Californians can’t catch a break as gas prices spike again

The ongoing heat wave is raising the risk of blackouts on top of perennial drought and fires. And now, after enduring record pump prices in June that were much higher than the national average, Californians face surging gasoline costs again at the end of the summer travel season when they typically fall.

Pump prices jumped 10 cents a gallon in a week in Los Angeles County and the Inland Empire and 13 cents in Orange County, according to auto club AAA. Record wholesale premiums signal they could rise even further. At the state level, retail prices average $5.34 a gallon on Friday, 4 cents more than the previous day.

The confluence of bad news highlights how vulnerable California’s energy systems are to supply disruptions. The state is an energy island, cut off from crude and fuel hubs in the Gulf Coast and Midwest by the Rocky Mountains. Regulators require a boutique grade of cleaner-burning fuel that few refineries are geared to produce outside of the state. As a result, fuel shortages take time to resolve and price spikes are far more common than elsewhere in the country.

Gasoline stockpiles on the US West Coast have fallen by 11% since the beginning of August amid a lack of imports to their lowest level in about seven years, data from the Energy Information Administration show. The California grade of gasoline known as Carbob also saw inventories drop to 8% below the five-year average for this time of year, according to the California Energy Commission.

Refiners in the state are running harder, but hot weather and a stressed power grid may be causing some problems. Excess heat challenges the water cooling system in refineries, and one way to handle it is to cut operation rates, said John Auers, managing director at RBN Energy.

“Heat, along with the way the power grid is being managed, can be contributing to the refinery issues,” Auers said in a phone interview. A string of incidents recently surfaced in Southern California and may have spooked traders in the spot market, which sets the basis for retail prices.

Click here to read the full article at the OC Register

Congress Just Passed the Inflation Reduction Act. It Will Hike Taxes on Some Middle-class Households.

It also spends billions on new green energy programs, and it lets the IRS hire 87,000 new agents.

Congressional Democrats have put the finishing touches on a questionable bet: that higher taxes will help tame rising prices, and that voters will reward the effort.

On Friday afternoon, the House of Representatives approved a $300 billion tax hike with a party-line vote, 220–207, sending the Inflation Reduction Act to President Joe Biden’s desk. It passed the Senate with a similar party-line vote on Sunday.

Despite the bill’s name, independent analysts have found it will have virtually no impact on inflation. In reality, it is a pared-down version of what Biden originally pitched as the “Build Back Better” plan—it leaves aside much of the original bill’s spending, but it maintains a huge corporate tax increase, huge spending on green energy initiatives, and a plan to swell the ranks of IRS agents. What was originally a roughly $4 trillion proposal that would have relied heavily on borrowing ended up being something of a rarity in Washington: a bill that will raise more revenue than it spends.

And where will it get that revenue? Quite possibly from you. Households earning as little as $50,000 annually are more likely to see a tax increase than a tax break from the legislation.

In the final hours before the House vote, the Joint Committee on Taxation (JCT) completed a breakdown of how the bill’s corporate tax increases would affect households at various income levels. The JTC, a nonpartisan number-crunching agency within Congress, found that households earning between $50,000 and $75,000 are more likely to see a tax increase than a tax decrease next year.

Higher-earning households are more likely to see tax increases, but households earning more than $1 million next year are actually far more likely than lower-earning households to get a tax break.

That fits with what The Tax Foundation, a tax policy think tank, found when it analyzed the bill. The Inflation Reduction Act will “would also reduce average after-tax incomes for taxpayers across every income quintile over the long run,” the Tax Foundation reported on Wednesday. Those tax increases will reduce long-term economic output by about 0.2 percent and could eliminate 29,000 jobs, the group found.

Democrats pushed the bill as a cost-cutting measure that would help Americans make ends meet, reduce the federal budget deficit, and help protect the environment.

“It makes a difference at the kitchen table,” Pelosi said at a press conference on Friday morning. “And at the board room table, corporations will now have to pay their fair share.”

If only those two things could be separated as cleanly as Pelosi implies. Tax increases on corporations get passed along from the board room table to the kitchen table in a variety of ways: lower pay for workers, higher prices for consumers, and smaller investment returns for shareholders.

