 22 percent, but in 2008-09 it declined 10 percent. Overall, however, adjusting for increased rate changes, inflation and population, sales tax revenue has remained roughly constant per capita since 1970–71, according to the LAO.

AB464 will next be considered by the Senate Rules Committee.

California could soon legalize motorcycle lane-splitting

As reported by the Los Angeles Times:

Motorcycle lane-splitting — the rush-hour time saver for bikers that enrages many drivers — may be poised for formal legalization.

California would be the first state to sanction the traffic-evading tactic, already widespread on traffic-choked freeways of Los Angeles.

The state Assembly is expected to approve the legislation as soon as Thursday, and supporters believe it will clear the Senate as well.

The measure would allow motorcycles to travel between cars at speeds up to 15 mph faster than the flow of traffic, up to a speed of 50 mph. …

Click here to read the full article

Will Dems Try to Recall One of Their Own?

Time doesn’t heal all intra-party wounds.

Last November, unknown community activist Patty Lopez defeated a fellow Democrat, incumbent Raul Bocanegra, in the 39th Assembly District. It is — without a doubt — the biggest upset in the history of California’s Top Two primary, which was enacted by voters with Proposition 14 in 2010.

Political professionals were left stumped at how Lopez won. In the June 3 primary, Bocanegra beat Lopez by nearly 40 points, the largest margin of any Democrat vs. Democrat primary in Los Angeles County. In advance of the November election, Lopez didn’t report any expenditures or obtain a candidate statement.

It hasn’t taken long for those unresolved questions to turn into vicious smears and an organized effort to unseat Lopez.

Recall?

Before the first-term state lawmaker could introduce her first bill, angry self-described “progressives” were talking of a recall attempt.

“We cannot wait two years down the line for a chance to rectify the results of misplaced trust and uninformed voting,” Rosemary Jenkins, a Democratic activist and chair of the Northeast Valley Green Alliance, wrote at CityWatchLA.com. “By and large, worthy office-holders must pay their dues first, gaining experience through working their way up the ladder. She has not done that.”

Democrats fighting logoJenkins even branded Lopez as “functionally illiterate. … As a Progressive, I firmly believe in diversity with all its ramifications, but to be an effective legislator at any level requires fluency in the English language and the ability to communicate well.” (boldface in original)

Jenkins offered as grounds for a recall: Lopez has failed to use her taxpayer-funded office to support patronage jobs for Democratic activists.

“Speaking of the Democratic Party, she, as an elected Democrat, is obligated to hire Democrats as her staff members,” Jenkins wrote. “She has been in violation of this regulation.”

Of course, no such regulation exists and likely would be illegal. Although it’s rare, numerous California politicians have hired staffers of the opposing political party for key positions. Gov. Arnold Schwarzenegger famously hired Democrat Susan Kennedy as his chief of staff. In 2013, then-State Sen. Lou Correa, a Democrat, hired longtime GOP staffer Damon Conklin to serve as a top adviser and lead his communications outreach.

Lopez’s chief of staff is a longtime Democratic staff member, Lourdes Jimenez, who recently worked for Sen. Ben Hueso, D-San Diego. What’s Lopez’s big staffing crime? She hired Ricardo Benitez, a Republican, to a field representative position.

“What Sacramento is finding out about the newly elected Assemblywoman is troubling, to say the least,” Mario Solis-Marich, another blogger angry with Benitez’s hiring, wrote at LAProggressive.com.

‘Smear campaign’

The pettiness and persistence of the attacks has some constituents questioning whether it’s part of a larger smear campaign.

“It appears that a very well-orchestrated smear campaign has been launched against Assemblywoman Patty Lopez disparaging her ethnic origins, gender, and abilities, while insulting the intelligence of the voters of the 39th Assembly District,” Michael Moncreiff, who lives in Rancho Tujunga, recently wrote at CityWatchLA.com. “All these disrespectful remarks are being callously disseminated one month after the Assemblywoman took office and well before she has commenced her legislative work.”

capitolFrontAs recently as mid-January, an attack website accused Lopez of “deceiving voters.” However, the website has recently been taken down and no archived copy was available.

The attacks, to a degree, have galvanized support for Lopez.

