A non-profit affordable housing complex located in National City, California has become a major political force in San Diego County.
Since 2010, the “San Diego County Building Trades Council Family Housing Corporation dba National City Park Apartments” has donated about $800,000 directly to campaign committees, most of them based in San Diego County. It has been a top donor in 2016 to campaigns to pass bond measures for San Diego County community college and school districts where construction contractors are required to sign Project Labor Agreements (PLAs).
For example, this “low to moderate income apartment community” in National City has given $50,000 to the campaign to pass Measure X, which authorizes the Grossmont-Cuyamaca Community College District to borrow $348 million via bond sales to investors. In addition, it helped to pay for polling services on behalf of the college administration. (The polling results had to be obtained from the college through a public records request.) It also gave $50,000 to the campaign to pass Measure Z, which authorizes the Southwestern Community College District to borrow $400 million via bond sales to investors.
This money is obtained through rental payments of apartment tenants. Built in 1968 with US Department of Housing and Urban Development funds, the National City Park Apartments have apparently been owned and managed by the San Diego County Building and Construction Trades Council since their construction. The head of the Trades Council – Tom Lemmon – is chairman of the Board of Directors for the San Diego County Building Trades Council Family Housing Corporation and receives some compensation from the Corporation. He also lived there as a boy. In 2008, the Trades Council paid off the loans from its purchase of the apartment complex.
The payoff of those loans may have triggered the decision to start getting the affordable housing complex involved in politics in 2010. Another inspiration may have been the Citizens United decision issued on January 22, 2010 by the U.S. Supreme Court. That controversial decision extended certain political speech rights to non-profit organizations classified under Internal Revenue Code section 501(c)(4) as “operated exclusively for the promotion of social welfare . . . the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.” The San Diego County Building Trades Council Family Housing Corporation tells the IRS that its purpose is “to provide affordable rental housing for low to moderate income families.”
Below is a list of ways that the National City Park Apartments are providing “affordable rental housing for low to moderate income families.”
Political Contributions of San Diego County Building Trades Council Family Housing Corporation dba National City Park Apartments and Affiliated Entities, 2010-2016
|Election||Recipient of Contribution||Amount|
|2010||Yes on Prop J (San Diego Unified School District parcel tax)||$50,000|
|2011||No on Prop A and Prop B (City of San Diego Project Labor Agreement ban and pension reform)||$5,000|
|2011||Californians Against Identity Theft and Ballot Fraud (radio ads to discourage people from signing petitions for PLA bans and pension reform)||$25,000|
|2012||A Better San Diego Issues Committee, a Sponsored Committee of the San Diego and Imperial Counties Labor Council, AFL-CIO||$100,000|
|2012||Kids First/Yes on Prop Z (San Diego Unified School District bond measure)||$85,000|
|2013||David Alvarez for City of San Diego Mayor (after Bob Filner resignation)||$75,000|
|2014||San Diego County Democratic Party (for David Alvarez for City of San Diego Mayor, after Bob Filner resignation)||$12,500|
|2014||Yes on Prop 41 (Coalition for Veterans Housing, to pass California Veterans Housing and Homeless Prevention Bond Act)||$5,000|
|2014||San Diego County Democratic Party (for November 2014 Election)||$47,500|
|2014||Escondido Taxpayers Association (opposing ballot measure to enact charter for City of Escondido)||$10,000|
|2014||Chula Vista Voters Against Corruption (committee formed to oppose John McCann for Chula Vista City Council)||$25,000|
|2015||San Diego Works! sponsored by San Diego Imperial Counties Labor Council, AFL-CIO||$15,000|
|2016||Contribution to independent expenditure committee primarily formed to support Proposition I, Barbara Bry, and Justin DeCesare, sponsored by Alliance San Diego Mobilization Fund (preserve San Diego High School in Balboa Park, elect Bry and DeCesare to San Diego City Council)||$25,000|
|2016||San Diego County Building and Construction Trades Council Political Action Committee||$25,000|
|2016||San Diego County Democratic Party||$10,000|
|2016||South Bay Parents and Community for Quality School Construction (Sweetwater Union High School District bond measure)*||$73,650|
|2016||Rendon Ballot Measure Committee to Keep California Competitive (committee under control of California State Assembly Speaker)||$10,000|
|2016||San Diego County Democratic Party||$7,000|
|2016||Educators & Parents for Great Schools to Support Whitehurst-Payne for School Board 2016, sponsored by San Diego Education Association (independent expenditure committee primarily formed to support Sharon Whitehurst-Payne; Board Member; San Diego USD)||$10,000|
|2016||Teachers and Parents Putting Kids First Supporting Kevin Pike 2016 (independent expenditure committee primarily formed to support Kevin Pike; Board Member, Sweetwater Union HSD)||$8,000|
|2016||South Bay Families for Affordable College – Yes on Z (Southwestern Community College bond measure)||$50,000|
|2016||Rodriguez for City Council 2016 (Jose Rodriguez, National City Council)||$1,000|
|2016||Rodriguez for City Council 2016 (Jose Rodriguez, National City Council) – office space||$2,700|
|2016||Irene Lopez for San Ysidro School Board 2016||$1,000|
|2016||Tremper for Chula Vista School Board 2016 (Glendora Tremper for Chula Vista Elementary School District board)||$2,000|
|2016||Careers & Affordable Education for East County – Yes on X (Grossmont-Cuyamaca Community College District bond measure)||$50,000|
|2016||San Diegans for Full Voter Participation, Yes on K and L, Sponsored by Community and Voter Rights Organizations (City of San Diego ballot measures to shift election significance from June to November, when more people vote)||$75,000|
|2016||Careers & Affordable Education for East County – Yes on X – polling (Grossmont/Cuyamaca Community College District bond measure)||$1,875|
* Campaign reports from South Bay Parents and Community for Quality School Construction indicate two $22,500 contributions on February 1, 2016 from the San Diego County Building Trades Council Family Housing Corporation that are not in the Corporation’s own campaign reports. Those contributions are included in this amount.
Lobbying and Policy Activity
The San Diego County Building Trades Council Family Housing Corporation also provides funding and support for labor union activism and allied causes. Some examples:
- Since 2011 the San Diego County Building Trades Council Family Housing Corporation has employed Murtaza Baxamusa as Director of Planning and Development. Baxamusa is a union-oriented economist involved in many policy debates in San Diego County going back to his previous position with a San Diego-based union-oriented think tank called the Center on Policy Initiatives. He is a leader of the Middle Class Taxpayers Association, a union front group that is displacing traditional fiscally-conservative taxpayers associations as the statutorily-required taxpayers representative on local government bond and tax oversight committees.
- It provides grants to organizations such as the Center for Policy Initiatives, Cesar Chavez Service Club, and the Gay & Lesbian Victory Fund.
- It sponsored a lunch in 2016 at the San Diego Housing Federation 25th Annual Affordable Housing and Community Development Conference. The San Diego County Building and Construction Trades Council is among the highest-status members in this organization.
- It uses the legal services of Ricardo Ochoa, a union lawyer. Ochoa represented the San Diego County Building Trades Council Family Housing Corporation No. 1 for its defense of a civil rights lawsuit for housing and accommodations (Gash v. San Diego County Building Trades Council Family Housing Corporation No. 1). Ochoa also represents school and community college district faculty unions in San Diego County. Recently he filed a lawsuit on behalf of a coalition of unions and other groups called “Quality of Life Coalition” – with the political director of the International Brotherhood of Electrical Workers Local 569 as lead plaintiff – to challenge the ballot arguments in support of a transportation investment plan and sales tax (Measure A) on the November 2016 ballot. During the development of the transportation plan, unions had demanded that the San Diego Association of Governments (SANDAG) mandate a Project Labor Agreement on construction contracts funded by the tax.
It’s all about providing affordable rental housing for low to moderate income families.
CAMPAIGN CONTRIBUTIONS – SOURCES
The Local Affordable Housing That Labor Built – commentary by Tom Lemmon – San Diego Union-Tribune – June 3, 2011
Building Trades’ Family Housing Corporation Re-Elects Board Members – San Diego Reader – February 8, 2012
Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.
It’s rare to see a California local government rescind a vote. But on October 4, 2016, the San Joaquin County Board of Supervisors voted 5-0 to rescind a controversial and probably illegal vote taken three weeks earlier to satisfy the political demands of construction unions.
On September 13, the board had voted 3-2 to direct staff to negotiate a Project Labor Agreement (PLA) with construction trade unions for a $41 million county hospital expansion. Organizations that defend fair and open bid competition for public contracts were caught by surprise. There was nothing on the September 13, 2016 meeting agenda to indicate board discussion – let alone action – concerning a government-mandated Project Labor Agreement.
But some people seemed to know a vote would happen. Union officials and activists attended the September 13 meeting and called on the Board of Supervisors to negotiate a Project Labor Agreement. At least one Supervisor was ready to make a motion for it even though the proposal was introduced to the board via public comment.
In addition to undermining the public interest, the vote appeared to be illegal. Under the California Ralph M. Brown Act, an elected governing board cannot vote on items without notifying the public in advance that such items will be considered for action. This is a basic principle of open and transparent government.
But having a law and actually enforcing it are sometimes two different things. Frequently the public encounters insurmountable challenges in making California local governments accountable for violating what’s commonly called “the Brown Act.” In this case, opponents of government-mandated Project Labor Agreements needed persistence and determination to confirm the illegal action and get it rectified.
A video record of the meeting posted on the county website after the meeting strangely cut off before the vote, thereby depriving the public of a source to prove what had happened. A reporter who covered the September 13 Board of Supervisors meeting for the local newspaper insisted that the board had not taken a vote to negotiate a Project Labor Agreement. Members of the public trying to obtain draft meeting minutes were frustrated by what seemed to be bureaucratic delays.
Yet there was one reliable witness at the meeting who was paying close attention to the proceedings. This witness was sure that a 3-2 vote had been taken specifically to authorize staff to negotiate a union Project Labor Agreement to include as a bid specification for the San Joaquin General Hospital Phase 2 Acute Care Patient Wing Expansion Project.
Eventually, the county was able to restore the video to completeness and provide the order of the board. It was indeed a vote directing staff to negotiate a Project Labor Agreement with unions, with the agreement to come back for ratification at the September 27 board meeting. (Allowing only two weeks for “negotiations” of a major labor relations contract suggests that union officials and some county supervisors were going to pressure staff to hastily sign off on a standard boilerplate agreement that unions typically introduce at the start of negotiations.)
The plot was now proven. A coalition of organizations banded together and hired a law firm to send a letter to the Board of Supervisors demanding that the vote be nullified. Meanwhile, the Board of Supervisors cancelled its September 27 meeting for unknown reasons. Then the Board of Supervisors scheduled an agenda item at the October 4 meeting to rescind the original September 13 vote.
But supporters of fair and open bid competition on taxpayer-funded contracts even struggled at the October 4 board meeting to get that 5-0 vote to correct the apparently illegal action. Hundreds of Service Employees International Union (SEIU) activists repeatedly disrupted and delayed the meeting to express displeasure with their own contract negotiations. When a representative of the Coalition for Fair Employment in Construction was speaking during public comment to urge the board to rescind their Project Labor Agreement vote, someone set off the fire alarm, resulting in the evacuation of the building.
In the past 20 years, the militant union activism and underhanded political tricks formerly concentrated in a few urban centers of California have rippled out 75 miles to places such as San Joaquin County. While many fiscal conservatives are fleeing the state or dying, those who choose to remain in California must monitor their local government agendas and make elected officials accountable when they violate the law for a special interest group.
Union Creates Bedlam at San Joaquin Supervisors Meeting – Stockton Record – October 4, 2016
Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.
