OCTax recognizes HJTA with its highest award

At a dinner on September 21, the Howard Jarvis Taxpayers Association was awarded the 2017 Royalty Award by the Orange County Taxpayers Association for its legacy of commitment to the taxpayers of California — from the landmark victory of Proposition 13 in 1978 to its ongoing watchdog efforts in Sacramento today:

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Pension costs are ‘crowding out’ spending on parks, schools and social services, says report by Prof. Joe Nation at Stanford

By Adam Ashton, Sacramento Bee | California governments likely will make do with fewer teachers, parks employees and other public workers while they struggle to absorb fast-rising pension costs in the next few years, a former state lawmaker argues in a study released this week through Stanford University.

Joe NationFormer Democratic Assemblyman Joe Nation projects that many cities, counties and school districts will double their spending on pensions by 2030, “crowding out” their ability to fund public services.

The trend is an acceleration of the swelling pension costs that most California governments [including Fullerton] have recorded since the dot-com crash in the early 2000s, when pension plans that had been over-funded suddenly had to catch up with investment losses.

“As painful and as steep as these increases have been since 2003, my best estimate is that we are only about half way through these increases,” he said. “If you’re a public agency and you went from paying $1 million a year to $10 million a year, that’s an enormous increase. You’re likely to go from $10 million to $20 million by the year 2030.”

To read the entire story, please click here.

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Watch last night’s city council meeting

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Tonight’s city council meeting agenda

To read or download tonight’s detailed council meeting agenda, click here or download it here (pdf).

The public participation portion of the meeting begins at 6:30 with presentations and awards. Actual city business normally doesn’t start until 7:00 or thereafter.

And you can always watch it on cable Channel 3 (Spectrum — formerly Time Warner).

 

 

 

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California’s legislative Democrats answer to public employee unions

By John Moorlach | This past year, many California legislators had the answer of who dominates them: the public-employee unions. Bill after bill, these wealthy unions showed who runs those under the Capitol dome, showing the unions own the supermajority Democrats in the Assembly and Senate.

John MoorlachWhen speaking on the Senate floor, I tried to identify a few of the most egregious bills the unions got the obedient Democratic Legislature to pass and we’ll soon find out if Gov. Jerry Brown will grant public employee union bosses more power to waste your hard-earned tax dollars and control your lives.

Even as the Legislature produced a housing bill package, the costs for prevailing wages and inclusionary zoning requirements were dramatically increased in Assembly Bill 73, by Assemblyman David Chiu, D-San Francisco, and AB199, by Assemblyman Kansen Chu, D-San Jose.

Housing costs are a problem and teachers are just as impacted as other professionals. Rather than improve affordability for all, AB45, by Assemblyman Tony Thurmond, D-Richmond, would give special housing privileges to teachers while also requiring expensive prevailing wages.

Currently, parents, friends and others who get paid helping out part-time on playgrounds are not unionized. AB670, by Thurmond, would change that, pulling funds from the classroom and pouring them into the pockets of union leaders.

For the months school is not in session during the summer, AB621, by Assemblyman Raul Bocanegra, D-San Fernando, gives custodians, school food workers and others without teaching or other professional credentials a back-door pay raise. It’s projected to cost schools up to $200 million a year in money that ought to go to teaching, pensions and retiree medical care.

To read the entire commentary, please click here.

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Will the Trump tax plan help California?

A weekly column by Jon CoupalBy Jon Coupal | As most people are now painfully aware, California’s progressive political majority has just hit middle-class taxpayers with billions of dollars in new taxes. As a direct result of these actions, the state will soon have the distinction of having the highest taxes in the nation in the following categories: Highest income tax rate; highest state sales tax rate; highest vehicle tax; and the highest gas tax (and that doesn’t even include the added costs of cap-and-trade regulation). For the wealthy, California can be a lovely place to live. For normal folks, life in the Golden State can be a struggle. According to a recent article in the Sacramento Bee, California lost more than 1 million people in net domestic outmigration between 2004 and 2013.

Other than leaving the state, perhaps the only relief available for California’s middle class is tax reform at the federal level. And while there’s a lot to love in the “Unified Framework for Fixing Our Broken Tax Code” embraced by both President Trump and the Congressional Republican leadership, there is also a very big caveat.

