Union In The News – Weekly Highlights

Marin unions appeal pension ruling to state Supreme Court
By Richard Halstead, October 4, 2016, Marin Independent Journal
Four Marin labor groups have appealed a state appeals court decision that some say could radically alter the ability to reduce the retirement benefits of public employees who are still on the job. The plaintiffs — the Marin Association of Public Employees, known as MAPE; the Marin County Management Employees Association; Service Employees International Union 1021; and the Marin County Fire Department Firefighters’ Association — have requested that the state Supreme Court review a decision issued in August by the 1st District Court of Appeal in San Francisco. In the decision, the appellate court upheld the Marin County Employees’ Retirement Association’s interpretation of two 2012 state amendments that created new rules for how county retirement boards are permitted to calculate their current members’ retirement allowances. (read article)

Judgment against union grows to $7.8 million
By L.M. Sixel, October 4, 2016, Houston Chronicle
A judgement against the Service Employees International Union grew by another $2.5 million, according to an order signed last week by Harris County District Court Judge Erin Elizabeth Lunceford. The organization got hit last month with a $5.3 million judgment after a Harris County jury found the labor union’s aggressive organizing campaign went too far when it maligned the reputation of a local janitorial company. The total award grew to $7.8 million when $2.5 million of interest was added, The jury sided with Professional Janitorial Service in a suit the company brought nine years ago against the nation’s second largest labor union, which targeted the company as part of its “Justice for Janitors” organizing campaign and wrongly claimed Professional Janitorial Service had violated wage, overtime and other labor laws. (read article)

Virginia’s right-to-work amendment
By Clarissa Cooper, October 3, 2016, Staunton News Leader
On the 2016 ballot, most people have been focusing on the presidential race. In Virginia, two proposed constitutional amendments will also be on the ballot for people to vote on in November. The second proposed amendment is a right-to-work amendment involving labor unions. According to the Virginia Department of Elections, Virginia’s current right-to-work law states that union membership cannot be a condition of employment. If Virginia voters approved adding this into the constitution, it would make it much more difficult for labor laws to change in the future, according to Department of Elections materials. (read article)

D.C. police, labor union settle divisive claims over overtime and All Hands on Deck
By Peter Hermann, October 3, 2016, Washington Post
D.C. police and the union for the rank-and-file officers have ended one of their most divisive disputes with a $9 million agreement to pay overtime for working All Hands on Deck, the former chief’s signature crime-fighting program. The settlement worked out over the weekend comes after a federal arbitrator ruled in 2009 that the extra assignments were illegal and violated parts of the contract over pay and work schedules. The District appealed the decision to a labor relations board, but lost in 2011. (read article)

Talks resume in faculty labor dispute; union accuses management of ‘regressive bargaining’
By Jan Murphy, September 29, 2016, PennLive.com
Negotiators for the faculty union and the State System of Higher Education returned to the bargaining table on Thursday to continue efforts to reach an agreement and thwart what would be the first-ever faculty strike at the 14 state universities. The faculty has set Oct. 19, the first day after the fall break, as the day they will walkout if no agreement is reached. The more than 5,000 professors in the State System have been working under an expired contract since June 30, 2015. Numerous issues separate the sides including changes to the use and pay of temporary faculty, allowing graduate students to teach courses, and modifications to the health care plan. (read article)

Graduate Students Vote to Select Union Affiliation
By Garrett Williams, September 30, 2016, The Chicago Maroon
Graduate students at the University of Chicago have taken the next step toward unionization by initiating an affiliation referendum. This vote will decide which labor union Graduate Students United (GSU) will affiliate with, should its push for unionization succeed. AFT and SEIU are both major labor unions with about 1.6 million and 1.9 million members, respectively. Non-tenure track faculty at the University of Chicago chose to unionize with SEIU Local 73 this past December. The union chosen by GSU will contribute resources and organizing muscle to GSU’s push for union certification. Once an affiliate union has been decided upon, GSU will proceed with the election process. (read article)

State-Run Retirement Plan OK’d in California
By Nick Cahill, September 29, 2016, Courthouse News Service
Millions of California workers lacking access to pension and retirement plans received a boost Thursday after Gov. Jerry Brown signed a bill that greenlights a state-sponsored savings plan for private employees. Hoping to encourage and spur retirement planning for nearly 7 million Californians relying largely on social security, the California Secure Choice Retirement Program will create savings plans for workers whose employers don’t offer 401(k) or other retirement options. Structured like a traditional 401(k), workers will be able to take the state-sponsored retirement plan with them to new jobs but face penalties for withdrawing before retirement. While similar to California’s public-employee pension plan, it will not be guaranteed by state taxpayers. (read article)

Jerry Brown again vetoes union-backed restrictions on paid signature gatherers
By Christopher Cadelago, September 29, 2016, Sacramento Bee 
A union-backed effort to change the signature-gathering process for ballot initiatives was turned away again by Gov. Jerry Brown, who argued in a veto message Thursday that the bill would do little to lessen the grip of powerful interests. Senate Bill 1094 sought to require that proponents of a statewide initiative use non-paid volunteers to collect at least 5 percent of signatures needed to qualify their initiative. SB 1094 “will not keep out special interests or favor volunteer signature gathering,” Brown wrote. (read article)

Chicago Teachers Union sets Oct. 11 strike date
By Lauren FitzPatrick & Jesse Betend, September 28, 2016, Chicago Sun-Times
Determined to control the bargaining clock and “call the question” on what could be the second walkout since Mayor Rahm Emanuel took office, the Chicago Teachers Union’s House of Delegates on Wednesday set a strike date of Oct. 11. “If we cannot reach the agreement by then, we will withhold our labor,” CTU President Karen Lewis said at a news conference, surrounded by dozens of members. CTU’s full membership overwhelmingly voted last week in favor of a strike to pressure the Board of Education. Delegates took a voice vote so loud Wednesday it could be heard from outside the special meeting. (read article)

California pensions: How a deal went wrong and cost taxpayers billions
By Jack Nolan, September 28, 2016, The Mercury News
With the stroke of a pen, California Gov. Gray Davis signed legislation that gave prison guards, park rangers, Cal State professors and other state employees the kind of retirement security normally reserved for the wealthy. More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived. Proponents sold the measure in 1999 with the promise that it would impose no new costs on California taxpayers. The state employees’ pension fund, they said, would grow fast enough to pay the bill in full. They were off — by billions of dollars — and taxpayers will bear the consequences for decades to come. (read article)

Labor Pressing Obama for Action on Contractor Workers’ Union Rights
By Sam Skolnik & Ben Penn, September 28, 2016, Bloomberg BNA
Labor groups and lawmakers are pressuring the Obama administration to issue perhaps its furthest-reaching executive order aimed at federal contractors — this time to strengthen workers’ union rights. Labor and progressive leaders told Bloomberg BNA that the administration is discussing a possible post-election action: a model employer executive order (EO), including a labor peace clause that would mandate that contractors affirm workers’ right to unionize in return for a no-strike pledge. However, an administration official downplayed the possibility that the White House currently has plans for a new contractor-focused EO. (read article)

Big Labor has an identity crisis, and its name is Dakota Access
By Aura Bogada, September 28, 2016, Grist
A growing rift has split the country’s biggest union federation, the AFL-CIO. Many labor activists and union members are outraged that Richard Trumka, the federation’s president, threw the AFL-CIO’s support behind the Dakota Access pipeline project earlier this month. The AFL-CIO’s statement backing the pipeline was announced a week after the Obama administration put construction on hold. Trumka acknowledged “places of significance to Native Americans” but argued that the more than “4,500 high-quality, family supporting jobs” attached to the pipeline trumped environmental and other considerations. (read article)

State school board discusses waivers to Labor Day start
By Associated Press, September 28, 2016, Albany Times Union
Maryland’s state school board has adopted a resolution to “expeditiously” approve waivers to Gov. Larry Hogan’s order to start school after Labor Day starting next year, if local school boards can explain the educational benefits to students. The board adopted the resolution Tuesday. Doug Mayer, Hogan’s spokesman, says Superintendent Karen Salmon and board member Andy Smarick have assured the governor’s office that the board will not approve waivers before the regulations have been adopted. He says that could take about 90 days. Mayer also says the executive order requires a “compelling justification” for a waiver. Supporters say the delayed start would boost tourism and increase family time. But opponents say it shortchanges education. (read article)

The Government Union Political Class: Today California, Tomorrow America

Government unions in California collect and spend over $1.0 billion per year. That’s just government unions. That’s just California. They use a small fraction of this money to engage in collective bargaining. They use about a third of it to engage in politics – that’s nearly $700 million per election cycle. The rest, well over a billion per election cycle, goes to “educate” the public.

A billion dollars a year to pursue the government union agenda. You can argue this figure. Maybe it’s $800 million. Maybe, and more likely, it’s $1.2 billion. Nobody knows for sure, because government unions are required to reveal even less about their operations than private unions or public corporations. In an attempt to obtain more accurate membership and dues numbers, we spoke with an expert on public sector unions at Pepperdine University. He said that California has over 6,000 “locals” that have organized government workers into unions. In many cases, each of these locals files their own 990 form with the IRS. Our own analysis, stated in a California Policy Center study “Understanding the Financial Disclosure Requirements of Public Sector Unions,” summed it up as follows:

To amalgamate the financial information provided by literally thousands of local public sector union affiliates across every department and agency throughout California’s 478 incorporated cities and 57 counties would be a herculean task, but it is reasonable to assume that the total annual dues revenue and expenditures of California’s public sector unions is at least twice the total derived from totaling these 16 major organization’s 990 data. Put another way, at the end of 2010, following a lively election season, California’s public sector unions, collectively, were probably still sitting on well over $200 million in cash, and had just spent nearly $1.0 billion dollars on collective bargaining and political activity. It is left to the reader to ascertain why any spending to pursue the agenda of organized government workers is not intrinsically political, but dissecting actual political spending from the sparse data provided in 990 forms is an exercise in futility.

With this kind of money, you can hire a full time, professional army. And they have. When political candidates who are not backed by government unions decide to run for office, they either have to be independently wealthy, or they have to spend nearly all of their time soliciting donations. Campaign “reform” has made it impossible for a candidate to find just one wealthy donor, so unless they’re personally rich, they are in perpetual fundraising mode. The government union backed candidates, on the other hand, are often recruited to run for office by these unions, and have to do nothing more than sign a few forms that have been prepared for them in advance. The unions then run a turn-key operation to put them in office, telling them what to say and where to appear.

That’s not how politics is supposed to work in a democracy. No wonder government unions have taken over nearly every city, county and school district in California, along with the state legislature.

When it comes to “educational” efforts, the government unions spend even more money than they spend on direct political action. From Sacramento outwards to cities, counties and school districts, they hire the most capable consultants that money can buy. The finest attorneys, the most creative and capable public relations professionals, academic experts, polling wizards, media gurus. And, of course, these government unions fund “Think Tanks” that promote their agenda relentlessly.

Without this billion-dollar-a-year torrent of money, political advocacy and policy analysis works the way it’s supposed to work. Political campaigns and policy shops alike are required to present their vision to donors who then decide whether or not to support them. But when these interests, sustained by capricious pittances, are pitted against the government union machine, the outcome is predictable. They lose. And lose. And lose. California is Exhibit A for how a democracy is destroyed by a government that serves itself.

If there wasn’t an intrinsic conflict of interests between what government unions advocate – more power for government agencies and more wealth for government workers, with the welfare of private citizens a secondary concern – perhaps none of this would matter. But California, where government unions have ruled for decades, is a trendsetting travesty of how a democracy is supposed to function. It is a state where appeasing the government unions is a prerequisite for success in business. It is a state where giving up and living on government entitlements is increasingly preferable to trying to make a living when everything – housing, transportation, energy, water, and perpetually rising taxes – is punitively expensive thanks to bad policy choices. And it is a state where unionized government workers earn pay and benefits that average twice as much as what private sector workers earn, rendering them relatively immune to the consequences of their unionized government agenda.

This is America’s future if government unions are not stopped.

 *   *   *

Ed Ring is the president of the California Policy Center.

 

Charters Under Attack

For years, teachers’ unions have tried to kill charter schools—but only on odd-numbered days. On even-numbered days, they tried to organize them. Things lately have become very odd, at least in California; the unions are in full-assault mode.

United Teachers of Los Angeles president Alex Caputo-Pearl has long groused about how charter schools don’t play by the rules. Teachers’ union talking points effortlessly roll off his tongue—billionaires this, accountability that. But on May 4, despite pleas by charter school parents, UTLA, in concert with the Alliance to Reclaim Our Schools—a union front group—planned a major protest outside schools where charters share a campus with traditional public schools. “We will stand with Los Angeles parents, educators, students, administrators, and community members for fully funded public schools and call on corporate charter schools to pay their fair share to the district,” AROS said in a statement. Of course, charters are public schools, not “corporate.” And charters are the ones that aren’t fully funded, which is why they frequently have to share facilities. But UTLA and AROS don’t bother with those minor details. The rally mostly fizzled, so school kids were thankfully spared the sight and sound of angry protesters marching and chanting.

UTLA wasn’t finished. In what it thought would be a coup de grâce, the union released the results of a “study” it commissioned, which, among other things, asserted that the Los Angeles Unified School District “lost more than $591 million dollars to unmitigated charter school growth this year alone.” The school district countered by pointing out that it actually makes money due to the existence of charter schools. Undaunted, Caputo-Pearl was at it again in August. “With our contract expiring in June 2017, the likely attack on our health benefits in the fall of 2017, the race for governor heating up in 2018, and the unequivocal need for state legislation that addresses inadequate funding and increased regulation of charters, with all of these things, the next year-and-a-half must be founded upon building our capacity to strike, and our capacity to create a state crisis, in early 2018,” he told the annual UTLA leadership conference in July. “There simply may be no other way to protect our health benefits and to shock the system into investing in the civic institution of public education.”

Despite public charter schools outperforming traditional public schools in both English & Math on standardized testing for 2016 - Alex Caputo-Pearl, president of the United Teachers of Los Angeles, had stated the importance of spending the next year-and-a half on building a capacity to strike against charter schools.

Despite public charter schools outperforming traditional public schools in both English & Math on standardized testing for 2016 – Alex Caputo-Pearl, president of the United Teachers of Los Angeles, had stated the importance of spending the next year-and-a half on building a capacity to strike against charter schools.

In late August, just weeks after Caputo-Pearl’s tantrum, UTLA hit the streets with a media campaign. Empowered by a massive dues increase, the union began spreading its venom via billboards, bus benches, and the media. The timing was particularly bad, as the just-released 2016 state standardized-test results showed that charters outperformed traditional public schools in both English and math. Los Angeles, where one in six students is enrolled in a charter, saw 46 percent of its independent charter-school students meeting or exceeding the standard on the English Language Arts test, versus 37 percent for students in traditional public schools. On the math test, the difference was smaller: 30 percent versus 26 percent. Despite the unions’ perpetual “cherry-picking” mantra, 82 percent of charter students qualify as low-income compared with 80 percent for traditional schools. Charters also match up closely in areas of ethnicity, English-language learners, and disabled students.

The California Teachers Association jumped into the act on August 31 by unleashing “Kids Not Profits,” an “awareness” campaign calling for more “accountability and transparency of California charter schools and exposing the coordinated agenda by a group of billionaires to divert money from California’s neighborhood public schools to privately managed charter schools. These same billionaires are spending record amounts of money to influence local legislative and school board elections across the state.” In a press release announcing the launch of the campaign, the union quotes from its new radio ad, which claims to lay out the “billionaires’ coordinated agenda”:

  1. Divert money out of California’s neighborhood public schools to fund privately run charter schools, without accountability or transparency to parents and taxpayers.
  2. Cherry-pick the students who get to attend charter schools—weeding out and turning down students with special needs.
  3. Spend millions trying to influence local legislative and school board elections across California.

While Numbers One and Two are outright lies, there is some truth to Number Three. CTA has become fat and happy. It is by far California’s biggest political spender. It drives the union elite crazy that philanthropists are pouring unprecedented amounts of money into edu-politics in an attempt to balance the playing field. The union is finally facing some stiff competition in Sacramento, as well as in some local school board races.

Second only to its obsession with billionaires is the union’s incessant harping about accountability. “It’s time to hold charter schools and their private operators accountable to some of the same standards as traditional public schools,” CTA president Eric Heins says. This is laughable. Charter schools operate in accordance with all state and federal laws. They must meet rigorous academic goals, engage in ethical business practices, and be proactive in their efforts to stay open. If a school doesn’t successfully educate its students according to its charter, parents will pull their kids out and send them elsewhere. After a specified period—usually five years—the school’s charter is revoked. A failing traditional public school, by contrast, rarely closes. Union-mandated “permanence” laws ensure that tenured teachers, no matter how incompetent they may be, almost never lose their jobs.

