California’s Voters Approve New Taxes and Reject Tax Repeal

Although hundreds of election results remain to be decided across California, thanks to millions of vote-by-mail ballots still being counted, we can already project with reasonable accuracy the total amount voters approved in new taxes and borrowing. At the local level, new taxes nearly always are approved by voters. In 2016, out of 224 local tax proposals, voters approved 71 percent, adding $2.9 billion in new taxes. As shown on the table, if a similar percentage of November 6, 2018 local tax measures are approved by voters, California’s taxpayers will be providing local governments with another $1.6 billion per year.

Total Estimated New Annual Taxes Approved by California Voters, November 2018

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While these new local taxes add billions – over time, tens of billions – of additional burden on California’s already beleaguered taxpayers, state ballot measures often offer even more significant tax increases. This November, voters turned down an opportunity, via Prop. 6, to eliminate an estimated five billion in new gasoline taxes. In all, California’s voters enabled another $6.1 billion in annual taxes, in a state that already has among the highest overall tax rates in the U.S.

California’s Total New Debt

The impact of new taxes is immediate. Rates go up, revenues increase, and government budgets swell. Compared to taxes, the impact of bonds is greater in the long run, but harder to recognize. In reality, bonds are just deferred taxes. From a financial perspective, it would almost be preferable to use taxes to fund many projects that currently rely on borrowing, because at least taxpayers would only be paying principal, and not interest. For example, if you assume 3 percent inflation, the present value of the payments on a $1.0 billion bond (5% interest, 30 year term) is $1.3 billion. That is, in real dollars, using a typical example, bond financing costs taxpayers 30 percent more than paying for services using operating funds. But the seduction of borrowing is hard to resist: big money today, while mortgaging tomorrow.

Total Estimated New Borrowing (incl. Annual Payments) Approved by California Voters November 2018

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As it is, this November, voters mortgaged a lot of tomorrows. And as always, the big money in the case of new bonds was almost all local. In 2016, of the 193 new local bond measures, voters approved a whopping 94 percent of them. This added $32 billion in new debt, equating to an estimated $2.1 billion in new annual principal and interest payments. As shown on the table, if a similar percentage of November 6, 2018 local bond measures are approved by voters, California’s taxpayers will owe another $15.5 billion. The principal and interest payments on this new debt will cost taxpayers another $1.0 billion per year.

At the statewide level, despite rejecting Prop. 1, the water bond, voters approved three new major state bond measures totaling $6.5 billion. Adding that to the likely $15.5 billion in local bonds, Californians this November will have added $23.0 billion in debt, costing $1.5 billion per year in annual payments of principal and interest.

California’s Total Accumulated Debt

Who was it that said, “a billion here, and a billion there, and pretty soon we’re talking about serious money”? That would describe California’s total state and local government debt. When you look at what constitutes California’s total debt, accumulated over decades, it puts the relentless drive for higher taxes into context. The next table summarizes California’s total debt, as estimated by California Policy Center researchers Marc Joffe and William Fletcher in a 2017 study entitled “California’s Total State and Local Debt Totals $1.3 Trillion.”

Added in column two of this table is the estimated annual payments on this debt. As can be seen, the conventional debt – bonds, loans, and other contractual debt – paid back over 30 years at an interest rate of 5 percent, is costing California’s taxpayers $27.7 billion per year. Add to that, of course, annual payments of another $1.5 billion on new debt approved by voters earlier this week. But it’s in the unfunded liabilities for public employee retirement benefits where truly serious money burdens California’s taxpayers.

California’s Total Estimated State and Local Government Debt 2018

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The story of how California’s taxpayers ended up on the hook for unfunded retirement pension liabilities easily in excess of a half-trillion dollars defies glib explanations. Anyone wanting to dig deep into California’s public sector pensions is encouraged to read the California Policy Center primer “Resources for Pension Reformers” and click on the many links for in-depth analyses of this complex topic. Simply put, an unfunded pension liability is the difference between the assets being managed by a pension fund at any time, and the present value of all promised future payments to retirees and active workers that have been earned up to that same point in time.

