California Dems Push Pension Funds to Divest from Guns, Oil Pipeline

PensionsSACRAMENTO – California’s two major pension funds, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), control more than $500 billion in total assets, making them two of Wall Street’s most influential investors. They also are government entities, and some California leaders want to use their investment muscle to achieve public-policy outcomes.

This often comes in the form of divestment, by which the funds are encouraged – or even required – to sell their assets in industries that are viewed negatively by the people who push these efforts. These efforts tend to work against the goals of the funds’ professional investment staff, which are charged with getting high investment returns to fund pensions for the systems’ retirees. Both funds have a fiduciary responsibility to maximize their return on taxpayer dollars.

Yet estimates from a consulting firm suggest that CalPERS has lost approximately $8 billion in returns because of previous efforts to divest from coal-related and tobacco industries. That’s become a particularly contentious issue as funding levels have fallen to 68 percent for CalPERS and 64 percent for CalSTRS. That means they have only around two-thirds of the assets needed to make good on all the current and future pension promises made to government retirees.

Despite the troubling numbers, there’s a new push for divestment from some politicians. Following the October massacre in Las Vegas, by which a gunman murdered 59 people at a country music concert, state Treasurer John Chiang has called for the teachers’ fund to sell its assets in weapons firms and sporting-goods companies that sell any guns that are illegal in California.

“Neither taxpayer funds nor the pension contributions of any of the teachers we represent, including the three California teachers slain in Las Vegas should be invested in the purveyors of military-style assault weapons,” said Chiang, a 2018 candidate for governor and member of both pension boards. Chiang also told the Sacramento Bee that he plans on making a similar request to the CalPERS board.

The newspaper also noted that both funds “this year have faced calls to divest from companies that do business with the controversial Dakota Access Pipeline,” which would transport oil underground from North Dakota oilfields to Illinois. It has prompted protests from a variety of environmental and Native American activists.

Critics of these proposals say they are largely symbolic and would do little to influence gun sales or the pipelines. Divestment from these relatively small industries wouldn’t have much impact on the massive funds’ financial returns, either.

On Oct. 30, 12 members of California’s Democratic congressional delegation sent a letter to CalPERS chief executive officer Marcie Frost urging the pension fund to divest from a fund that has acquired a hotel owned by Donald Trump’s organization. This move is more directly political than many divestment efforts, which tend to focus on the social implications of investing in the pipeline, weapons manufacturers, coal-related industries and tobacco companies.

Divestment advocates sometimes argue that these controversial products may be poor long-term investments. For instance, the Public Divestiture of Thermal Coal Companies Act of 2015 and similar efforts by the state insurance commissioner were based in part on the notion that these coal-related companies may face diminishing values as the world shifts away from carbon-based fuels – a point rebutted by those who note that the current price of the stocks already reflects that risk.

But the Trump-related divestment call, led by U.S. Rep. Ted Lieu of Torrance, is designed to target the president. The members of Congress expressed their disappointment that CalPERS “has not divested its interest” in that fund “nor has taken any actions to ensure that its fees are not being transferred to President Trump,” according to their letter. They criticized CalPERS for taking a “wait-and-see” approach toward the matter.

These members of Congress claim that this CalPERS investment could be in violation of the Domestic Emoluments Clause of the U.S. Constitution, which states that “no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” This would be an unusual interpretation of an arcane clause.

Meanwhile, the pension funds have been expanding other divestment and socially motivated investment efforts. Last December, the CalPERS investment staff “recommended that the board remove its 16-year ban on tobacco investments in light of an increasing demand to improve investment returns and pay benefits,” according to a Reuters report. But instead of removing the ban, the board “voted to remain divested and to expand the ban to externally managed portfolios and affiliated funds.”

And last year CalPERS adopted a five year Environmental, Social and Governance plan that focuses on socially responsible investing. The fund has long used its financial clout to push companies it invests in to promote, for instance, board diversity and other social goals.

Whatever their chances for approval, the latest efforts are not out of the ordinary. But they will rekindle the long-running debate between political and financial goals, and whether the former imperils the latter given both funds’ large unfunded liabilities.