“She listens to us and is working for our communities instead of the pocketbooks of a few,” Nina Royal, who is active in several community organizations in the district, recently posted on Facebook. “I am confident that she will work hard to make a difference in our District.”

Another community activist in the largely Spanish-speaking district told Hoy Los Angeles, “Ella representa lo que la gente quiere, es la voz de ellos.” In English, “She represents what people want, (she) is the voice of them.”

‘I will make sure that everyone’s voice is heard’

Lopez, who declined CalWatchdog.com’s request for comment on the recall attempt, has said she’s interested in representing all people in her district, not just politically connected party loyalists.

“I am no different from many of my colleagues in the Assembly because I ran for this office to improve the lives of people in my district and in California,” Lopez recently wrote. “And as the new representative of the 39th District in the California Assembly, I will make sure that everyone’s voice is heard.”

She added, “I am still learning how everything works in the Legislature.”

New 2015 Laws: Hollywood Wins, In-Home Care Loses

New Year’s Day sure wasn’t a holiday from new regulations: 2015 brings 931 new laws Californians must obey. Some took effect on Jan. 1; others will later in the year.

State lawmakers — with the approval of Gov. Jerry Brown — have changed how consumers shop for groceries, how Hollywood blockbusters are funded and how much time you get off work when you’re sick.

Perhaps the most talked about new law, the country’s first statewide ban on single-use plastic bags, also is the least likely to go into effect. Under Senate Bill 270, by state Sen. Alex Padilla, D-Los Angeles, grocery stores and markets would be banned from distributing plastic bags on July 1. Stores would also be forced to charge customers at least 10 cents for a recycled paper bag, the proceeds of which can go toward offsetting the cost of complying with the new regulation.

However, a manufacturing trade group, the American Progressive Bag Alliance, has channeled consumer anger over the new state regulation into a successful petition drive. Earlier this week, the group turned in more than 800,000 petition signatures to county registrars in an effort to qualify a referendum for the 2016 ballot. If the measure qualifies for the ballot, the law would be delayed until voters decided its fate in Nov. 2016.

Hooray for Hollywood handouts

While the outcome of the state’s plastic bag ban remains in doubt, there’s no doubt Hollywood will have its handout in the new year. Assembly Bill 1839, authored by Assemblymen Mike Gatto, D-Los Angeles, and Raul Bocanegra, D-Pacoima, would more than triple California’s corporate welfare program for film and television programs.

Under the state’s current subsidy program, the California Film Commission gives away $100 million in tax credits to big studios that keep production in California. The new law will increase that corporate welfare fund to $330 million per year for the next five years. It also changes how the funds are distributed, linking the size of the welfare to the number of jobs created by the project.

“In the last 15 years, film production has dropped nearly 50 percent in California,” said Senate GOP leader Bob Huff of Diamond Bar, a co-author of the corporate welfare bill. “When that happens, it’s the ‘behind the scenes’ workers who take a hit, as well the ancillary businesses that serve the production sites and teams. If California is going to get these jobs back, we must compete with other states and nations who are clamoring for that big movie business.”

Yet taxpayers often fail to see an adequate return on their investment, as CalWatchdog.com reported earlier this year, “A recent Legislative Analyst’s Office report concluded that the Golden State is actually failing to recoup its supposed investment in keeping the entertainment industry local, losing some 35 cents on the dollar.”

In-home workers excluded from new paid sick leave

As the state gives away hundred of millions of dollars to Hollywood studios, it simultaneously claims it can’t afford to extend a new perk to in-home care workers. AB1522, authored by Assemblywoman Lorena Gonzalez, D-San Diego, requires all companies to provide their employees up to three paid sick days per year.

But the new law, which takes effect on July 1, excludes 365,000 in-home support service workers. The California Chamber of Commerce opposed the bill and included it in its list of 2014 “job-killers.”

Why did the Democratic-controlled Legislature abandon the state’s low-paid workers and exclude government from the new regulation?

“At the end of the day,” Gonzalez told the union-backed Capitol & Main blog, “we were forced to take that specific group out.  It was a condition of having the bill signed by Gov. Brown.”

Brown objected to the $82 million annual price tag to hold the state to the same regulations as private businesses. The cost of providing sick days to in-home workers was less than the current Hollywood subsidy program.