Over nearly three decades, some critical mistakes were made in California’s public employee pension fund management. Pension benefits were increased, again and again, by politicians eager to curry favor with public employee unions, but didn’t want to blow their current year budgets by granting salary concessions. Instead, they sweetened future pension benefits which did not incur significant immediate costs. Then the required annual costs to fund pensions were underestimated. Rates of return on invested pension fund assets were overestimated. Life expectancies were underestimated. And as the assets of California’s state and local pension systems began to fall well behind the value of their liabilities, creative accounting was employed to understate the amounts needed to reduce that debt.

Because of all these unknowns, there is a wide range of estimates of California’s total public sector pension debt. At the least it totals over a quarter trillion; at most, about triple that amount. This much is reasonably certain: if there is an economic downturn, and if pension benefits aren’t further reduced, it is likely that payments on pension debt will need to be in excess of $50 billion per year. In all, absent reforms and an epic continuation of the bull market, Californians are likely to be paying over $90 billion per year on state and local government debt. More than half of that will be to pay down unfunded pension liabilities.

The Public Sector’s Insatiable Desire for More Money

It is impossible to view California’s relentless pattern of tax increases apart from its public sector pension crisis, which is just beginning. Currently, the estimated annual payments on unfunded pension liabilities in California is estimated at $17 billion. Imagine the impact of that amount soaring to $55 billion. Just based on modest adjustments to the assumptions governing projections of pension solvency, and based on official announcements already made by California’s largest pension fund, CalPERS, the ongoing (normal costs for pension benefits earned in the current year by active workers) plus the unfunded payments for pensions are estimated to rise from $31 billion in 2017 to $59 billion by 2024. No tax increase, anywhere so far, not even all of them added up, are sufficient to cover this shortfall.

If analysts find California’s looming pension funding crisis alarming, public employees who receive these pensions find it terrifying. That’s why, when a new local tax or bond measure is on the ballot, local governments use taxpayer funds to engage in “information campaigns” aimed at their voters that come very close to being political advocacy. Sometimes they cross that line. After such activities in support of a local sales tax increase in Los Angeles County, the California Fair Political Practices Commission found cause to charge the county, as well as the individual members of the Board of Supervisors, with 15 counts of campaign finance violations.

Californians had a chance to apply vigorous pressure to its elected officials by passing Prop. 6, which would have repealed the gasoline tax. That repeal would have cost state and local governments $5.0 billion per year. Why wouldn’t Californians seize an opportunity to lower what are the highest gas taxes in the U.S.? The answer reveals more about California’s public sector, and their desperate need for more revenue.

Earlier today and in the aftermath of the Nov. 6th election, Carl DeMaio, a former member of the San Diego City Council, who launched the Prop. 6 campaign, described the tactics of the opposition. California’s attorney general is responsible for reviewing ballot initiatives and approving the final wording of these initiatives as they appear on the ballot. According to DeMaio, rather than objectively describing the intent of Prop. 6, which was to repeal the new gasoline tax, his department used focus group research to compile a title and summary for the initiative that was worded in a manner more likely to get people to vote no. But it didn’t end there.

Not only is California’s attorney general alleged to have doctored the language of Prop. 6 to draw down voter support, California’s public sector unions spent millions on an opposition campaign. Overall, the opposition to Prop. 6 spent $50 million on their campaign, compared to only $2.6 million spent by its proponents.

Even in California, $50 million buys a lot of airtime. Lost on California voters, sadly, was the irony of a veteran firefighter who made $324,000 in 2017, serving as the main television spokesperson opposed to Prop. 6 which would have lowered taxes. California’s public sector unions collect and spend at least $800 million per year. They can, quite literally, spend as much as they need to spend to defeat candidates and propositions that do not favor their own interests.

Why don’t California’s voters and policymakers overcome high taxes and an unaffordable cost of living? Partly it’s due to the grip that public sector unions have on politicians, which prevents the state legislature from ever getting spending under control. Partly it’s the lack of any effective opposition, since the supposedly tax averse Republican party in California is a hollow shell, lacking on-the-ground infrastructure, strong candidates, or a shared and compelling political agenda. Saddest of all, it’s because the media in California is entirely unwilling to make the connection between public sector compensation, the power of public sector unions, and the punitive taxes and living costs that are its consequences.