Steven Greenhut is Western region director for the R Street Institute. Write to him at [email protected]

This article was originally published by CalWatchdog.com

Sen. Feinstein likely to face challenge from the Left in 2018

Dianne FeinsteinJust hours after U.S. Sen. Dianne Feinstein, D-Calif., announced she was running for re-election, progressives in the state called for a primary challenge to the long-serving Democrat.

For example, Bay Area Congressman Ro Khanna, D-Calif., reportedly asked Rep. Barbara Lee, D-Calif., and former Clinton labor secretary Robert Reich to run against the incumbent, believing the party needs someone further to the left to occupy the seat.

“There are other voices in our state who are far more in touch with the values,” Khanna told Politico.

While Feinstein has been a fixture of California politics for decades, her softer tone toward President Trump and stances on issues like national security and encryption have caused her to lose favor with some in her party.
“She was totally out of touch when the whole debate happened on encryption,’’ Khanna added, according to Politico, referencing the dialogue that took place in the aftermath of the San Bernardino terror attack. “She didn’t even understand some of those issues.”

Furthermore, she faced jeers from a town hall crowd this summer after suggesting that President Trump could become a “good president” if he would “learn” and “change.”

“Look, this man is going to be president most likely for the rest of this term,” the senator said at San Francisco’s Commonwealth Club in August. “I just hope he has the ability to learn and to change and if he does he can be a good president. And that’s my hope.”

Following backlash, she was forced to clarify her remarks.

At 84, she is the oldest senator in the upper chamber and the top Democrat on the Senate Judiciary Committee.
As some reporters noted, the announcement is seen as bad news for L.A. Mayor Eric Garcetti and Senate President Pro Tem Kevin de León, who were viewed as likely candidates if Feinstein decided to retire. De León in particular is thought to have been eyeing the seat, as he’s termed out of the state Senate next year.

The talks about a primary challenger come as Democrats nationally have been looking to revamp their image with fresh faces and “new blood” after Hillary Clinton’s defeat last November.

“Her policies are completely out of touch with California Democrats, and we think she’d be more at home in a Republican primary,” Corbin Trent of the Justice Democrats told Vox, expressing support for a primary challenger.

With California positioning itself as the center of the so-called “Resistance” against the Trump agenda in Washington, the stage could be set for a challenge to Feinstein from the left. But with support from top Democrats in the state like U.S. Sen. Kamala Harris, along with a robust campaign infrastructure and strong name recognition, any effort to take her on will present a steep challenge.

This article was originally published by CalWatchdog.com

Democrats release plan to make California public college free

College debtCalifornia Democrats are making a push to offset the cost of higher education, releasing a sweeping plan to increase student aid that would be perhaps the most favorable in the nation for students – but one that may be unfavorable for the taxpayer.

“Lower-income students … are able to many times, through our great programs in California, get help to pay for tuition. But they’re still graduating with a tremendous amount of debt,” said Assemblyman Kevin McCarty, D-Sacramento.

The plan, unveiled earlier this month, would cover not just tuition but living expenses as well, making it different from other similar proposals in states like New York.

“California is taking the boldest step in the nation for making college debt-free,” Assembly Speaker Anthony Rendon, D-Paramount, said in a recent press conference.

The cost for the program would come at a price tag of $1.6 billion per year, phased in over five years, and would be paid for using money from the state’s General Fund, lawmakers say.

Proponents say existing tax revenues will cover the cost, but other projections to provide universal college came in at a much higher cost of $3.3 billion annually.

Some lawmakers are skeptical of the effectiveness of the plan, especially as California confronts a wide range of other issues like infrastructure and entitlement spending.

“I think it’s well intentioned,” Republican Assemblyman Rocky Chavez said of the plan. “But I don’t think it recognizes the economic reality or really addresses the challenges we have to address.”

Additionally, the plan comes at a time when the effectiveness of Cal State schools is being called into question due to poor graduation rates.

For example, under 20 percent of full-time CSU freshmen graduate in four years, much less than the 34 percent national average for public universities.

The “Degrees Not Debt” program would affect around 400,000 students at UC and Cal State institutions.

It’s just one of over a dozen student-aid related bills already proposed in Sacramento this year alone to offset the cost of college, as the average student loan debt per graduate in the Golden State is $22,191.

For example, Assembly Democrats last month pushed forward a plan that would grant in-state tuition for individuals in the state as refugees.

Currently, around 60 percent of Cal State students and about half of University of California and community college students already have their tuition fully covered by existing grants and aid programs.