Other new laws in California

Redevelopment Revival

AB229, by Assemblyman John Perez, D-Los Angeles, allows local governments to create Infrastructure and Revitalization Financing Districts to revive old military bases. These districts could issue 30 years of debt with the approval of two-thirds of voters in the district.

SB628, by state Sen. Jim Beall, D-Campbell, revives redevelopment agencies under a new name, “Enhanced Infrastructure Financing Districts.” These districts would be allowed to “finance public capital facilities or other specified projects of community-wide significance” with the approval of 55 percent of voters in the district.

New Gun Laws: 

AB1964, by Assemblyman Roger Dickinson, D-Sacramento, bans gun shop owners from selling single-shot handguns that can be altered into semi-automatic weapons.

AB1014, by Assemblymember Nancy Skinner, D-Oakland, creates a new restraining order that allows the confiscation of firearms when a person is determined to be “an immediate and present danger of causing personal injury to himself, herself, or another.”

New Laws in the Bedroom: 

SB1255, by state Sen. Anthony Cannella, D-Modesto, expands California’s “revenge porn” ban against posting intimate images of unwilling or unaware people on the Internet, including selfies.

SB967, by state Sen. Hannah-Beth Jackson, D-Santa Barbara, requires colleges to develop instruction manuals informing students that sexual activity requires affirmative consent.

This article was originally published by CalWatchdog.com

CA Common Cause: State lawmakers accepted $844,000 in gifts in 2013

Let the good times roll!

California lawmakers accepted $844,000 in gifts in 2013 — the majority of which came from special interest groups that routinely lobby the state Legislature.

According to a new report released by the good-government group California Common Cause, gifts to elected state representatives included $580,000 in travel payments, more than $100,000 in meals and receptions and $65,500 for tickets to entertainment and sporting events.

“With ongoing federal investigations into potential ethics violations by several state lawmakers, this report highlights that there are many legal channels through which special interests exert their influence in Sacramento,” Kathay Feng, executive director of CA Common Cause, said in a press release.

More than 2,700 gifts reported in 2013

Each state lawmakers received, on average, $600 worth of gifts every month. To put that number into perspective, it’s three times the freebies the average recipient of food stamps receives in California. According to the California Department of Social Services, “The average amount of CalFresh benefits received per household is about $200 per month.”

In total, state lawmakers reported more than 2,700 individual gifts in 2013, ranging from a $1.50 bottle of Coke to a $15,782 trip to Armenia. While meals were the most common item, the largest payments were for travel to exotic locations and accommodation in luxury hotels. Among the more unique gifts were:

  • $439 in tickets to a Drake concert given by the Oakland-Alameda County Coliseum Authority to Assemblyman Rob Bonta, D-Oakland;
  • $216 in nail polish given by the Personal Care Products Association to then-Senator Leland Yee, D-San Francisco, who is facing charges of corruption;
  • $160 worth of golf fees and clubs given by the California Foundation on Education and the Environment to state Sen. Anthony Cannella, R-Ceres;
  • $130 in spa services given by the California Legislative Black Caucus Policy Institute to state Sen. Holly Mitchell, D-Culver City;
  • $115 in seafood given by the Monterey Bay Aquarium Foundation to Assemblyman Reggie Jones-Sawyer, D-Los Angeles.

Gifts increasing in number and value

capitolFrontCA Common Cause says both the number and value of gifts increased dramatically in the past year. According to their report, state elected officials accepted approximately $216,000 in gifts and travel payments, including $41,000 in hotels and lodging; $30,000 for tickets to entertainment and sporting events; and more than $100,000 for meals and receptions.

“While Californians across the state exchange gifts this month in celebration of the holidays, its worth taking a minute to reflect on the year-round, not-so-secret Santa happening in the state Capitol,” said Sarah Swanbeck, policy and legislative affairs advocate for CA Common Cause. “What we’re seing is a growing trend in both the number of gifts and the total value of those gifts given by powerful special interest groups to state lawmakers.”

To compile its report, the group analyzed publicly available financial disclosure reports, which are filed annually with the Fair Political Practices Commission. That means the figures are likely to be lower than the actual total. State law does not require gifts under $50 in value to be reported on these Statement of Economic Interest forms. Financial disclosure reports for 2014 won’t be available until March 1.