First, the good stuff. The plan calls for lowering the income tax rates for individuals and families. It would shrink the current seven tax brackets into three — 12 percent, 25 percent and 35 percent — with the potential for an additional top rate for the highest-income taxpayers.

To read the entire column, please click here.

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Observations on the impact of Trump’s tax plan on California taxpayers

Yesterday Jon Coupal discussed the Trump tax plan on the John and Ken Show on KFI:

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An update on the two ballot initiatives to repeal the gas tax

By Joel Fox | A Sacramento judge’s re-writing of the gas tax initiative title and summary will have implications on a title and summary for a second initiative on the same subject–and then the battle begins whether one or both measures make the ballot.

Joel FoxSacramento Superior Court Judge Timothy Frawley is probably a fan of the writing style of Winston Churchill. The British Prime Minister, known for his adept use of the English language, said, “Broadly speaking, the short words are the best, and the old words best of all.”

The judge admonished the attorney general for trying to use the “amorphous and confusing term “revenues” to refer to “taxes” and “fees.””

The judge went on to say: “This is a remarkable argument since SB 1 raises new “revenues” solely by increasing taxes and fees.”

The judge’s direct approach secures Assemblyman Travis Allen’s successful challenge to the title and summary and emphasizes Allen’s desire to highlight the tax repeal. The initiative will serve as an important platform in Allen’s announced run for governor.

But the Allen initiative repeal is not the only game in town.

A second initiative to repeal the gas tax has been filed and has the backing of Republican Party activists.

Given Judge Frawley’s decision over the title and summary in the Allen v. Becerra case, expect the title and summary of the latter measure to hone closely to what Frawley dictated for the former initiative.

Republicans desperately want to see a tax repeal measure on the ballot for political reasons. With the possibility of an all-Democratic gubernatorial finale in November 2018, Republicans hope a gas tax repeal, which is unpopular in the polls, would drive to the ballot box voters that might otherwise sit out the election. Such a result could save some of the Republican congressional members who are targets for the Democrats who want to flip the House majority.

But which measure moves forward? Can it be both? Allen’s proposal is a statute and requires fewer signatures (365,880) to qualify for the ballot. The second proposal is a constitutional amendment declaring all gas taxes must face a vote of the people and needs more signatures (585,407) to qualify.

Still, the constitutional amendment qualifying mark is low by historical standards given the relatively small turnout in the last gubernatorial election, which determines the number of required signatures for initiative qualification. A solid financial campaign behind the amendment should make it easy to qualify.

One would expect a meeting of the minds—more likely a meeting of the electoral interests—involved in the campaigns to meld efforts and move one measure forward.

[Cross-posted from Fox & Hounds.]

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Parking among chief complaints during mayor’s town-hall style meeting at CSUF

Mayor Bruce Whitaker’s “Talk Around Town” last night at Cal State Fullerton was covered by the Daily Titan. You can read the story by reporter Ethan Peschansky here.

Mayor Bruce Whitaker at CSUF

(Bailey Carpenter / Daily Titan)

 

 

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Cities facing fiscal mess plead with CalPERS as pensions consume budgets

By Steven Greenhut | If you ask the union-controlled California Public Employees’ Retirement System about the state’s looming pension crisis, you’re likely to get this answer: What pension crisis?

Steven GreenhutBut the story was much different at CalPERS’ own Finance and Administration Committee meeting held Sept. 19. City officials from across California warned CalPERS board members about the dire fiscal situation their cities face because the pension debt is consuming larger portions of local budgets. The energetic discussion included 18 speakers, many of them local officials who trekked to Sacramento.

“In Hayward, 68 percent of our unfunded pension cost is retiree benefits,” said Hayward City Council member Sara Lamnin, who pointed out that “this means the promises of the past weren’t paid for, frankly.” Hayward’s future is really troubling. She said that “over the next three fiscal years, the city of Hayward’s revenue is projected to grow 1.4 percent, but our cost for PERS is going to go up 30.5 percent.” Lamnin wasn’t asking for someone to rescue Hayward. Officials just want to know how bad the damage will be. “We ask you for data,” she said.