Student aid and college reform has come into increasing focus, partly spurred by former Democratic Bernie Sanders’ push to make all at public universities tuition-free.

This article was originally published by CalWatchdog.com

California may test all young kids for lead exposure

Three months after a Reuters study of national lead exposure data showed eight communities in California faced worse contamination than Flint, Michigan – the poster city for U.S. lead risks –Assemblyman Bill Quirk is moving to address the potential public health crisis. The Hayward Democrat has introduced a bill that would require all children from 6 months to 6 years old to be tested for lead contamination.

Early exposure to lead has long been associated with cognitive problems. Writing last year in Mother Jones, Irvine journalist Kevin Drum said such exposure has been linked to lower IQs, violent crime and attention-deficit-hyperactivity disorder. The gradual increase in IQ across the world has been linked to new laws against lead-based paint and piping.

But in California, state law only requires lead testing for children who live in or frequently visit buildings built before the crackdown on lead-based paint began in the 1970s and for those who get benefits under government welfare programs.

“Given the ages of California’s infrastructure, lead exposure risks are ubiquitous,” Quirk told Kaiser Health News. “The current screening process only tests certain children. Better data can help us better identify clusters and arm the state with a thorough, more comprehensive response.”

In Flint, national media have focused for two years on the problems with water supplies created when Flint city leaders stopped using water piped in from Detroit’s water system to save money by using cheaper water from the polluted Flint River and other local sources. That led to a public health emergency being declared after the supply change apparently sent the number of children with elevated exposure to lead in blood tests soaring to 5 percent, twice the national norm. In December, Congress appropriated $120 million to help Flint deal with the problem. …

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California Democrats spend significant campaign cash fighting each other thanks to top-two primary rule

Kamala Harris Loretta SanchezNew figures on the November 2016 election cycle showed that Golden State Democrats continued to shell out substantial sums to compete with one another for elective office. Numbers taken from the California Secretary of State, and verified with Cal-Access campaign records, illustrate how the state’s blanket primary system, which pits the top two first-round vote-getters against one another in general elections regardless of party, has changed election dynamics.

“In the 2016 election cycle, Democrats raised or spent $91.5 million on same-party races – a 69 percent increase from 2014 when Democrats spent $54.3 million,” according to Forward Observer, which gathered and analyzed the data. “The average budget for a same-party race between Democrats was $3.97 million in the 2016 cycle, up 32 percent since 2014.”

For the state GOP, by contrast, blanket primaries have had an increasingly milder effect. “Republicans raised or spent $2.78 million on same party races in 2016, a decline of approximately 80 percent since 2014 when Republicans spent $13.85 million,” Forward Observer added. “Notably, there were no same-party races between two Republicans in either the state Senate or the U.S. House of Representatives in 2016.”

Contributing to the discrepancy, Republicans in California have simply run against one another with less frequency than Democrats. Since the 2012 elections, when the blanket primary system began, only 20 of 79 total intraparty races – including those for seats in the Assembly, the state Senate and the U.S. House of Representatives – pitted one Republican candidate against another. The 59 Democrat-on-Democrat races notched over the relatively brief time period have added up: “In total, Democrats have spent a total of $195 million on same-party races since Prop. 14 first went into effect in 2012 compared to $31.3 million spent by Republicans,” Forward Observer concluded. “In other words, Democrats have spent $6.24 on same-party races for every dollar spent or raised by Republicans.”

A wedge effect

The news underscored indications earlier this year that California Democrats could be polarizing on some issues as a result of the party’s statewide dominance and tough competition for limited leadership positions. “Another effect of the [blanket primary] system, harder to quantify but possibly more serious, has been a sharpening differences between the more moderate and more progressive wings of the party, sparking sometimes thorny disagreements that could have been softened had all candidates vying for office run against Republican opponents,” as CalWatchdog previously reported. “In some cases, such as Kamala Harris’ race against Loretta Sanchez, the challenger was too weak to force a bruising battle over political agendas. In others, however, a more moderate non-incumbent drew a clear line on policy and was rewarded at the ballot box.”

“Last year, for instance, Orinda Mayor Steve Glazer – a former aide to Gov. Jerry Brown who pitted himself against the BART strike and won support from Chuck Reed, the ex-San Jose Mayor spearheading public pension reform – bested Assemblywoman Susan Bonilla, D-Concord, the far more liberal Democrat who initially had been widely expected to win the race to replace outgoing state Senator Mark DeSaulnier.”