The CTA and other unions can’t deal with the fact that non-unionized charters typically do a better job of educating poor and minority students than do traditional public schools. So they lie and create distractions in order to preserve their dominion. But all the yammering about charters “siphoning money from public schools,” grousing about billionaires “pushing their profit-driven agenda,” and bogus cries for “accountability” simply expose the unions as monopolists who can’t abide competition. But that’s just what children, their parents, and taxpayers deserve—less union meddling and more competition and choice.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

Unfunded Pension Costs Driving Huntington Beach to Become More Like Ferguson, MO

It’s been 19 months since the U.S. Department of Justice released its scathing report on the Ferguson Police Department. Chief among the DOJ’s findings: Ferguson’s law enforcement practices were “shaped by the city’s focus on revenue rather than public safety needs.” Nearly every policing activity – including tickets, misdemeanor fines and court fees – was seen as an income opportunity.

That model led to tension between police and citizens, disrupting families and the community. When a white police officer shot and killed Michael Brown, a black 18-year-old, on August 9, 2014, a city balancing on a knife’s edge toppled quickly into chaos.

Now what might be called Ferguson’s worst practices have been brought to Huntington Beach.

Last month, as the Orange County Register reported, the City Council approved a plan to hire a city prosecutor to handle misdemeanors.

“A significant number of misdemeanors go unprosecuted,” City Attorney Michael Gates told the Register, adding that the prosecutor will “add a lot of teeth to our laws.”

“There will be a whole class of crimes that will now be prosecuted where the DA may not have gotten to them,” Gates said. “We will prosecute every one of them until conviction.”

This comes on the heels of a proposal pushed through the council last year to substantially raise city fees and fines. Confronting a rising price tag for compensation for police and firefighters, then councilman, now mayor, Jim Katapodis put forward the plan as a means to cover the cost, and additional police officers.

Parking in front of a handicapped ramp will now cost you $356, an incredible jump from its former cost of $55. A glass container on the beach? Skateboarding? They’ll cost you $175 each, up from $125. There are others.

It’s not entirely surprising that Katapodis’ main public policy objective has been to increase the number of law enforcement officers to pre-recession numbers. He has spent his professional career in and around law enforcement. Police and fire unions have been staunch supporters, first backing Katapodis in 2010, when he ran for City Council while still an LAPD sergeant. According to Katapodis, adding more sworn officers is essential to ensure a safe city and should come at whatever cost necessary.

But over the last few years violent crime has been falling. And suspending basic accounting – adding more officers at higher pay – has driven Huntington Beach’s finances into the red.

City Council member Erik Peterson, who voted against the fee increases, said he didn’t understand how the city can start paying salaries without knowing how much they’ll receive from the increased fees.

In fact, H.B. owes $300 million on pensions for its retired city workers. That number was high enough to warrant a 2013 Moody’s investigative review. That review didn’t lead to a downgrade, but it’s a red flag.

In H.B., the Police Department is being expanded literally at the expense of the public, setting police against residents in a struggle not for public safety but for revenue. Critics say the mayor and City Council majority don’t even know how much revenue that parasitic system will generate. It’s equally clear they haven’t considered its costs. It cost Ferguson almost everything.

Matt Smith is a graduate student at Princeton Seminary, and a Journalism Fellow at the California Policy Center in Tustin.

LA Story: The Poorer You Are, the More Likely You Are to Support Charters

Los Angeles school teachers gathered in August in the posh, iconic – and for the group, weirdly ironic – Westin Bonaventure Hotel. They heard their union’s leaders extol their role as revolutionary defenders of the city’s poorest communities against the wealthy.

But that’s not how the city’s poor have seen it. The poorer you are, it turns out, the more likely you are to believe LA school district leaders have stranded the poor, data reviewed by the California Policy Center suggests.

It’s actually the rich who tend to like the teachers union – a fact that seems to turn the whole class-conflict paradigm on its head. While wealthy Angelenos on the north and west sides of the Los Angeles School District support the teachers union, generally poorer neighborhoods in the south and east often elect reform-minded candidates to the board of education.

CPC evaluated school district representatives – rating them either reformers or union supporters – and overlaid LA Unified’s seven local school districts with a neighborhood income map. The results are conclusive: Voters in the highest-income areas, namely Bel-Air, Porter Ranch, and Beverly Crest elected Steve Zimmer, Scott Schmerelson and Monica Ratliff – all union supporters. Voters in the poorest-income areas – downtown, South Gate and Wilmington elected Monica Garcia, Ref Rodriguez and Richard Vladovic – all reformers backed by charter school advocates.

The split between the high- and low-income voting preferences also correlates with the Academic Performance Index of schools (API). Wealthy families have access to better schools and are therefore likely more satisfied with the status quo. Conversely, poor families send their children public schools that provide a lower level education and therefore have more reason to hope and vote for change. Large neighborhood high schools in LAUSD’s three northern districts averaged an API of 702. Their counterparts in the poorer southern districts averaged 660.

(Perhaps the worst news: even the best public schools are underperforming. California’s state target API score is 800 – 98 points above the north LA average.)

Sean Corcoran, a professor of Educational Economics at New York University, has seen this phenomenon before

“We find that low school quality – as measured by standardized tests – is a consistent and modestly strong predictor of support for charters,” Corcoran observed in a 2011 paper on Washington State Charter Schools.

It’s obvious – but jarring if you listen teachers union leaders.

At their July 31 conference, United Teachers Los Angeles president Alex Caputo-Pearl depicted a Los Angeles in which the wealthy are working overtime to destroy public education.

“Billionaires across the country are looking at Los Angeles as the next and biggest opportunity to privatize and profit from the education of children,” he said. “From late August to late September, over 70 billboards, signs, bus benches and more will carry our messages that billionaires should not be driving the public school agenda, and that amazing people work in our public schools every day.”

Caputo-Pearl mentioned “billionaires” six times in his speech and “money” five times.

Ironically, the billionaires running charter schools occasionally represent LA’s best educational hope. In a 2015 comparison of union schools and charters, my colleagues at the California Policy Center found that charters cost less and teach students more effectively than union schools. In standardized testing, study authors Marc Joffe and Ed Ring noted, “Charter students outperformed the LAUSD traditional students with average [SAT] scores of 1417 to 1299.”

That performance difference might explain more than anything the preference among less wealthy voters for charter schools. Now, at last, those poorer Angelenos have a choice in schools, just like parents in LA’s richest neighborhoods. The poor are finding their voice, and they’re using it to say they want real education for their children.

Their votes have a tangible impact on the board, where the union/reform divide appears frequently. On March 8, the WISH academy (a network of two charter schools operating just west of Inglewood) petitioned to form a high school. Union-backed Steve Zimmer, the district board’s president, moved a motion to deny the petition on alleged financial grounds. When the motion was not seconded, second district trustee Garcia, a reformer, moved a motion to approve the academy charter. Third-district trustee Rodriguez, a public proponent of charters, seconded Garcia’s motion immediately.

After a two-hour debate, they voted. Garcia, Rodriguez, and Richard Vladovic (all reform-funded) voted yes. Monica Ratliff, a young, former teacher from the sixth district, joined them. George McKenna III and Scott Schmerelson voted no. As candidates, both were funded and endorsed by United Teachers Los Angeles. Zimmer had the last vote – and at 4-2, he could safely take a bold stand either for or against the charter school. Instead, Zimmer abstained.

Adam Jacobs is an intern at the California Policy Center. He attends George Washington University in Washington D.C.

OUSD spends taxpayers' money to persuade taxpayers to let them spend more taxpayer money

Officials of the Orange Unified School District have spent more than $50,000 to support a $288 million bond measure on the November ballot. Expenses include $23,200 for opinion polling and $6,000 per month for campaign consultants, according to documents reviewed by the California Policy Center: School board members authorized the district to spend up to $128,000 on the effort. If voters approve the bond, there will be additional costs – $225,000 for financial advisors and $265,000 for legal advice.

The district’s use of public funds rests on a crucial legal distinction, said Orange Unified Superintendent Michael Christensen. It’s legal to use taxpayer dollars to educate the public, but not to campaign.

Critics say that’s a distinction without a difference during the campaign season.

“It should be illegal for school district resources to be allocated for political campaigns, political polling, campaign strategists and consultants. It’s a shameful abuse of our tax dollars,” said former Villa Park Councilwoman Deborah Pauly, who opposes the bond. “It’s not surprising that OUSD has squandered $50,000 trying to trick well-meaning voters into increasing their own property taxes for the next 30 years.”

Bonds are loans in which borrowers – in this case, the school district – pay lenders interest on the principal for a period of years. The district makes those interest payments with income from new taxes. Orange school trustees voted July 21 to set that tax at $29 for every $100,000 of assessed property value. The owner of a house or building valued at $1 million would pay $290 per year, for example.

But residents won’t know the full cost of the bond until after the measure is passed and bonds are ready to be issued. The interest rates depend on the market, though Christensen said his staff estimates the rate will be around 4.85 percent. If he’s right, the total cost of a $288 million bond will be roughly $547 million, with about $259 million going toward interest alone.

Though district officials say all Orange Unified schools need a makeover, the measure would refurbish only the district’s four high schools – El Modena, Canyon, Villa Park and Orange. That’s an average of $137 million for each of the four schools.

The bond proposal does nothing to refurbish Orange Unified’s six middle schools or 29 elementary schools.

There was a time when OUSD saved cash for new buildings and maintenance of old ones. That changed in 2002, with a union-backed campaign to recall conservative district trustees, including a high-profile teachers strike in April 2002 and the claim that the district’s conservatives had been so stingy with teacher pay that the district was bleeding qualified teachers.

“Since 1998, Orange’s most experienced educators have departed in droves – more than 1,000 teachers and administrators, including Teachers of the Year, mentor teachers, counselors, librarians, nurses, reading specialists and special education teachers,” a union advocate wrote in the Los Angeles Times.

Behind that dramatic claim was a district that actually saved cash against the certain need of school repairs. But union power triumphed over thrift. In June, the conservatives were shown the exits and union-backed candidates promptly took their places. Once in control of the gavel, district trustees commissioned a report that concluded, “Orange Unified had consistently overestimated its expenses and underestimated district revenues and kept unnecessarily high levels of emergency reserves,” the Los Angeles Times reported.

Those “unnecessarily high” reserves were liquidated to pay for teacher salary increases in 2002. Just two years later, Orange Unified asked voters to approve a bond, first in March, and then again in November. Both times it was denied. Then, in 2014, it lost a bond vote that would have allowed the district to borrow $296 million.

With three bond failures since 2002 – and a controversial fourth bond measure coming in three months – Orange voters seem to be sending a clear message to the district. School officials know how to spend, but voters remember a time, before 2002, when school officials knew how to save.

Ethan Musser is a rising senior at Mississippi State, and a Journalism Fellow at the California Policy Center in Tustin. This article first appeared in the Orange County Register.

Union In The News – Weekly Highlights

Gap Co-Founder Doris Fisher Is Behind the Charter School Agenda
By Joel Warner, September 27, 2016, Capital & Main
As co-founder of the Gap, San Francisco-based business leader and philanthropist Doris Fisher boasts a net worth of $2.6 billion, making her the country’s third richest self-made woman, according to Forbes. And she’s focused much of her wealth and resources on building charter schools. She and her late husband Donald donated more than $70 million to the Knowledge is Power Program (KIPP) and helped to personally build the operation into the largest network of charter schools in the country, with 200 schools serving 80,000 students in 20 states. (read article)

Knight wants delay in OT rule
By Bartholomew Sullivan, September 27, 2016, Ventura County Star
Rep. Steve Knight hopes to get a floor vote this week on a bill he co-sponsored to delay the Dec. 1 implementation of the Department of Labor’s overtime rule that would provide time-and-a-half pay to 4.2 million people earning less than $47,476 a year, including 392,000 Californians. Knight, R-Lancaster, took issue with the rule in a letter to Labor Secretary Thomas E. Perez in December. He contends employers won’t be able to afford the new rule, which would exempt from the Fair Labor Standards Act certain employees who perform executive, administrative or professional duties beyond 40 hours a week. (read article)

What the Jersey City PLA ruling means for union labor in construction
By Kim Slowey, September 27, 2016, Construction Dive
A recent New Jersey appeals court decision has stoked the fires of the union versus nonunion debate, which continues to grow across the U.S. as unions are reportedly losing their grip on critical markets. In 2007, as the country was feeling a kick in the teeth from the recession, Jersey City enacted a law under which developers, using private funds, would receive short-term (five years) and long-term (20 years) tax abatements for building $25 million-plus projects there, according to attorney Russell McEwan with employment and labor law firm Littler Mendelson. In exchange, those developers had to sign a Project Labor Agreement (PLA) obligating them to use union-only labor on their projects. (read article)

Court throws out suit over Wisconsin ‘right-to-work’ law

By Patrick Marley, September 26, 2016, Milwaukee Journal Sentinel
A federal judge on Monday threw out a lawsuit challenging a 2015 law that banned labor contracts requiring workers to pay union fees. The ruling by U.S. District Judge J.P. Stadtmueller is the latest setback for unions, which have challenged the state’s “right-to-work” law in state and federal courts. Two locals of the International Union of Operating Engineers argued the law violated the National Labor Relations Act and unconstitutionally took something of value from the unions without compensation. Stadtmueller disagreed, citing a 7th U.S. Circuit Court of Appeals’ decision that upheld Indiana’s “right-to-work” law. Terry McGowan, president of one of the union locals, said the unions would appeal, putting the issue back before the 7th Circuit. (read article)

Long Beach reaches tentative labor agreement with city’s largest union

By Courtney Tompkins, September 26, 2016, Long Beach Press Telegram
Long Beach’s largest labor union has reached a tentative agreement with the city after nearly two years of negotiations, officials announced Monday. The general terms of the agreement with the International Association of Machinists (IAM), which represents nearly half of the city’s labor force, include a 2 percent annual wage increase for fiscal years 2017 through 2019, healthcare reform provisions, and creation of a labor management committee to develop a pathway for temporary workers to obtain permanent employment. (read article)

Union leaders struggle to turn members against Trump
By Sean Higgins, September 26, 2016, Washington Examiner
Every four years, the AFL-CIO labor federation engages in a quixotic mission: to attempt to dissuade many of its own members from voting for their first choice for president, the Republican candidate. Between one-quarter and one-third pull the lever for the GOP, anyway. The labor leaders’ efforts have taken an added urgency this year because the Republican nominee, Donald Trump, may have the strongest appeal in decades of any GOP candidate to the union rank-and-file. The AFL-CIO has conceded as much. An internal poll it did in June found that 41 percent of its members in five key battleground states — Ohio, Pennsylvania, Florida, Nevada and Wisconsin — favored Trump. (read article)

Under pressure from union, L.A. County makes it easier for probation workers with discipline problems to get promotions
By Abby Sewell and Garrett Therolf, September 25, 2016, Los Angeles Times
More than 50 employees working inside Los Angeles County’s juvenile lockups received promotions despite a history of disciplinary problems or criminal arrests under a deal county leaders quietly cut earlier this year. The workers had previously been denied promotion for actions ranging from mistreatment of children in custody to off-duty drunk driving.  The county softened the policy after the union representing the employees filed a lawsuit challenging the denial of promotions. A judge ruled in favor of the county. But when the union appealed, the county decided to settle the case and create a new policy allowing more employees with discipline records to receive promotions. (read article)

How a pension deal went wrong and cost California taxpayers billions
By Jack Dolan, September 24, 2016, The Bakersfield Californian
With the stroke of a pen, California Gov. Gray Davis signed legislation that gave prison guards, park rangers, Cal State professors and other state employees the kind of retirement security normally reserved for the wealthy. More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90 percent of their peak pay for as long as they lived. Proponents sold the measure in 1999 with the promise that it would impose no new costs on California taxpayers. The state employees’ pension fund, they said, would grow fast enough to pay the bill in full. They were off — by billions of dollars — and taxpayers will bear the consequences for decades to come. This year, state employee pensions will cost taxpayers $5.4 billion, according to the Department of Finance. (read article)