“Infrastructure” is a perennial topic that enters and leaves California’s public consciousness in the following manner: A politician says “we must rebuild our crumbling infrastructure,” journalists report it, almost nothing is done, and the infrastructure continues to crumble. The talking point is made. Check the box. Repeat. Decades pass.
If you’ve driven west on Interstate 580 from California’s central valley into the San Francisco Bay Area, “infrastructure” becomes more than a hard-to-pronounce, sort of awkward sounding four syllable word that emanates from the mouths of politicians every election cycle. Because the divots, pot-holes, fissures and bumps on Interstate 580 west are impossible to ignore. The road is literally falling apart.
It isn’t enough to marvel at how Californians tolerate this negligence. Because it harms our quality of life. Today the failure is measured in terms of how many cars and trucks require far more frequent maintenance to repair their battered suspensions because we can’t fix our roads. Today it’s short showers and annoying light switches that turn off automatically because we won’t build new water and power infrastructure. But tomorrow it could be a catastrophe, as entire regions are potentially denied water, power or transportation, because over time, less and less viable infrastructure became critical to supporting more and more people.
Why? Why have California’s policymakers paid lip service to infrastructure for the last 20-30 years, all the while watching it crumble? Here are three reasons:
(1) Environmentalists provide the moral cover for neglect. There isn’t a road, a bridge, a power plant, a port upgrade, new housing, a water treatment plant – not one scratch in the ground that isn’t bitterly contested by the environmentalist lobby. Powerful environmentalist organizations, often receiving government funds, with opportunistic trial lawyers populating their boards of directors, have an incentive to tie every possible infrastructure investment up in knots. While some environmental oversight is necessary, the challenge of complying with every environmentalist objection deters all but the wealthiest corporations, and creates costly delays that last for decades.
(2) Many corporate special interests benefit from neglect. Corporations who own existing sources of supply can charge higher prices and generate higher profits. Utilities are the obvious examples of this – ever since “decoupling” legislation was passed in California, the only way utilities can generate higher profits is to raise unit costs, since unit output and profit percentages are fixed by law. So if water costs $2.00 per CCU instead of $0.25, or if electricity costs $0.50 per KWH instead of $0.05, utility companies make a killing for their shareholders. Similarly, owners of land that has finally been approved for development, or quarries that got operating permits before the regulations made them prohibitive, are able to sell their inventory at fantastic markups.
(3) Public sector unions also benefit from infrastructure neglect. Taxpayer funds that ought to be paying to construct and upgrade roads and bridges end up being allocated instead to pay government workers higher salaries and fund generous pensions. These unions also benefit from the legislated and entirely artificial scarcity that drives up prices for land and homes, because it increases property tax revenue. And of course, every additional environmentalist inspired regulation and code means more unionized government inspectors and enforcement officers can be hired. Government over-management and mismanagement always benefits public sector unions.
So where is California’s private sector labor movement when it comes to infrastructure? Here is a quote from the California Labor Federation’s website, under “Advocacy / Key Issues.” Revealingly, this is number ten of ten on their “issues” page:
“Invest in California’s Infrastructure: We must have a comprehensive strategy for making investments in infrastructure and a sustainable, equitable way to finance them. We need to restore our public transportation systems, modernize our rail system and rebuild our roads and waterways. We must double our efforts to build high speed rail in California.”
Apart from “high speed rail,” a project that fails to justify itself under any rational cost/benefit analysis, this all sounds good. But where’s the follow up?
When scoping meetings are held to approve infrastructure projects, whether it is widening a highway, approving a new subdivision, repairing a bridge, or building the Temperance Flat or Sites reservoirs, where are the unions? Why aren’t hundreds of them showing up two hours early to these meetings, elbowing the environmentalist trial lawyers and their zealous puppets out of the room? Why aren’t they packing the out-of-control California Air Resources Board meetings to show solidarity with the workers in dairies, agriculture, manufacturing, mining and timber, trucking, and countless other industries who employ hundreds of thousands of Californians?
Instead California’s labor unions typically resort to “greenmail,” a tactic that goes as follows: Pick a project that the environmentalist lobby doesn’t actually object to, then sue the developer on environmentalist grounds until they concede to enact a project labor agreement, than drop the lawsuit.
Is this the best they can do?
California’s private sector labor movement should consider how environmentalism, married with the special interests of monopolistic corporations, allied with government labor whose agenda is utterly different than their own, have destroyed literally millions of good jobs in this state. They should consider how close California is to becoming an authoritarian wasteland, where land, water, energy, housing and transportation are cynically rationed by this alliance of oligarchs and elitists. They need to wake up and fight for their core principles – the welfare of workers and their families.
An essential point that union leaders and their members ought to understand is the cost of building infrastructure in California is prohibitive for reasons that go far beyond paying a prevailing wage, or even the cost of hiring a few extra employees on a project to comply with union work rules. The costs are prohibitive because oligarchs and elitists have colluded to make every element of a project more expensive – the land, power, materials, transportation, staging, permits, and time-delays. The compounding effect of these pernicious barriers have enriched oligarchs, government workers, and the trial lawyers representing the environmentalists. They’ve made the rest of us poorer, and they’re the real reason we don’t have more good jobs.
To take one dramatic example, consider the Carlsbad desalination plant, which – not even including distribution pipes to move the water into the municipal supply – was built at at a capital cost of $12,733 per acre foot of annual capacity. Compare that to the Sorek desalination plant, completed in Israel in 2013 at a capital cost of $4,111 per acre foot of annual capacity, less than one-third as much! This was accomplished in a nation where labor is not cheap, nor is the government a paragon of free market deregulation. This is not an isolated case.
It is a crime against all Californians that other developed nations can build infrastructure for less than one-third what it costs here, and that other states in the U.S. can build infrastructure for less than half what it costs in California. Labor costs occupy a dwindling percentage of what infrastructure projects cost, which means that unions should start lobbying aggressively for infrastructure investment, instead of playing petty greenmail games. They may not win every project labor agreement battle. But they will win the war to create millions of good new jobs, and change California from a land of authoritarian scarcity back into a land of opportunity and abundance.
* * *
Ed Ring is the president of the California Policy Center.
California’s Misguided Water Conservation Priorities, August 17, 2016
The Alternative to Crony Capitalism and Phony Shortages, June 15, 2016
Government Unions and the Financialization of America, May 24, 2016
California’s Economically Illiterate Legislature, April 5, 2016
Practical Reforms to “Right-Size” Government Unions, March 29, 2016
Investing in Infrastructure to Lower the Cost of Living, March 14, 2016
The Future of Unions in the Post-Scalia Era, February 16, 2016
In Search of a Legitimate Labor Movement, January 19, 2016
The Alliance Between Wall Street and Public Unions, December 1, 2015
Why Aren’t Unions Fighting California’s Bullet Train Boondoggle?, November 24, 2015
When Will Unions Fight to Lower the Cost of Living?, October 27, 2015
Desalination Plants vs. Bullet Trains and Pensions, April 7, 2015
Raise the Minimum Wage, or Lower the Cost of Living?, March 31, 2015
The Abundance Choice, December 24, 2014
An Economic Win-Win For California – Lower the Cost of Living, December 3, 2014
How to Create Affordable Abundance in California, July 1, 2014
California’s Green Bantustans, May 21, 2014
Editor’s Note: This article by Jon Coupal provides an update on what has to be one of the biggest con jobs ever perpetrated on California’s voters – “High Speed Rail” that will never make a profit, will never move significant numbers of people, will not even be “high speed” in many sections of track, cannot integrate with other rail assets (different track gauge), and is going to cost at least $50 billion more than they said it would. So why are we still doing this project? One significant reason is the political support it gets from organized labor. Rather than fight for projects that would actually improve the lives of millions of Californians, such as better roads, refurbished bridges, upgraded ports, new power stations, and sorely needed water infrastructure, California’s labor movement backs high speed rail. And the reason they do that is because they don’t want to fight the powerful environmentalist lobby. This is a failure of vision and it is a failure of courage. And it is difficult to overstate how much this fails the ordinary working families that organized labor purports to support above all else. Read on.
High-speed rail continues to be an expensive, sick joke for California. Under the current plan, it is no longer “high-speed” and projected costs, which seem to change almost daily, appear to be doubling.
In the latest news, the nascent California high-speed rail system is running $50 million over budget for a two mile stretch in Fresno.
Let that sink in for a moment.
$50 million, over budget, for just a two mile stretch.
Let’s see, HSR has a $50,000,000 cost over run on 2 miles of a 32 mile job. Does that mean we can expect total cost overrun of $25 million per mile times 32 miles or $800,000,000?
Better yet, let’s extrapolate that to the entire project. You know, the one sold to voters. According to High Speed Rail Authority itself, over 800 miles of track are needed. So, at $25 million of cost overruns per mile, that works out to $20,000,000,000. That’s $20 billion in cost overruns!
In just 3 years, from the original passage of Proposition 1A authorizing about $10 billion in High Speed Rail bonds, the estimated cost for high-speed rail had gone from $40 billion to $98 billion, the amount that independent expert analysis had predicted prior to the bond’s being approved.
Responding to public outrage, the High-Speed Rail Authority came up with a plan costing “only” $68 billion. The new “blended” system would combine high and low speed rail, doubling the travel times as well as ticket prices.
Fearing a voter revolt, the High-Speed Rail Authority rushed to break ground, hoping that once they dug a hole, the pet project of Gov. Brown and the majority of Sacramento lawmakers, who receive backing from construction contractors and labor unions that expect to be the primary beneficiaries of billions of dollars of public spending, would be safe from outside interference.
By beginning a first segment between Merced and Fresno, the rail authority engaged in the classic Willie Brown strategy. The former Assembly Speaker, in a moment of candor, once told the San Francisco Chronicle, “In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.”
Constant cost overruns and a lack of accountability plague California’s infrastructure projects. Perhaps, as a public service, it should be required that Brown’s words be reprinted in every ballot summary for every construction bond placed before the voters.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.
If anyone is looking for evidence that government unions use their immense influence to support the growth of an authoritarian state, look no further than their unequivocal support for global warming “mitigation,” and all attendant agencies and laws to support that goal.
In 2006 California’s union-controlled legislature passed AB32, the “Global Warming Solutions Act,” a measure that was touted as a trailblazing breakthrough in the dire challenge to avoid catastrophic climate change. The premise behind AB32 is that CO2 is a dangerous pollutant, and that eliminating CO2 emissions is necessary to prevent the planet’s climate from overheating, with all the apocalyptic consequences; rising oceans inundating coastal regions, epic droughts cascading through the world’s fragile forests and killing them, extreme storms, acidic oceans, collapsing agriculture – the end of life as we know it.
Maybe that’s true – and maybe not – but how it’s being managed is a corrupt, misanthropic, epic scam.
If anyone is looking for evidence that government unions and crony capitalists work together – contrary to the conventional wisdom that presents the appearance that they are in conflict – again look no further than their shared support for global warming mitigation, expressed in the legislative mandate to reduce CO2 emissions. AB 32 implements this by forcing industrial entities to purchase permits to emit progressively smaller quantities of CO2, via an auction process that is expected to raise $20 billion per year to finance renewable energy investments.
Think about how government unions will benefit from all this money:
- Transit workers will claim a share because they will be getting cars off the road.
- Firefighters will claim more fires are because of global warming and demand more funds – when in reality most severe wildfires are the result of decades of forest mismanagement and unwarranted wildfire suppression.
- Cities will qualify for proceeds when they zone extremely high density housing.
- Code enforcement officers will declare that the percentage of their jobs oriented towards conservation and energy/water efficiency qualifies them for a share of the proceeds.
- Teachers will declare that the percentage of their curricula oriented towards climate education qualifies them for a share of the proceeds.