National impact

Nationally, divided Democrats have sometimes replicated the pattern. “Former Vice President Joe Biden, beloved by the Democratic base, had the audacity to endorse Barack Obama’s labor secretary, Tom Perez, to become Democratic National Committee chairman,” as Dan Morain wrote at the Sacramento Bee. “Sen. Bernie Sanders, who supports the more liberal Rep. Keith Ellison of Minnesota, denounced Biden’s move as representing the ‘failed status-quo approach.’” But while Sanders made a big cameo during November’s elections, getting involved in the state initiative process, it’s unlikely he or other national party figures will try to tip the scales one way or the other in a close race scenario between two state-level California Democrats vying for the same office.

Still, the next big test of Democrats’ fundraising fortunes in a head-to-head matchup has been teed up for spring, when the special election will be held to replace new state Attorney General and outgoing Rep. Xavier Becerra in Congress. “At this point, 17 Democrats, two Republicans and one Green-party candidate will appear on the April 4 special-primary ballot,” Jim Geraghty observed at National Review. Assuming no contender wins a majority of votes on that day, the runoff election has been slated for June 6.

This piece was originally published by CalWatchdog.com

Californians Narrowly Vote to Speed Up Death Penalty Process

Death PenaltyA measure to speed up executions in California was projected to pass Tuesday night, according to the Associated Press.

Proposition 66, which aims to cap death-sentence appeals at five years, stands at 51.1 percent of the vote. While such a slim margin of victory would usually suggest the electorate is divided, a competing measure to end the death penalty altogether was rejected by 53.4 percent of voters (ballots are still being counted, so totals may change).

“California voters not only want to keep the death penalty intact but they want it to work as intended,” said Anne Marie Schubert, Sacramento County district attorney, who called Prop. 66’s lead “insurmountable.”

Prop. 66 speeds up the appeals process by expanding the number of courts and attorneys able to hear and try death penalty appeals to meet a five-year cap on the appeals process that currently takes decades. A court order could be sought when cases drag on.

Stance stands out

In a cycle when voters chose a cornucopia of liberal policies, like implementing a $2-per-pack tax on cigarettes, extending a tax on the highest incomes, legalizing recreational marijuana, placing further restrictions on guns and ammo and upholding a ban on plastic bags, the death penalty position stands out.

In fact, voters at the same time resoundingly approved a measure that would allow (but not guarantee) early parole for thousands of “non-violent” inmates, showing that Californians’ soft spot hardens when it comes to those considered the worst of the worst.

“Californians have long been a bit schizoid when it comes to the death penalty,” said John J. Pitney, Jr., a Roy P. Crocker professor of politics at Claremont McKenna College.

Pitney recalled Democrat Dianne Feinstein’s campaign ad from the 1990 gubernatorial race. Feinstein, who is currently a U.S. senator, but at the time had just finished a second term as mayor of San Francisco, pitched herself as pro-choice, pro-environment and “the only Democrat for governor for the death penalty.”

Good policy?

While some debate the morality of the death penalty, others argue it is an ineffective policy.

According to data provided by the Legislative Analyst’s Office, no one has been executed since 2006. The vast majority of Death Row inmates will die of other causes long before the state kills them (Prop. 66 will presumably speed this process up, although there’s still legal complications with the lethal injection process).

And it’s costly: The state spends $55 million each year on death penalty appeals, for both prosecutors and court-appointed defense attorneys.

Opponents use the inefficiency and cost of the current system as grounds for abolition of the death penalty. But that may have ultimately been their undoing, said Pitney.

“In recent years, opponents of the death penalty have argued that it is too inefficient and costly,” Pitney said. “That argument may have backfired, at least in this state. Instead of abolishing it, voters backed a measure to make it more efficient.”

Bipartisan Support for Occupational Licensing Reform

occupational-licensing-2SACRAMENTO – One of the rare issues where politicians on the left and right increasingly agree involves occupational-licensing requirements – the oftentimes cumbersome government-approval processes that many workers must go through to become certified to work legally in their profession. Both sides have come to recognize that excessive rules limit employment opportunities for the poor, quash economic development and force people into the underground economy.