Oroville Finance Director Ruth Wright said her Butte County city has been forced to cut its workforce by a third and negotiated cuts in police salaries by 10 percent. Oroville expects its cash flow to be gone in three to four years, she said. “We’ve been saying the ‘bankruptcy’ word.”

These city officials were there to support state Sen. John Moorlach, R-Costa Mesa, who sent a letter to the CalPERS board of administration requesting detailed answers to two seemingly straightforward actuarial questions.

First, Moorlach wanted to know the financial effect of moving employees from “their current tiers to a PEPRA tier on a going-forward basis.” That would mean providing them with the slightly-less generous pensions offered after the 2013 reforms went into effect. Moorlach also wanted the pension fund to study the cost savings if cost-of-living adjustments to retirees were temporarily suspended until the fund’s liabilities are stabilized. No one is proposing any cuts, but Moorlach was just seeking cost comparison data.

“Cities all across the state of California are gravely concerned about the rising costs of their annual retirement contributions and the growing size of their unfunded actuarial liability,” said Bruce Channing, the city manager for Laguna Hills in Orange County, and chairman of the League of California Cities’ pension-services committee.

He warned of “severe hardship” and cutbacks in staff in many cities if the problem isn’t addressed – and reminded CalPERS officials that “saying we have to invest our way out of this really is not the answer.”

The League’s Dane Hutchings noted a shocking statistic: “I have members who by all accounts are considered financially healthy cities” but their financial models “suggest that by fiscal year ’27-’28 as much as 94 cents of every current dollar of payroll will be allocated to CalPERS contributions.” That’s without accounting for new hires or raises in the coming decade.

Lodi City Manager Steve Schwabauer said his city’s pension costs are expected to double by 2022, which is the equivalent of a fire station and “all of my parks and recreation and all of my library.” These are ominous warnings from actual city officials.

Given CalPERS’ touting of PEPRA as a key reason that the state is “bending the cost curve” regarding pension liabilities, Moorlach’s first request should have been a no-brainer. Why not figure out other PEPRA-related savings possibilities? The second question would make sense, too, if the pension fund were interested in exploring ways to protect cities from potential insolvency rather than simply protecting public employees from any pain.

As expected, CalPERS gave the final say to union officials, who feared that the data would be used to justify lower benefits.

“Yes, it’s painful for employers to deal with those rising costs,” said Jai Sookprasert, a California School Employees Association lobbyist. “It’s doubly more painful for the employees. What part of negotiate, talk to your employees is not clear? … Really, data? This is just data? … Is it data or conjectures?”

So, learning actuarially sound information about what different benefit levels might do to unfunded liabilities is now just a conjecture, at least in the view of some union officials. Apparently, it’s better for local officials not to know what different options will mean for their budgets. They should just pay up and quit their complaining.

The CalPERS board fell in line and didn’t even vote on the request, meaning that Moorlach’s proposal will not be heeded.

In 1999, CalPERS promised that the Legislature’s proposal that would lead to 50-percent retroactive pension increases for public-safety officials across the state wouldn’t cost taxpayers “a dime” because investment returns would make up the difference. The fund was laughably wrong, and their efforts led to the current problems cities across the state are facing.

Now CalPERS and its union allies typically claim that there’s no pension crisis and that Gov. Jerry Brown’s modest PEPRA reform will right the ship. Apparently, there’s no need to worry about what these hard-pressed city officials are saying. But what will they say 10 to 15 years from now, as pension costs gobble up majorities of local budgets and services will be slashed and burned?

For now, denial is the easiest course. CalPERS had a good year with investment returns of 11.2 percent. Likewise, the Democratic-controlled state Legislature totally ignored the pension liabilities and the arguably even-larger problem surrounding soaring retiree-medical costs during its recently concluded legislative session. But the problems only are going to get worse, and other cities are going to hit the fiscal wall.

“The unions will say it wasn’t our fault. We didn’t vote for it. You guys voted for it,” said Sen. Moorlach in an interview Monday. He was shocked by their audacity. No doubt, they’ll also be blaming Wall Street and stingy California taxpayers. But by then the state and cities could be in full crisis mode. Will CalPERS still be in denial if dozens of cities are using about the “b” word?

[Cross-posted from the California Policy Center website.]

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