- More generally, municipalities will collect more property tax as restrictive zoning elevates the cost of housing.
Think about how crony corporations and corrupt financial special interests benefit from this money:
- Wall Street traders will set up new subsidiaries to traffic in carbon emission auctions and take a cut.
- “Green” entrepreneurs will manufacture devices calculated to save energy and water – despite the fact that the shortages are contrived.
- Producers of energy and water will sell at higher prices since competitive development of these resources is restricted.
- Utilities whose profits are “decoupled” from the quantity of energy and water they deliver will increase revenue and hence their profit margins which are pegged to revenue, without having to increase services.
- Manufacturers of noncompetitive products with no natural demand – high speed rail is a perfect example – are enriched via hundreds of billions of investment for their supposedly greener and cleaner solutions.
- More generally, artificial scarcity causes asset bubbles which benefits wealthy investors and pension funds, but impoverishes ordinary workers.
Even if CO2 is a threat to life on earth, there is an alternative that merits discussion:
Instead of investing in “green” energy infrastructure and embedded surveillance systems to micro-manage energy consumption, California should be investing in natural gas and 5th generation nuclear power stations, desalination plants along the coast, liquid natural gas terminals, efficiency upgrades to existing high-voltage transmission lines, run-off harvesting and aquifer storage systems, upgraded aqueducts, comprehensive waste-water treatment and aquifer recharge, offshore drilling for oil and gas, widened roads and freeways, more airport runways, and buses for mass transit. These steps will result in energy, water and transportation costing everyone in California less. This will benefit businesses and consumers, and make California a magnet for investors and entrepreneurs all over the world.
And even if CO2 is a threat to life on earth, vigorous debate on that topic should be encouraged, not outlawed.
If you are an informed skeptic – something the axis of government unions and powerful financial special interests are trying to outlaw – it becomes tiresome to recite the litany of legitimate reasons that debate regarding the actual impact of anthropogenic CO2 is of critical importance. The primacy of solar cycles, the multi-decadal oscillations of ocean currents, the dubious role of water vapor as a positive feedback mechanism, the improbability of positive climate feedback in general, the uncertain role (and diversity) of aerosols, the poorly understood impact of land use changes, the failure of the ice caps to melt on schedule, the failure of climate models to account for an actual cooling of the troposphere, the fact that just the annual fluctuations in natural sources of CO2 emissions eclipse estimated human CO2 emissions by an order of magnitude. And let’s not forget – California only is responsible for 1.7% of global anthropogenic CO2 emissions. Does any of this matter to the California Air Resources Board?
Apparently not. Nor does it matter to California’s legislature, which recently stopped just short of passing Senate Bill 1161, the Orwellian California Climate Science Truth and Accountability Act of 2016. SB 1161 would have authorized prosecutors to sue fossil fuel companies, think tanks and others that have “deceived or misled the public on the risks of climate change.”
What California’s legislature ran up against, of course, was the U.S. Constitution. Perhaps they believe time is on their side. After all, even the Scalia court ruled in 2007 that CO2 is pollution, in one of the most frightening inversions of reality in U.S. history. Imagine what a court packed with Clinton appointees will come up with.
The failure to deploy clean fossil fuel solutions in the developing world, much less here in California, condemns billions of humans to further decades of poverty, misery, and unchecked population growth. Cheap energy equals prosperity equals population stabilization. Until a few years ago that hopeful process was inexorable. But in recent years, somewhere on the shores of Africa, cost-effective industrial development ran into global warming’s global mafia and was stopped in its tracks.
The consolidation of power inherent in government suppression of energy development and micromanagement of energy consumption is not only a recipe for a corporate union police state in America. It is a recipe for systemic oppression of emerging societies across the world. At the very least, the debate must continue.
* * *
Ed Ring is the president of the California Policy Center.
The California Department of Industrial Relations does not determine state prevailing wage rates for construction trades by surveying contractors or workers or by using statistics gathered by the California Economic Development Department. By law, the state uses union agreements to set prevailing wages. Thus, the prevailing wage is always the “union wage.” And the geographical region of a prevailing wage is based on the jurisdictional boundaries of the relevant union.
Calculating a prevailing wage starts when a union official provides the Department of Industrial Relations with its master labor agreement negotiated with representatives of contractors signatory to the union. State personnel then review the union agreement and identify all of the payments an employer is required to make per hour worked by an employee represented by the union. Those payments are assigned to categories identified in state law and added up to determine the prevailing wage.
For example, the state calculates the prevailing wage for a inside wireman electrician working in Sacramento County by identifying and adding up all the payments made by a National Electrical Contractors Association (NECA) contractor per hour worked by an inside wireman represented by the International Brotherhood of Electrical Workers (IBEW) Local No. 340.
A prevailing wage determination includes a “Basic Hourly Rate” paid directly to the employee (from which union initiation fees and dues are deducted). Fringe benefits are categorized as “Health and Welfare,” “Pension,” “Apprenticeship and Other Training,” and “Vacation/Holiday.” There is also a Travel/Subsistence amount for workers who travel a certain distance from a certain location, as indicated in the master labor agreement.
Then there is the mysterious “Other,” comprised of payments to “worker protection and assistance programs or committees,” “industry advancement and collective bargaining agreements administrative fees,” and “other purposes” similar to those listed above. Basically, employer payments in master labor agreements that don’t fit in one of the direct employee fringe benefit categories get classified as “Other.”
“Other” was added to prevailing wage determinations on January 1, 2004 after the soon-to-be-recalled Governor Gray Davis signed the union-backed Senate Bill 868 in 2003. Union lobbyists and lawyers are very protective of this new category incorporated in prevailing wage rates and fought an effort in 2006 to impose regulations on it.
Federal and state law do not establish any specific regulations or reporting requirements for the trust funds that receive payments indicated in “Other.” Most of them file an annual Form 990 with the Internal Revenue Service, and they will file a Fair Political Practices Commission (FPPC) form when making a campaign contribution to a ballot measure. But union members are not informed about how these trust funds spend money, and these trust funds don’t need to file any reports with the federal Office of Labor-Management Standards (OLMS) or Federal Mediation and Conciliation Service (FMCS).
During the past 16½ years, a little bit of taxpayer money has been diverted to these union-affiliated “Other” trust funds as workers represented by unions built government facilities and private developments with government funding. But now that “little bit” is becoming “quite a bit” in some cases.
On June 1, 2014, the master labor agreement for inside wiremen electricians in Sacramento County (and surrounding counties in the IBEW Local No. 340) increased Other from 47 cents to $3.47. On June 1, 2015, Other increased to $5.47. On June 1, 2016, Other increased to $7.47. The union informed the California Department of Industrial Relations that the money was going to “LMCT,” meaning a Labor-Management Cooperation Committee.
Provisions in the IBEW Local No. 340 master labor agreement suggest this LMCC is the Sacramento Electrical Construction Industry Labor-Management Cooperation Committee. Gross receipts for this trust fund from June 1, 2014 to May 31, 2015 totaled $2,420,684. It gave a “distress grant” of $107,946 to the Shasta Butte Electrical Workers Training Fund. (94-2584061). It was also somehow “providing wage supplementation” to union employers to compete against non-union employers, perhaps through a program sometimes referred to as “job targeting.” No other specific expenditures are known.
Obviously “Other” is becoming a taxpayer-funded bonanza of millions of dollars to union-affiliated non-profit organizations that provide little information to union members, government, or the public. Consider the number of trades and the number of unions representing these trades in California. How much is being collected for “Other?” How is it being spent? Shouldn’t union members know where that money goes?
More relevant for the general public is knowing how much of that money goes to lobbying and campaigning. The California Department of Industrial Relations is supposed to exclude employer payments for political purposes from prevailing wage determinations. Perhaps the state needs to begin scrutinizing the expenditures of “Other” trust funds receiving $7.47 per hour on behalf of each worker.
Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.
Last week, Will Kempton, Executive Director of Transportation California and former Director of Caltrans published a response to Jon Coupal, President of the Howard Jarvis Taxpayers Association, in a Fox & Hounds piece stating that, “…in spite of all the recent audits and criticism, the organization [Caltrans] employs competent people who want to serve the public well.” In the same piece he highlighted the need to address California’s transportation funding crisis and provided one solution: Raise your taxes even higher.
There is no doubt that there are many fine and capable Caltrans employees who simply want to build and maintain our state’s highway system. What Kempton missed was the incredible dysfunction at Caltrans and tries to deflect any criticism of the department. He of all people knows how bad it really is at Caltrans, and for those who are unaware of the facts, his echo to raise taxes for transportation spending might seem like the only viable option. However, reports concerning a very dilapidated Caltrans are replete with criticisms of its inability to provide details for budget reviews and audits by either the LAO or the State Auditor.
We’re told the Governor and the Secretary of Transportation are serious about fixing California’s roads, but can you mention one initiative to actually fix Caltrans? All I hear is cries for more tax increases.
Allow me to review a few facts revealing the competency level at Caltrans:
- Caltrans has 3,500 too many architects and engineers at a cost of HALF A BILLION $$ A YEAR.
- Caltrans spends roughly $10 billion per year and has 10,000 architects and engineers. In contrast, Riverside County is managing a $7.5 billion freeway widening project that only has 9 engineers.
- Caltrans officials lied to legislators for 7 years. Caltrans spent $250,000 on a study of how to improve field maintenance operations for greater efficiency.
- Caltrans spends 3 times the national average on road repairs. Yet, California’s roads rate among the nation’s WORST in pavement condition and congestion.
- Caltrans only outsources 10 percent of its engineering and architectural work. Most states outsource 50 percent. Our neighbor, Arizona, outsources more than 80 percent!
- 62% of Caltrans projects are over budget.
- The January budget analysis reflected that the Governor’s transportation plan would increase gas taxes on California drivers by $3 billion when California’s gas taxes are already the nation’s 5th highest.
Left up to the Governor and the legislature, it will be YOU, the taxpayer, who will be asked to fund a “pothole” tax. I hate to break it to you, but you’re being taken to the cleaners. You are the victim of intentional infrastructure neglect. This literally is “highway robbery.” The fix is in. And the answer is you and your wallet.
California’s leadership should be sincere in its pursuit of better roads. Fix Caltrans. Taxpayers should expect no less.
I’m ready to #FixCaltrans.
Watch & Share this video: bit.ly/FixCaltransVid
About the Author: As a Certified Public Accountant and Certified Financial Planner, John Moorlach began his career in public service 20 years ago when he warned that then Orange County Treasurer-Tax Collector Robert Citron’s risky investment strategies would lead to bankruptcy. Moorlach’s warnings proved true when Orange County filed for bankruptcy protection in December of 1994, becoming the largest municipal bankruptcy in U.S. history. John Moorlach was twice re-elected to County Treasurer-Tax Collector. In 2006, voters elected John to serve in his first of two terms on the Board of Supervisors, where he continued his focus on reforming the county’s budget practices and sounding the alarm on the county’s growing unfunded liabilities. He now currently holds office as the State senator for the 37th senate district.
According to my father, in the 1950s and ’60s, California had the best transportation agency in the entire world. But all that changed with the election of a new, anti-growth, small-is-beautiful governor by the name of Jerry Brown.
Now, fast forward 40 years. Governor Brown, version 2.0, proposes a budget that assumes a big increase in transportation taxes and fees. The California Legislature shouldn’t just say no, it should say hell no.
Where to start? First, let’s take judicial notice of the fact that California is already a high tax state with the highest income tax rate and the highest state sales tax in America. But more relevant for the issue at hand, we also have the highest fuel costs in the nation. This is because of both the 4th highest excise tax on fuel and the fact that refineries are burdened with additional costs to comply with California’s environmental regulations.