Advocates for reform don’t argue against training and regulations per se, but they recognize that it’s unnecessary to, say, force African-style hair braiders to spend thousands of dollars and go through hundreds of hours of traditional barbershop training when the hair treatment they provide has nothing to do with the certification they receive. There’s broad understanding that people within existing professions often impose unnecessary barriers to entry as a way to reduce competition and artificially inflate wages. Defenders of the system say the rules are needed, however, to protect health and safety.

California’s independent state oversight agency, the Little Hoover Commission, this month released a report on licensing barriers that could serve as a blueprint for the state Legislature when it returns to session in January. In his letter to the governor and Legislature, the commission’s chairman, Pedro Nava, made it clear what licensing is all about:

One out of every five Californians must receive permission from the government to work. For millions of Californians, that means contending with the hurdles of becoming licensed. Sixty years ago the number needing licenses nationally was one in 20. … What was once a tool for consumer protection, particularly in the healing arts professions, is now a vehicle to promote a multitude of other goals.”

Some of those goals are reasonable and well-intentioned: professionalizing industries, guaranteeing a level of quality and so forth. But they also “have had a larger impact of preventing Californians from working, particularly harder-to-employ groups such as former offenders and those trained or educated outside of California, including veterans, military spouses and foreign-trained workers,” Nava explained. Furthermore, the standards are not always equal. He pointed to manicurists, who need 400 hours of education, whereas tattoo artists are required to register and conform to some minimal requirements, take a single class and pay $25.

According to the report, California actually has a lower percentage of licensed people than other states. That 20 percent figure places it in 30th place. One-third of Iowans have a license and nearly 31 percent of workers in Nevada have one, also. But California’s rules are more onerous than other states “in the amount of licensing it requires for occupations traditionally entered into by people of modest means,” according to the report. For these types of professions (pest control, manicurist, etc.), the required rate of licensure is a whopping 61 percent.

The commission held hearings this year to review the state’s occupational-licensing system. The commission found the licensing requirements to be “obvious to many” when it comes to health-care professions such as nursing. But it also heard testimony from those in “seemingly less-intuitive industries to speak about health and safety considerations.” It quoted a representative from the cosmetology industry, who defended the licensing requirements because “many of the procedures cosmetologists do can result in irreparable damage.” These include skin peels and the use of strong hair chemicals. But critics “say that there is a spectrum of activities to manage health and safety risks and that licensing should be considered the nuclear option.”

One alternative would be private certification. In those situations, a private authority (think of automotive mechanic organizations) sets standards. People are free to follow them or not – but being certified by that body confers a sense of legitimacy that consumers can consider when choosing to patronize a business. The commission quoted an attorney with the reform-oriented Institute for Justice, who noted: “Outside of driving, he said, eating out is one of the most harmful activities the average consumer will do on a regular basis. But the state doesn’t license food handlers.” That certainly puts the concept in perspective.

Critics argue that licensing unnecessarily raises prices. It also quashes innovation. The commission used the example of a barber who found a need for mobile barbershops, but state regulations only allow barbers to operate out of a permanent location. “Eventually he gave up on his idea even though he had data indicating demand for that service.” More is lost there than just a job. A person had to give up his entrepreneurial dream. Furthermore, the commission noted that excessive regulations inhibit mobility, given that a person trained in one state would have to go through enormous training again to operate in another state.

“Occupational licensing regulations are made in the name of protecting the public interest,” according to the commission. “The reality, witnesses told the commission, is that occupation regulation often amounts to rent-seeking. Briefly defined, rent-seeking is an attempt to influence the political, social or other environment to achieve an economic gain for oneself without contributing to productivity.”

That’s an economic way of saying that people who already work in an industry often band together and lobby to keep new competitors out of that industry. The commission refers to it as “gatekeeping.” And it’s really tough on poorer people trying to get their foot on the economic ladder.

The commission offered a variety of recommendations for the state government: collecting more demographic data on license applications; seeking federal grants to review the current licensing requirements; requiring reciprocity for license holders from other states; seeking sunset provisions on licensing regulations; creating a research institute to study new licensing laws; improving training for veterans; and creating apprenticeship rules that would allow people to work while they address their licensing requirements.