As Reason has detailed a length in recent weeks, other aspects of the bill also leave much to be desired. It would dedicate about $300 billion of new revenue to reduce the long-term budget deficit, but that aspect of the bill is probably better understood as a plan to actually pay for about an eighth of the borrowing that Congress has approved since Biden took office. Meanwhile, giving the IRS a massive budget boost so it can hire 87,000 new agents likely means more tax audits aimed at the middle class, no matter what Democrats are currently claiming. The expanded subsidies for purchasing of health insurance via the Affordable Care Act’s marketplaces is likely to push inflation higher. And the bill’s aim to reduce carbon emissions to 40 percent below 2005 levels by 2031 may be plausible, but just barely.

Perhaps the only aspect of the Inflation Reduction Act that’s as bizarre as its name is the meta-analysis of the bill that’s been taking place in political media. Its passage is a “win” that “could give Democrats a boost heading into the midterms,” according to NPR. It “will help validate the Democrats’ monopoly on political power in Washington and hand Joe Biden a notable presidential legacy ahead of November’s midterm elections,” gushed CNN’s Stephen Collinson.

Time will tell, but this sounds like a reprise of the claims that were made after last year’s bipartisan infrastructure package—which, regardless of what you think about its merits, plainly hasn’t done much to reverse Biden’s flagging approval rating.

Click here to read the full article at Reason

A Win for Direct Democracy and Taxpayers in San Bernardino County

Entrenched politicians loathe the tools of direct democracy, which include the powers of initiative, referendum, and recall. Both at the state and local levels, they do everything they can to limit the exercise of those powers, including going to court to nullify what voters do at the ballot box.

That’s what happened with Measure K in San Bernardino, which amended the County Charter to impose a one-term limit on members of the Board of Supervisors and reduce their pay from more than $200,000 per year to $5,000 per month. The Red Brennan Group, which spearheaded Measure K, said it puts the Board of Supervisors’ salary on par with the median household income in the county, and that a one-term limit would incentivize elected officials to focus on serving the public rather than maneuvering for reelection.

Unsurprisingly, Measure K was extraordinarily popular with voters who passed it by a two-thirds majority (66.84%). But while the citizens of San Bernardino County were celebrating, the Board of Supervisors launched a counter-attack by filing a lawsuit to get Measure K nullified. The Red Brennan Group stepped up to defend their initiative and the Howard Jarvis Taxpayers Foundation sent a friend-of-the-court brief supporting the legality of the measure.

Along with their lawsuit challenging Measure K, the Board of Supervisors ran to their allies in Sacramento to change the law in a way that would undercut the initiative. Assembly Bill 428 would prohibit term limits of less than two terms for a County Board of Supervisors and further provided that a Board can set the pay of its own members. The Howard Jarvis Taxpayers Association objected to the bill and argued that it thwarted the will of the voters in San Bernardino. The author of the bill, Assemblyman Chad Mayes, I-Yucca Valley, denied that his bill would have that impact but his representations lacked credibility. Eventually, he relented and agreed to insert language into the bill that made clear it would “not affect any term limits that were legally in effect prior to January 1, 2022, in any county.”

Last week, an appeals court issued a tentative ruling in the lawsuit and sided with the voters, upholding Measure K’s one-term limit and the cut to the supervisors’ pay. The court also vindicated HJTF’s interpretation that the original version of AB 428 was an attempt to thwart the will of the voters in San Bernardino.

Noting that the amendment resolved any ambiguity, the court wrote, “Plainly, then, the Legislature did not contemplate that AB 428 would undo Measure K. To the contrary, it agreed with the Jarvis Association that the unamended version threatened Measure K, and thus it amended AB 428 so as to let Measure K stand.”

It’s satisfying to be recognized for the work HJTA does in defense of taxpayers, not only the hundreds of thousands of HJTA members, but all the California taxpayers whose interests are rarely represented by their elected officials.

Click here to read the full article in this the OC Register

California’s Budget Substance is as Bad as the Process

This column addresses budget issues frequently and, most recently, reported on how broken the budget process is. While the “budget bill” is constitutionally mandated to be enacted by June 15, it only passed by that date for one reason — so the legislators could continue to receive their paychecks.