The high cost to drive in California might be understandable if we were getting value for our tax dollars. But we aren’t. A big problem is that Caltrans is dysfunctional, plain and simple. It has never fully recovered from the days when the agency was effectively destroyed by Gianturco. A report by the California State Auditor just a couple of months ago concluded that a primary responsibility of Caltrans – maintenance of our highways – is not being executed in a manner that is even close to being efficient or competent. Senator John Moorlach, the only CPA currently serving in the California legislature, reacted saying that “This audit reinforces the fact that our bad roads are not a result of a lack of funding. They’re a result of a lack of competence at Caltrans.” Moreover, a report by the Legislative Analyst concluded that Caltrans is overstaffed by 3,500 employees costing California taxpayers over a half billion dollars a year. All this compels the obvious question: Why, for goodness sake, do we want to give these people even more money?
Another unneeded and costly practice consists of project labor agreements for transportation construction projects. These pro-union policies shut out otherwise competent companies from bidding on projects resulting in California taxpayers shelling out as high as 25% more than they should for building highways and bridges.
Finally, California’s environmental requirements are legendary for their inefficiency while also doing little for the environment. Exhibit A in this foolishness is Governor Brown’s incomprehensible pursuit of the ill-fated high speed rail project. Not only has the project failed to live up to any of the promises made to voters, it is currently being kept alive only by virtue of the state’s diversion of “cap and trade” funds which are supposed to be expended on projects that reduce greenhouse gas emissions. But in the Kafkaesque world of California transportation policies, the LAO has concluded that the construction of the HSR project actually produces a net increase in emissions, at least for the foreseeable future.
No one disputes the dire need for improvements in California’s transportation infrastructure. But imposing draconian taxes and higher registration fees that serve only to punish the middle class while wasting billions on projects that don’t help getting Californians get to work or school cannot and should not be tolerated. Legislators who present themselves to voters as fiscally responsible need to understand that a vote for higher transportation taxes will engender a very angry response from their constituents.
About the Author: Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.
Imagine for a moment that two premises are beyond serious debate: (1) That there will be another financial crisis within the next five years that will equal or exceed the severity of the one experienced in 2009, and (2) That the political power of public safety unions will prevent local governments from enacting pension reforms sufficient to avert a financial disaster when and if the next financial crisis hits.
What will these public safety unions do?
It’s distressingly easy for politicians to dismiss both of these premises, but since for the moment we’re not, imagine the following: Major European banks have declared insolvency because their debtors have all defaulted on payments, the Chinese stock market has collapsed because their export markets are shrinking instead of growing, and the deflationary contagion reaches American shores. Across the nation, speculative buying is replaced by panic selling. Housing prices fall, defaults accumulate, and the pension funds lose half their value overnight. In a cascading cycle reminiscent of 1929, deflation sweeps the global economy.
Meanwhile, pension reform has been limited to incremental adjustments to the pension benefits for new employees. Millions of retirees and active public safety workers still expect pensions that are roughly equivalent to the amount they made at the peak of their careers. But the money won’t be there.
How will public safety unions use their political power to address this challenge?
If the present is any indication, the solutions won’t be pretty. In San Jose and San Diego, public safety unions lead the charge to roll back local pension reforms enacted by voters. In counties across California, public safety unions lead the charge to undermine in court the reforms enacted by the State Legislature in the Public Employee Retirement Act of 2014. That’s all fine while the economic bubble continues to inflate. But what do we do when it pops? What do we do when there’s no money?
When challenging public safety unions to exercise their political power to advocate on issues other than law and order or their own compensation and benefits, a reasonable response is that public safety unions, like any government union, shouldn’t be involved in politics. The problem with that response is that they already are. Government unions, and their partners in the financial community, are a major cause of the economic bubble we’re experiencing. Their insatiable appetite for high returns, 7% or more, compels the financial engineering that creates unsustainable economic growth. When the crash comes, government unions will blame “Wall Street.” But in reality, they will share the blame, because they didn’t want to admit that their pension benefits relied on unsustainable rates of economic growth.
If there is another economic crash, public safety unions will face a choice. They can use their political power to strip away every remaining service that local government performs that isn’t related to public safety, raise taxes, and support “fees” on everything from green lawns to vehicle miles driven. They can support the creation of an authoritarian, oppressive state, raising revenue through rationing and regulating our water, energy, land use, home improvement, etc., at levels that make today’s annoying excesses seem trivial. They can hide behind environmentalism and egalitarianism to tax the last bits of vitality and freedom out of ordinary productive citizens. They can even hide behind faux libertarian ethics to charge exorbitant fees for rescue services, or profit from draconian applications of asset forfeiture laws. If they do this, it may be enough for them. But the price on society will be hideous.
There is an alternative.
Public safety unions can recognize that sustainable economic growth occurs when people have fewer impediments to running their private businesses. They can recognize that large corporations use regulations to eliminate their smaller competitors, and that excessive regulations of land, energy and water are the reasons that California has such a high cost of living. They can recognize that competitive resource development and cost-effective infrastructure development can only be achieved when the environmentalist lobby and their allies – the corporate and financial elites – are confronted and forced to accept less crippling restrictions.
Better yet, public safety unions can begin to recognize these political precepts NOW, before the financial apocalypse. Along with hopefully accepting more pension reforms instead of always fighting them, these unions can also protect their members’ futures by fighting for economic reform and more rational environmentalist restrictions. The sooner these reforms are adopted at the state and local level, the more resilient our economy will be when the economic implosion occurs. If pension benefit cuts are inevitable, because the money isn’t there anymore, with economic and environmentalist reforms the cost-of-living will also be cut.
America’s excessive public employee pension benefits have created a four trillion dollar monster, pension funds ravaging the world in search of high returns during the late stages of a credit expansion that has granted present growth at the expense of future growth. The day of reckoning is coming. Public safety unions can help prepare, for their own sake as well as for the sake of the citizens they are sworn to protect.
* * *
Ed Ring is the president of the California Policy Center.
CHAPTER 1: PIGS (ala Portugal, Italy, Greece & Spain)
In March 2011, facing a $4 million deficit, panicked Stanton City Council members met in special session and voted unanimously, dramatically to declare a fiscal emergency.
It was the sort of thing we’d been hearing from Portugal, Italy, Greece and Spain for months—a government’s tax revenues falling so disastrously short of its spending that what comes next is slaughterhouse ugly. By the standard of the PIGS, what followed immediately in Stanton might strike you as banal: Having declared a fiscal emergency, the council agreed to ask voters to approve a 50 percent hike in the city utility tax, from 5 percent to 7.5 percent.
At that meeting, David Shawver—then a 23-year council veteran and self-proclaimed “ultra-conservative football coach Republican”—said he and his colleagues had no choice but to raise taxes. As with the PIGS of Europe, the Great Recession had slammed Stanton, Shawver said. The city was pinched between the rising cost of its public workers and falling property- and sales-tax revenues. Conservative George W. Bush bailed out the nation’s largest banks in 2008; David Shawver begged for a new tax in 2011.
“We had to come up with some type of system or some type of program to generate more revenue to keep the city going,” Shawver told a Garden Grove reporter at the time.
That same night, leaning on the podium reserved for public comments, a retiree named Charles Rell asked Shawver and the others a question that seems just as pertinent today: “How much more can we afford to pay?”
Shawver’s response could have been that neither Rell’s personal finances nor even arithmetic figured into the city’s calculations. Because long before that night, Shawver and his council colleagues had embarked on a great adventure, a free-spending circus in one of the county’s poorest and smallest cities: the creation of a $6 million park that would supernova into a $24 million project that will cost the city millions more over time.
Whether Rell and others like him can afford that park is irrelevant. Thanks to Shawver, they’ll have to.
It’s not too late to christen it Central Pork.
CHAPTER 2: GO-GO, STANTON!
To understand how truly weird it is to blow $24 million after you’ve declared a fiscal emergency and begged the public to raise taxes, it’s best to start in 2010. In September of that year, about the time of the Great Recession’s second, deepest roller-coaster plunge, the city announced it would spend $12.5 million to purchase land from the Savanna School District. Two months later, at a formal signing ceremony, buyer and seller cock-a-doodled their delight. Stanton City Council member Al Ethans said the purchase “enhances our facilities for parks beyond our fondest expectation.”
Looking back from the lofty promontory of 2016, hearing a guy say that his real-estate deal is “beyond our fondest expectation” sounds like the sort of go-man-go, mad-money hyperbole that was on almost every overmortgaged American’s lips—right up to the moment the housing crisis burned down the entire planetary economy in 2008.
Stanton’s $12.5 million land acquisition was followed just four months later by the self-declared fiscal emergency and the call for a bump in the utility tax.
Finances grew shakier. Stanton voters rejected the council’s pitch for a tax hike on utilities. And in June 2011, California Governor Jerry Brown announced that he and state lawmakers had decided to kill the state’s scandal-plagued redevelopment process. For years, city officials, including those in Stanton, had used the state’s redevelopment law as a revenue booster. In return for declaring property “blighted,” city officials were allowed to freeze the assessed value of that property and therefore the property-tax revenue for everybody else. School districts all over the state went into the red as their expenses climbed but their share of property-tax revenue remained frozen by the city. Redevelopment in Stanton meant that schools were on fixed incomes while the city captured 100 percent of the tax on the increase in the value of the land over time—what geeks call the “tax increment.”
Officials were not unique in having claimed their entire city was blighted, and therefore subject to the pickpocket-light touch of the city tax collector. State lawmakers excused the accounting trick as necessary to improvements—by which they meant the replacement of rundown properties with high-income, tax-generating commercial and residential projects.
When the band stopped playing—when Sacramento officials shut down the redevelopment dance hall—Shawver threatened legal action. In a statement that reveals his very liberal reading of a program that was supposed to build new buildings and clear away the wreckage of his city’s past, Shawver told the Orange County Register, “We were using that money for a lot of our city services.”
Brown’s decision ended Stanton’s future casino-style real-estate investments—but would not apply retroactively to the 2010 announcement to buy school property, though no cash would change hands until 2013.
Throughout much of that period, a Los Angeles Times reporter noted, the digital sign outside the Stanton City Hall blinked the ominous, verb-free reminder: “STANTON FISCAL CRISIS.” In June 2012, just before voters killed the utility-tax hike, City Manager Carol Jacobs warned residents the city was on the verge of bankruptcy.
Tallying up the toll of the financial crisis in Stanton in 2012, Times reporter Christine Mai-Duc wrote, “In the last two years, after-school programs have been cut, city staffers have been laid off and even the lone police station in town has closed to the public, a sign on the door offering residents a number to call if they need assistance. The city has even elected to stop paying dues to the League of California Cities, an organization that lobbies on behalf of local governments. It’s not required by law, says City Manager Carol Jacobs, and Stanton just can’t afford it.”
“We’ve never really had much fat in this city,” Shawver told the Times. “We’re getting to a point here where there’s not much left to cut.”
CHAPTER 3: DON’T MENTION THE PORK
To recap: a self-declared “fiscal emergency,” the threat of bankruptcy so catastrophic that the city had shuttered its police station, the end of redevelopment and the death of a tax hike at the polls. During all of this, in October 2011, the council voted to spend $6 million to build Central Park on land it bought from the school district for $12.5 million.
That would be $18.5 million. But the cost to build Stanton Central Park is now at least $24 million—the cost of the school property, plus the city’s upwardly revised $11.5 million construction estimate.
Still, the city spends. And as if to answer Rell, the fixed-income retiree raising uncomfortable questions at that 2011 emergency council meeting, city officials asked residents to pay still more. But they don’t mention Stanton Central Pork.