Top Recipients of Gifts in 2013

John_Pérez_2011Legislative leaders topped the list of gift recipients in 2013, with former Speaker of the Assembly John A. Perez, D-Los Angeles, taking home nearly $38,000 in gifts and perks. The Top 10 recipients, according to the report:

  1. Assemblyman John A. Perez: $37,823;
  2. Sen. Ricardo Lara: $32,492;
  3. Sen. Anthony Cannella: $26,644;
  4. Assemblyman Steven Bradford: $25,408;
  5. Assemblyman Travis Allen: $23,118;
  6. Sen. Kevin de Leon: $22,910;
  7. Assemblyman Scott Wilk: $21,780;
  8. Assemblywoman Connie Conway: $20,675;
  9. Assemblywoman Cristina Garcia: $20,600;
  10. Assemblywoman Kristin Olsen: $17,603.

All of the state lawmakers listed in the Top 10 of gift recipients utilized the longstanding loophole that allows elected officials to circumvent the state’s $440 gift limit.

Legislators gone wild on junkets

State officials can accept gifts that exceed the state’s gift limit if it is for travel-related expenses in conjunction with a speech or conference. Special interest groups routinely take advantage of this loophole by organizing “conferences” in exotic locales. In 2013, the two biggest donors helped state lawmakers jet off to Scandinavia, Taiwan and Maui, courtesy of this loophole.

The biggest gift-giver to state lawmakers was the California Foundation on the Environment & Economy, which spent $161,893 in travel-related gifts. It was followed by the Independent Voter Project, which spent $38,080 in 2013.

Fairmont kea laniFounded by former Assemblyman Steve Peace, the IVP hosts a notorious annual conference in Maui. Eighteen state lawmakers attended the group’s 2013 conference, held at the luxurious Fairmont Kea Lani, “Hawaii’s only all-suite and villa luxury oceanfront resort.”

The travel gift loophole has been criticized by newspapers and ethics experts.

“Almost all of this largesse came courtesy of people and organizations with business before the Legislature,” the Press-Democrat recently editorialized. “With all the junkets and outings, it’s a wonder they find time for any business.”

Sacramento: Only place there’s still a free lunch

While travel-related gifts accounted for nearly 70 percent of the dollar amount, the most frequent gift given to legislators in 2013 was a free lunch. That’s gifts of meals and drinks; and attendance at receptions, events and hospitality suites.

In the area of free meals, the California Democratic Party donated more than any other group, according to CA Common Cause. The state party spent nearly $10,000 to wine and dine its members.

Top 10 gift-givers

The top 10 gift-givers in 2013 were:

  1. California Foundation on the Environment & Economy: $161,893;
  2. Independent Voter Project: $38,080;
  3. Consulate General of the Republic of Armenia: $25,173;
  4. State Legislative Leaders Foundation: $24,027;
  5. Pacific Policy Research Foundation: $22,015;
  6. Taipai Economic and Cultural Office: $32,533;
  7. California Issues Forum: $18,902;
  8. The Jewish Federation of Greater Los Angeles: $17,989;
  9. American Israel Foundation: $12,737;
  10. California Democratic Party: $10,556.

This article was originally published at CalWatchdog.com

CARTOON: CA Politically Polarized Legislature

CA Legislature

Wolverton, Cagle Cartoons

Assembly GOP Leader Kristin Olsen Introduces New Stars

 

Ling and Young2014 was a solid year for California Republicans. In the state Senate, the GOP prevented Democrats from regaining a two-thirds supermajority.

And in the Assembly, Republicans defeated three Democratic incumbents, which also reversed a Democratic supermajority.

“We unseated sitting Democrats for the first time in 20 years because Californians want positive change and because we had great, hard-working candidates on the ballot this year, candidates who are connected with their communities and know the challenges facing people in their districts,” newly elected Assembly Republican Leader Kristin Olsen told CalWatchdog.com. “They were more diverse than ever – in gender, ethnicity, culture, socio-economic upbringing and background.”