Photo courtesy Franco Folini, flickr

Moreover, since the enactment of the budget, there have been two so-called “junior budget bills” amending the fake June 15th budget and around 30 so-called “budget trailer bills” directing the spending of billions in ways that the budget bill itself did not direct.

But it isn’t just the budget process that is wholly broken, the actual substance of the bill reveals perverse spending priorities. Let’s start with the size of this gargantuan budget. One veteran political reporter, who has followed state budgets since the 1960s, remembers when the budget was $3 billion. It has grown since then by 100-fold to a staggering $300 billion.

The old saying that the bigger they are, the harder they fall, can be applied to the California state budget. There remains a legitimate question whether massive new spending programs can be sustained when, not if, we have a major recession, as more and more economists and business leaders are predicting.

For taxpayers, priority number-one in this year’s budget was the long-promised gas tax relief. This is especially important since, on Friday, California’s gas tax went up by about three cents. That might not seem like a lot, but we already had the highest gas tax in the nation. So, while other states are providing immediate gas tax relief directly at the pump, California will not.

Rather than do the right thing and suspend the gas tax for a year — a quick, simple and low-cost solution recommended by Republicans—the governor and Democrats in the legislature agreed on a $9.5 billion tax rebate program which will attempt to target refunds based not on the amount of taxes paid, but on need and family size; and not now, but just before the November election.

Another example is Assembly Bill 208 that will create a new excise tax on lithium extraction. Why? Because lithium is crucially important for battery manufacturing and there is something of a gold rush on lithium occurring in the Salton Sea. The Legislature intends to get in on the action.

The Legislature’s plan would impose a tax of $400 to $800 per metric ton of lithium extracted in California. The industry says that could discourage investment and make locally sourced lithium more expensive than imports coming from half a world away. Currently, lithium is imported from countries including China, where the lithium industry has been tied to forced labor and environmental degradation.

Meanwhile, the California Energy Commission estimates that there is enough lithium in the Salton Sea to meet America’s lithium needs and up to 40% of the world’s demand. Further, it has been reported that the Salton Sea could produce the world’s “greenest” lithium and that the lithium industry has the potential of breathing economic life back into a region that faces high rates of unemployment and suffers health impacts from the drying sea.

Disincentivizing our local lithium industry through taxation is counter to California’s climate and labor values and bad for Riverside and Imperial counties, our state, the United States, and the world.

Space limitations prevent a full airing of all the silliness to be found in the state budget, but this one caught our eye. One of the post-budget “trailer” bills revealed Gov. Newsom’s obsession with poking at pro-business states like Texas and Florida. The bill would give special consideration to businesses seeking state “Go-Biz” grants if they’re relocating jobs away from a state that limits access to abortion or “permits discrimination” on the basis of sexual orientation, gender identity, or gender expression. Apparently, Newsom believes businesses will be more attracted to California for its woke purity than they are repelled by its high taxes and burdensome regulations.

Click here to read the full article in the Redlands Daily Facts

State Budget Deal: Most Californians Will Get Stimulus Payments

Most Californians would receive stimulus payments ranging from $200 to $350 per person under a budget deal that Gov. Gavin Newsom and state legislative leaders announced Sunday night.

Tax refunds under the agreement’s $17 billion “inflation relief package” would provide $350 to individuals making less than $75,000 per year. Couples making less than $150,000 who file their taxes together would receive $700. If families in those categories have at least one dependent, the deal calls for them to also receive another $350. That means families could receive up to $1,050.

The agreement also would provide checks, although in smaller amounts, to many people who make more money. The smallest payments are designated for individuals making up to $250,000, who would get $200. Couples filing jointly who make less than $500,000 will receive $400, plus an additional $200 for dependents.

Under the plan, the state would send people the money through direct deposits and debit cards beginning in October. The state’s Franchise Tax Board estimates all the money would be sent out by early next year, said H.D. Palmer, spokesperson for the state’s Department of Finance.

The state budget deal must be passed by the Legislature and signed by Newsom to become law, but a statement from legislative leaders, Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon, saying they’ve signed on to the deal indicates that will happen.

In addition to the tax refunds, the budget agreement would also suspend the 23-cent state sales tax on diesel for a year starting Oct. 1, Palmer said. Under the agreement, the state would provide local governments the revenue that would have come from the diesel tax, to avoid stalling local transportation projects.