As mentioned above, the commission argues that the current situation poses particular burdens on former offenders, who “typically must demonstrate that their convictions were not substantially related to the duties of the occupation.” The commission pointed to those who reported “some arbitrariness in licensing authorities’ decisions.” Military spouses face problems as they follow their partners to other states, where their licenses don’t always transfer. Veterans and foreign-trained workers often have the requisite skills, but need to go through the entire licensing process anyway. The Legislature has in the past few years passed several bills designed to help veterans and military spouses, but the problem still exists for them, too.

Reformers call for wide-ranging changes. The last real attempt at this came in 2004, when then-Gov. Arnold Schwarzenegger introduced the California Performance Review. “Facing insurmountable hurdles, Governor Schwarzenegger withdrew the plan from consideration a month later,” according to Nava. But times are different now.

There’s rarely much bipartisanship in the state Legislature, but there are occasional promising signs. This year, legislators approved – and the governor signed into law – a measure that would reform the way police departments take private property without a conviction (asset forfeiture). Legislators from both parties saw that the burden fell heavily on poor Californians and that the process seemed to violate constitutional rights.

Likewise, liberals recognize that excessive licensing regulations harm opportunities for poor people and conservatives often see the rules as an affront to a market-based economy. The time may be ripe for reform and perhaps Little Hoover’s suggestions will lead the way.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at [email protected]

This piece was originally published by CalWatchdog.com

How Will New Laws, Signed By Gov. Brown, Affect Your Life?

Jerry Brown state of the stateSACRAMENTO – The 2016 legislative season is officially over, with Gov. Jerry Brown having signed 900 bills while vetoing 159 by Friday’s deadline. Some of the recently signed bills are far-reaching and will have a noticeable effect on Californians’ lives. Here’s a small sampling of some of the measures that will soon be law.

A new government-run retirement program: On Thursday, Gov. Brown signed Senate Bill 1234, which gives legislative approval to the state’s continuing efforts to create a new government-run retirement program for private-sector employees. Once it is up and running, private employers (with five or more employees) will be required to offer this program, whereby 3 percent of each employees’ earnings will be deducted and invested by a state-selected investment group – possibly, the California Public Employees’ Retirement System (CalPERS).

Employees can opt out. The details are not yet certain, but the goal is to invest the money in a low-risk investment tied to the Treasury bond. Supporters say the law protects taxpayers from incurring more than minimal costs, but critics insist the program could grow and change in ensuing years – and that there’s no way of creating a massive new government program without imposing risks on the state budget.

The idea, which is being pitched in other states too, grew out of union activism. Several years ago, when publicity over unfunded public-pension liabilities began creating pressure for pension reform, union allies wanted to come up with a “positive” rebuttal to all those news stories about six-figure pensions and pension-spiking gimmicks. This idea is designed help private workers.

Putting limits on ‘policing for profit’: One of the most controversial policing strategies in recent years has been “civil asset forfeiture.” Born out of the nation’s drug war in the 1980s, forfeiture was designed to help police agencies crack down on drug kingpins by allowing departments to grab the cash, cars and properties gained through their illegal activities. But like many government programs, asset forfeiture morphed into something its creators never envisioned.

Two of the men who helped create the program in the U.S. Department of Justice, John Yoder and Brad Cates, wrote an op-ed in The Washington Post in 2014 pointing to the corruption engendered by this process: “Law enforcement agents and prosecutors began using seized cash and property to fund their operations, supplanting general tax revenue, and this led to the most extreme abuses: law enforcement efforts based upon what cash and property they could seize to fund themselves, rather than on an even-handed effort to enforce the law.”

Basically, police agencies came to depend on the revenue and they distorted their law-enforcement priorities based on the chance to grab more cash. There’s no due process here, given that police agencies file suit against the property itself, alleging it was involved in a drug crime. No conviction is necessary. California had previously passed reforms that mostly required a conviction, but police agencies got around that by partnering with the feds (and operating under looser federal standards) and then splitting the seized property.

Senate Bill 443 was killed last year after lobbying efforts by police chiefs and other law-enforcement agencies. But a fairly recent amendment – allowing cops to still take large amounts of cash without a conviction, but limiting smaller amounts of cash and property takings – eliminated most opposition from law enforcement. The new law is meaningful, and one of the more substantive compromises to take place in Sacramento this year.