This article was originally published by the California Policy Center

It Will Be A While Until All Votes Are Counted

vote ballotsWhile some elections offices say all their precincts have reported, workers aren’t close to counting all of the ballots.

That’s because a precinct is counted as reporting after all ballots received are submitted to the county elections office, not after those ballots have been tabulated.

Janna Haynes, spokeswoman for the Sacramento County Voter Registration and Elections Department, said the results that were released at 2 a.m. Wednesday morning make up more than one-third of the ballots that the county has received.

“We have 185,000 and some change that have been tabulated, calculated and results released,” Haynes said. “We have already partially processed another 175,000 ballots. And there’s probably another 150,000 sitting here that haven’t even been counted yet.”

And then there are the ballots that were mailed in. The county will conduct a final pickup of those ballots on Friday and should have the voter turnout numbers by Monday. …

Click here to read the full article from Capital Public Radio

What Employers Need to Know About Election Day

VotedUnder California law, employers and employees have rights and obligations related to election day. These provisions of law are found in the California Elections Code as set forth below:

If a voter does not have sufficient time outside of working hours to vote at a statewide election, the voter may, without loss of pay, take off enough working time that will enable the voter to vote. (Elections Code Section 14000(a))

No more than two hours of the time taken off for voting shall be without loss of pay. The time off for voting shall be only at the beginning or end of the regular working shift, whichever allows the most free time for voting and the least time off from the regular working shift, unless otherwise mutually agreed between the employer and employee. (Elections Code Section 14000(b))

If the employee on the third working day prior to the day of election, knows or has reason to believe that time off will be necessary to be able to vote on election day, the employee shall give the employer at least two working days’ notice that time off for voting is desired, in accordance with this section. (Elections Code Section 14000(c))

Although this requirement has passed as of this article, not less than 10 days before every statewide election, every employer shall keep posted conspicuously at the place of work, if practicable, or elsewhere where it can be seen as employees come or go to their place of work, a notice setting forth the provisions of Section 14000. (Elections Code Section 14001)

Note that both Sections 14000 and 14001 shall apply to all public agencies and their employees, as well as to employers and employees in private industry. (Elections Code Section 14002)

Chris Micheli is a Principal with the Sacramento governmental relations firm of Aprea & Micheli, Inc.

This article was originally published by Fox and Hounds Daily

Farm-Confinement Proposition Opposed by Farm Bureau and PETA

ChickensCalifornia voters’ support for farm animal rights was made clear in 2008 with the landslide victory of Proposition 2, which said animals could not be confined in a way that prevented them from turning around freely, lying down, standing up or fully extending their limbs. The measure won 63 percent of the vote and took on even greater significance when the state Legislature passed a law saying the limits on confinement applied to all food sold in California, not just the products of farms in the Golden State.

Now another measure, once again sponsored by the Humane Society of the United States, is on the California ballot. Proposition 12 would require that chickens have a minimum of 1 square foot of confinement space by 2020, with a mandate that all egg-laying hens be cage-free by 2022. It would also require 24 square feet for each breeding pig by 2022 and 43 square feet of space for each calf raised for veal by 2020.

Proposition 12 is expected to pass easily. Not only does it have broad support from the state Democratic Party, the California Labor Federation and a range of civic groups including the League of Women Voters, it’s also backed by some farm interests, including Central Valley Eggs, one of the state’s largest “factory farms.”

But the measure faces criticism on several fronts.

The People for the Ethical Treatment of Animals – which formally supports a vegan diet – opposes the measure as providing cover for continuing the human consumption of animals. “Humane labels make consumers feel good about their decisions but perpetuate cruelty to animals,” PETA’s Lindsay Dadko told Governing magazine.“ Cruelty is cruelty is cruelty, and it doesn’t matter what label you put on it.”

State egg production fell 34% after last farming prop

The California Farm Bureau, the state Republican Party and several business groups oppose Proposition 12 as imposing unique burdens on Golden State farms that hurt their ability to export eggs and meat to other states and nations.