The agreement also includes money to help Californians pay their rent and utility bills, the governor and legislative leaders said. It also adds $47 billion in infrastructure spending and $200 million for reproductive health care in the wake of the Supreme Court decision this past week overturning Roe v. Wade.

“In the face of growing economic uncertainty, this budget invests in California’s values while further filling the state’s budget reserves,” Newsom, Atkins and Rendon said in a written statement.

The announcement of the deal indicates Newsom’s proposal to send $400 payments to vehicle owners is dead. Newsom had initially made the proposal to provide targeted relief from high gas prices that his administration said could be sent out to Californians more quickly than payments to tax filers. But he failed to get lawmakers to sign onto the idea.

Click here to read the full article in the SF Chronicle

California Legislators Want to Help You Buy A House With Down Payment, ‘Shared Equity’

First-time buyers often rely on family gifts to afford the down payments on their homes. Now California Legislators want the government to fill the role of generous relative.

Lawmakers are proposing creating a billion-dollar fund in this year’s state budget that would provide California’s first-time buyers either all of the money they need for a down payment, or very close to it, in exchange for partial ownership stakes in those residences.

The proposal, put forward by state Senate President Pro Tem Toni Atkins, comes as skyrocketing property prices broaden the divide between those who own their homes and those who rent in California. In the past year, Golden State homeowners gained $141,000 in home equity, on average, the housing research firm CoreLogic reported last week, more than in any other state.

California’s rate of home ownership, at 56%, is second lowest in the country behind New York, according to the American Community Survey data from the census. 

Atkins said the California Dream for All program is aimed at creating opportunities for lower- and middle-income buyers in a rapidly rising market, including those who have faced racial and economic barriers to homeownership.

“The California Dream for All program will give more people the chance to break free from the cycle of renting,” Atkins said last month. “This has the ability to change people’s lives.”

The proposal is the subject of negotiations between the Legislature’s Democratic supermajority and Gov. Gavin Newsom, also a Democrat, on how to spend a projected budget surplus of $97.5 billion. The legislature passed a budget on Monday that includes the proposal, though negotiations with Newsom continue on a final overall spending plan. 

A spokesman for the governor declined to comment on the proposal, citing the ongoing negotiations. It was not included in the governor’s original budget nor in his May revised budget.

A multi-billion dollar fund

The housing proposal – which would call for issuing revenue bonds of $1 billion a year for 10 years to create the fund — is the largest in a slew of proposals intended to promote homeownership this year. The proposal also includes $50 million in the budget this year, and $150 million per year after that to pay for the administrative costs of the program and the interest costs of the revenue bonds.

The program envisions helping some 7,700 borrowers a year, according to estimates made by the program’s designers based on home price projections. A start date for the proposed program has not been indicated.

If approved, the program would begin issuing interest-free second mortgage loans covering up to 30% of a home’s purchase price, though lawmakers expect many of the loans would cover 17%, asking borrowers to include 3% of their own money or pair the loan with other first-time buyer programs.

The interest-free loans would be paid back into a state fund whenever the home was sold, or if a bigger mortgage was acquired in a cash-out refinancing. For instance, if the fund provided 20% toward the purchase price of the home, the fund would get back its initial investment, as well as a 20% share of any increase in the home’s value. 

The program would reinvest those proceeds, giving the fund the ability to make new loans for eligible participants, even if prices have risen significantly.

As long as home prices rise, the plan would create equity for people who otherwise would have remained renters. The program also would generate enough returns for the state to help future homebuyers. 

If prices fall, homeowners might still gain some equity and the fund would absorb the losses, program planners said.

Building generational wealth

The program is intended to build as much flexibility as possible. Buyers who have lived in historically low-income neighborhoods can receive priority for some of the funds and can use shared appreciation loans to buy in their current neighborhoods or buy homes elsewhere.

“We need to make sure that the state’s homeownership assistance program serves people in all parts of the state, including in its high cost areas,” said Micah Weinberg, chief executive of the nonprofit group California Forward, which oversaw drafting the proposal.

“We cannot wait until more housing is built for these communities to begin to build the generational wealth that they were locked out of and deeply deserve,” he said during a recent legislative hearing.