State Labor Council fined for campaign finance violations
By Associated Press, September 23, 2016, Walla Walla Union-Bulletin
The Washington State Labor Council will pay the state $16,622 over the organization’s failure to file lobbyist employer reports of in-kind and cash contributions properly and on time. The state attorney general’s office said Friday the group agreed to a civil penalty of $18,500, with half suspended for four years as long as there are no further violations of the law; $5,240 in attorney fees and court costs; and $2,132 in investigation costs to the Public Disclosure Commission. The attorney general’s office received a complaint last year from the Freedom Foundation against WSLC alleging multiple violations of the state’s public disclosure laws. (read article)

LA Police Union: Police Commission Wants Cops To Run From Armed Suspects
By Kerry Picket, September 23, 2016, Daily Caller
The Los Angeles Police Commission wants LAPD police officers to run away when a suspect confronts them with a weapon, warns the Los Angeles Police Protective League, the labor union of the city’s police officers. The organization posted a blog post critical of the commission’s recent decision to find that fault lay upon an LAPD officer who used deadly force when a female suspect, Norma Guzman, came at him and his partner swinging a large knife. The commission — composed of five mayoral appointees and city council-confirmed civilians who broke ranks with Police Chief Charlie Beck — claimed the LAPD Officer violated deadly force rules, in the case which happened last year. Despite support from Beck, Guzman’s family and local activists want the officer to be charged criminally, the Los Angeles Times reported. (read article)

Faculty union leader: ‘If we have to go on strike we are going to do whatever it takes’
By Jan Murphy, September 23, 2016, PennLive.com
Anyone who thought the state universities’ faculty union wasn’t serious about calling the first-ever strike in the 33-year-old system’s history better brace themselves.  “I say with a heavy heart that we feel we have no choice but to say by October 19, if we don’t have a contract, all the faculty at all 14 of our universities will be on strike,” said Association of Pennsylvania State College and University Faculties President Ken Mash on Friday at a news conference at the Red Lion Hotel in Swatara Twp. This announcement came as a result of the more than 5,000 faculty members employed by the system have grown increasingly frustrated over working under an expired contract since June 30, 2015. (read article)

Dakota Access Pipeline Exposes Rift In Organized Labor
By Dave Jamieson, September 23, 2016, Huffington Post
The nation’s largest federation of labor unions upset some of its own members last week by endorsing the construction of the Dakota Access pipeline in North Dakota. Some labor activists, sympathetic to Native American tribes and environmentalists, called upon the AFL-CIO to retract its support for the controversial project. The rift within the federation may be even deeper than it first seemed. The day before federation President Richard Trumka issued a statement supporting the pipeline, Sean McGarvey, the head of the AFL-CIO’s building trades unions, sent him and the presidents of the federation’s other unions a blistering letter. McGarvey said unions’ resistance to the Dakota Access pipeline had helped upend the lives of union workers employed on the project. (read article)

Chicago Teacher: Why We May Strike Again
By Gabriel Sheridan, September 22, 2016, Labor Notes
The Chicago Teachers Union announced this morning that members have voted to authorize a strike, with 90.6 percent turnout and 95.6 percent voting yes. The union’s House of Delegates will meet September 28 to decide the next step. A strike could begin as soon as October 11. Chicago teachers are voting September 21-23 on whether to authorize another open-ended strike. I remember how worried I was as a rank-and-file teacher on the eve of the 2012 strike vote. I thought we’d never get a majority. Our contract has been expired for more than a year. We already voted by 88 percent in December to authorize a strike, and walked out for one day in April. The union is holding this second vote partly to discourage any legal attacks from the mayor or governor over technicalities—and partly to solidify our solidarity. (read article)

Chicago Teachers Union Questions Governor’s Appointment
By Sarah Karp, September 20, 2016, WBEZ
The Chicago Teachers Union claims the Illinois Educational Labor Relations Board was further compromised Friday when Gov. Bruce Rauner appointed a former attorney for Chicago Public Schools. With Lara Shayne’s appointment, three of the five members have been appointed by Rauner, who is known for his anti-union views and dislike of the Chicago Teachers Union. Until just last week, Shayne served as senior manager of labor relations for CPS. CTU attorney Robert Bloch said Shayne occasionally participated in negotiations with the union over the contract dispute. Now, as a member of the board, Shayne will be asked to decide disputes between school districts and unions, including disagreements between CPS and the CTU. (read article)

For Nov. 8th: $32B in Local Borrowing, $2.9B in Local Tax Increases

New local taxes and new local borrowing are a regular phenomenon in California elections, but this year our government union controlled politicians have outdone themselves. Let’s compare:

November 2014 – $11 billion in new borrowing proposed via 118 local bond measures, 81% passed. Of the 117 local proposals for new taxes, 68% passed.

June 2016 – $6.2 billion in new borrowing proposed via 48 local bond measures, an estimated 93% passed. Of the 42 local proposals for new taxes, an estimated 66% passed.

November 2016 – $32.2 billion in new borrowing via 193 local bond measures, and 224 local proposals for new taxes!

Not only do these general and primary and special election tax and bond measures accumulate year after year, but they nearly always pass! The primary source for this information is the California Tax Foundation, who have just produced another excellent guide “Local Tax and Bond Measures 2016.” This time, they have not only compiled a list of all of the proposed local taxes and bonds, but for each of the proposed new local taxes, they have compiled the projected annual collections. The result is stunning.

2016 California Local Tax and Bond Measures
20160927-uw-local-taxes

As this table reports, $32.2 billion in new borrowing is being proposed, nearly all of it for schools and colleges. At 5.0% annual interest with a 30 year repayment plan, this borrowing will cost property owners another $2.0 billion per year in increased property taxes. If over 90% of these bonds are approved by voters, as recent history indicates is likely, California’s taxpayers will suddenly have saddled themselves with nearly $30 billion in new government debt.

Also as reported on the above table, the 224 proposed tax increases are estimated to cost taxpayers at least $2.9 billion per year. “At least,” because CalTax was unable to find revenue projections for 29 of them. And while “sin taxes” on marijuana and soda promise to bring in $58 million and $18 million, respectively, it is sales tax, that everyone pays, that will bring in most of the revenue, over $2.3 billion.

Because local taxes are numerous and dispersed onto hundreds of differing ballots across the state, they don’t get the visibility that state tax increases generate. But collectively they are just as significant. California’s Prop. 30, passed by voters in 2012, generated about $6.0 billion per year. That same tax, which was supposed to be temporary, will be extended through 2030 if voters approve Prop. 55 this year. But if you compare this statewide tax to the proposed local taxes, $2.9 billion per year, along with required payments on the local bonds, $2.1 billion per year, you are adding another $5.0 billion annual burden to taxpayers.

Passing Prop. 30 was a major fight. Similarly, Prop. 55 has huge visibility with voters. But because nearly all of the local measures pass, and because dozens if not hundreds of them appear on the ballot every election, local taxes and bonds matter more. Invisible, ongoing, and ever expanding, they are silently elevating the cost-of-living for ordinary Californians as much or more than state taxes.

Where does this money really go? Why is there an insatiable thirst for more taxes and more borrowed funds?

One word:  Pensions. One cause:  Government unions and their allies in the financial community, who together comprise what is by far the most potent political lobby in California.

A May 2016 analysis by the California Policy Center, using the most recent data available from the U.S. Census Bureau, estimated that during 2014, California’s 80+ independent state/local government employee pension systems received $30.1 billion in contributions (ref. table 2-A). Later in that same report, on table 2-C which is displayed below, one can see how much these pension systems actually need to remain financially healthy. At a minimum, they are collecting $8.0 billion per year LESS than they need. And that is if the investments they’ve made yield an annual return of 7.5% per year for the next 30 years. At the modest reduction of that projection to 6.5% – which even CalPERS has announced they are going to phase in as their new projection for calculating required annual contributions, these pension systems are collecting $22.2 billion per year LESS than they need.

California State/Local Pension Funds Consolidated
2014 – Est. Funding Status and Required Contributions at Various ROI

20160516-CPC-Ring-pension-liabilities

If California’s state and local government workers participated in Social Security like the rest of California’s workers, instead of receiving guaranteed defined benefit pensions that on average pay FOUR TIMES what Social Security recipients can expect, there would be no insatiable need for more money for the pension systems. Even if California’s state and local government workers merely received defined benefits that paid, on average, TWICE what Social Security recipients can expect, these pension funds would currently have surpluses. Moreover, there would be money left over in local municipal and school district operating budgets to maintain facilities, instead of having to perpetually borrow.

Six billion per year ala Prop. 30 and Prop. 55. Another five billion per year thanks to new proposed local taxes and borrowing just this November. And it’s not even close to enough. California’s state and local government pension systems are going to need somewhere between $50 to $60 billion per year to stay afloat, and currently they’re collecting barely more than half that much.

No wonder there’s the perennial scramble for more. More. MORE.

 *   *   *

Ed Ring is the president of the California Policy Center.

The Case for Limited Government is Now Stronger Than Ever

I have studied U.S. and California politics in particular since the mid-1990s, and believe the case for limited government is stronger now, than at any other time in history.

A series of emerging trends have coalesced to produce a political environment that makes it very unwise to try to enact sweeping policy change in today’s political environment (with the exception of an outright repeal of failed government programs).

A major treatise could be written on the subject, but here are some of the key considerations that led me to this conclusion.

First, there has been a noticeable decline in the quality of our elected leaders. To put it bluntly, many politicians are just in it for themselves and purport to pursue the public’s interest only as a means to their own ends.

The ramifications of this trend are huge and have served to give public interests more power over the political process and make it impossible in many cases to enact legislation that is within the public’s interest.

Second, the country’s political economy has gotten increasingly complex which makes it more difficult than ever to craft responsible public policy that is capable of addressing a policy problem not only today, but over a significant time period.

Third, the increasing polarization in the electorate, and reflected in U.S. governing bodies, make it extremely difficult, and more commonly impossible, to substantially revise a public policy once it has been approved.

Many examples could be provided to prove the validity of these assertions, but let’s look at a few case studies.

At the federal level, there is no better recent example than Obamacare. The policy was sold as being the best of all worlds expanding coverage, reducing costs, and improving the business climate in the process.

The only thing Obamacare has done well is expand coverage, but this has come at a great cost in the form of double digit annual cost increases on individuals, business, and government itself.

Without question, the program needs some major fixes to restore at least short-term viability and there are no signs that the political consensus needed to bring such change could be achieved. The result is a government program that is completely unsustainable, but has nonetheless provided health coverage to tens of millions more Americans which makes it impossible for anyone to advocate an outright repeal without a replacement.

Obamacare is looking like another example of a major government program that was enacted with very good intentions, but cannot be made sustainable over the long-run due to the huge complexity of the issue and the inability of the U.S. Congress to come anywhere close to the consensus needed to reform it. Two other examples: Social Security and Medicare, both unsustainable, yet almost politically untouchable.

At the state level, the pension crisis is an excellent example which holds ramifications for the long-term health of state government that equal or exceed Obamacare, Social Security, and Medicare combined.

The Public Employee Pension Crisis has the potential to entirely bankrupt the State of California

The Public Employee Pension Crisis has the potential to entirely bankrupt the State of California and all of its public agencies. Stanford University had measured the unfunded pension liabilities at $950 billion in 2013, but more recent estimates peg the debt at around $1.5 trillion for 2016.

 

In California, the level of retirement benefits provided to public employees is unaffordable to most public agencies in California, and is not currently being covered through contributions raised from public employers, and to a far less extent public employees.

The result is a massive run up is debt for nearly all state and local public agencies in California. In 2013, the total debt for unfunded pension liabilities was estimated at $950 billion, according to Stanford University. But more recent calculations for 2016, peg the debt at $1.5 trillion 50% higher due to major investment losses and soaring benefit costs.

Public pension debt alone in California is currently estimated to equal $77,000 per household in 2013, according to Stanford University’s pension tracker.

Despite the magnitude of the current pension crisis, there are only a handful of California Legislators who will even publicly admit that the pension crisis is a major issue in California. This is due to the fact that the state’s public employee unions control the California Democratic Party, and the Democrats run the California State Legislature.

The state’s pension crisis has the potential to bankrupt the State of California and nearly all of its public agencies, but there is not the faintest sign of a political consensus that will even admit that there is a major problem here, let alone consider a solution.

Furthermore, absent changes to the state’s pension system it makes no sense to further increase state and local tax revenues (i.e. tax and fee increases) since these increased revenues will simply go to fund overly generous and unsustainable public employee benefit costs which are increasing at 10-25% per year on average.

Private conversations with Republican legislators, who are the minority, indicate that they understand the issue and the need for reform but there is nothing to be gained by them going out on the issue short of a critical mass for reform.

Democrat legislators, on the other hand, support the status quo because the public employee unions bankroll their campaigns and the Democratic Party, and most if not all have already signed pledges to the state’s public employee unions to only increase public employee compensation, regardless of the consequences for the state.

Although the necessity for Pension Reform in CA seems to be obvious, many legislators seem unwilling & therefore unable to address the issue, largely due to the strong influence of Public Employee Unions when it comes to campaign financing of many within the state legislature.

Although the necessity for Pension Reform in CA seems to be obvious, many legislators seem unwilling & therefore unable to address the issue, largely due to the strong influence Public Employee Unions possess when it comes to campaign financing of many within the state legislature.

 

The state’s unsustainable public pension system is another example of a large government program gone bad, but nothing can be done to fix it given the circumstances of the state’s current political environment.

One last case study regarding the need for limited government is the state’s regulatory climate, which has an obvious parallel at the federal level but I will confine my discussion to the State of California.

The State of California’s regulatory climate is credited with being a key factor, along with high taxes, for encouraging more than 10,000 businesses to relocate out of state in recent years.

In a recent Inside Source interview with Stanford University Economics Professor Roger G. Noll, Noll states that California’s regulatory policies and practices are deeply flawed, but not necessarily enough to “drag Silicon Valley to Texas.”

Noll said most California legislators lack the capacity and inclination to craft responsible regulatory policy and that most regulation considered by the California Legislature is deeply flawed.

“We have pretty much a bankrupt system, it is rare to have a bill that is well crafted,” Noll stated.

Yet this does not stop the Democrat Legislature from developing bill after bill that seeks to regulate the California economy in almost every way imaginable. The sad truth is that the vast majority of this legislation is deeply flawed and will do more harm to the state’s business climate while providing little if any public benefit other than a political sound byte.

Moreover, most Democrats develop and pass regulatory legislation as a means to advance their careers and the policy agendas of their supporters, as opposed to advancing the public interest.

Thus, we have a Democrat majority whose primarily occupation is advancing their own agenda, as opposed to the public’s interest, without regard for the long-term consequences for the state’s business climate and economy.

If the Legislature cannot craft legislation in such as way that is beneficial and cost-effective it should just leave the issue alone, which brings us full circle to the need for limited government.

The increased complexity of the economy has dramatically increased the number of issues that can be regulated as well as the potential for harmful effects from poorly crafted legislation, which has become the rule in California, not the exception.

In other words, the best thing the California Legislature can do on most regulatory issues is do nothing. But political motivations necessitate the opposite due to a decline in the quality of our public leaders, primarily if not exclusively California Democrat politicians.

Then California Treasurer Bill Lockyer (D) saw this trend in 2010, noting that most of the legislation considered and passed in the California State Assembly is “junk” but lawmakers “move it along” to keep the special interests happy.

Lockyer also chastised the Democrat Legislature for its inability to address the state’s pension crisis because of who elected them (i.e. public employee unions) stating that it will “bankrupt the state” if nothing is done.

In short, government has reached a point in California, as well as at the federal level, where politicians cannot address the most important issues (i.e. failing government programs) due to political realities, but commonly do the wrong things in the areas where they can act.

The only solution is limited government. First, we must prevent more government programs from going on the books that will inevitably become unsustainable or unworkable, but impossible to fix. And second, we must limit politicians from advancing their own private agendas through legislation that actually does more harm than good.

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.

Proposition 13 Is Safe — For Another Few Weeks

The Legislature is in adjournment, and with lawmakers at home campaigning for reelection, they are unable to engage in their favorite pastime of undermining Proposition 13 and its protections for California taxpayers.

However, this time out is only a brief respite from the Sacramento politicians’ inexorable pursuit of taxpayers’ wallets, the ferocity of which matches the dedication and intensity of a bear going after honey.

This December, after the election, lawmakers will reconvene to kick off the next two-year legislative session. During the just completed session, with great effort, taxpayer advocates were able to blunt a number of major efforts to modify or undermine Proposition 13, and, as surely as Angelina and Brad will be appearing on the covers of the supermarket tabloids, these attacks on taxpayers will begin anew when the Legislature is back in session.