According to a 2017 study by Purdue University agriculture researchers, Proposition 2 imposed a 9 percent premium on California egg prices. It is also associated with a drop of 34 percent in egg production – going from 5.3 billion eggs in 2007 to 3.5 billion in 2016.

The state Legislative Analyst’s Office concluded that Proposition 12 was likely to yield higher prices for eggs, pork and veal, mainly because of the cost of building or modifying confinement structures.

But a third faction opposes Proposition 12 on the grounds that it is actually a step back for chickens, at least until the cage-free rule takes effect in 2022. This is based on the idea that state regulators have botched their interpretation of Proposition 2. The Humane Farming Association and other groups say that egg-laying hens when stretching their wings take up at least 2 square feet, and that Proposition 12 – with its 1 square foot requirement – is much worse.

On Friday, during a KQED forum on Proposition 12, Bradley Miller, director of the Humane Farming Association, said, “We can do better. One square foot per hen is cruel. They should have more space than that.”

This article was originally published by CalWatchdog.com

San Francisco to allow noncitizens to vote for school board

San Francisco, CA, USASan Francisco will become the largest city in the United States and one of only a handful nationwide to allow noncitizens, including people in the country illegally, to vote in a local election in November.

They are only allowed to vote in the city school board race, and the fear that their information may reach U.S. officials appears to be stronger than the desire to have a say in their children’s education. Only 35 noncitizens have signed up to vote as of Monday, the registration deadline in California, according to San Francisco’s Department of Elections. The state allows people to register and vote on Election Day.

Voters in 2016 approved a measure allowing parents or guardians of a child in San Francisco schools to help elect representatives to the school board regardless of their immigration status. In the same election, Donald Trump won the presidency and has since cracked down on illegal immigration and ramped up rhetoric against those living in the U.S. illegally. …

Click here to read the full article from the Associated Press

Trump Pulls Off Biggest Upset in U.S. History

Republican presidential candidate Donald Trump speaks to supporters as he takes the stage for a campaign event in Dallas, Monday, Sept. 14, 2015. (AP Photo/LM Otero)

Donald Trump is going to be the next president of the United States.

The billionaire businessman who never before held elected office shocked America and the world, defeating Hillary Clinton in an extraordinary rebuke to the nation’s political class after an ugly and divisive race that will go down as the most stunning upset in American history.

Trump did so decisively, stomping across the electoral map with wins in the four biggest battlegrounds of Florida, North Carolina, Ohio and Pennsylvania. He defied the polls and pundits after a scorched-earth campaign against Clinton, the Republican establishment, and basic decorum, toppling the blue wall of states that Clinton had supposedly constructed to keep the White House in Democratic hands.

The nation, the markets and the world stood stunned, wondering what would come next. The Dow Futures sank as much as 750 points. The Mexico peso plunged.

“It is time for us to come together as one united people,” Trump said in a victory speech, following a concession call from Clinton at nearly 3 a.m. Eastern. “It’s time.”

Trump led an unseen rebellion of working-class voters, most of them white and so disgusted by a stalled status quo that they voted for a candidate promising dramatic change, even as Trump set disapproval records for a winning candidate. He also tapped into ethnic antagonism, vowing strict immigration controls, a ban on Muslims and a deportation force, promising an era of restoration.

“The forgotten men and women of our country will be forgotten no longer,” Trump declared.

Clinton had been heavily favored to win. She led national polls and in most battleground states heading into the election. Her allies were so confident that a supportive super PAC had actually redirected millions to other races.

But Trump had been underestimated from the first day of his candidacy, when he descended the gilded escalators of Trump Tower to bash Mexican immigrants as “rapists.” He went on to dispatch 16 rivals in the Republican primary before mounting a vicious campaign against Clinton in which he paraded her husband’s infidelities, repeatedly called her corrupt and questioned whether she could govern as a woman.

For 17 months, the reality television showman mesmerized the public with his unvarnished tweets, constant television presence and raucous mass rallies. His full-throttle grip on the national imagination enriched the news media and eroded standards of political civility.