Click here to read the full article in CalMatters

At $6.09 a Gallon, Los Angeles Pays Record Gas Price Over US Average

Los Angeles drivers know they pay more for gasoline than the average US driver: It’s the price for cleaner air in a state that’s made being green part of its DNA.

What motorists in LA — a city famed for its car culture — may not realize is that the amount they pay over the national average soared to more than $1.80 a gallon in late March, the widest in at least 10 years, according to data from the AAA.

So far, at least, the cash squeeze at the pump isn’t crimping travel plans, even though each tank costs about $24 more. The Auto Club of Southern California predicts 2.6 million local residents will take to the highways this Memorial Day weekend. That’s up 5% from 2021 but about 7% below 2019, before the Covid-19 pandemic.

The cause for the spike in prices earlier this year was refinery outages, according to Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks prices at 150,000 US gas stations.

While the local refinery issues have largely been resolved, prices nationally have kept on climbing. Regular gasoline rose to $6.09 a gallon in LA this week, according to the AAA, still almost $1.50 more than the national average of around $4.60.

The higher prices in California are partly the result of taxes and state programs to reduce greenhouse gases, like a rule requiring a less-polluting blend of fuel. These measures add about $1.30 to the cost of a gallon, according to the Western States Petroleum Association, a trade group.

California also imports both oil and refined products, which must be trucked in or brought by tanker.

“We don’t have pipelines coming in from Texas and other parts of the country,” said Kevin Slagle, a spokesman for the oil group. “We have to ship it in from around the world.”

Prices, including the extra amount LA drivers pay, could spike again in the summer when travel picks up and a planned increase in the state tax is due to take effect. At the same time, a Chevron Corp. refinery in the state is scheduled for maintenance, and a South Korean refinery that supplies the US West Coast had some units offline after a fire.

To offer drivers some relief, Governor Gavin Newsom, a Democrat who’s running for re-election this year, has proposed an $11 billion package that includes $400 refunds to personal car and truck owners, with a maximum of $800 for up to two vehicles.

Click here to read the full article in the Mercury News

California Says “NO” To Higher Taxes!

An overwhelming majority of Californians, 64% of the them, think that federal and state taxes are too high, according to a recent UC Berkeley/LA Times poll.
All those high taxes have contributed to California’s budget surplus, which has more than doubled since January to a staggering $68 billion!
Yet things don’t seem to change in Sacramento – regardless of the crime surge, inflation and high gas prices, a dismal education system, or whether it is universal publicly funded health care or reducing bovine methane emissions, the politicians in Sacramento keep talking about raising more taxes!
Why should there be such a big budget surplus in Sacramento when Californians feel over-taxed? Shouldn’t the surplus be given back to the taxpayers in the first place?

It is time to take action! Californian’s have the opportunity in this election year to ask their elected officials these fundamental questions!
And “Live in Taxifornia,” our weekly radio show on KABC 790 AM Talk Radio in Los Angeles, and our podcasts at www.KABC.com and www.Taxifornia.net, help give voice to these issues! Broadcast live on Sunday’s at 4 pm, all SO of our interesting one-hour shows are archived at www.Taxifornia.net and include policy discussions with many political leaders and elected officials on the most important issues facing our state.
You are invited to join in the debate and conversations about the future of California at “Live in Taxifornia!”
Visit www.Taxifornia.net to hear podcast interviews with California’s top political leaders, and sign up for our free email newsletter!

Gas Tax Fight and Memories of 1978

With the state government of California sitting on a budget surplus that exceeds $50 billion, Sacramento politicians can’t bring themselves to return a few dollars to middle-class taxpayers.

While the cost of consumer goods and services is rising rapidly, due mostly to feckless government policies, it is the cost of gasoline that truly sticks in the craw of average Californians. Conservatives in the Legislature, mostly Republicans, have accused the Democrats of intentionally running out the clock on providing gas tax relief before an automatic increase goes into effect on May 1st.

That accusation is well-founded.

Nearly a year ago, Republicans in the state Senate pushed for a “gas tax holiday,” including a full suspension on state gas tax collection for the current fiscal year.

The suspension could have easily been backfilled by the state’s overflowing general fund, which would protect transportation funding.