Bills will be introduced to make it easier to raise taxes on property owners as well as to cut the Proposition 13 protections for commercial property, including small businesses. There may even be an effort to place a surcharge on all categories of property, an idea that was put forward by authors of an initiative that nearly collected enough signatures for placement on this year’s November ballot.

Accompanying the legislative fusillade will come the usual arguments that local government, or schools, or infrastructure, or the homeless, or the elderly, or (fill in the blank with the program or cause of your choice), or all of the preceding, need more money.

Government at all levels has become a militant special interest and its Prime Directive is to increase revenue – to take in more taxpayer dollars that is – and more is never enough.

California appears to have become a state constantly looking for new mechanisms of generating more revenue from its taxpayers in order to fund what is already the countries most compensated  public employees.

California appears to have become a state constantly looking for new mechanisms of generating more revenue from its taxpayers in order to fund what is already the countries most compensated public employees. If the Legislature ever successfully removes the protections associated with Proposition 13, Proposition 218, and the Right to Vote on Taxes Act, the fiscal burden upon CA taxpayers could be enormous.

 

The dirty little secret behind why government has changed from a service entity, dedicated to meeting the needs of its constituents, to a rapacious overlord, is that since being granted virtually unfettered collective bargaining rights in 1977, California’s state and local government workers have become the highest compensated public employees in all 50 states. With the high pay comes high union dues, collected by the employing entity and turned over to the government employee union leadership. These millions of dollars can then be used as a massive war chest to elect a pro-union majority in the Legislature and on the governing bodies of most local governments. And since these elected officials’ political futures are dependent on the goodwill of their union sponsors, there are almost no limits on what they will be willing to do to extract more money from taxpayers to be shoveled into ever increasing pay, benefits and pensions for government workers. (Government employee pension debt is several hundred billion dollars).

Literally, the only protections that average folks have from a total mugging by state and local governments are Proposition 13 and Proposition 218, the Right to Vote on Taxes Act. These popular propositions put limits on how much can be extracted from taxpayers by capping annual increases in property taxes, requiring a two-thirds vote of the Legislature to raise state taxes and guaranteeing the right of voters to have the final say on local tax increases.

It is easy to see why these taxpayer protections are despised by the grasping political class and their government employee union allies. This is also why taxpayers will have to work hard to preserve them.

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.

Union In The News – Weekly Highlights

Pot shop vote in LA?
By Debbie L. Sklar, September 20, 2016, MyNewsLa.com
Will you get to vote to keep and permit pot shops in Los Angeles?
Proponents of a measure to repeal Proposition D, a city ban on medical marijuana dispensaries, say they have turned in more than 100,000 signatures to the City Clerk’s office in an effort to qualify for the March ballot. The measure calls for creating a permitting process that would replace the ban. It was put forward by the United Food and Commercial Workers Local 770, a labor union, and the UCBA Trade Association, which is consists of dispensaries that were given immunity to continue operating under Proposition D despite the ban. The City Clerk’s office still needs to verify whether the petitions meet the 61,487 minimum threshold for valid signatures. The proponents are aiming to put the measure on the March 2017 ballot. If the signatures are deemed sufficient, the City Council also has the option to adopt the ordinance language as-is or call a special election. (read article)

Chicago Teachers Union Questions Governor’s Appointment
By Sarah Karp, September 20, 2016, WBEZ
The Chicago Teachers Union claims the Illinois Educational Labor Relations Board was further compromised Friday when Gov. Bruce Rauner appointed a former attorney for Chicago Public Schools. With Lara Shayne’s appointment, three of the five members have been appointed by Rauner, who is known for his anti-union views and dislike of the Chicago Teachers Union. Until just last week, Shayne served as senior manager of labor relations for CPS. CTU attorney Robert Bloch said Shayne occasionally participated in negotiations with the union over the contract dispute. Now, as a member of the board, Shayne will be asked to decide disputes between school districts and unions, including disagreements between CPS and the CTU. (read article)

The Pension Gap
By Jacquelin Sullivan, September 18, 2016, Los Angeles Times
With the stroke of a pen, California Gov. Gray Davis signed legislation that gave prison guards, park rangers, Cal State professors and other state employees the kind of retirement security normally reserved for the wealthy. More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived. They were off — by billions of dollars — and taxpayers will bear the consequences for decades to come. (read article)

Graduate-Student Unions Mean Good News for Professors, Too
Alex Gourevitch and Suresh Naidu, September 18, 2016, Chronicle
The National Labor Relations Board’s recent decision that graduate students are employees who have a right to unionize has produced a predictable bout of hand-wringing among university administrators. Elite institutions, like Columbia University, the University of Chicago, and Princeton University, have issued warnings that unions suppress the individuality of graduate students under the weight of “collectivist” solutions. (read article)

Detroit teachers ratify new union contract
By Anne Zaniweski, September 16, 2016, Detroit Free Press
Detroit teachers have ratified a new contract. Under the deal, teachers will see pay increases, mostly in the form of bonuses; an added prep period for elementary school teachers, and the creation of a committee to address teachers’ health and safety concerns. About 60% of the votes cast were in favor of the deal, according to officials. The contract will be for six months, retroactive to July 1 and lasting through December. The new school board that takes office in January can maintain it through the end of the school year or renegotiate it. More than 2,900 teachers and paraprofessionals will be covered by it. (read article)

Report outlines how to make equity part of California’s low-carbon economy
By Jacqueline Sullivan, September 14, 2016, Phys.Org
Governor Jerry Brown’s signing last week of two landmark climate bills, SB 32 and AB 197, demonstrates the emergence of a powerful coalition of environmentalists, labor unions and grassroots “environmental justice” organizations that will be crucial to achieving the new emissions goals, as explained in a new report by the University of California, Berkeley and the University of Southern California.
The report, “Advancing Equity in California Climate Policy: A New Social Contract for Low-Carbon Transition,” identifies ways to reduce greenhouse gas emissions while ensuring that the low-income and working class in California do not bear the brunt of the costs and are included in the benefits of the state’s transition to a low-carbon economy. (read article)

Major Union Sits Out Ohio Senate Race
By Morgan Chalfant, September 14, 2016, Washington Free Beacon
A major labor union in Ohio is refraining from endorsing a candidate in the state’s contested Senate race, despite having previously backed Democrat and former Gov. Ted Strickland. The Ohio State Building and Construction Trade Council, which boasts 94,000 members, said Thursday that it would not endorse either Strickland or incumbent Sen. Rob Portman (R.), the Dayton Daily. The revelation comes after several labor unions have broken with histories of endorsing Strickland and backed Portman instead. The decision was made by the organization’s 21-member executive board, which discussed the issue at a recent meeting in Columbus. (read article)

National Police Union Endorses Donald Trump
By Dave Jamieson, September 16, 2016, The Huffington Post
A labor union representing more than 250,000 police officers officially endorsed Donald Trump for president on Friday. The Fraternal Order of Police said its “member [had] spoken,” and that the Republican candidate had locked down the necessary two-thirds support from the union’s board. The union’s president, Chuck Canterbury, said in a statement that Democratic presidential nominee Hillary Clinton hadn’t bothered seeking the union’s backing. (read article)

Local farmworkers will get expanded overtime pay
By Kaitlyn Bartley, September 14, 2016, Half Moon Bay Review
Jerry Brown signed a law granting state farmworkers overtime pay after eight hours of work per day or 40 hours per week instead of the current 10 per day or 60 per week. Assembly Bill 1066 removes exemptions for agricultural employees regarding meal break and specific wage requirements, bringing their state-mandated benefits in line with employees in many other industries. Agricultural workers currently receive some overtime pay under a state law from 2002, but AB 1066 will increase it to time-and-a-half pay for working more than eight hours in a day or 40 in a week, and it will double pay for those who work more than 12 hours a day. The bill will phase in the changes starting in 2019 through 2022, and allows the governor to temporarily suspend the pay increases for a year if he also suspends scheduled increases to the state’s minimum wage. (read article)

SEIU civil trial calls into question inner workings of labor union
By David Yates, September 14, 2016, SE TexasRecord
Earlier this month, a Harris County jury ordered Service Employees International Union to pay Professional Janitorial Services – Houston $5.3 million in damages, finding the Chicago-based labor union made false claims about the company’s business practices and treatment of employees. In the wave of news articles and press releases that followed the trial, questions were raised on the seemingly controversial methods SEIU employs to force companies to fall in line, calling into question the integrity of the organization’s leaders and past and current attorneys. (read article)

AZ Supreme Court OKs police pay for on-the-clock union work
By Peter Cheng, September 14, 2016, Cronkite News
The Arizona Supreme Court on Tuesday ruled that paying police officers while they did work for the police union does not violate the state constitution. The court’s split decision overturns two previous lower court rulings against the practice of so-called “release time” for Phoenix police officers. As part of the city’s agreement with the police union, Phoenix had for years allowed officers to do work for the Phoenix Law Enforcement Association – on the taxpayers’ dime. Over a two-year period, the union had negotiated release time provisions worth about $1.7 million, according to court documents. (read article)

California expands already historic farm overtime policy
By Alison Noon, September 13, 2016, San Diego Union Tribune
For the first time, farmworkers in California will soon be entitled to the same pay as other hourly workers after California’s governor signed an expansion of a labor policy. Gov. Jerry Brown’s announcement came decades after labor leader Cesar Chavez and the thousands of farmworkers he organized pushed officials to recognize the union of agricultural laborers. The legislation will require that farm employers pay workers one and one-half times regular wages pay after eight hours in a day or 40 hours in a week, rather than the rate enacted in 1975 of 10 hours in one day or 60 hours in a week. (read article)

Construction unions gain in New York City
By Greg David, September 13, 2016, Crain’s New York Business
Construction union leaders are pushing hard for a requirement that all residential buildings built with the 421-a tax break be required to use union labor. Developers are resisting because using union labor in the city costs at least 30% more than nonunion and such projects will have to set aside at least 25% of the units at low rents, eroding profit margins. Yet, oddly, union leaders claim that their members worked on 65% of all residential buildings with more than 100 units and 80% of projects with more than 300 apartments. (read article)

Arizona court ruling OKs ‘release time’ for public employees’ union work
By Dustin Gardiner, September 13, 2016, The Arizona Republic
A five-year legal battle between the Phoenix police union and a conservative think tank ended Tuesday when the Arizona Supreme Court ruled that public employees can be paid public money for time spent working on behalf of their union. The 3-2 decision found the city’s agreement with its police union for paid “release time” doesn’t violate a provision in the state Constitution barring public entities from making gifts or donations to benefit private individuals, associations or companies. (read article)

Average Costa Mesa Firefighter Makes Nearly $250,000 Per Year. Why? Pensions.

Does that fact have your attention? Because media consultants insist we preface anything of substance with a hook like this. It even has the virtue of being true! And now, for those with the stomach for it, let’s descend into the weeds.

According to payroll and benefit data reported by the City of Costa Mesa to the California State Controller, during 2015 the average full-time firefighter made $240,886. During the same period, the average full-time police officer in Costa Mesa made $201,330. In both cases, that includes the cost, on average, for their regular pay, overtime, “other pay,” the city’s payment to CalPERS for the city’s share, the city’s payment to CalPERS of a portion of the employee’s share, and the city’s payments for the employee’s health and dental insurance benefits.

And if you think that’s a lot, just wait. Because the payments CalPERS is demanding from Costa Mesa – and presumably every other agency that participates in their pension system – are about to go way up.

We have obtained two innocuous documents recently delivered to the City of Costa Mesa from CalPERS. They are entitled “SAFETY FIRE PLAN OF THE CITY OF COSTA MESA (CalPERS ID: 5937664258), Annual Valuation Report as of June 30, 2015,” (click to download) and a similar document “SAFETY POLICE PLAN OF THE CITY OF COSTA MESA (CalPERS ID 5937664258), Annual Valuation Report as of June 30, 2015,” (click to download). Buried in the bureaucratic jargon are notices of significant increases to how much Costa Mesa is going to have to pay CalPERS each year. In particular, behold the following two tables that appear on page five of each letter:

Projected Employer Contributions to CalPERS  –  Costa Mesa Police

20160920-uw-calpers-fire

Projected Employer Contributions to CalPERS  –  Costa Mesa Firefighters

20160920-uw-calpers-fire

In the rarefied air of pension arcana, pension systems can get away with a lot. If you’re a glutton for punishment, read these notices from CalPERS in their entirety and see if, anywhere, they bother to explain the big picture. They don’t. The big picture is this:  For years CalPERS has underestimated how much they are going to pay in pensions and they have overestimated how much their investments will earn, and as a result they are continuously increasing how much cities have to pay them. This notice is just the latest in a predictable cascade of bad news from pension systems to cities and other agencies.

Coming down to earth just a bit, consider the two terms on the above charts, “Normal Cost %” and “UAL $.” It would be proper to wonder why they represent one with a percentage and one with actual dollars, but rather than indulge in futile speculation, here are some definitions. “Normal Cost” is how much the city pays (never mind that the city also pays a portion of the employee shares – we’ll get to that) into the pension system if it is fully funded. The reason pension systems are NOT fully funded is because, again, year after year, CalPERS underestimated how much they would pay out in pensions to retirees and overestimated how much they would earn. Read this disclaimer that appears on page five of the letters: “The table below shows projected employer contributions…assuming CalPERS earns 7.5 percent every fiscal year thereafter, and assuming that all other actuarial assumptions will be realized….”

And when the “Normal Cost” payments aren’t enough, and the system is underfunded, voila, along comes the “UAL $,” that bigger catch-up payment that is necessary to restore financial health to the fund. “UAL” refers to “unfunded actuarial liability,” the present value of all eventual payments to retirees, and “UAL $” refers to the payments necessary to reduce it to a healthy level. Notice that for firefighters this catch-up payment is set to increase from $4.2M in 2017 to $6.8M in 2022, and for police it is set to increase from $5.8M in 2017 to $10.1M in 2022. This is in a small city that in 2015 employed an estimated 125 full-time police officers and 75 full-time firefighters.

As always, it must be emphasized that the point of all this is not to disparage police or firefighters. No reasonable person fails to appreciate the work they do, or the fact that they stand between us and violence, mayhem, catastrophe and chaos. And it is particularly difficult for those of us who are part of the overwhelming majority of citizens who appreciate and respect members of public safety to have to disclose and publicize the facts of their unaffordable pensions.

The following charts, using data downloaded from the CA State Controller, put these costs into perspective:

Average and Median Employee Compensation by Department
Costa Mesa – Full time employees – 2015

20160920-uw-costamesa-ftcomp2015bydept

In the above chart, before sorting by department and calculating averages and medians, we eliminated employees who worked as temps or only worked for part of the year. This provides a more accurate estimate of how much full-time workers really make in Costa Mesa. Bear in mind that most part-time employees still receive pension benefits, as will be shown on a subsequent chart. As it is, during 2015 the average full-time police officer in Costa Mesa was paid total wages of $121,636, about 15% of that in overtime. But they then collected another $79,694 in city paid benefits, including $59,337 paid by the city towards their pension, AND another $11,562 that the city paid towards their pension that the State Controller vaguely describes as “Defined Benefit Paid by Employer.” Total 2015 police pay:  $201,330.

Also on the above chart, one can see that during 2015 the average full-time firefighter in Costa Mesa was paid total wages of $150,227, about 32% of that in overtime. They then collected another $90,659 in city paid benefits, including $72,202 paid by the city toward their pension, and as already noted, another $10,440 that the city paid toward the employee’s share of their pension. Total 2015 firefighter pay: $240,886.

To distill this further, the following chart shows, per full-time employee, just how much pensions cost Costa Mesa in 2015 as a percent of regular pay.

Average Employer Pension Payment as % of Regular Pay
Costa Mesa – Full-time employees – 2015
20160920-uw-costamesa-pension-as-percent-of-reg-pay

As the above chart demonstrates, employer payments for full-time employee pensions during 2015 already consumed a staggering amount of budget. For police, every dollar of regular pay was matched by 80.5 cents of payments by the city to CalPERS. For firefighters, every dollar of regular pay was matched by a staggering 94.4 cents of payments by the city to CalPERS.

The next chart shows the impact this has on the City of Costa Mesa budget. Depicting total payroll amounts by department, it compares the same variables, total employer pension payments as a percent of total regular pay. As can be seen, the percentages are nearly the same, despite this being for the entire workforce including temporary and part-time employees, some who may not have pension benefits (most do), and many who do not receive top tier pension formulas which the overwhelming majority of full-time public safety employees still receive. As can be seen, for every dollar of regular police pay, CalPERS gets 75 cents from the city, and for every dollar of firefighter pay, CalPERS gets 92 cents from the city.