In 2014, city council members, many of them present for the unanimous declaration of financial emergency three years before, backed a 1 percent local sales tax. Their reason: Without the sales-tax increase, they told voters, the city would lose vital public-safety services. Of course, it wasn’t presented that way in the city’s full-color, ALL-CAPS messaging. In that campaign, opposing the city sales tax meant you supported house fires and gangsters—and, what’s maybe worse, that you hated cops and firefighters.
Faced this second time with a tax hike or the apocalypse, voters approved the tax.
Shawver has tried to downplay the impact of the now-1-year-old tax hike on residents—and is working to kill a November 2016 ballot measure to repeal the tax.
The self-described conservative and member of the Orange County Republican Party’s central committee told a March community gathering that the increased sales tax is great—because it’s pretty much a tax on outsiders and it pays for sheriff’s deputies and firefighters.
“It’s a tax on people who drive through our community,” Shawver said at that meeting. “They drive up and down Beach Boulevard, stop to get gas, and we get one penny. One penny! And thanks to that one little penny, we’ve been able to restore critical public-safety assets.”
It also hits anyone who shops in Stanton, of course, though not (the officials stayed carefully on message) grocery and pharmaceuticals shoppers.
But it’s all for a good cause, Shawver said: public safety.
Stanton has a well-earned reputation for violence—it’s among the toughest towns in a county more famous for catfights among wealthy housewives than gunfights, gangs and prostitution. So public safety is no abstract line item. But even Shawver admits the county sheriff’s deputies, firefighters and paramedics who patrol Stanton are a major cost center.
“I’m not going to fool you,” Shawver told the community gathering. “Public safety is expensive, but I am concerned with maintaining the level of service that you demand.”
Already expensive, public safety is getting pricier. This year, the city will pay an additional $1.1 million for public safety, most of that for the escalating pay and benefits of its $220,000-per-year firefighters and $187,000-per-year sheriff’s deputies. Those are extraordinary pay packages, even in relatively affluent Orange County. And they stand out especially in Stanton, where the median yearly household income is $46,000 and 22 percent of the population lives below the poverty line. They were negotiated with the county by the powerful firefighters’ and deputies’ unions—the same public-employee unions that back Shawver and who carried almost the entire cost of the 2014 campaign to raise the sales tax.
CHAPTER 4: ‘STOP DIGGING’
If it weren’t for a few lousy public investments—such as the park—the city might be able to pay its sheriffs and firefighters even at that stratospheric level, without a tax hike of any kind. But park spending never made even a cameo appearance in the muffled 2014 debate over the tax increase. There has been only limited dissent inside City Hall. Stanton businessman Rick Muth was an early critic of the park, and that was when he was outside City Hall. Muth says he became more alarmed when he got inside, after Republican state Senator (and former Orange County treasurer and county supervisor) John Moorlach appointed him to the oversight board responsible for winding down Stanton’s redevelopment agency. That put Muth directly in contact with Shawver and Shawver’s Great Pork.
Muth’s connection to Stanton runs through Orco Block Co., the company that Muth’s father, grandfather and a family friend created in 1946—a full decade before Stanton became a city. The Big Bang in Southern California building that followed shortly after Orco’s founding continues to this day, and it helped make the company one of the largest building-materials suppliers in the region.
Citing the city’s financial emergency and a general lack of transparency where city spending is concerned, Muth opposed park funding. He says he battled city staff “even to get minutes from meetings” and was repeatedly denied itemized park expenses. When he asked council members how a city in a financial death spiral could afford to build and maintain the park, Muth says Shawver told him that all construction and operations costs would be funded through the sale of “excess city land around the park” once the real-estate market ticked up.
Muth says shortly after that conversation, he was touring the proposed park site with another council member. He asked the council member to point out the excess park land Shawver had said would be sold to cover operating expenses. Muth says the council member looked at him “with this really puzzled look on his face” and told Muth there was no excess park land to sell.
Now it was Muth’s turn to look puzzled. But the council member said any budget gap would be easy to fill: The city would cut down on park costs by closing the Central Park occasionally. Muth is still incredulous as he recounts the conversation and those that followed. “No one could tell me how you close a park for a few days every week,” he says.
“The last straw for me,” Muth recalls, “was when the city refused to give another oversight board member the true, full cost of the park”—unless she dropped her demand to explain how the park had jumped from $6 million to $8 million, then to $11.5 million. In March 2015, he resigned from the board.
Shawver did not respond to multiple requests for comment.
His City Council campaign site lists accomplishments that will outnumber mine if I live to be 400. He’s a credentialed teacher; a softball, wrestling and football coach at Millikan High School in Long Beach for 42 years; he’s got certificates for first aid, CPR and lifeguarding. He’s taught religion in his Catholic parish. He coached Pop Warner football and was his Neighborhood Watch director. He volunteered for the Stanton Haunted House, the Christmas pageant, the Easter egg hunt and the Drug Busters youth program. The list of activities that Shawver recites—afternoon teas, soccer, fiestas, civic clubs, pancake breakfasts and charity luncheons—suggests not just boundless commitment, but also capacious memory of his own remarkable contribution. It’s unlikely he’s forgotten anything.
But if these good deeds indicate feverish social activity, they do not really capture something else about the man: After 28 years on the Stanton City Council, he says, “my work is not finished.” Looking back over the past many years of financial drama, the city’s residents may wish that it was—finished, I mean.
The man’s energy may also explain his Rooseveltian (Franklin, not Teddy) sense that government can and should do anything, including build a massive park in a time of financial crisis. “Quality of life is very important, but if a city is in such financial crisis that it has to go out and raise taxes, well, you just have to go back to basics, to do what you’re absolutely responsible for,” says former city of Orange mayor Carolyn Cavecche, who is CEO of the Orange County Taxpayers Association.
Building a park is nice, Cavecche says, “because everybody loves parks, including me.” But paying for public safety? “That’s just basic.”
Steven Greenhut laughed when told about the city’s decision to build Central Park in the midst of financial crises. “What’s that old saying about the first thing you do when you find yourself in a hole? Stop digging?” says Greenhut, a formerRegister editorial writer who’s now western region director for the free-market R Street Institute. “Cities that cry ‘poverty’ and ‘public safety’ to convince their residents to pay higher taxes have no business spending big bucks on new parks.”
CHAPTER 5: THE PAPER TRAIL
City officials say not to worry. The city budget declares, “The project’s design, construction and construction management are funded from a Redevelopment Agency Bond, a State Grant and Park-In-Lieu Fees and has no impact on the City’s General Fund.”
Translation: State taxpayers (who generously funded the public-parks-friendly Proposition 84, but who don’t count because, like drivers who stop in Stanton to buy gas, most of them live elsewhere) and hypothetical future real-estate developers (who will pay fees on construction) will fund most of the park. On page 126, deep in the Stanton budget, there’s also the promise that city staff will “successfully procure sponsors and additional revenue programs for the new Stanton Central Park.” In public meetings, officials have offered the example of revenue from participants in a community softball league.
But by far the biggest source of cash will come from $28 million in bonds hurriedly issued by the Stanton Redevelopment Agency just as Brown raised his sword over the program.
The city’s assertion that paying for the Central Park will have “no impact on the City’s General Fund” is hard to square with reality. My colleague, the bond analyst Marc Joffe, found Stanton’s bonds cost city taxpayers nearly $400,000 to issue. Interest payments—totaling $42 million over 30 years—will continue to put a multimillion-dollar ding in the city’s budgets.
There are other significant park costs that Stanton officials never mention in their estimates but which appear scattered throughout city financial documents. There’s lost revenue from the golf course that closed when the city took over the school property. The city’s park-maintenance budget will jump dramatically, on average about $150,000 in each of the next two years. The budget for parks staff will go up “by $202,810, or 43 percent in FY [fiscal year] 2015-16. The increase primarily relate [sic] to salaries for the new Stanton Central Park,” the budget reports. A new, six-figure community-development director will spend part of her time managing the park.
“Saddling the people of Stanton with a $24 million park and all the other associated costs—a park that was sold to them as $6 million—is unconscionable,” says Sal Sapien, the city’s former mayor and still a member of the county Democratic Party’s central committee. Sapien is also a longtime Shawver adversary. Recalling that he and other council members voted to censure Shawver in the early 1990s “for his antics,” he says, “The council should censure him again.”
CHAPTER 6: THE GOLDEN SHOVEL
Spiraling costs weren’t on the official brain at last summer’s Central Park groundbreaking, though. That June, with golden shovels held over their hard-hatted heads in triumph, city officials were talking about the future, about coming together, about the generosity of government, the noblesse oblige of City Hall.
“This is a gift to Stanton residents,” declared Allan Rigg, the public works director. “I’m excited. It’s an exciting time in Stanton.”
But as Register reporter Chris Haire deftly observed in his account of the groundbreaking, “Not everyone is thrilled about the impending [park] construction.”
Haire talked with leaders of three churches renting space on the old school grounds. In a little-remembered footnote to the city’s $24 million Central Park, the churches are gone now.
“The churches received 45-day eviction notices. Because of their size—California Christ Community Church has 50 to 60 members—and lack of money, the churches are having trouble finding new locations,” Haire reported.
“It was kind of a shock for us,” Daniel Park, pastor of California Christ Community Church, told Haire. “I don’t even know if the city knew we were here.”
About The Author: Will Swaim is vice president of communications for the California Policy Center and founding editor and former publisher of OC Weekly. Additionally, Swaim was editor of Watchdog.org, a national network of state-based investigative reporters, and vice president of journalism at Watchdog’s nonprofit parent, the Washington, D.C.-based Franklin Center for Government & Public Integrity.
It’s election season, so every California Democrat politician is out there on the campaign trail, precinct walking with their “friends” in labor, and speaking to labor organizations and anyone else who will listen. They are speaking with one voice–that ” we are proud to stand up for working families.”
This may sound like a great tag line, and is surely based on recommendations by campaign consultants, polling and focus groups, and perhaps most importantly resonates strongly with their organized-labor base, who is primarily responsible for funding all California Democrat campaigns.
But the truth is that California Democrat politicians and the California Democratic Party is the “party of organized labor” not of “working families.” This distinction may not be all together clear, or even relevant, at first glance to someone not familiar with the inner workings of California politics and campaigns.
There is a big difference between a “pro-labor agenda,” and a “truly progressive” agenda that seeks to bolster the middle-class and truly lift up “working families,” not just those on welfare. If you look at everything California Democrats politicians are advocating for, and what they consider to be major policy successes, it becomes painfully clear that California Democrat politicians are primarily out to benefit “organized labor,” which comes at the expense of almost everyone else. Of course there are some exceptions with the moderate and pro-business Democrats, but here we are primarily talking about the California Democratic leadership and solidly “pro-labor” state Democrat politicians.
By and large, California Democrat state politicians are preoccupied with pursuing a narrow, pro-labor agenda that is focused on providing the greatest amount of public subsidies, wage and benefit enhancements, and welfare benefits to a very narrow class of people–the poor, organized labor, and public employees–which represents their “core constituencies.” Everyone else suffers as a result, including “working families” who are not on welfare, lower and middle-class families above the poverty line, small business, and big business. California’s biggest policy problems such as pensions, housing costs, taxes, and lack of infrastructure spending do not even appear to be on Sacramento’s radar.
In other words, the California Democrat “pro-labor agenda” is neglecting the state’s middle-class and the state’s business climate, and making it much harder for the “true working families” who do not collect state welfare checks to prosper. Moreover, this “pro-labor agenda” conflicts with a “truly progressive agenda,” but most Democrats and progressives have no idea exactly how. Robert Reich, the state’s most prominent left-leaning economist is right–the system and its policies are “rigged” in California–but not in the way that most people think.