Later, they offered amendments formally requesting the suspension of the state gas tax and postponing the pending increase.

In the Assembly, who can forget the Democrats’ ambush of Assembly Bill 1638 by Assemblyman Kevin Kiley, another gas tax suspension proposal?

Again, by refusing to even hear the bill the ruling political class is revealed as wholly disconnected to the concerns of average citizens.

That’s too bad because a one year suspension of the gas tax would have reduced the cost of fuel by 51.1 cents per gallon, providing instant tax relief.

It is also an elegantly simple solution that would have been easy for state bureaucrats to administer.

While the majority party in the legislature has slow-walked gas tax relief, Gov. Gavin Newsom at least put the issue on the table by introducing some gas price relief in his original January budget as well as his March State of the State speech.

But legislative leaders in both houses rejected his proposal, falsely claiming that transportation projects wouldn’t be fully funded.

Rather, they said they would prefer some sort of direct payments to taxpayers but weren’t clear on who would get the money.

Which brings us to today, exactly where we were a year ago except that now, both the price of gas as well as the gas tax are higher.

It is no surprise that a recent PPIC poll reveals that record percentages of voters believe they are overtaxed. What is surprising, however, is why a majority of our elected representatives in Sacramento are turning a blind eye to the problem and not taking any meaningful action.

If past is prologue, political foot-dragging on tax relief can be very dangerous.

Click here to read the full article at the OC Register

Californians Don’t Get Much Bang for Billions of Bucks

The Howard Jarvis Taxpayers Association isn’t shy about its mission.

Named for the chief architect of California’s Proposition 13 property tax limit, the organization fiercely defends Jarvis’ iconic 1978 measure against those — public employee unions, particularly — seeking its repeal.

So far, Jarvis and its allied groups have prevailed for more than four decades, most recently fending off a 2020 ballot measure that would have removed some of Proposition 13’s limits from business property.

But HJTA, as it calls itself, also works on a broader front, opposing most non-property tax increases and criticizing what it regards as wasteful spending of tax dollars. The latter effort includes an annual report on “waste, fraud and abuse” — essentially a summary of reports from news organizations and independent watchdogs such as the state auditor.

This year’s version, called “Follow the Money 2021,” contains dozens of examples of how public funds have been squandered, embezzled or otherwise misused, plus situations HJTA says show politicians getting special treatment.

One could quibble with some of the examples, but in the main they indicate that taxpayers often are not getting as much bang for their bucks as they should.

So, one might wonder, how does California compare with other states in that regard? By happenstance, as HJTA was preparing its report, an organization called Wallet Hub was offering an answer.

In March, Wallet Hub, a website devoted to consumer finance, released a study of what it calls “return on investment,” merging tax burdens with quality of services to develop an index that compares states on how efficiently they spend public funds.

The factors included in the service side of the equation include schools, roadways, hospitals, crime, water quality and poverty. Minnesota is scored as having the best services.

Unfortunately — but perhaps not surprisingly — California does not fare well in its “return on investment” score. In fact, it’s the fourth worst overall, just ahead of Hawaii, New Mexico and North Dakota. New Hampshire scores the highest, followed by Florida and South Dakota.

In services, California ranks 34th, but its tax burden, one of the highest in the nation, pulls down its overall “return on investment” score. Arch-rival Texas, incidentally, has the seventh highest return.

The HJTA report and the Wallet Hub comparison underscore an irritating aspect of governance in California — the eagerness of political officeholders to create new projects and services and their reluctance to evaluate whether their pet programs are delivering the promised results and intervene when they are falling short.

One of the cases HJTA cites, a high-tech budget tool called FI$cal, is a prime example of the syndrome. Hundreds of millions of dollars have been spent on FI$cal over the last decade and a half and it’s still not working. The state auditor has issued 18 reports critiquing the project’s management and performance but governors and legislators continue throwing money down a rathole.

Many other examples are obvious, some particular projects such as FI$cal and some broader issues such as homelessness. It’s very near the top of voter concerns, as measured in polls and California taxpayers have spent billions of dollars on it. However, the problem seems to be, if anything, growing more acute as politicians and supposed experts debate what might work.

Click here to read the full article at the Press Enterprise