Total Employer Pension Payment as % of Regular Pay
Costa Mesa – All active employees; full, part-time and temp – 2015
20160920-uw-costamesa-empl-pension-pmt-as-percent-of-reg-pay

At this point, the impact of CalPERS stated rate increases can be fully appreciated. And because this article, already at nearly 1,000 words, has violated every rule of 21st century social media engagement protocols – keep it short, shallow, simple, and sensational – perhaps the next paragraph should be entirely written in bold so it is less likely to be lost in the haze of verbosity. Perhaps a meme is in here somewhere. Perhaps an inflammatory graphic that shall animate the populace. Meanwhile, here goes:

Once CalPERS’s announced increases to the “unfunded payment” are fully implemented, instead of paying $10.9M per year for police pensions, Costa Mesa will pay $15.2M per year, i.e., for every dollar in regular police pay, they will pay $1.04 toward police pensions. Similarly, instead of paying CalPERS $6.4M per year for firefighter pensions, Costa Mesa will pay $9.1M per year, i.e., for every dollar in regular firefighter pay, they will pay $1.30 towards firefighter pensions.

Wow.

So just how much do Costa Mesa’s retired police and firefighters collect in pensions? Repeatedly characterized by government union officials as “modest,” shall we report and you decide? The following table, using data originally sourced from CalPERS and downloaded from Transparent California, are the pensions earned by Costa Mesa retirees in 2015. Excluded from this list in order to present a more representative profile are all pre-2000 retirees, since retirement pensions were greatly enhanced after the turn of the century, and it is those more recent pensions, not the earlier ones, that are causing the financial havoc. Also excluded because the benefit amounts are not representative and the retirement years are not disclosed, are all “beneficiary” pensions, which survivors receive.

Average Pensions by Years of Service
Costa Mesa retirees – 2015

20160920-uw-costamesa-pensions

While these averages are impressive – work 30 years and you get a six-figure pension – they grossly understate what Costa Mesa public safety retirees actually get. There are at least four reasons for this: (1) The data provided doesn’t screen for part-time workers. Many retirees may have put in decades of service with the city, but only worked, for example, 20-hour weeks. They would still accrue a pension, but it would not be nearly as much as it would be if they’d worked full time. (2) Nearly all full-time employees are also granted “other post-employment benefits,” primarily health insurance. It is reasonable to assume that for public safety retirees, the value of these other post employment benefits is at least $10,000 per year. (3) Because CalPERS did not disclose what department retirees worked in during their active careers, this data set is for all of Costa Mesa’s retirees. That means it includes miscellaneous employees who receive pensions that are, while very generous, are not nearly as good as the pensions that public safety retirees receive. (4) While recent reforms have begun to curb this practice, it has been common at least through 2014 for retirees to purchase “air time,” wherein for a ridiculously low sum they are permitted to claim more years of service than they actually worked. It is common for retirees, for example, to purchase five years of air time, so when their pension benefit is initially calculated, instead of multiplying, for example, 20 years of service times a 3.0% multiplier times their final salary, they are permitted to claim 25 years of service.

All of this, of course, is dense gobbledygook to the average millennial Facebook denizen, or, for that matter, to the average politician. To be fair, it’s hard even for the financial professionals hired by the public employee unions to acknowledge that maybe 7.5% (or even 6.5%) annual investment returns will not continue for funds as big as CalPERS, or that history is no indicator of future performance. And even if they know this, they’re under tremendous pressure to keep silent. So the normal contribution remains too low, and the catch-up payments mushroom.

Finally, to be eminently fair, we must acknowledge that since modest bungalows on lots so small you have to choose between a swing set or a trampoline for the kids are now going for about a million bucks each in most of Orange County, making a quarter million per year ain’t what it used to be. But there’s the rub. Because until the people who work for the government are subject to the same economic challenges as the citizens they serve, it is very unlikely we’ll see any pressure to lower the cost of living. Everything – land, energy, transportation, water, materials, etc. – costs far more than it should, thanks to deliberate political policies and financial mismanagement that creates artificial scarcity. But hey – artificial scarcity inflates asset bubbles, which helps keep those pension funds marginally solvent.

Cost-of-living reform, if such a thing can be characterized, must accompany pension reform. What virulent meme might encapsulate all of this complexity?

 *   *   *

Ed Ring is the president of the California Policy Center.

Freedom Foundation Serves Notice in California with Union Opt-Out Ads

The Freedom Foundation – which last year expanded into Oregon after spending a quarter century fighting for free markets and limited, accountable government in neighboring Washington – will take its first formal plunge into California this week by unveiling a series of TV ads targeting unionized caregivers.

Much like ads that have run successfully in Washington and Oregon, the California ads will deliver to home-based care providers a message their union doesn’t want them to hear: “You have a choice.”

Prior to 2014, home-based health providers being compensated for by Medi-Cal for providing care for a client or loved one were required to pay either dues or fees to a labor union.

But in Harris v. Quinn, the U.S. Supreme Court established that these state-paid home care aides and other “partial-public” employees could decide for themselves whether to associate with a union.

Faced with the prospect of massive defections – and the corresponding loss of billions in dependable revenue – the unions answered Harris by first ignoring the ruling, then fighting to keep the workers unaware of their newly affirmed legal rights.

And for those who heard about their rights and tried to exercise them, the unions dreamed up ways to make the opting-out process more trouble than it was worth.

The Freedom Foundation works in all three areas. Its lawyers have filed countless suits in the past two years aimed at making the unions live up to their legal responsibilities under Harris. Equally important, the organization has created a one-of-a-kind canvassing program that has hired dozens of workers to fan out all over the Pacific Northwest and visit thousands of home care providers with information their union is trying to keep from them.

The new California ads lay the groundwork for a similar push in this state by introducing viewers to providers in neighboring states who opted out with the Freedom Foundation’s help.

“As our name implies, we’re committed to freedom,” said Freedom Foundation CEO Tom McCabe. “If someone wants to be a union member and support its political agenda with their hard-earned dollars, that’s their privilege. But we also believe people have the right to decide for themselves they want to keep every dollar Medicare has allocated for their effort and for the care of their loved ones.”

The ads will run on cable TV stations in the Orange County market starting on Sept. 12.

“This is our largest ad buy – really, our largest marketing effort of any kind – ever,” McCabe said. “We’re in California for good now, and we want to bring the same information to forcibly unionized workers in this state that we did to the thousands of caregivers who’ve opted out in the past two years in Washington and Oregon.

He concluded, “Our message to the workers and the unions that deceive them is that we’re here, we’re staying and we mean business.”

The Freedom Foundation is a member-supported, Northwest-based think and action tank promoting individual liberty, free enterprise and limited, accountable government.

A Need for Public Sector Collective Bargaining Reform

California business leaders are unanimous in their desire for the California Legislature to proactively improve the state’s business climate, as opposed to only enacting policies that will further hinder economic growth.

But it is far less understood how to actually get to a place where the Legislature both acknowledges that there are major issues with the state’s business climate and works with business leaders to advance solutions.

I have thought long and hard about this issue and believe that public sector collective bargaining reform should be among the top priorities, if not the top priority for the business community to improve the state’s business climate. 

The short answer about why reform is needed is that the state’s current system of collective bargaining locks in high-cost government and prevents meaningful government reforms that will both increase efficiencies and make the state more hospitable to business.

On the surface, the major issues with the state’s business climate are policy-related, namely high-taxation and onerous government regulation.

But the root causes of the state’s poor business climate are really political in nature, and therefore need political solutions.

Most business leaders in California continue to be astonished at how out of touch the California Legislature is with business community and business climate issues.  And again, the root cause of this aloofness is a political problem—the California Legislature is controlled by Democrats who are closely tied to their pro-labor base, namely the state’s public employee unions.

So to move the needle on business climate issues in the California Legislature, political pressure must be applied to the state’s public employee unions.   Ideally, the business community needs to level the political playing field between business and labor and perhaps the best way to do this is through public sector collective bargaining reform.

Governor Arnold Schwarzenegger saw the nexus between union issues and the California economy in the mid-2000s, but his political approach largely failed because he tried addressing the policies without first addressing the political power of the state’s public employee unions.

Governor Arnold Schwarzenegger was not able to instill the new Pro-Business Policies he desired on account of not first addressing the power that the state’s public employee unions possessed.

 

Pro-business policy change is not possible in the current political environment because the state’s public employee unions are too powerful and can almost always unilaterally defeat all attempts to make the state more business friendly.

Thus, the road to improving the state’s business climate must start with political reform, and I believe public sector collective bargaining reform is the best way to get there.

After all, the establishment of collective bargaining rights for public employees in California is what created the state’s public employee unions to begin with, and gave rise to their ascent to become the most powerful political interest in California.

In 1968, the California Legislature passed the Meyer-Milias-Brown Act, which established collective bargaining for California’s municipal and county employees.  Collective bargaining rights were extended to school districts in 1976, state government employees in 1978, and higher education employees in 1979.

I have served as an expert witness and participant in dozens of major sets of public sector labor negotiations around California over the last six years, including the 2013 labor standoff for the Bay Area Rapid Transit District (BART) and the lead expert witness in labor arbitration for the City of San Francisco over the last two rounds of negotiations.

Based on my experience, I believe that the state’s collective bargaining system is “broken” and serves to lock in unaccountable, unsustainable and high-cost government.

Collective bargaining also serves to empower the state’s public employee unions as the preeminent political force in California by allowing them to not only control government operations at the bargaining table, but also control government through the political process at both the state and local, primarily by giving large sums of political contributions.

The state’s collective bargaining rights were put into place to provide a “reasonable method of resolving disputes regarding wages, hours, and other terms of conditions of employment between public employers and public employee organizations,” according to the Meyers-Milias-Brown Act.

But the actual effect has been to give public sector unions almost unilateral control over both state and local government operations, as well as the state’s political system.

Since every major change to government organization and operation must either be made in the California Legislature, at the ballot box or in collective bargaining—public sector unions are effectively able to even prevent the most common sense reforms such as teacher tenure, merit pay, right to work, and civil service reform.

The state’s collective bargaining process is also deeply flawed and essentially “corrupt” due to unchecked conflicts of interest in the process.  It is standard practice for local elected officials to recuse themselves from votes on legislation that impacts businesses or groups that are contributors to their campaigns, but this standard does not apply to public sector unions.

Public sector unions are legally allowed to make large campaign contributions to the elected officials who are in charge of the collective bargaining process and who ultimately decide what pay and benefit increases public employees are awarded.  The result is a continuous increase in the salaries, benefits and perks of public employees that far exceed their private sector counterparts and any reasonable standards of just public compensation.

Real public sector collective bargaining reform would serve to both control the cost of government, which is essential to limiting the state’s tax burden, as well as limit the ever increasing war chest of campaign contributions afforded to the public sector unions by curbing union dues, which are based on the continuous upward spiral in public employee wage and benefit costs.

The current process is also hugely expensive and inefficient and represents a huge transfer of wealth from the state’s public agencies to law firms and labor attorneys who are key participants in the collective bargaining process.

Thus, collective bargaining reform holds the key to improving the state’s business climate both by controlling the cost of government, and helping level the political playing field between the business community and public sector unions in the state’s political process, which will serve to produce a more business-friendly political environment.

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.

Down Ballot Measures Could Cost You Big Bucks

Election month is rapidly approaching. That’s right, “election month” because, since 2002, California voters have been freed from casting ballots in person on the official Election Day, which this year is November 8. Voting by mail begins October 10.

Polls show that many voters are disenchanted with the coming election because the major candidates for president are held in such low esteem. However, whether you are a strong advocate for a candidate or are disillusioned, it would be a huge mistake to ignore the ballot measures. Besides candidates, voters must decide on 17 state propositions and hundreds of local tax and bond measures designed to dip into taxpayers’ wallets.

A number of the state measures will impact taxpayers. Proposition 55 is an extension of California’s highest state income tax rate in the nation, which was sold as “temporary” when approved by voters in 2012. Proposition 56 would increase tobacco taxes to fund ongoing programs that will demand funding, even when the number of smokers declines. Proposition 53 is also important as it would expand taxpayers’ right to vote on major state bonds for mega-projects costing more than $2 billion.

To help voters make informed decisions, the Howard Jarvis Taxpayers Association has created a special website, California Initiatives 2016, which has simple summaries of what the 17 initiatives will do and links to the websites of the sponsors and opponents of each measure. This helpful taxpayer tool can be found at http://cainitiatives2016.com.

However, for average citizens, the real pocket gougers will appear on local ballots. These include 184 school bonds with a face value of over $25 billion. The actual cost to taxpayers of these bonds, which place a lien on property to guarantee repayment, is more than double face value after interest is included.

Remember, whether or not voters think these local bonds are justified, taxpayers are entitled to good value for each hard earned tax dollar. This determination can best be made by researching the measure as well as the school district’s record of responding to the needs of students, parents and taxpayers. A complete list of these local school construction bonds can be found at http://www.bigbadbonds.com.

Taxpayer advocate Richard Michael, who maintains a bond tracking website, reminds us that promoters of these bonds are enamored with the following words to convince you to vote yes: “21st century;” “school improvement;” “college and career ready;” “technology;” “leaking roofs;” “asbestos;” “safety systems;” “aging facilities;” etc. To this list we would add “broken toilets,” a favorite with the Los Angeles Unified School District that managed to push through 5 bonds in a period of 13 years. The almost universal use of these words is unlikely a coincidence, since so many bond backers employ the same consultants who make recommendations on how to frame arguments to increase the chances of passage.

School bonds, of course are not the only tax measures that will appear on local ballots. There are other bonds, parcel taxes, sales taxes and utility user taxes to be voted on throughout California. For example, Bay Area voters are facing a $3.5 billion BART bond and Los Angeles County will decide on an additional half-cent sales tax to support the MTA that is suffering declining ridership. All of these local measures need careful scrutiny.

While voters can still wait until the traditional “first Tuesday after the first Monday” in November to vote in person, if you have done your homework and want to share what you have learned with family, friends, neighbors and contacts, don’t wait. In the November 2014 election, more than 60 percent of California voters cast votes by mail. Information on how to be a smart voter will not help anyone who has already cast their ballot.

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.

Anaheim Awards Biggest Tax Subsidy in City History to Disney, Unions Silent

There’s evidence of a very California coup in the city of Anaheim, where an unusual alliance of city officials, government union leaders and developers is advancing its own financial interests at the expense of everyone else. Their near-term goal: a July 12 vote by the Anaheim City Council to offer major corporations, including Disneyland, the largest tax subsidies in Anaheim history.

That agenda item came as a surprise to Mayor Tom Tait, the man you might figure should know everything at City Hall. A long-time critic of taxpayer subsidies to business, Tait says city staff, including City Manager Paul Emery, worked to keep the deal under wraps. “I inquired multiple times about a new potential Disney property,” Tait told us. “When asked, he (Emery) denied any knowledge of this proposal.”

In an email, Emery told us he notified Tait and other council members about the Disney subsidies on June 8. But that was one day after the Register reported the Disney deal. And by then, Tait says he’d already heard the news elsewhere. “I had to hear it from the Disney president after it was announced,” Tait says. “At some point, (Emery) should have called me to let me know.”

Anaheim spokesperson Mike Lyster said there was nothing unusual in communications to Tait.

“To brief council members before an application has been filed is premature, as some inquiries may never result in a formal application, or a project may change significantly before an application is submitted,” he said in an email. Even when that pending application is from Disney? Requesting a historic $267 million subsidy? Maybe even especially then: “We don’t want to treat Disney any differently than we treat everybody else,” Lyster said.

Critics might reasonably note that Disney ain’t everybody else. And that payments Disney and two other luxury hoteliers are seeking total about half a billion dollars.

20160901-cpc-disneyland
The Magic Kingdom

And here’s where the story of political intrigue gets more interesting: leaders of the Orange County Employee Association originally opposed subsidies to Disney and other luxury hoteliers, fearing that any revenue loss would imperil government worker pay and benefits.

In January 2012, OCEA rallied to oppose subsidies to the proposed GardenWalk hotels – two four-star hotels in the resort district. OCEA attacked council members supporting the subsidies in mailers condemning the “Giveaway Three.” But a year later, union leaders were suddenly pro-subsidy, their fear of future shortfalls apparently eliminated. When the Anaheim city council voted for the same GardenWalk subsidy in 2013, OCEA was silent. In 2015, fire and police union leaders actually endorsed a measure that would stop the city from taxing gate receipts at Disneyland for the next 45 years.