Giving the terminally ill the right to try: One of the more significant “freedom” battles this year was over the so-called “right to try” – i.e., the ability of terminally ill patients to try experimental drug treatments that have yet to gain final approval from the Food and Drug Administration. Similar measures have been approved by 31 other states.

The Goldwater Institute, a Phoenix-based free-market think tank, has been championing these measures across the country. As Goldwater explains: “The FDA … often stands between the patients and the treatments that may alleviate their symptoms or provide a cure. To access these treatments, patients must either go through a lengthy FDA exemption process or wait for the treatments to receive FDA approval, which can take a decade or more and cost hundreds of millions of dollars.”

The California law, Assembly Bill 1668, passed overwhelmingly. According to the official bill analysis, it authorizes drug manufacturers to make investigational treatment available “to a patient with a serious or immediately life-threatening disease, when that patient has considered all other treatment options currently approved by the FDA, has been unable to participate in a relevant clinical trial, and for whom the investigational drug has been recommended by the patient’s primary physician and a consulting physician.”

Allowing felons to vote: One of the more controversial new laws, Assembly Bill 2466 by Assemblywoman Shirley Weber, D-San Diego, allows felons who are serving their sentence in county jails to vote. The measure was opposed by law-enforcement groups, but Weber argued it would stop discrimination in voting and make it less likely that prisoners would commit new offenses.

“Civic participation can be a critical component of re-entry and has been linked to reduced recidivism,” Weber said, according to a Los Angeles Times report. For me, this bill is not about second chances, but about maintaining the integrity of elections,” said Sen. Pat Bates, R-Laguna Niguel, in a statement. “Close elections, especially at the local level, could now turn on a handful of ballots cast by people in jail. This new law is bad for democracy and will further erode trust in government.”

Putting self-driving cars on the road: Autonomous vehicle technology has been advancing rapidly, and California is, not surprisingly, ground zero for the development of this important new technology. Gov. Brown signed a bill Thursday “that for the first time allows testing on public roads of self-driving vehicles with no steering wheels, brake pedals or accelerators,” according to a San Jose Mercury News article. “A human driver as backup is not required, but the vehicles will be limited to speeds of less than 35 mph.”

Assembly Bill 1592 itself is rather modest. It provides two spots for such testing – in a San Ramon business park and at the former Concord Naval Weapons Station. And Friday, the California Department of Motor Vehicles released new regulations that are far friendlier toward self-driving cars than the DMV’s previous regulations. So while the new law itself isn’t particularly significant, the state’s new legislative and regulatory approach certainly is. If that approach continues, we’ll be seeing rapid expansion of autonomous vehicles here.

Greenlighting granny flats: The governor’s signing of Senate Bill 1069 shows increasing bipartisan understanding of the state’s skyrocketing home prices. The bill would relax standards for creating ADUs (accessory dwelling units), better known as granny flats.

“Eliminating barriers to ADU construction is a common-sense, cost-effective approach that will permit homeowners to share empty rooms in their homes and property, add incomes to meet family budgets, and make good use of the property in the Bay Area and across California while easing the housing crisis,” according to the bill analysis’ summary of the author’s arguments.The bill embraces a regulatory approach that could be tried with other types of housing.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at [email protected].

This piece was originally published by CalWatchdog.com

High-Visibility Tobacco Tax Initiative Receiving Lots of Attention, Money

SmokingSACRAMENTO – There’s broad agreement that the 17 initiatives on the statewide ballot on November 8 cover some of the most significant public-policy issues to come before voters in more than a decade. For instance, voters will have a chance to legalize marijuana, outlaw the death penalty, put an end to the state’s virtual ban on bilingual education, approve a broad gun-control package and reduce prison sentences for some non-violent felons.

But two months before the election, one of the highest-visibility measures also is fairly narrow in scope. Proposition 56 would raise California’s relatively low tobacco tax (relative to other states) by $2 a cigarette pack – and increase taxes by an equivalent amount on all other tobacco products (cigars, chewing tobacco, etc.). It also would significantly increase taxes on electronic cigarettes and vaping products. It has high visibility right now because of a series of advertisements opponents are running on radio stations across the state.

Supporters pitch the measure as a means primarily to boost public health. “An increase in the tobacco tax is an appropriate way to decrease tobacco use and mitigate the costs of health care treatment and improve existing programs providing for quality health care and access to health care services for families and children. It will save lives and save state and local government money in the future,” according to the initiative’s findings.