It made him a hero to his fans. And they voted in droves. …

Click here to read the full article from Politico

What Donald Trump Has Achieved for America Already

Donald TrumpGRAND RAPIDS, Michigan — The conventional wisdom is that the 2016 election has seen politics hit new lows. And in some ways — the rhetoric of the candidates, the partisan behavior of the media — it has.

But it has also seen the beginning of a democratic renewal — thanks to Donald Trump. And that remains true whether you are voting against him, or voting for him simply to reject Hillary Clinton.

Trump did more than break the stranglehold of the Republican establishment. Were that all he had accomplished, it would have been admirable enough. But he did something more: he reached out to Americans who had been forgotten by the political process and gave them a reason to care.

Think about the fact that Trump chose to hold the final rally of his campaign in Michigan. Not just as a stunt, either: the most recent poll, which came out just hours before Trump boarded his plane for Grand Rapids, shows Trump ahead by 2 points in the state.

Democrats spent the day campaigning here. They know the danger is real.

Trump is taking the biggest gamble of recent political memory, and reaching out to the very core of the traditional Democratic base in the hope of flipping a blue state. For the first time since Ronald Reagan, a Republican is courting the vote of the American worker.

Trump is not just attempting a win, but a realignment — and perhaps one long overdue.

The result, once the dust settles, is likely to be a more active, lively, and engaged political process — one where the views and concerns of working, law-abiding Americans are no longer shunted aside.

Bernie Sanders could not achieve that because he wanted to fight for them, but not to win for them. Trump wants both.

Well before the votes are counted, it is safe to proclaim: today is a new day in American politics.

There is something intrinsically great about this nation’s ability to save itself, and Trump has helped it begin that process. And just in time, too — for the challenges that lie ahead are as big as any we have yet overcome.

In 24 hours, we will know if he will be the one to lead us through.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. His new book, See No Evil: 19 Hard Truths the Left Can’t Handle, is available from Regnery through Amazon. Follow him on Twitter at @joelpollak.

This piece was originally published by Breitbart.com/California

What Will the California Propositions Cost You?

MoneyAll statewide ballot measures receive an analysis from the Department of Finance and the Legislative Analyst’s Office as to the fiscal effects of the initiatives. That got me wondering what it would cost Californians if in the unlikely event an unrestrained electorate decided to vote Yes on all 17 measures.

Truth be told, it is more likely that the voters reject a larger share of the ballot measures. In fact, throughout the state’s history, two out of three initiatives that make the ballot fail. Still it is interesting to know what we could be facing if the unusual happens. After all, the Cubs won the World Series, so you never know if something unexpected happens. Maybe voters will vote yes on all. It wouldn’t be unprecedented. On the 1911 special election ballot, 22 out of 23 measures passed.

In trying to calculate the cost of ballot measures, even the experts at Finance and LAO have trouble. You’ll find the words “uncertain” and “unknown” and “depends” scattered about the fiscal effect sections attached to many of the propositions.

Some measures are easy to tabulate. The Proposition 51 school bond will cost $17.6 billion to pay the principal and interest, or $500 million a year for 35 years. The legislative transparency initiative, Proposition 54 will require a couple of million start up money for recording equipment and an on-going additional million for staff and storage of videos.

The tax measures can also be tagged with numbers, although Proposition 55’s take calculated between $4 and $9 billion depends on the economy. Proposition 56’s tobacco tax is expected to bring in $1.3 to $1.6 billion at first. However, a drop off is predicted when consumers react negatively to the additional tax on smoking products.

The marijuana legalization measure, Proposition 64, comes with a tax and the fiscal effect could be a billion dollars to the state and more to local governments that apply a local tax to cannabis. There are also regulatory and health service costs associated with legalizing marijuana along with the potential for cost savings with fewer incarcerations.

Proposition 61 dedicated to placing a spending cap on drug costs is specifically designed to save the state money. But hold on a second, say the fiscal watchdogs. Uncertainty is a watchword here. According to the fiscal analysis, “drug manufacturers would likely take actions that mitigate the impact of the measure.” The fiscal effects of this measure were officially summed up as “unknown.”