What happened? Multiple sources told us the unions’ conversion came in April 2012 after a meeting between Nick Berardino, head of the OCEA; Carrie Nocella, Disneyland’s government relations and minority business development director; and Todd Ament, Anaheim Chamber of Commerce president. After that meeting, Anaheim was a kind of Tomorrowland of happy relations between corporate, union and City Hall representatives.

In June 2012, just two months after the summit meeting, the Anaheim city council approved a contract with workers covered by OCEA: no outsourcing of government jobs, no layoffs, no furloughs, and $2,200 to each employee who had taken furlough days. Tait was the lone dissenter.

A few months later, in November 2012, the City Council voted 4-1 to keep firefighter pension rates high – even as other California municipal officials were slashing government worker pay and benefits. Again, Tait was the lone dissenter. A few months after that, with Tait again in the minority, the council cut a similar deal with police. In January 2016, the City Council was at it again, voting 4-1 to raise firefighter salaries by 10 percent by mid-2017. Of course, Tait was again the lone no vote.

So now, on July 12, hotel developers including Disney will ask Anaheim taxpayers for subsidies amounting to a half-billion dollars. The city’s top elected official was boxed out of discussions — blindsided, he says, on what will be the largest subsidy in Anaheim history. If precedent means anything, union leaders will support the subsidies despite the likelihood that doing so will undermine the city’s financial health and harm its own workers.

If you live in Anaheim, the story is clear: city officials, public employee unions, and powerful businesses continue to give away hundreds of millions of dollars at the expense of the taxpayer. Of course, Anaheim isn’t alone in taxing its residents on behalf of powerful interest groups – corporations and government unions. But there is something unique in the fact that all this is playing out in the shadow of the Matterhorn.

David Schwartzman is a junior at Hillsdale College, and Matt Smith is a graduate student at Princeton. Ethan Musser (Mississippi State) and Blake Dixon (Yale) also contributed to this report. The four participated in the California Policy Center’s investigative reporting summer internship, in Tustin. This article appeared first in OC (Orange County) Weekly.

Union In The News – Weekly Highlights

Agriculture reacts to California’s new overtime law
By Todd Fitchette, September 13, 2016, Western Farm Press
California Gov. Edmund Brown doesn’t need to please farmers anymore as he will be termed out of office in a couple years and someone new, with probably the same penchant for over-regulating the state’s farmers, will take his place in the state capitol. That said, Gov. Brown signed (Sept. 12) signed AB 1066 into law, a bill that forces farmers to pay their employees overtime after eight hours per day. Current law exempts agricultural employees from the state’s overtime law. The law will be phased in over the next several years, meaning that farm workers who are not a part of a labor union won’t see the full effects of the law until 2020. Those who work under collective bargaining agreements will see none of this. (read article)

California’s Citizens United ballot measure: Who’s for it, who’s against it and what it could really do
By Sarah D. Wire, September 13, 2016, Los Angeles Times
California voters will get to weigh in on the flood of money in politics this November through a ballot proposition that supporters say sends a strong message and detractors say does nothing much at all. Proposition 59 is part of the uphill fight against the Supreme Court’s 2010 Citizen’s United decision, which said money spent to influence voters that isn’t funneled through a candidate’s campaign is free speech, and the federal government cannot prohibit corporations and labor unions from spending money that way. Since the decision, elections have become dramatically more expensive, with hundreds of millions being spent to influence elections at all levels by groups that don’t have to disclose their donors. (read article)

Fight for $15 Swarms 28 State Capital After Worker Dies
By Connor D. Wolf, September 12, 2016, Inside Sources
The Fight for $15 movement protested in over two dozen state capitals Monday in response to a low-wage worker dying. Fight for $15 organizers setup rallies and vigils at 28 state capitals across the country. Participants marched through the streets of cities like Dallas, Texas. They also held church services in cities, including Chicago, Illinois. Movement organizers dedicated the day to a low-wage worker who had died. The Fight for $15 movement has been at the forefront of the minimum wage push since it started in 2012. The movement is primarily backed by labor unions like the Service Employees International Union (SEIU). Those opposed argue raising the minimum wage to $15 an hour would actually be detrimental for many workers who would lose their jobs. (read article)

Nuclear backers: California legislature, not PUC, should review Diablo Canyon closure
By Gavin Bade, September 12, 2016, Utility Dive
The pro-nuclear nonprofit Environmental Progress wants the California Public Utilities Commission to step aside and allow the state legislature to determine the fate of the Diablo Canyon nuclear plant, slated for closure by Pacific Gas & Electric. In a filing last Wednesday, the group said the CPUC should refuse to review the joint settlement PG&E made with environmental and labor groups on the closure of the 2,240 MW plant, arguing the agency is in a “crisis of legitimacy.” At the time, the group’s president Mike Shellenberger went as far to say the agreement was negotiated by “corrupt institutions behaving unethically and perhaps illegally” — a charge the utility and its partners in the joint settlement vehemently deny. (read article)

Union: UTA spends plenty of taxpayer money to block labor organizing
By Lee Davidson, September 9, 2016, Salt Lake Tribune
A labor union is complaining that the Utah Transit Authority is likely spending a lot of taxpayer money to try to persuade 44 TRAX supervisors to vote against organizing in an election scheduled for Monday and Tuesday. UTA declined to say whether it is spending any money on the effort or, if so, how much. The agency has delayed its responses to separate open-records requests seeking such information both by Teamsters Local 222 and The Salt Lake Tribune. “They are spending a lot of money,” asserts Britt Miller, business agent for the Teamsters local. “Our concern is tax dollars are being used to deny these workers their right to organize.” (read article)

Court orders board to probe complaint about labor union
By Michael Rubinkam, September 9, 2016, Williamsport Sun-Gazette
The Pennsylvania Labor Relations Board erred when it refused to investigate a college professor’s complaint involving the use of teacher union dues to promote the 2014 candidacy of Gov. Tom Wolf, a state appeals court ruled Thursday. State law prohibits public employee unions from using union funds to support political candidates. The board “ignored the General Assembly’s intent that it, and not the Attorney General, police compliance” with the law and thus “abdicated its statutory responsibilities,” the court said. (read article)

Prop. 52, a measure to fund Medi-Cal, is its own worst enemy

By Victoria Colliver, September 9, 2016, San Francisco Chronicle 
Supporters of Proposition 52, a California ballot measure that would lock in an existing hospital fee that helps fund the state’s Medicaid program for the poor, know their biggest opposition is the measure itself. While the proposition lacks organized opponents, it’s just the sort of wonky, complicated and arcane type of measure that frustrates voters and makes them likely to skip that box on their elections form or to simply vote “no.” “A lot of initiatives are not that simple, and this is included in that. That’s especially challenging given how large the ballot is,” said Kevin Riggs, spokesman for the Yes on 52 campaign, of the 17 statewide voter initiatives on the November ballot. Prop. 52, backed by the California Hospital Association, would make permanent the “hospital quality assurance fee,” a fee that’s been collected since 2009 on hospital stays, ranging from $145 to $618 a day. (read article)

The National Labor Relations Board Says Charter School Teachers Are Private Employees
By Rachel M. Cohen, September 8, 2016, The American Prospect
The National Labor Relations Board issued a pair of decisions in late August, which ruled that teachers at charter schools are private employees, therefore falling under the NLRB’s jurisdiction. The cases centered on two schools with teachers vying for union representation: PA Virtual Charter School, a statewide cyber charter in Pennsylvania, and Hyde Leadership Charter School, located in Brooklyn. In both cases, the NLRB concluded that the charters were “private corporation[s] whose governing board members are privately appointed and removed,” and were neither “created directly by the state” nor “administered by individuals who are responsible to public officials or the general electorate.” (read article)

This Union Employee Has Never Voted for His Union. Here’s What He Says About That
By Leah Jessen, September 7, 2016, Daily Signal
Of the 8 million unionized, private sector employees in the United States, 94 percent have never voted for their own labor union representation. An hourly autoworker at the Ford Rawsonville Plant in Ypsilanti, Michigan, Terry Bowman, told The Daily Signal that during his 20 years of employment at Ford he has never voted for the union that represents him. “I have no power to represent myself in any way, shape, or form,” Bowman, a UAW-Ford (United Automobile Workers) employee, told The Daily Signal. “Everything that I have and do is based on that collective bargaining agreement that I have basically been forced to accept if I want to work at Ford Motor Company.” (read article)

NLRB rules that graduate students at private universities can form unions
By Mimi Li, September 7, 2016, CSULA University Times
In a 3-1 decision last month, The National Labor Relations Board ruled that graduate students who work as teaching or research assistants at private universities have the right to unionize. The decision was a response to a petition filed by the Graduate Workers of Columbia and the United Auto Workers. The decision overturned a 2004 Brown University ruling, which concluded that engaging in collective bargaining would interfere with the purpose of a graduate student’s education, which was the same argument that Columbia University made for this case.  (read article)

Jury finds against union, awards $5.3 million in damages to cleaning firm
By L.M. Sixel, September 6, 2016, Houston Chronicle
A Harris County jury on Tuesday awarded a Houston commercial cleaning firm $5.3 million in damages, finding that a labor union’s aggressive organizing campaign went too far when it maligned the reputation of the company. It opens the door for more employers to sue unions over hardball tactics often used in membership drives and contract disputes. The jury, by a 10-2 vote, found for Professional Janitorial Service in a suit the company brought nine years ago against the Service Employees International Union, which targeted the company as part of its “Justice for Janitors” organizing campaign and wrongly claimed Professional Janitorial Service had violated wage, overtime and other labor laws. (read article)

If Police Unions Were Abolished and Police Associations Were Restored

Earlier this month the New York Times ran an editorial entitled “When Police Unions Impede Justice.” They make the point that collective bargaining agreements for police employees often make it very difficult to hold police officers accountable for misconduct. When you have nearly 1.0 million sworn police officers in the United States, you’re bound to have a few bad apples. According to the NYT, these collective bargaining agreements discourage citizens from lodging misconduct complaints, micromanage investigations, and minimize disciplinary sanctions.

This isn’t news. It’s one of the reasons collective bargaining agreements for police officers are especially problematic. The other big problem with collective bargaining agreements for members of public safety are the often excessive and unaffordable benefit packages they’ve “negotiated” with the politicians whose careers are made or broken by these same unions. So what if police unions were abolished?

One may argue that abolishing police unions in favor of police associations – which could not engage in collective bargaining – would actually benefit all parties. An immediate benefit would be greater accountability for police officers. Why wouldn’t greater individual accountability be supported by the overwhelming majority of police officers who are conscientious, humane, compassionate members of the communities they serve? In turn, why wouldn’t greater police accountability foster rapprochement in neighborhoods where mistrust has developed between citizens and law enforcement?

With respect to pay and benefits for police officers, the risks of abolishing collective bargaining may be overstated. As it is, rates of base pay for police officers are not excessive by market standards. If they were, it would be easier to hire police officers. The primary economic problem with police compensation is retirement benefits, which in California now easily average over $100,000 per year for officers retiring in their 50’s after 25+ years of service. As the unions defend these excessive pensions, younger officers are left with far less generous benefits. The perpetually escalating contributions the pension funds demand – for all public employees – are behind virtually all tax increases being proposed in California. It can’t go on.

So abolishing collective bargaining for police would lead to several benefits (1) more police accountability and improved community relations, (2) minimal impact on base police pay, and (3) quicker resolution of financial challenges facing pensions, which will increase the probability that the defined benefit will be preserved, and will increase the potential retirement benefit available to the incoming generation of new police officers.

Apart from ending collective bargaining agreements, abolishing police unions in no way abolishes the ability of police officers to organize in voluntary associations to pursue common professional and political objectives. Before we had unionized police forces, police associations were very influential in civic affairs and could be again. And there are broader political objectives that may animate these police associations, beyond protecting bad cops and fighting for financially unsustainable retirement benefits. Police and other public safety employees, whether they are part of a union or part of a voluntary association, should think carefully about where the United States is headed. This is especially true in California.

The most dangerous risk of politically active police unions is the fact that whenever government fails, whenever our common culture is undermined, whenever social programs breed more problems than they solve, we need to hire more police officers. And whenever government expands to regulate and manage more aspects of our lives, we need to hire more police officers. Social upheaval and authoritarian government create jobs for police officers. For a police union that wants more members, a failing society and an authoritarian government suits their agenda.

For this reason, police officers have a choice to make. Do they really want to enforce the laws emanating from the climate extremists, the tolerance extremists, the sensitivity extremists, the equality extremists, the multi-cultural extremists – the entire ostensibly anti-extremist extremist gang of elitists who currently control public policy in California? Do they want to deploy drones to monitor whether or not someone got a permit to install a window in their bathroom, or watered their lawn on the wrong day? Do they want to fine or arrest people who aren’t willing to adhere to speech codes, or who refuse to hire less qualified employees in order to fulfill race and gender quotas? Do they want to police a society that has fragmented irretrievably because we continued to import millions of unskilled, destitute individuals from hostile cultures, than indoctrinated their children in union-ran public schools to falsely believe they live in a racist, sexist society?

It’s a tough choice. Will politically active police organizations redirect some of their resources to support policies that might actually reduce the number of police we need? Abolishing collective bargaining may make the right choice easier, because police will then be less immune to the economic and social havoc the elitists are currently imposing on the rest of us.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED POSTS

Appreciating Police Officers, Challenging Police Unions, July 26, 2016

Public Safety Unions and the Financial Apocalypse, May 17, 2016

The Challenges Facing Conservatives Who Support Public Safety, March 22, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

Pension Reform Requires Empathy, not Enmity, October 20, 2015

Public Sector Union Reform Requires Mutual Empathy, June 16, 2015

Can Unionized Police Be Held Accountable for Misconduct?, June 23, 2015

Pension Reformers are not “The Enemy” of Public Safety, April 20, 2015

Conservatives, Police Unions, and the Future of Law Enforcement, January 6, 2015

Police Unions in America, December 9, 2014

Conservative Politicians and Public Safety Unions, May 13, 2014

How Much Does Professionalism Cost?, March 11, 2014

Commentators Question Value, Motivations of California Legislature’s Far Left Political Agenda

The 2015-16 Legislative Session is in the books but some high-profile commentators are questioning what appears to be a far leftward drift in the policy agenda of the liberal California Democrat Legislature that has forgotten about the state’s middle class and the need to grow our economy.

The dust has not even settled on the end of session battles, and there is a pile of hundreds of liberal bills on the Governor’s desk, but analysts appear to agree that the 2015-16 was perhaps the most liberal or far-left legislative session in recent history.

George Skelton, a prominent left-leaning LA Times Columnist, opined “The California Legislature capped its two-year session by passing a load of liberal bills to help poor people, including farmworkers.  That’s good, but what about middle middle-class folks?” according to Skelton’s recent column.

“They were snubbed again.  Ignoring the declining middle class has become the norm, both in Sacramento and Washington,” Skelton concludes.

Skelton cites a Public Policy Institute of California report noting that California “is primarily a middle-class electorate, something that seems to escape ruling Democrats in the Legislature as they push through bills lobbied by the labor unions representing the poor,” wrote Skelton.

Skelton goes on to provide countless examples including increased farmworker overtime, additional welfare benefits, increasing the minimum wage, and paid family leave.  But Skelton says the problems that the Legislature does not seek to address are glaring and include almost nothing for the middle-class, small businesses, roads, and infrastructure, among other key issues.  “If there was any gesture toward small business, we didn’t hear much about it,” Skelton states.

George Skelton, Columnist for the LA Times, believes that the California Legislature repeatedly ignores the interests of the middle class by actively and continuously passing legislative bills lobbied for by labor unions.

“It’s great to help the poor.  But too often the Legislature overlooks everyone else—everyone, that is who doesn’t contribute to a reelection kitty,” Skelton concludes, taking a swipe at the state’s labor unions who control the Democrat Legislature.

The state’s public employee unions were ecstatic with the results of the 2015-16 Legislative session, with labor leaders saying they are proud partners of the California Legislature and glad the officials they elect share their values and agree to collaborate on a staunchly pro-labor agenda.

“The California Labor movement is proud to partner with the Speaker and Legislature to make the American Dream possible for all workers,” said Art Pulaski, executive Secretary-Treasurer of the California Labor Federation in a press release issued by Assembly Speaker Anthony Rendon(D).

“We’re lucky in California for the most part to have elected officials who espouse the values of the labor movement,” said California Labor Federation chief of staff Angie Wei, according to a Sacramento Bee report.