CA Democrat Agenda Primarily Involves Spending as Much Taxpayer Dollars as Possible, Not Spending Reform
If you look at the priorities of the California Democratic leadership they talk about being proud to stand up for “working families” and a desire to “alleviate poverty,” and improve education. Many of their stated goals are noble, but their means of achieving them and the policies they utilize to advance these goals only serve to benefit their “core constituencies” listed above, not the rest of us and California as a whole.
Their primary policy instrument is spending as much taxpayer dollars as possible on government programs, primarily welfare, health care, and education. But the problem is that they do so almost indiscriminately and do not try to spending taxpayer dollars wiser or more effectively. California Democrat politicians have all but given up on asking California state agencies to spend tax dollars more effectively, and rarely consider any program changes that would upset the state’s hugely inefficient and unwieldy bureaucracy.
Spending taxpayer dollars on welfare programs helps the poor but not anyone else, and does little to actually lift the poor out of poverty over the long-term–welfare spending begets more welfare spending. Spending more money on education in itself, does not improve education. As a Dan Walters Sacramento Bee column reported earlier this year, the state is spending billions of dollars more on education now compared to a few years ago, with little or no noticeable improvement in the actual quality of education.
In short, most California Democrat policy priorities boil down to one simple end–indiscriminately increasing the size, cost and scope of California government as much as possible–to the primary benefit of the poor and state’s public sector unions. Their policy toward government spending and public employee compensation is essentially giving them as much money as is available in the government budget, no questions asked.
What is most telling about the “pro-labor agenda” and perhaps its greatest departure from the public interest and a “truly progressive agenda” is what California Democrat politicians are not doing. California Democrats and the Democratic leadership have all but given up on trying to solve the biggest problems that ail California, particularly working families, the middle-class and California businesses. But before we get to that, let’s take a quick look at the recent “crowning achievements” of California Democrat politicians.
A Brief Look at the “Crowning Achievements” of CA Democrats
The centerpiece of the “pro-labor” agenda is environmental regulation, and the “crown jewel” is AB 32. California Democrats love to tout their desire to enact never ending layers of increased “environmental protections” and “environmental regulations.” Environmental policy is extremely important to California voters and does represent a “truly progressive” policy stance–perhaps the last remaining shred of integrity the California Democratic Party and its candidates have left in support of a “truly progressive” policy agenda. But even here they are taking environmental regulation too far, to the primary detriment of “working families” and the middle classes, who will bear the brunt of the excessive regulatory burden in increased costs of goods and services that are regulated, particularly energy costs.
AB 32 was a legitimate policy victory for the state and should be celebrated as such. But how much further should the state take environmental regulation before the rest of the state and the world show at least some willingness to follow. California is responsible for emitting less than 0.5% of the world’s total carbon emissions, yes less than half of a single a percentage point. So even if California totally eliminated its consumption and production of CO2 emissions, that would represent but a blip in the grand scheme of things worldwide.
We do get benefits from improved air quality and health considerations, particularly around stationary pollution sources. But California alone cannot save the world from “climate change” even if we totally eliminated CO2 emissions within our borders. So why are California Democrats in a race to enact the strongest and most costly environmental regulations when there is little indication that the rest of the world and nation will follow anytime soon? My view is that it is because this represents action on their strongest policy position, however, beyond a certain point, further regulation will only serve to undercut our global competitiveness, while providing marginal benefits to California residents. “Working families” will be hit the hardest because they pay the greatest portion of their discretionary income in energy costs.
The biggest recent success that California Democratic leaders are pointing to this campaign season is their “victory” in increasing the statewide minimum wage in California from $10 to $15 dollars per hour–a 50% increase. Economists say that increases in the minimum wage do modestly raise the take home pay of low-wage workers, but in return lead to about a 10% reduction in employment, according recent discussions with economists. So is this really the great policy victory that it is being billed as by Democratic politicians? Effectively, trading a very modest increase in wages for those who keep their jobs, while putting other workers out of work. Touting this increase as genuine social progress may work on the campaign trail, where few people question the results, but the reality is that this was not the great policy victory that it is being billed as. After all, shouldn’t the end goal be to lift workers out of poverty entirely, not have them making more in their existing minimum wage jobs.
Another recent “success” touted by California Democrats as a victory for “working families” is the expansion of the state’s paid family leave program. Prior to the expansion, California law already allowed workers to take up to six weeks off from work to bond with anew child or care for sick family members and receive 55% of their wages. The new measure increases the pay to 60% of wages, starting in 2018, and creates a new classification for low-income workers who make about $20,000 or less annually to receive 70% of their regular pay, according to a Wall Street Journal Report.
The program is funded by worker contributions and estimated to cost about $350 million in 2018, and $587 million annually by 2021, according to a legislative analysis obtained by the Wall Street Journal. This policy does represent an improvement for primarily low-wage workers but its paid for by higher wage workers. It is a marginal improvement at best, and will surely be followed up with future legislation to increase length of time allowed and percentages claimed by workers.
As one can see, the recent list of true policy victories for “working families” is pretty short. And as will be seen is clearly outweighed by all the negative aspects of the “pro-labor agenda,” which is perhaps better defined by the policy solutions that it does not include–namely the state’s most pressing policy problems. Or put another way, the “pro-labor agenda” comes with a great cost to California, and that cost is a long list of policy problems that are off limits and not subject to negotiation, or even substantive discussion.
“Pro-Labor” Politicians Silent on Mounting Pension Problem
The best example of one such issue is the refusal of the California Democratic Party and California Democrat politicians to even acknowledge the magnitude and implications of the state’s pension crisis. The public position of almost every California Democrat lawmaker is to first not even discuss the “problem,” let alone any solutions. Yet every financial expert I have talked to, including a consensus of top economists and government professors at Stanford University, say this is the biggest public policy problem in the state.
The pension problem is eating state, and particularly local balance sheets alive, and leaving no additional money to pay for other pressing spending priorities such as infrastructure, roads and education. Total statewide pension and retiree health care debt is estimated to top $1.3 trillion, according to the Stanford Institute for Economic Policy Research (SIEPR). Would a “truly progressive” politician allow all government revenues to go to pensions, as opposed to policy programs and priorities that truly benefit California and its citizens?
To further illustrate, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) lost a combined $25 billion in 2015, the deficit between what they said they will earn and what they actually earned. Both funds are on pace to lose another $25 billion in 2016, potentially more according to early return estimates analyzed by the Bond Buyer. That’s roughly $50 billion of taxpayer dollars lost in just two years, or almost half of total annual California General Fund spending. To be clear, this is $50 billion debt that will grow at 7.5% annually and need to be funded by future tax revenues. This represents a growing expenditure of public dollars that is not available to be spent on truly progressive priorities at both the state and local levels of government. Perhaps worse, California state and local taxpayers, including “working families,” are on the hook for all loses incurred by both funds. Why even bother running a 6-month budget process at the Capitol if nobody will so much as lift a finger to stop the state’s pension funds from driving state and local governments off a fiscal cliff?
Of course, these same politicians have likely already come up with some internal justification for not doing anything about this issue, such as “o’well” that is what the unions want, their members apparently know more about what is good for the State of California than every other independent expert who has examined the issue.
California Democrats Refuse to Address the True Causes of CA Housing Crisis
Another major departure from a “truly progressive” agenda, is the unwillingness of California Democrat politicians to address the California housing crisis. This was clearly demonstrated last week when California Assembly leaders, including Assembly Speaker Anthony Rendon, touted a package of $1.3 billion in new government spending that was intended to address the housing crisis–but it all involved new government subsidies and spending on existing programs for California Democrat “core constituencies” that have clearly failed to address the problem to begin with.
California’s housing crisis holds the greatest potential to further reduce the standard of living of the poor and middle-classes in California–perhaps more than any other policy area except the pension issue. As has been discussed in a previous column, the state’s housing crisis is market-driven. It was created over a number of years, decades even, where the state’s heavily regulated and fee-burdened housing market has failed to build new housing units to meet surging demand, particularly in coastal areas, the Bay Area and Los Angeles.
California Democrats are silent on the causes of what is driving the crisis, appear to have no intention of investigating the true causes of the state’s housing problem, and have given no indication that they are willing to consider any policy changes that would actually address the root causes of state’s housing crisis–beyond providing more taxpayer dollars to the poor to pay for “unsustainable” increases in market-based rents.
Government has essentially created the problem, and the private sector is the only force that can generate the 100,000 units that need to be built on an annual basis to build our way out of the problem. But no California Democrat, or very few, are talking about the need to address onerous government regulation, crushing development fees, and generally about what the building industry needs to “jump start” the California housing market.
CA Democrats Don’t Support Enough Infrastructure Spending
Perhaps the only kind of spending a California Democrat politician does not like is infrastructure spending. This is largely because the state’s public employee unions shun infrastructure spending because the vast majority of these dollars do not end up in their pockets.
Yet infrastructure spending is critical to building and sustaining a thriving economy and business climate. All business leaders will tell you that infrastructure spending is needed to improve the state’s business climate. This is why Silicon Valley leaders are backing transportation sales taxes to pay for roads, which business needs to transport goods. But infrastructure does not stop there, we need state highways, water storage, state parks, schools, universities, waste water plants, and maintenance of existing facilities that state and local governments all but neglect every year.
What most people don’t realize, and even fewer will admit, is that the state’s infrastructure problem is closely related to the state’s pension problem and public employee compensation issues. Public employee compensation costs are consuming all new tax dollars and preventing state and local governments from funding infrastructure projects. And local sales tax measures to increase infrastructure funding hurt “working families,” assuming they can pass with the “albatross” of the pension issue hanging over them.
Governor Jerry Brown’s January budget proposal only allocated $500 million for the most critical infrastructure maintenance costs (less than 0.5% of General Fund spending), noting that the state needs to start funding massive mounting public employee compensation debts. Sonoma, Marin, and Mendocino counties have some of the worst road conditions in the state, but are all hamstrung by unsustainable increases in public employee compensation costs and mounting debt from these same issues.
Infrastructure benefits all Californians. It truly is a public good. Apart from support for some school bonds, why doesn’t increased infrastructure spending fit into the “pro-labor” agenda? Simple, it does not benefit the state’s public employee unions, as much as salary and benefits which consume 80% of state and local government spending. And these same governments can’t afford to pay for it, given unsustainable spending in these same budget categories.
CA Democrats Fail to Address Tax Reform
Tax reform is perhaps the toughest issue of all, but holds the greatest potential to lift up the California working families and the middle-classes. California Forward released a series of reports on the issue and Controller Betty Yee’s Council is scheduled to release a report on tax reform soon. But you don’t see many California Democrats, or the Democratic leadership out there discussing the need to tackle tax reform. One exception is Sen. Hertzberg, who has introduced a major tax reform bill to expand the state’s sales tax to services, but again this expands the state’s most regressive tax and would be passed onto consumers.
California Democrats are just as guilty as Republicans in proposing a series of new tax expenditures and exemptions every year that help a select special interest (i.e. the movie industry), but are paid for by everyone else.
The state’s tax system holds the greatest potential to transfer wealth from the rich to the lower classes–which is perhaps the single greatest defining policy of what I thought it meant to be a “progressive.” But nearly all Democrats shy away from this issue because it upsets business, and is not seen as fitting into their long-term career path of climbing up the ladder in state and/or local politics. It’s too tough of an issue to attract the Democratic mainstream, and holds little potential for a short-term political payoff, beyond very narrow proposals that benefit special interests.
What needs to be done on tax reform? Simple, you broaden the base and lower the rates, as any expert on tax policy will tell you. California has the highest tax rates in the county on the sales tax and the income tax, up to 9.5% for the sales tax and 13.3% for the income tax. The sales tax is regressive and hits the poor the hardest, particularly working families who don’t collect any state welfare payments. The income tax also hits the lower and middle-classes the hardest, as well as small business, in terms of proportion of income and they don’t have the same exemptions and deductions afforded to the rich.