Gov. Jerry Brown recently signed into law a package of anti-tobacco bills that, among other things, raise the smoking age to 21. Studies of addiction show that teens who begin smoking are more likely to continue this dangerous habit throughout their lives. Backers of this initiative argue that raising the prices of cigarettes is another main way to dissuade people from smoking. And they point to the costs to the health system imposed by smokers.

But the measure’s opponents are focused increasingly on the spending aspects of the proposal. According to the official ballot argument against the measure, “Prop. 56 allocates just 13 percent of new tobacco tax money to treat smokers or stop kids from starting. If we are going to tax smokers another $1.4 billion per year, more should be dedicated to treating them and keeping kids from starting. Instead, most of the $1.4 billion in new taxes goes to health insurance companies and other wealthy special interests, instead of where it is needed.”

An analysis by the non-partisan Legislative Analyst’s Office confirms that only a small percentage of the estimated $1.4 billion in new revenues are earmarked to such programs. The main priority of the new funds, based on the LAO analysis, is to “replace revenues lost due to lower consumption resulting from the excise tax increase.” That reinforces the odd conundrum faced by California and other states. They use tax and regulatory policies to promote public health by reducing smoking, but then struggle to find funds to pay for ongoing programs as the number of smokers – and therefore the number of tobacco-taxpayers – keeps falling.

The initiative then earmarks some funds to law enforcement, to University of California physician training, to the state auditor and to administration. But 82 percent of the remaining funds go to “increasing the level of payment” for health care related to Medi-Cal, the state’s health-care program for low-income people. Prop. 56 opponents therefore argue it’s designed mainly to benefit health-insurance companies and other interest groups – and includes few limits on how they spend the money they receive.

Furthermore, the initiative bypasses educational-funding requirements under Proposition 98, the 1988 initiative that now requires approximately 43 percent of state general-fund revenues to be directed to the public-school system. As the LAOexplained, “Proposition 56 amends the state Constitution to exempt the measure’s revenues and spending from the state’s constitutional spending limit. (This constitutional exemption is similar to ones already in place for prior, voter-approved increases in tobacco taxes.) This measure also exempts revenues from minimum funding requirements for education required under Proposition 98.”

It’s not unusual for a major tax hike measure to ignite controversies over how the new revenues will be spent. But there’s a serious question about whether this initiative will meet its health-improvement goals given the way the tax hammers a common product used by people to quit smoking.

In a research paper co-authored with my R Street Institute colleague Cameron Smith, we note the measure boosts excise taxes on vaping by 320 percent. The key, stated goal of the tobacco tax increase is to dissuade people from buying cigarettes. By the same logic then, the massive boost in taxes on e-cigarettes seems designed to dissuade people from using them.

Yet as Public Health England explained: “The comprehensive review of the evidence finds that almost all of the 2.6 million adults using e-cigarettes in Great Britain are current or ex-smokers, most of whom are using the devices to help them quit smoking or to prevent them going back to cigarettes.” That government health agency urges public-health officials to promote vaping as a way to improve public health. Some U.S. studies come to similar conclusions.

Proposition 56 backers argue that vaping hasn’t been proven safe and the devices haven’t been around long enough to know long-term health effects. They also fear teens will begin vaping and then move on to combustible cigarettes, which everyone agrees are dangerous. And they point to a recent University of Southern California study suggesting teens who vape are six times more likely to begin smoking cigarettes than teens who don’t vape.

In reality, the study seems mainly to reflect “the difference between teens inclined to experiment and teens not so inclined,” according to a public-health expert we quoted. Furthermore, the e-cigarette industry doesn’t claim vaping is safe – they say it is a safer alternative to cigarette smoking. Research suggests they are about 95 percent safer.

California has the second-lowest smoking rate in the nation at around 12 percent. Only Utah has a lower percentage of smokers. So Proposition 56 doesn’t effect a broad swath of the public – but it is a contentious measure given questions about where the tax dollars will go and about its heavy-handed treatment toward vaping. Compared to many of the other initiatives on the ballot, this one might seem simple, but it’s about far more than whether the state government should boost taxes on a pack of cigarettes by two dollars.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at [email protected]

This piece was originally published by CalWatchdog.com