The far left Courage Campaign, was quoted as stating 2016 capped the most left wing or “progressive” legislative session in the state’s history, with a “sweep that should warm the hearts of most liberal constituencies,” according to the Bee.

“What we’ve accomplished collectively will go up there with any other legislative period in the history of California,” said Senate Pro Tem Kevin de Leon (D), according to the Sacramento Bee.

Most business and taxpayer groups, including those who back moderate Democrat candidates, suggest that the legislature has lost touch with economic realities and the best interests of the general electorate.

“If this state does not start seriously focusing on the business climate.  Probably the only thing that is going to be left is high-tech, Pharma and the motion picture industry,” said Tom Scott, the California Director for the National Federation of Independent Business (NFIB) in a recent interview just prior to the end of session.

 

Tom Scott, the California Director for the National Federation of Independent Business (NFIB), believes that the bills and propositions passed by the California Legislature continue to negatively impact and deteriorate the State’s business climate

Scott said there are “about 1,000 things wrong with the state’s business climate” but things appear hopeless at the moment because the leadership of this state has lost touch with the economic realities of the state’s business climate continues to head in the wrong direction.

Scott says business in California has already taken a number of hits this year including the minimum wage increase, sick leave, paid family leave, multiple regulations, and increases in fees and taxes.   “It is this piling on effect which is just killing small business.  The big corporations can dodge a lot of this stuff,” Scott says.

Big business is also complaining about recent actions taken by the liberal Democrat Legislature.

Rob Lapsley, president of the California Business Roundtable, wrote a report released on Labor Day questioning the California Legislature’s commitment to improving the California economy and creating jobs, particularly in the less prosperous areas of the state.

Lapsley raised a series of questions about important economic issues in the state that are not being address, particularly those related to limited job creation and economic growth outside the Bay Area, and suggests that the California Legislature needs to place a bigger focus on the economy and economic growth.

Lapsley stated that the state’s economy “has been subjected to an unrelenting expansion of regulation, fees, and taxes since 2000.”

“We hope 2017 will bring a broader discussion on the economy we can offer to future generations,” Lapsley concluded.

“California is clearly becoming more hostile to business,” states Jon Coupal, president of the Howard Jarvis Taxpayers Association, adding that there has been an accelerated decline of the state’s business climate, due in large part to heavy taxation and onerous regulation.

Coupal said the state’s hostility to business should concern every Californian because the state’s future is closely tied to health of the California economy.   Some recent media reports even found evidence pro-labor Democrat leaders, including Senate Pro Tem Kevin De Leon, were “punishing” the California business community during this session for objecting to the Legislature’s far left liberal agenda.

“From the perspective of fiscal sanity, it is a shame that every two year legislative session in California is an exercise in trying to prevent damage to taxpayers and the economy. Rarely is there anything remotely worthwhile in the hundreds of bills passed by our esteemed political leadership: No pension reform, no education reform, no civil justice reform or tax reform. While other states run clean, effective and efficient governments, the California Legislature resembles a three ring circus more times than not,” Coupal wrote in a recent column.

Coupal says California policymakers should be concerned about the impacts of the state’s poor business climate instead of asking “how high?” when public sector union bosses say “JUMP.”

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.

A Labor Day Update on the California Economy

Labor Day 2016 continues to show improving conditions within California’s economy.  The Legislature has just concluded a session that is being described as one of the most progressive ever for environmental and labor union policies. And Governor Brown is looking at over 700 new laws on his desk. His signature or veto will directly impact the fate of our job growth for years to come.

California Economy Continues Transformation

The revised June job numbers show that since the recovery began in February 2010, our state has regained  2.3 million nonfarm jobs.  Our seasonally adjusted unemployment rate of 5.4% while higher marginally from prior months, put us at levels not seen since before the recession in the summer of 2007.  We see the benefits of this every day. New cars are on the road. New housing and home renovations are underway. The malls and restaurants are busy. It should and does feel good.

But the Governor and policymakers are entrusted with the responsibility to look deeper at the numbers to  prepare for the future. This shows that the pace of the recovery in California remains low by historical patterns, reflecting conditions in the country as a whole. Real GDP has grown at an average annual rate of 2.7% since the recovery began, below the 4% growth seen during 1987-2000 and higher levels experienced in years before.  Nonfarm jobs which had been expanding at an annual rate of 3.0% in 2014 and 2015, have slowed to an annualized rate of 2.2% in the first half of 2016.

To put our low current growth rates into historic perspective, California in February 1975 was also in an economic recovery period, again under Governor Jerry Brown.  In the following 76 months, the state created 2.4 million jobs, representing a 32% increase.  The 2.3 million jobs—virtually the same number—created in the 76 months since February 2010 are at only 16%.

In their latest projections, both Department of Finance and Legislative Analyst expect jobs growth to slow further in the coming years, with Finance showing 1.0% by 2018 and 2019 and LAO around 1.5%.  These differences are small but important.  For the state budget, they translate into a projected deficit by 2019-20 in the case of the Finance numbers, or an $11 billion surplus in the case of LAO’s.

For many Californians, these are more than just mere numbers.  They mean the difference between having the opportunity at a job that will help their household afford the growing cost of living in our state, or continued reliance on state programs for their basic needs.  The types of jobs being created are equally important—whether they offer the paths to upward mobility and whether future generations will continue to experience a California better than those in the past.

Middle Class Wage Jobs Impacted the Most

The key to California’s past promise as a land of upward economic opportunity lay in the diversity of our workforce and our jobs.  No matter their background, the wide range of jobs at differing wage levels gave workers especially Latinos and African-Americans the opportunities to move up in life, gain skills, and compete for jobs producing income sufficient to own a home, educate their children, and save for retirement.  The state budget focused on these aspirations through investments in roads and other infrastructure and in affordable education and skills training regardless of an individual’s educational level. State policies served to promote housing supply rather than escalating housing costs.  Affordable energy was seen as a competitive edge for middle class jobs, not as a public policy priority to be phased out as quickly as possible.

The upward path has narrowed for many as the recovery has restructured the economy to jobs creation primarily in the higher and lower wage industries.  Middle class jobs in manufacturing remain 183,000 below the pre-recession high in 2007; construction jobs are off 140,000.  In contrast, lower-paying Individual & Family Services jobs—primarily state supported, minimum wage In-Home Supportive Services jobs—are up nearly 200,000.

Population Still Growing Faster than Jobs . . . Contributing to Poverty

The good news on our  2.3 million jobs gained since 2010 still mostly serve to rebuild those lost during the recession. Comparing to the pre-recession highs, real growth in the economy shows a net gain of 950,000 nonfarm jobs and 1.1 million additional persons employed.  Population in this period grew much faster—total population by 2.7 million and as the state aged, working age population by 3.4 million.

One of the most immediate consequences of this slower jobs growth has been a steep drop in the labor force participation rate.  While this rate now appears to be stabilizing at around 62% of the working age population, it is doing so near the historic lows previously seen in 1976.  The California rate also remains below the national average, in spite of the state having a relatively younger population and higher pressures to continue working into retirement age due to the state’s significantly higher costs of living.

On a numbers level, California is still short about 1 million jobs and 1 million persons employed to achieve the same population based levels that existed prior to the recession.

On an individual level, this slower jobs growth translates into relatively fewer persons per household being employed than prior to the recession, a factor that directly translates into lower household income, consequent higher poverty levels, and a lower household ability to afford the state’s high housing costs and other high costs of living.

Our Economic Growth Engine is the Bay Area

Economic growth within California remains highly focused within the Bay Area.  With just under 20% of the state’s population, the Bay Area alone contains:

  • 45% of net nonfarm job gains since the pre-recession high
  • 52% of net job gains since the pre-recession high in Professional & Business Services, the primary growth industry for higher wage jobs
  • 45% of net employment gains since the pre-recession high
  • 27% of total personal income, and 32% of the net increase in total personal income 2007-2014
  • 40% of state personal income tax paid, and 52% of the net increase in tax paid 2007-2014 

    The staggering job growth occurring in the Bay Area appears to statistically overshadow the deteriorating business climate that is seen in the rest of the state’s economy as a result of unrelenting expansion of regulation, fees, and taxes since 2000.  

     

A California economy without the Bay Area would look considerably different:

  • Instead of 2.3 million, created only 1.6 million nonfarm jobs since February 2010, or less than the 1.8 million jobs created in this period by Texas — a state with a population 13% smaller than California outside the Bay Area.
  • Instead of 5.9%, a June unemployment rate of 6.3% (seasonally unadjusted) — tied for the 6th highest rate in the nation.
  • Instead of 16.4%, a 2014 poverty rate of 17.9% vs. the US average of 15.5% — California outside the Bay Area is home to 91% of the net increase in persons living in poverty 2007-2014.
  • Instead of $49,985, a 2014 per capita income of $45,292 — below the US average of $46,030.

Even within the portions of California outside the Bay Area, significant differences exist between the interior and coastal regions.  Among the nation’s 387 top metropolitan areas (MSAs), 8 California MSAs ranked in the areas with 10 highest unemployment rates in June.  Ten California MSAs were in the highest 20.

Challenge for Labor Day 2017:  Broaden Economic Growth for All Californians

The Governor, the Legislature and all Californians are rightfully proud of our return to being the 6th largest economy in the world as measured by GDP.  This is a testament to the economic resilience of Californians and the enormous ingenuity, determination and drive coming from California employers large, medium and small.

Distribution of this growth remains heavily uneven as the state continues to splinter into a two-tier economy and risks evolving into a two-tier society.  The economic divide growing between the Bay Area and the rest of the state should be no surprise.  The Bay Area industries leading this growth are the least regulated in the state, and challenges to their continued growth comes less from market forces and technological barriers, and more from governments and competitors that want to rein them in with the same 19th Century regulatory models applied to the rest of the economy.

The remainder of the state’s economy, instead, has been subjected to an unrelenting expansion of regulation, fees, and taxes since 2000.  The low level of jobs growth is in large part a reflection of the increasing costs of doing business in this state and the increasing costs and restrictions associated with providing jobs.  As businesses have had to shift spending and investments to regulatory compliance rather than efficiency and capacity, the jobs creation rate along with the business creation rate itself have declined.

California has never depended on a single industry to meet the economic aspirations of its people.  We cannot.  We are too diverse.  We have some of the highest rates of educational attainment in the country, but also the nation’s highest percentage—17.9%–of adults with less than a high school education.  The hollowing out of middle class wage jobs—in particular middle class wage jobs that have been the hardest hit by the state’s growing regulations—limits the upward mobility options for much of our population.  The high cost of housing and the increased barriers to commuting caused by the condition of our roads has also reduced the mobility of labor and restricted the ability of many to access jobs even where they are being created.

The 2016 legislative session just completed with major new laws focused on the transformation of our energy sector and our whole economy through new climate change policies. The foundation of these policies is based on the argument that  “green jobs” creation will replace and surpass the hundreds and hundreds of thousands of good paying middle class jobs that will be phased out in our energy and manufacturing sectors. Currently, after 4 decades of compounding regulations, green jobs in California still comprise at most 2% of our jobs under the most generous of estimates.  It is now up to the oversight of the Legislature to determine how much and how fast we are willing to impact the other 98% on which our workers and our households depend.

These are the challenges that are now in front of our state policymakers. Will we see policies that accept the current growth trends and simply attempt to make the current failures more tolerable? Will we see policies that instead of reforming housing policies to reduce the costs for all, will at best alleviate costs for a very few? Will we see policies that assume unemployment and underemployment are now a permanent feature of our state rather than reforms to create growth engines in other parts of the state?

We hope 2017 will bring a broader discussion on the economy we can offer to future generations.

About the Author: Rob Lapsley is president of the California Business Roundtable, a nonpartisan organization comprised of the senior executive leadership of the state’s major companies employing over half a million Californians. Before he was named president in 2011, he was vice president and state political director for CalChamber. He served in the US State Department as special assistant to the US ambassador to Spain during the Iraq War. He was chief of staff to California secretary of state Bill Jones and served as undersecretary of state from 1995 to 2001. He has served on the PPIC Statewide Survey Advisory Committee since 2011.

Union In The News – Weekly Highlights

CEQA remains immune to reform
By Editorial Staff, September 6, 2016, OCRegister
The California Environmental Quality Act was adopted in 1970 to ensure that new developments would not cause unacceptable damage to the environment, but too often it has been used as a cudgel to prevent perfectly sound projects for reasons that have nothing to do with the environment. A report from law firm Holland & Knight published in July illustrates just how the law is really being used. (read article)

As Minneapolis nurses strike, unions join arms with Democratic officials in Labor Day events
By Patrick Martin, September 6, 2016, World Socialist Web Site
Labor Day 2016 began with a major struggle by the American working class, as nearly 5,000 nurses in the Minneapolis-St. The hospital management provoked the walkout by demanding the gutting of healthcare for the nurses, who themselves play a critical role in providing health services for hundreds of thousands of patients. The strike began despite desperate efforts the nurses’ union, the Minnesota Nurses Association, to prevent it. (read article)

Clinton Champions Unions on Labor Day
By Mitch McAndrew, September 6, 2016, Daily Iowan
For the second year in a row, Hillary Clinton spent her Labor Day supporting labor unions. The Democratic presidential hopeful voiced her support for organized labor on Monday night to a crowd full of union members and supporters, both local and national, at the 49th-Annual Salute to Labor in the Quad Cities. Flanked by union leaders and Illinois Democrats, including Illinois Senate candidate Tammy Duckworth and longtime Sen. Dick Durbin, Clinton pledged to defend unions by stymying attempts to roll back collective bargaining, standing up to unfair trade deals such as the TPP, stopping pension cuts, and fighting right-to-work laws. (read article)

8 ways employees can thrive while labor unions decline

By Douglas P. McCormick, September 5, 2016, PBS NewsHour
Labor Day represents an opportunity to celebrate the accomplishments of the labor movement on behalf of the American worker.However, Labor Day is also an appropriate time to consider how this collective bargaining model will fare in tomorrow’s dynamic economy and labor markets. The truth is that while we should celebrate the enormous accomplishments of the labor movement, the way workers should promote their interests has changed. While collective bargaining used to produce large gains for workers, entrepreneurship is now a worker’s most powerful tool for long-term career success and financial prosperity. (read article)

Police union tells Chicago cops to avoid overtime over Labor Day Weekend
By Bill Kissinger, September 5, 2016, World Socialist Web Site
As Chicago struggles with a growing violence problem, the head of the police union is telling his members to avoid overtime for the Labor Day weekend. The union says the move is meant to give officers more time with their families, but some critics see it as a way for police to make a point at the expense of the people living in violent neighborhoods. It is turning into a war of words between the powerful police union president and one of Chicago’s most respected religious leaders, and it all comes on the heels of Chicago recording its 492nd homicide of the year, more than New York and Los Angeles combined. (read article)

Organized labor’s different look this Labor Day
By Joe Garofoli, September 4, 2016, San Francisco Chronicle 
This year’s post-Labor Day sprint to election day will look a little different for organized labor in California than during past presidential elections. Their political enemies have changed — they’re often Democrats now — and unions are more focused on their long-term future than trying to stave off an existential threat. Four years ago, California’s top unions, led by $21 million from the California Teachers Association, poured tens of millions into defeating Proposition 32, which would have banned unions from receiving automatic paycheck deductions from their members. This year, the 2.1 million-member California Labor Federation, an umbrella group representing 1,200 affiliated unions, is expected to spend less than $10 million, most of it focused on maintaining a grip on power in Sacramento by taking on moderate Democrats and their funders. (read article)

The SEIU wants $15 per hour for everyone… except SEIU employees
By Jazz Shaw, September 3, 2016, Hot Air
As we’ve all learned by now, the SEIU is very invested in the idea of making sure that workers around the country all receive a “living wage” no matter their occupation. Part and parcel of this effort is the Fight for 15, setting a goal of a $15 per hour minimum wage for all workers. Or perhaps we should say… almost all of them. The Wall Street Journal seems to take particular pleasure in pointing out that the SEIU hires numerous stage actors around the country to show up at employers like McDonald’s and carry protest signs, pointing out how unfair their labor practices are. But do these astroturf “protesters” get paid $15 per hour? Er… no. And some of them aren’t happy about it. (read article)

Judge orders N.J. teachers union to court over benefit talks
By Dustin Racioppi, August 31, 2016, NorthJersey.com
Mercer County Superior Court Judge Mary Jacobson on Wednesday ordered the New Jersey Education Association to appear next week to explain why key members missed meetings on health care plans that the administration says could save taxpayers $70 million the next two years. The lead plaintiff, Attorney General Christopher Porrino, had requested “emergent relief” by the court Tuesday so the state can set employee health care rates before the open enrollment period begins Oct. 3. Without the rates, Porrino’s office argued in court papers, “school employees will be unable to make informed decisions about which health benefits plan to choose.” (read article)

The Latest: Massive California parks bond proposal dies
By Associated Press, August 31, 2016, San Diego Union Tribune
An effort to send more than $3 billion in bonds to state and local parks in California has died at the tail end of the legislative session. Senate President Pro Tem Kevin de Leon on Wednesday opted not to let a proposal advance that would have asked voters to approve the funds to build and restore parks and to address a backlog in maintenance at state parks. De Leon authored legislation that laid the groundwork for the last major investment in local parks. A review by The Associated Press found that fewer than half the parks funded by that program are unbuilt a decade later. (read article)

Labor Leader To Wisconsin Unions: Women’s Issues Are Labor Issues
By Shawn Johnson, August 30, 2016, Wisconsin Public Radio
A national labor leader told union members Tuesday in Madison that women’s issues are labor issues, saying unions are positioned to help women with the election of Democratic presidential nominee Hillary Clinton. National AFL-CIO Secretary-Treasurer Liz Shuler told leaders attending the state AFL-CIO’s unity conference that as more women become the primary breadwinners in their families, they’re finding they have little or no say over how they spend their time. She said a lot of factors are driving that, from employers who make unpredictable schedules to high day care costs to a lack of access to paid sick leave. (read article)

Crop of university ‘anti-union’ university websites sparks criticism from proponents of graduate assistant unions.
By Colleen Flaherty, August 30, 2016, Inside Higher Ed.
The National Labor Relations Board ruled last week that graduate student workers at private institutions may now form unions. But they need to vote to unionize first. In the meantime, a handful of institutions, including those with active graduate assistant union campaigns, have either launched or updated websites that they term information, but that are attracting criticism as being “anti-union.” Others say universities have an obligation to inform students of the drawbacks to unionization — not just the benefits. (read article)

California Needs Infrastructure, and Unions Should be Helping

“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.