By failing to address the state’s unsustainable spending issues, California Democrats are essentially advocating for future tax increases, that will hit working families and the middle-classes the hardest. They should be working to ease the tax burden on “working families,” not increase it–that would be “truly progressive.” Local governments are constantly enacting a series of local fees, mitigations and exactions that negatively impact “working families” and the business community.
To be fair, most California Democrats are hoping for the Prop. 30 extensions to pass which raise $7.5 billion annually, primarily from the wealthy and small business (about $5.5 bil.), but this also includes a 1/4 sales tax increase that will hit the poor and working families (about $1.7 bil.).
This is not tax reform, it’s a general tax increase that lets big business off the hook and hits the average taxpayer and small business the hardest (Note: data from The Economist shows that U.S. corporations are generating the lion’s share of business profits, record profits in fact, higher than any other nation, but not necessarily passing them through to workers). The reason is that many small businesses (S Corps and sole proprietors) pay taxes through the state’s income tax, while corporations pay through the state’s corporation tax which is so littered with special loopholes and exemptions that some experts say it is “voluntary.”
In short, California’s current tax system contains some progressive elements, namely the income tax, but as a whole the state’s tax system is is not “truly progressive.” It is loophole-ridden and serves to primarily benefit the rich and big corporations who can take advantage of all its loopholes to the detriment of everyone else (i.e. working families, small business) who pays full boat. It is largely in conformity with the federal tax code which is even worse as is being discussed at length on the national campaign trail.
Significant Policy Change is Difficult But Not Impossible
As one can see, the California Legislature has clearly been marginalized to proposing small, almost insignificant solutions, to address big problems. And as for the biggest policy problem in California, the state’s unsustainable pension system, California politicians are remarkably silent because any discussion of this issue offends their “friends” in labor. This is completely ridiculous, and unconscionable to any one who understands the facts of this policy issue, which almost certainly includes Gov. Jerry Brown.
A review of major policy changes enacted over the past 40 years beginning with Prop. 13, shows that significant policy change does happen but it requires bold leadership and a willingness to commit to taking on tough issues over the long-haul, according to a study published by the Kersten Institute. Most major policy changes do not happen overnight, but the important thing is to at least try.
The critical ingredients of policy changes enacted in the California Legislature are strong leadership from both Legislative leaders and the Governor. Unfortunately the California Democratic leadership is silent on many of the major policy issues facing California. Gov. Jerry Brown has perhaps the greatest capacity to take on the tough issues, but even he has recently shirked from his initial willingness to think and act big on the tough issues. Gov. Brown has since decided to just follow the lead of the California Legislature on all but a few pet “legacy issues.”
Gov. Brown did make public employee compensation debt issues the major focus of his January State of the Union Address and is likely to drive a hard bargain in the budget process for increased state payments for retiree health care. But that’s about it. The Governor has tried to get CalPER’s to accept some reasonable reforms, but they have refused and he has not made a major issue out of it.
Gov. Brown has been mostly focused on his criminal justice initiative and his two “legacy infrastructure projects,” the delta tunnels and high-speed rail. The sad reality is that the State of California cannot even pay for its most basic infrastructure needs, particularly in the absence of additional pension and retiree health care reform. Who needs the delta tunnels and high-speed rail if the infrastructure we have is currently falling into disrepair?
The Governor made road spending a key issue last year, in response to requests by California business leaders and the counties, but has not chosen to connect this to the pension problem, which is the real cause of the “roads crisis.” The Governor can, and should do more to address these major issues.
So what we really have in California politics is a leadership crisis. A leadership crisis characterized by the unwillingness of California leaders to address the state’s most pressing policy problems in a substantive way. Discussion of such issues, if even raised at all, is largely confined to a cursory review, and often followed by proposing a narrow or very piecemeal solution, which may not even represent a step in the right direction. Other major problems such as pension reform, infrastructure, and tax reform are hardly discussed at all, it’s almost as if they are not even on the radar of Sacramento politicians, even though they loom large in almost every other venue in California, particularly with local governments, the business community and the average citizen.
Another problem is that California has become a “one party state” for all practical purposes which prevents many of their policy positions from being challenged in a competitive election. The state would benefit by returning to a true two party state as reported by a recent Kersten Institute report.
It’s Fine to Be “Progressive,” But Please Be “Truly Progressive”
So the next time you hear a California Democrat politician say “I’m proud to stand with organized labor for working families.” Please question what that actually means, and clarify if that is for the “working families” that are paying California’s taxes, or just those who are partially or fully subsidized from state taxpayers because they are a “core Democrat constituency”?
California has a series of major public policy issues that are going unaddressed and undiscussed in the circles of power in California, all of which have huge implications for “working families” and California’s future as a state.
It is time for California Democrat politicians to start standing up for the “public’s interest,” which includes the lower and middle-classes and what is going to help the state as a whole, not just organized labor. There is a big difference. It’s fine to be “progressive,” but please be “truly progressive,” not just “pro-labor.”
And next time you hear a California Democrat politician say they are “fighting organized labor” in Sacramento, take my word for it, “organized labor” already has the keys to the kingdom–so there is really no need to fight for them in Sacramento–it’s really just an exercise of preaching to the choir.
About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change
Construction trade unions in California remain distressed about how solar power is harming the environment. Their latest worry is the 150-megawatt Willow Springs Solar Project proposed for Kern County, in Antelope Valley at the Los Angeles County border.
An energy company called First Solar has been planning this project since 2010. In February 2015 Kern County released a Draft Environmental Impact Report for the solar project. Substantial objections to this project then emerged from an unincorporated association called “Kern County Citizens for Responsible Solar,” represented by the law firm of Adams Broadwell Joseph & Cardozo in South San Francisco.
This group claims the county isn’t complying with the California Environmental Quality Act (CEQA) in its evaluation of the environmental impact of the solar power plant. Although the county has tried to modify subsequent versions of its Environmental Impact Report to address these objections, the association’s law firm continues to insist that the report is inadequate.
This process became absurd. At one point a change made by the county to mollify Kern County Citizens for Responsible Solar even triggered a new objection – from the East Kern Air Pollution Control District!
Finally, the Kern County Planning Commission had enough and scheduled a hearing on March 10, 2016 to approve the Final Environmental Impact Report. On that morning, the law firm of Adams Broadwell Joseph & Cardozo submitted a new set of objections. Later that day, a lawyer representing “Kern County Citizens for Responsible Solar” warned the Planning Commission that Kern County had failed to properly evaluate the environmental impact of the solar project. Also at the meeting to speak out against the project were the head of the Kern-Inyo-Mono Building and Construction Trades Council and the head of the International Brotherhood of Electrical Workers (IBEW) Local Union No. 428 in Bakersfield.
What’s the true identity of “Kern County Citizens for Responsible Solar?” Construction trade unions, working under another unincorporated front group called California Unions for Reliable Energy (CURE). A Kern County official bluntly revealed the true agenda of this fake organization at the subsequent April 12, 2016 meeting of the Kern County Board of Supervisors:
“The primary opposition to this project has been from law firms representing labor unions who have requested First Solar sign a Project Labor Agreement.”
The Planning Commission unanimously recommended county approval of the project despite the newly-submitted union objections. After postponing a Board of Supervisors hearing originally scheduled for March 15, county staff refined the Environmental Impact Report to address the new set of objections. The Kern County Board of Supervisors considered final approval of the Willow Springs Solar Project on April 12.
For Kern County officials, the morning of April 12 began as expected, with 31 pages of fresh objections from the law firm of Adams Broadwell Joseph and Cardozo. But this time there was blowback: as reported later that day to the Board of Supervisors, “a variety of entities” had also submitted letters “taking issue” with how unions use the California Environmental Quality Act as leverage to squeeze Project Labor Agreements out of solar energy developers. The letters documenting the practice can be read via the links below:
These letters did not shame Kern County Citizens for Responsible Solar. A lawyer for Adams Broadwell Joseph and Cardozo spoke at the Board of Supervisors on their behalf and objected to alleged failures of the Final Environmental Impact Report to “disclose” things.
Of course, the REAL lack of disclosure was the true identity of “Kern County Citizens for Responsible Solar” and its ulterior motives. But everyone knew what was happening. A representative of First Solar openly told the Board of Supervisors that it had not concluded negotiations on a Project Labor Agreement.
Following that statement, an official with the International Brotherhood of Electrical Workers (IBEW) Local Union No. 428 in Bakersfield claimed that since 2013 the union had signed Project Labor Agreements with First Solar, 8minuteenergy, Recurrent Energy, SunPower, and Sun Edison for construction of solar photovoltaic power plants in Kern County. Apparently he suspected that the surging unemployment of Kern County construction workers (caused by cutbacks in the petrochemical industry) was encouraging solar companies to be bolder about resisting union demands for Project Labor Agreements.
In the end, the Kern County Board of Supervisors voted 5-0 to approve the Willow Springs Solar Project. Unions now have the opportunity to use the California Environmental Quality Act (CEQA) to challenge the board’s decision in court.
How can the State of California protect the environment while discouraging parties from brazenly abusing environmental laws to extract economic concessions from public and private developers? State Senator John Moorlach has a solution based on the concepts of openness and transparency. He has introduced Senate Bill 1248, which would require a plaintiff or petitioner in a CEQA action to disclose information about parties that provide more than $100 to fund the action. It would also require the plaintiff or petitioner to disclose the financial or business interest in the project for those parties that provide more than $100 to fund the action. See Senate Bill 1248.
With Senate Bill 1248 enacted as law, Kern County Citizens for Responsible Solar, community champions of the environment, would acquire a new identity: International Brotherhood of Electrical Workers, demanding a Project Labor Agreement.
The Ports of Los Angeles and Long Beach are essential to the economic health and well-being of the Southern California – as well as the State of California and the nation. The two ports are responsible for more than 300,000 jobs for our friends and neighbors. But the world in which the ports operate is increasingly competitive. In a few short months an expanded Panama Canal will be operational, allowing larger vessels to transit the canal. In addition, ports in Canada and Mexico, as well as those on the East and Gulf coasts of the United States, are expanding their facilities – all with the intent of drawing cargo away from Southern California’s ports.
In this hyper-competitive environment, the recent announcement that the International Longshore Union (ILWU) and the employer group, the Pacific Maritime Association (PMA), are considering extending their current contract is welcome news. In 2014/2015, the PMA and the ILWU were engaged in a protracted and contentious contract negotiation that resulted in cargo slowdowns at West Coast ports. The impact was widespread and negatively affected all who utilize West Coast ports, especially the ports of Los Angeles and Long Beach. Eventually a contract was agreed upon, one that is set to expire in July of 2019 – but the reputation of our ports was damaged and the international trade community heightened its concerns about the reliability and predictability of our ports. For shippers, exploring the use of alternative gateways to the U.S. was no longer an academic exercise, but a requirement for economic survival.
To avoid a further loss of market share, it is essential that ILWU and PMA agree to an early contract extension prior to mid-2019. This action would go a long way towards erasing the memories of the last round of negotiations, and remove doubts and fears about the future. It is our understanding that the IWLU will consider the PMA offer to extend the west coast labor agreement at their caucus in Panama later this month. For the good of our economy and the 300,000 jobs who depend on our ports, we hope that both parties will move in mutual interest and extend their contract early in order to assure the future viability and competitiveness of our ports.
About the Author: Gary L. Toebben is President & CEO of the Los Angeles Area Chamber of Commerce, the largest business association in Los Angeles County representing more than 1,600 member companies and serving the interests of more than 235,000 businesses across the Los Angeles region. Since taking the helm of the L.A. Area Chamber in July 2006, Toebben has served on the Mayor’s L.A. Economy & Jobs Committee, the L.A. County Health Care Options Task Force and the City Council’s Business Retention & Attraction Task Force.