Is the GOP changing? In the Assembly, women make up a greater share of the Republican caucus than the Democratic caucus. Although Democrats hold nearly a two-thirds majority in the lower house, there are nearly as many Republican women (seven) as there are Democratic women (currently 10; or 11 if Patty Lopez defeats Raul Bocanegra in AD 39 in a tight race — Lopez currently leads by seven votes; both are Democrats).

The Friday following the election, Olsen introduced to the Sacramento press the three most talked about new members of her caucus — each of whom has a major achievement by virtue of her election. Catharine Baker is the first Republican to win a Bay Area legislative seat in years. Ling-Ling Chang is the first Taiwanese-American Republican woman to join the Assembly. And Young Kim is the first Korean-American Republican elected to the lower house.

Young Kim: First Korean American GOP woman elected to State Assembly

Kim’s election was significant for the Korean-American community and Republicans’ efforts to court Asian-American voters. Kim’s victory, which was front page news in Korean-language newspapers, resonated in Orange County’s  Koreatown and the much larger Koreatown in Los Angeles.
“In particular, the election of Young Kim is being evaluated as a political upset by even the mainstream community,” the Korea Times noted. “In politics, there is a huge advantage of being an incumbent. The probability of a first-time candidate to win over an incumbent is almost impossible. However, Young Kim was able to overcome difficult obstacles and disadvantages and win.”

For the next two years, you can expect Kim to be an almost daily fixture in the Korean-language newspapers, where she’ll be talking about lowering taxes and improving California’s business climate.

“Now that we’ve broken the Democrats’ supermajority in both houses, taxpayers can sleep a little better at night knowing that Proposition 13 is safe, at least for the next two years,” Kim told CalWatchdog.com, referencing the 1978 tax-limitation initiative.

She says she’ll focus on creating a business-friendly environment to help spur job creation in California as well as keeping our communities safe by putting a focus on public safety.

Fast-track to GOP leadership: Ling-Ling Chang

If there’s one freshman Republican on the fast-track to leadership, it’s Chang. She’s a smart, articulate assemblywoman-elect with impressive fundraising at a time when Republicans are serious about re-branding the party.

It’d be a no-brainer for Chang to land a spot on the Assembly Health Committee, one of the most coveted assignments in the lower house. An expert on public health, Chang has experience in both the non-profit and for-profit side of health care. She’s worked in the corporate sector training physicians and medical staff at various hospitals across Southern California.

jay obernolteWith a spot on a juice committee, Chang would boost her already robust fundraising, which aided GOP targets in November. In the final two months of the campaign, Chang contributed more than $60,000 to party committees and legislative targets, including colleagues Kim, David Hadley, Tom Lackey, Marc Steinorth, Catharine Baker and Eric Linder.

When CalWatchdog.com asked her about the incoming GOP class, she quickly focused the spotlight on her colleagues. One colleague, who is getting buzz as an expert in technology, is Jay Obernolte, a fellow Southern California Republican freshman.

“Jay is one of the smartest, most technologically savvy individuals I know,” Chang told us when we asked about the new freshmen class. “His experience as a software and video game developer and business owner will bring a cutting edge perspective for Republicans to the issues facing California.”

Obernolte, the mayor of Big Bear Lake, founded FarSight Studios, a successful video game company that makes “family videogames for the PlayStation3, Nintendo Wii, Xbox 360, Nintendo DS, Apple iPhone, and the PC.” For a caucus looking to make inroads with Silicon Valley, who better than a video-gaming geek who graduated from UCLA and CalTech?

Catharine Baker: Lone GOP voice in Bay Area

Republicans also benefit from Baker’s representation of the Bay Area. For years, Republicans have been without any state or federal elected officials in the region. An attorney from Pleasanton, Baker becomes the most prominent Republican official for hundreds of miles in the Bay Area.

In practical terms, that’s a very big deal. It means she’ll be sending out field representatives to PTA meetings, distributing certificates at chamber breakfasts and fielding constituent calls to help with the DMV– all the boring things that win elections.

“Voters sent a message on Election Day that the culture of corruption and one-party rule in the Legislature is unacceptable and not healthy for our state,” Olsen said.

She added, “Now, our Assembly Republican Caucus will take the responsibility voters have given us and work hard together to put California on a better path for ALL Californians in each and every neighborhood.”

This article was originally published on CalWatchdog.com