RELATED ARTICLES

California’s Misguided Water Conservation Priorities, August 17, 2016

Government Unions Benefit from the Asset Bubble that Harms Workers, July 19, 2016

How Gov’t Unions and Crony Capitalists Exploit Global Warming Concerns, June 21, 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

Why Pension Reform is Inevitable, and How Reforms Can Benefit the Economy, July 21, 2015

Libertarians, Government Unions, and Infrastructure Development, May 5, 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

Sacramento and Unions: Addicted to Our Cash

In November, we will be asked to reject or approve “The California Children’s Education and Health Care Protection Act of 2016.” If approved by a majority of the voters, this ballot measure, Proposition 55, will extend to December 31, 2030 the “temporary” income tax surcharges on upper income Californians that were authorized in November of 2012 when 55% of the voters approved Proposition 30.

Prop 30 was designed to prevent “devastating” cuts to the State’s educational budget by establishing a seven year “soak the rich” income tax surcharge (2012 to 2018) and a four year quarter of a cent increase in our sales tax (2013 to 2016).

According to Legislative Analyst, this 12 year extension of the ‘temporary” income surcharges will increase state revenues by $4 billion to $9 billion a year from 2019 through 2030, depending on the economy and, importantly, the stock market.  This year’s budget assumed $7 billion from these income tax surcharges. 

But this is not the only “revenue enhancement” scheme that is being cooked up by our friends in Sacramento and the campaign funding leadership of the public sector unions.

State Senator Bob Hertzberg (D-Van Nuys) is pushing to extend the sales tax to include services.  This so called “reform” would generate “roughly $10 billion in its first year and increasing amounts thereafter.”  According to a chart prepared by the California Board of Equalization, the State has identified 15 industries and 487,000 firms that have the potential to generate $111 billion in sales tax revenue.  This includes lawyers, accountants, and other value added service providers.

State Senator Bob Hertzberg (D-Van Nuys) is pushing to extend sales tax to include those services provided by service providers like lawyers and accountants.

 

According to a report by State Controller Betty Yee and her Council of Economic Advisors on Tax Reform, another revenue enhancement is the “split roll” where commercial and industrial properties would be assessed at their fair market value.  At a 1% property tax rate, annual “revenue gains would likely surpass $5 billion and may add up to more than $10.2 billion.”  However, the split roll will require the approval of the voters since it involves amending Proposition 13, the third rail of California politics.

The folks in Sacramento and their cronies in the transportation lobby are also beating the drums for an increase our gas tax, already the highest in the nation when you factor in the impact of the “cap & trade” fees.  This proposed increase is estimated to be in the range of $2 billion to $4 billion a year.  This money would help fund efforts of the California Department of Transportation to repair the State’s highways, roads, bridges, and other related infrastructure.

At the same time, the State is swiping $1 billion a year from CalTrans, a bloated agency where 3,500 surplus employees are costing the State, its taxpayers, and our roads over $500 million a year.

Our good friend Hertzberg is also pushing a bill (SB 1298) that would allow stormwater / urban runoff to be considered as wastewater, thereby allowing the County of Los Angeles to levy $20 billion in fees without the approval of the voters.  This would result in an increase in our real estate taxes of 8%.

Proposition 30 has done an admirable job of making up revenue shortfall over the last five years.  Since 2012, the State’s General Fund revenues have increased by almost $34 billion (39%) while overall revenues, including special funds, has increased to almost $171 billion, a bump of more than 40%.

Now that income and sales tax revenues have rebounded to record levels, Proposition 55 and the 12 year extension of the “temporary” income tax surcharges represents just another revenue grab by the State, the California Teachers Association, the hospital lobby, and the SEIU (Service International Employees Union) that deserves to be rejected by the voters in November.

And while a “soak the rich” tax has a certain appeal, we need to be careful not to kill the golden goose.  If only a small percentage of the upper income taxpayers and their profitable corporations and the small businesses they control decide to relocate or not invest in our economy, many of our fellow citizens will be without good manufacturing or value added service oriented jobs.

We need to send a message to the fiscally irresponsible scoundrels in Sacramento, their cronies, and the campaign funding leaders of the public sector unions that we are not their ATM.  After all, we are doing more than our fair share as we have the highest income tax rate, the highest sales tax, and the highest gas prices in the country.

About the Author: Jack Humphreville is a LA Watchdog writer for CityWatch, President of the DWP Advocacy Committee, Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and Publisher of the Recycler

Long Beach Resident Alleges City is Paying for Political Campaigns

Editor’s Note: The following was mailed to the California Policy Center office. It address the issue of release time in Long Beach, and is particularly interesting because it is from a retired LAPD chief of police, Stephen Downing.

“Good day,
The attached will be published as a column in the Long Beach Beachcomber this Friday. I provide this copy in the event you may like to consider publishing the story to your subscribers – of which I am one.
Thanks,
Stephen Downing
Long Beach Resident and Retired LAPD deputy chief of police”

 *   *   *

August 16, 2016

Mr. Pat West
City Manager
City of Long Beach
333 West Ocean Blvd. #13
Long Beach, CA  90802

Over the past five years the City of Long Beach has paid out a total of $1,200,387 to a city employee who has not worked a single day for the benefit of the Long Beach taxpayer – but has instead been allowed to work full time for a private corporation that supports, plans and finances political campaigns – a direct and egregious violation of taxpayers rights.

Under California law, local governments are strictly prohibited from engaging in political advocacy using public resources. Local governments may make public statements of an informational nature, provided they are factual and impartial. Statements that are not factual, or that are not impartial are prohibited both by our state and federal Constitutions.

The Free Speech clauses of the federal and state Constitutions prohibit the use of governmentally compelled monetary contributions (including taxes) to support or oppose political campaigns since “such contributions are a form of speech, and compelled speech offends the First Amendment.” Smith v. U.C. Regents (1995) 4 Cal.4th 843, 852.

Moreover, “use of the public treasury to mount an election campaign which attempts to influence the resolution of issues which our Constitution leaves to the ‘free election’ of the people (see Const., art. II A 2) … presents a serious threat to the integrity of the electoral process.” Stanson v Mott (1976) 17 Cal.3d 206 218.

According to compensation records provided to Transparent California by the City of Long Beach the full time president of the Long Beach Police Officer’s Association (POA) has been compensated with funds from the city treasury totaling $1,200,387 over the past five years.

In addition to conducting employee organization representation activity with the City of Long Beach during the five year period (for which release time is separately provided through the legal requirements of the Meyer-Milias Brown Act) the POA president has also devoted his taxpayer-paid time to advocate for, direct and manage the planning, execution, supervision and distribution of monies from the LBPOA PAC to endorse and support a wide variety of political campaigns including those of the current Long Beach Mayor, City Attorney, City Prosecutor, a majority of the sitting members of the Long Beach City Council, Kamala Harris for U.S. Senate, Patrick O’Donnell, Al Martsuchi and Mike Gipson for California Assembly seats, Betty Yee for State Controller, Jackie Lacey for District Attorney, Kim Nguyen, Susan Jung Townsend and Debra Archuleta for Superior Court judgeships, Felton Williams and Jon Meyr for School Board positions – as well as expending city-paid time for planning sessions with elected and non-elected city officials while allocating almost 300,000 from the LBPOA PAC to support the officeholder-controlled, special interest PAC-funded, mailbox-stuffing campaign that urged a YES vote on Measures A & B – a local measure that increased the Long Beach sales tax to the second highest local sales tax in the Nation.

It is a serious breach of the public trust when government officials spend public funds to create an advantage for one side of a political campaign. We have informed the Howard Jarvis Taxpayers Association about this activity.

As you may know, HJTA has successfully sued individual officials in similar circumstances for an accounting and personal reimbursement of mishandled public funds.

In order to avoid litigation over this matter, we demand that the Government of the City of Long Beach immediately cease using public funds to support the political activity of the LB POA president and restrict his release time – as well as the POA’s entire board of directors – to membership job related representation activity permitted and mandated by the Meyer-Milias Brown Act.

If we receive written confirmation from the City of Long Beach prior to adoption of the 2017 city budget that these demands have been met, we will take no further action.

Sincerely,

Stephen Downing
Long Beach Resident and Taxpayer

Cc:  Howard Jarvis Taxpayers Association, Legal Department
Robert Garcia, Mayor, Long Beach
Members of the Long Beach City Council
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Union In The News – Weekly Highlights

California Farmworker Overtime Changes Cheered By Union
By Drew Bollea, August 29, 2016, CBS Sacramento
Statewide rules regarding farmworkers’ overtime pay passed in the legislature on Monday. Assembly Bill 1066 reshapes the pay structure for farm laborers. While many farmworkers are celebrating a victory, others, including politicians, farmers, and farmworkers aren’t so sure.  “We’re asking for equality eventually. It starts today,” said Assemblywoman Lorena Gonzalez (D-San Diego). She presented AB1066. A similar version of the bill was defeated by two votes in June. This time, the bill passed 44-37 and includes a phasing in of the payment for smaller farms over several years. (read article)

As Union Membership Declines, Organized Labor Focuses on Nonunion Workers
By Mariam Baksh, August 30, 2016, The American Prospect
In an election season dominated by populist appeals, globalization and trade deals like the Trans-Pacific Partnership have come under fire for offshoring the manufacturing jobs that helped create a healthy American middle class. But there has been less attention to another factor that has contributed to the increase in income inequality: The dramatic decline in union membership since the late 1970s. (read article)

Election Reveals Limits Of Hawaii’s Biggest Labor Union
By Nathan Eagle, August 30, 2016, Honolulu Civil Beat
The state’s largest labor union backed a slate of Democratic candidates heading into the Aug. 13 primary election, shelling out thousands of dollars in contributions and providing extra bodies to do campaign grunt work. The Hawaii Government Employees Association, which represents more than 42,000 state and county workers, endorsed the winner in most races. But a closer look at the results shows the union had far greater success keeping incumbents in power — which constituted the vast majority of the 74 endorsements it announced in June — than in its rare attempts to remove a Democrat from office or influence who should fill an empty seat. (read article)

Cleveland Metropolitan School District, teachers union reach tentative labor agreement to avert strike
By Scott Suttell, August 30, 2016, Crain’s Cleveland Business 
There’s labor peace, for now, for the Cleveland Metropolitan School District. On Aug. 16, the union gave notice of its intention to strike starting the evening of Sept. 1. In a joint news release issued Tuesday morning, Aug. 30, the Cleveland Teachers Union and the school district announced they had reached a tentative agreement for a collective bargaining agreement. The agreement now will be sent to union members and the school board for ratification. (read article)

California Doubles Down On Green Economy, But Kicks Cap-And-Trade Down The Road
By Dean Kuipers, August 26, 2016, The Huffington Post
California doubled down on its green economy Wednesday as the legislature passed a pair of bills that set ambitious new targets for reducing greenhouse gas emissions. The new goals are being hailed by environmentalists for providing the certainty needed to ramp up clean-tech investment. Governor Jerry Brown announced in a press conference that opponents of the new targets were “vanquished.” Indeed, there had hardly been a squeak from the oil industry or anyone else. (read article)

Chase Brexton union vote to be certified next week, unless health system objects

By Scott Dance, August 26, 2016, The Baltimore Sun
A vote by Chase Brexton Health Care workers to unionize will become official next week unless the clinic’s leaders raise concerns about the election before then, the National Labor Relations Board said Friday. The employees, expressing concern over what they said are long workdays, heavy patient loads and limited training opportunities, voted 87-9 Thursday to join the 1199 SEIU United Healthcare Workers East labor union. Chase Brexton leaders opposed the unionization effort and sought to delay the election, accusing some of their managers of encouraging subordinates to vote in favor of joining the union. The labor board rejected a motion that could have blocked the vote, a spokeswoman said. (read article)

Labor Day signals need for labor reform
By Richard Berman, August 25, 2016, The Detroit News
On Labor Day, millions of Americans will celebrate the contributions of working men and women. Now a grand occasion for backyard barbecues, the holiday was dreamed up in the late 19th century by America’s labor movement to honor the “social and economic achievements of American workers.” But that same labor movement is now turning its back on employees. According to a recent Rasmussen poll of likely U.S. voters, only 20 percent of Americans believe that labor leaders “do a good job representing union members.” Almost 60 percent of voters also claim that most union bosses are “out of touch” with most of their members. (read article)

Big Labor Tries To Eliminate Right-To-Work By Lawsuit
By George Leef, August 25, 2016, Forbes
If the judge is on your side, you can win a case despite pathetic arguments. So if the cost of losing is near zero and the possible gain from winning is huge, why not launch a suit and see what happens? That’s the thinking behind a case challenging Idaho’s Right to Work (RTW) statute on the grounds that the state is taking property that belongs to labor unions when it allows workers to keep their jobs even if they don’t pay the dues demanded by the union. The theory of the suit is that Idaho’s law (and, logically, all other state RTW laws) is unconstitutional because it violates the Fifth Amendment’s provision that private property cannot be taken for public use unless just compensation is paid. (read article)

Labor Dept. issues new pro-union rule for contractors
By Sean Higgins, August 24, 2016, Washington Examiner
The Labor Department finalized a new rule Wednesday requiring all federal contractors to disclose any past violations of labor law when bidding for a project. In effect, any company that has had run-ins with unions or labor law enforcement agencies will find themselves at the back of the list. The rule is the latest pro-union regulation issued by the Obama administration, which has aggressively sought to use new federal rules to aid its union allies. (read article)

How construction unions helped kill Gov. Brown’s plan to fight the housing crisis
By Roland Li, August 23, 2016, San Francisco Business Times
It was the boldest California housing policy proposal in years: Allow any residential project that complies with local zoning and sets aside as few as five percent of its units as affordable to be built “as of right,” removing review from local municipalities. The idea was to fast-track approvals and reduce the cost of building as the state struggles with a crushing housing crisis. But after three months of debate and widespread opposition, the proposal by Gov. Jerry Brown, meant to boost the state’s housing production in the face of record-high housing prices, appears to be dead. (read article)

In long-awaited decision, labor board says graduate students can unionize at private universities
By Andrew Joseph, August 23, 2016, STAT News
Private universities will need to recognize graduate students who conduct research and help teach classes as employees and therefore accept the unions that they form, the National Labor Relations Board ruled Tuesday. In a 3-1 decision, the board ruled that undergraduate and graduate student assistants and research assistants are statutory employees and are therefore covered by the National Labor Relations Act. The decision opens the door for the students and research assistants at private universities to band together to negotiate issues like pay, benefits, workload, and class size. (read article)