In recognition that the municipal needs of people in the City of Needles might be different than the needs of people in the City of San Francisco, the California Constitution gives cities the right to control their own municipal affairs through a charter. These charters – approved by voters – are mini-constitutions that allow “home-rule.” Matters of statewide concern remain under the authority of the state.
Since the early 1930s, charter cities have been using their authority over municipal affairs to deviate from costly state mandates regarding so-called prevailing wages and apprenticeship requirements for purely municipal public works projects and private projects that get public funding (only) from the municipal government. Such laws imposed on public works projects effectively establish the wage and training terms and conditions for each trade in each county based on the applicable union Master Labor Agreement.
In other words, unions have quasi-regulatory power in California to determine contract bid specifications for government-funded projects (in most cases, for contracts of $1000 or more), whether built by a government or by a private developer. As a general rule, these specifications tend to disproportionately increase costs for taxpayers as the location of the project gets more distant from California Department of Industrial Relations headquarters in San Francisco.
During the truncated administration of Governor Gray Davis (1999-2003), union lobbyists succeeded in changing the legal definition of public works and the criteria used to calculate prevailing wage rates. This motivated more cities to ask voters to approve a charter with the intent of setting their own policies for purely municipal projects and private developments getting municipal financial assistance. In addition, other cities that already had charters were choosing for the first time to set their own policies.
Studies, anecdotes, and common sense showed that exercising this Constitutional right allowed charter cities to save money for taxpayers and build projects that would otherwise be economically infeasible. More could be built for less.
By the end of 2012, voters of 121 California cities had approved charters. Some charter cities chose to ignore the state mandates in their entirety and allowed construction contractors to choose wages and training practices based on market conditions. Other charter cities required contractors to follow most of the state mandates but set their own policies for some matters. And other charter cities did not exercise their authority at all for public works wages and training and simply included the state mandates in their project bid specifications.
The choice was left to the cities. See a status report of prevailing wage policies for charter cities at the end of 2012 in Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?)
Union Lobbyists and Lawyers Stomp Down the Charter City Rebellion
Obviously construction union leaders had become increasingly concerned about charter cities evading the provisions in their collective bargaining agreements when advertising contracts. In 2007, the State Building and Construction Trades Council of California sued the City of Vista, arguing that prevailing wage was a matter of statewide concern. The California Supreme Court sided with the City of Vista in 2012.
It was time for unions to use political campaigns and the state legislature to undermine the intellectual underpinnings of charter city authority and stop cities from ignoring the laws enacted at the State Capitol for unions. An organization called “Smart Cities Prevail” was created to discourage charter cities from deviating from state law. A new state law was passed to restrict the ability of voters to enact or amend charters. To exert political leverage, unions filed a lawsuit against the City of Oceanside claiming it violated the California Voting Rights Act of 2001 and had to redraw its districts. And unions heavily financed a campaign in the City of Costa Mesa to defeat a proposed charter.
But the strategy that proved completely effective in shutting down charter cities was a new law enacted in 2013, Senate Bill 7. Language in Senate Bill 7 was based on language in two earlier union-backed bills (Senate Bill 922 in 2011 and Senate Bill 829 in 2012) that cut off state funding for construction to any charter city that banned public contracts requiring companies to sign union Project Labor Agreements.
Senate Bill 7 declared that any charter city that deviated from state labor laws for public works contracts (such as prevailing wage and apprenticeship) would no longer be eligible to obtain state funding for construction. Several charter cities filed a lawsuit challenging the constitutionality of this law, but a San Diego County Superior Court judge upheld the right of the state to cut off the cash.
By the end of 2014, almost every charter city (perhaps every charter city) had passed an ordinance proclaiming their adherence to state prevailing wage law. Unions actually had the chutzpah to claim that charter cities had changed their policies because they learned about the value of prevailing wage laws, as if local governments had evolved toward ultimate enlightenment rather than being threatened with losing state funding.
Unions continue to undermine the independence and effectiveness of citizens bond oversight committees at California school and community college districts.
In December 2015, the elected board of trustees for the Rancho Santiago Community College District voted 4-2 to reject an application from the President & CEO of the long-established Orange County Taxpayers Association to serve on the college district’s Measure Q bond oversight committee. For two years, the obviously-qualified applicant had sought an appointment from the board to a vacant position on the committee.
This vacant position was designated in state law (California Education Code Section 15282) for someone “active in a bona fide taxpayers’ organization.” The board had never filled it.
Eventually the board found its champion for the taxpayers. On February 22, 2016 – exactly three years after the deadline for people to apply for the bond oversight committee – the board appointed a taxpayers’ association representative. The lucky appointee claimed to be active in the “Middle Class Taxpayers Association,” an organization founded in 2011 that is closely connected to labor unions. This board action is another example of the continual union-instigated chipping away of checks and balances at California local governments.
Independent citizens bond oversight committees for school and college bond measures were once portrayed as a taxpayer protection. They were established in state law in 2000, when Governor Gray Davis signed into law Assembly Bill 1908, the “Strict Accountability in Local School Construction Bonds Act of 2000.” This requirement for independent oversight was promoted during the successful fall 2000 campaign to convince voters to approve Proposition 39, which reduced the voter threshold for passing certain school and community college bond measures from two-thirds to 55 percent.
Sixteen years later, the appointed and elected leadership of school and community college districts in California has shifted to a new generation. Many of these leaders (and the special interests that support them) don’t appreciate legal restrictions meant to assuage the ancient concerns of a dwindling demographic of fiscal conservatives.
In some districts, bond oversight committees are regarded as time-wasting meddlers that interfere with how bond finance and construction has to be done nowadays in California (keeping the politically-powerful happy with favoritism and payoffs). And among all the activities of bond oversight committees, none is more irksome to these school and college districts than the demand to study and make a recommendation on the fiscal impact of a proposed Project Labor Agreement. It’s embarrassing and even politically threatening when independent citizens dare to evaluate the cost of a board mandate lobbied for by unions.
Rancho Santiago Community College District, based in Santa Ana (in Orange County) is an example of one such district. In November 2012, voters authorized the district to borrow $198 million by selling bonds. In April 2014, after a year of negotiations with unions, the board voted 4-2 to require contractors to sign a Project Labor Agreement for most work funded by that borrowed money.
In February 2013, separate from this process, the President and CEO of the Orange County Taxpayers Association applied for the taxpayers’ association position on the college’s new Measure Q Citizens Bond Oversight Committee. The board appointed the other members but left the taxpayers’ association position vacant, in violation of state law.
Almost two years later, a couple of board members pushed for an agenda item for the board to finally fill the vacant taxpayers’ association position. The board responded on December 7, 2015 with a 4-2 vote to reject the Orange County Taxpayers Association applicant.
It was rumored that construction trade union officials had told their allies on the board to reject the Orange County Taxpayers Association applicant because of the group’s past criticism of government-mandated Project Labor Agreements. A few months later, on February 22, 2016, the board finally complied with state law by appointing a former site representative and Political Action Coordinator for the California School Employees Association Chapter 41.
In her very brief application submitted to the district on February 16, 2016, the victorious appointee declared “I am a member of the Middle Class Taxpayers Association, and with so many middle class families in Santa Ana, I look forward to being considered for the Measure Q Oversight Committee.” The board appointed her to the position.
The Middle Class Taxpayers Association is a union front group. For more information on it, see the May 30, 2012 article posted on www.LaborIssuesSolutions.com entitled Don’t Be Fooled! Meet Some Sneaky Fake Taxpayer Groups In California and the April 5, 2015 article from the Howard Jarvis Taxpayers Association entitled Look for the Union Label.
Minutes of December 7, 2015 Rancho Santiago Community College District Board of Trustees (Item 6.6 – rejection of Orange County Taxpayers Association applicant as taxpayer association representative on the Bond Oversight Committee)
Minutes of February 22, 2016 Rancho Santiago Community College District Board of Trustees (Item 6.9 – approval of Middle Class Taxpayers Association applicant as taxpayer association representative on the Bond Oversight Committee)
On June 7, 2016, voters in nine California counties in the San Francisco Bay Area will vote on a proposal (Measure AA) to annually assess a $12 tax on every property parcel. This tax would apply equally to each parcel, ranging in assessed property value from Google headquarters in Mountain View to a $30,000 trailer in Vallejo.
The tax money would go to the obscure Oakland-based San Francisco Bay Restoration Authority, established in 2008 by state law as a regional agency. Regional governments are increasingly popular in California, in part because state laws such as the California Global Warming Solutions Act of 2006 (Assembly Bill 32) and Senate Bill 975 (2008) are compelling local governments to collaborate on public policy.
Governed by officials appointed by local governments, these regional governments often lack press oversight and public accountability. That creates a power vacuum that groups eager for taxpayer funding can fill for their own advantage. Construction unions have seized the opportunity.
In the case of the San Francisco Bay Restoration Authority, union Building Trades Councils of the nine affected counties want to control future construction contracts funded by this parcel tax. On February 24, 2016, the board of the San Francisco Bay Restoration Authority considered a policy requiring construction companies to sign a Project Labor Agreement with unions as a condition of working on contracts greater than $100,000 funded by the proposed parcel tax.
In front of a full room of union officials from the entire region, almost every Bay Restoration Authority board member expressed strong support for a government mandate for construction contractors to obtain their workforce (including apprentices) from the union hiring hall and make all employee fringe benefit payments to union health care and pension funds. One board member dared to assert that the parcel tax was actually about Bay restoration and not labor unions. She also questioned how the union deal would affect volunteer organizations. But in the end, she voted with the rest of the board to proceed with continued development of the Project Labor Agreement policy.
Objections came from construction business associations, the Santa Clara Valley Water District, the Contra Costa (County) Taxpayers Association, Ducks Unlimited, a construction company based in Sonoma that specializes in wetlands restoration projects, and one ordinary citizen from El Sobrante. The board voted to create an ad hoc committee to work with the Santa Clara Valley Water District and Ducks Unlimited to neutralize their opposition to the Project Labor Agreement.
Why is this regional agency implementing a Project Labor Agreement policy? Some of the union love is ideological and some of it is based on politics back at the local governments of the appointed board members. Much of it is presumably intended to convince the unions to provide major financial and organizational help to the Measure AA campaign to convince voters to approve the parcel tax.
Union campaign assistance is needed because of one major obstacle to voter passage of the $12 annual parcel tax: under Proposition 13 (approved by state voters in 1978), a two-thirds supermajority of all voters in the nine Bay Area counties must approve the tax increase. This threshold will be difficult to exceed, even in a region that strongly supports environmental causes. Both the Left and the Right have reasons to reject this tax.
In addition, the San Francisco Bay Restoration Authority has a logistical challenge in putting one tax measure on the ballot in nine different counties. This is an unprecedented effort that has provoked many legal questions and required significant interaction with county election officials. (Unlike the opposition to the Measure AA parcel tax, the San Francisco Bay Restoration Authority has taxpayer funds to get answers to legal questions.)
Big corporations (such as Pacific Gas and Electric) are eagerly supporting this regressive property tax, as it gives them an image of environmental activism while putting the burden of paying for the restoration on ordinary homeowners who had nothing to do with degrading San Francisco Bay in the first place. Nevertheless, union activism will also be needed to overcome voter resistance to sending their tax money to an obscure agency in Oakland.
A Project Labor Agreement locks in that union support. But could it backfire on the San Francisco Bay Restoration Authority?
Ironically, the board’s decision to give unions monopoly control over the construction contract workforce has inspired the development of organized opposition to the parcel tax. It also creates for voters a clearly identifiable example of insider politics, favoritism for special interest groups, and fiscal irresponsibility.