Also, pretty much unknown is the fiscal effect of Propositions 52 and 53. Prop. 52, the hospital fees for Medi-Cal matched by Federal money received its “uncertain” designation because there was no telling if the legislature would continue this fee on its own. Prop. 53, requiring a vote on revenue bonds, also was labeled “unknown” because not many projects would qualify as needing $2 billion in revenue bonds. If that were the case, the analysis suggested there would be ways around the $2 billion standard by breaking projects into smaller parts.

Increased court and law enforcement costs could run into the tens of millions of dollars under the new gun and ammo regulations offered by Proposition 63.

Elimination of the death penalty could reduce costs to the state about $150 million. However, one of those “depends” is applied to Proposition 62 — the dollars could be higher or lower depending on a number of factors such as whether the change in law would affect the murder rate and the need for prison construction.

Meanwhile, the counter measure to allow death penalty cases to limit appeals, Prop. 66, also got an “uncertain” price tag depending on how the state dealt with issues such as availability of attorneys, complexity of legal challenges and more.

Gov. Brown’s Proposition 57 parole changes could see net state savings by reducing the state’s prison population. However, county costs are projected to increase because more former prisoners will be supervised on parole and other factors, an estimated few million dollars increase annually.

The condom regulations of Proposition 60 would likely reduce tax revenue according to analysts because the adult film industry might pack up and leave the state. If not, new fees required of film producers would likely cover enforcement costs.

The referendum on banning plastic bags would have little effect on revenues, while its companion measure, Proposition 65 would increase state revenues by diverting the cost of carry out backs from grocers to a state fund.

The last two measures to discuss were not initiatives but put on the ballot by legislators. Proposition 58 would make changes to the English immersion education laws and Proposition 59 would advise elected officials to work to overturn the Citizens United court case. Here the legislators earn kudos for having little the fiscal effects. The English-only reform fiscal effect is considered minor. The prize goes to Prop 59 in which the fiscal effect summary reads in full: “This measure would have no direct fiscal effect on state and local governments.” No uncertainties here.

My intention was to go through the fiscal effect calculations and come up with a number after additions and subtractions if all the measures passed to see what taxpayers could be on the hook for or what state and local governments would take in. However, given all the “uncertainties,” “unknowns” and “it depends,” it is impossible to calculate.

Knowing the fiscal effects of the ballot measures seem to fall in line with Congresswoman Nancy Pelosi’s oft quoted line about the Affordable Care Act: “We have to pass the bill so you can find out what is in it.”

Or in this instance—what it costs.

This piece was originally published by Fox and Hounds Daily

Nearly 100 Ballots Found Outside California Man’s Home

California resident Jerry Mosna found 83 unused 2016 voter ballots at his home over the weekend — each ballot had a different name but were all addressed to his neighbor’s two-bedroom apartment — causing concern and serious suspicion of voter fraud.

“I think this is spooky,” Mosna said, according to Fox News. “All the different names, none we recognize, all at one address.”

ballots-voteMosna and his wife Madalena attempted to turn the ballots over to Los Angeles police, but they eventually found their way to the Los Angeles County Registrar’s office.

“We are carefully reviewing our records and gathering information to fully identify what took place,” the office of the Registrar reportedly said in a statement. “Our preliminary assessment is that this appears to be an isolated situation related to a system error that occurred causing duplicate ballots to be issued to an address entered for a single voter. We are working directly with the system vendor to ensure the issue is addressed and to identify any similar occurrences.”

Brenda Duran, a spokeswoman for the office of the Registrar, said the U.S. Postal Service “has indicated that they returned all of the improperly addressed ballots to our office.”

U.S. Postal Service spokesman Richard Maher said, according to Fox News, that his office has seen “relatively few” similar incidences like the one Mr. and Mrs. Mosna reported.

Follow Jerome Hudson on Twitter: @jeromeehudson.

This piece was originally published by Breitbart.com/California

Obama’s Hearing

Obama hearing

Gary McCoy, Cagle Cartoons