Posts

CA Democrats are Not Standing Up for "Working Families"

It’s election season, so every California Democrat politician is out there on the campaign trail, precinct walking with their “friends” in labor, and speaking to labor organizations and anyone else who will listen.  They are speaking with one voice–that ” we are proud to stand up for working families.”

This may sound like a great tag line, and is surely based on recommendations by campaign consultants, polling and focus groups, and perhaps most importantly resonates strongly with their organized-labor base, who is primarily responsible for funding all California Democrat campaigns.

But the truth is that California Democrat politicians and the California Democratic Party is the “party of organized labor” not of “working families.”  This distinction may not be all together clear, or even relevant, at first glance to someone not familiar with the inner workings of California politics and campaigns.

Senate Pro Tem Kevin De Leon (D) and Governor Jerry Brown (D) are two of the state’s top Democratic leaders who push “pro-labor” agenda items including raising the state’s minimum wage and expanded paid family leave.

There is a big difference between a “pro-labor agenda,” and a “truly progressive” agenda that seeks to bolster the middle-class and truly lift up “working families,” not just those on welfare.  If you look at everything California Democrats politicians are advocating for, and what they consider to be major policy successes, it becomes painfully clear that California Democrat politicians are primarily out to benefit “organized labor,” which comes at the expense of almost everyone else.  Of course there are some exceptions with the moderate and pro-business Democrats, but here we are primarily talking about the California Democratic leadership and solidly “pro-labor” state Democrat politicians.

By and large, California Democrat state politicians are preoccupied with pursuing a narrow, pro-labor agenda that is focused on providing the greatest amount of public subsidies, wage and benefit enhancements, and welfare benefits to a very narrow class of people–the poor, organized labor, and public employees–which represents their “core constituencies.”  Everyone else suffers as a result, including “working families” who are not on welfare, lower and middle-class families above the poverty line, small business, and big business.  California’s biggest policy problems such as pensions, housing costs, taxes, and lack of infrastructure spending do not even appear to be on Sacramento’s radar.

In other words, the California Democrat “pro-labor agenda” is neglecting the state’s middle-class and the state’s business climate, and making it much harder for the “true working families” who do not collect state welfare checks to prosper.  Moreover, this “pro-labor agenda” conflicts with a “truly progressive agenda,” but most Democrats and progressives have no idea exactly how.  Robert Reich, the state’s most prominent left-leaning economist is right–the system and its policies are “rigged” in California–but not in the way that most people think.

 

CA Democrat Agenda Primarily Involves Spending as Much Taxpayer Dollars as Possible, Not Spending Reform

If you look at the priorities of the California Democratic leadership they talk about being proud to stand up for “working families” and a desire to “alleviate poverty,” and improve education.  Many of their stated goals are noble, but their means of achieving them and the policies they utilize to advance these goals only serve to benefit their “core constituencies” listed above, not the rest of us and California as a whole.

Their primary policy instrument is spending as much taxpayer dollars as possible on government programs, primarily welfare, health care, and education.  But the problem is that they do so almost indiscriminately and do not try to spending taxpayer dollars wiser or more effectively.  California Democrat politicians have all but given up on asking California state agencies to spend tax dollars more effectively, and rarely consider any program changes that would upset the state’s hugely inefficient and unwieldy bureaucracy.

Spending taxpayer dollars on welfare programs helps the poor but not anyone else, and does little to actually lift the poor out of poverty over the long-term–welfare spending begets more welfare spending.  Spending more money on education in itself, does not improve education.  As a Dan Walters Sacramento Bee column reported earlier this year, the state is spending billions of dollars more on education now compared to a few years ago, with little or no noticeable improvement in the actual quality of education.

In short, most California Democrat policy priorities boil down to one simple end–indiscriminately increasing the size, cost and scope of California government as much as possible–to the primary benefit of the poor and state’s public sector unions. Their policy toward government spending and public employee compensation is essentially giving them as much money as is available in the government budget, no questions asked.

What is most telling about the “pro-labor agenda” and perhaps its greatest departure from the public interest and a “truly progressive agenda” is what California Democrat politicians are not doing.  California Democrats and the Democratic leadership have all but given up on trying to solve the biggest problems that ail California, particularly working families, the middle-class and California businesses.  But before we get to that, let’s take a quick look at the recent “crowning achievements” of California Democrat politicians.

 

A Brief Look at the “Crowning Achievements” of CA Democrats

The centerpiece of the “pro-labor” agenda is environmental regulation, and the “crown jewel” is AB 32.  California Democrats love to tout their desire to enact never ending layers of increased “environmental protections” and “environmental regulations.”  Environmental policy is extremely important to California voters and does represent a “truly progressive” policy stance–perhaps the last remaining shred of integrity the California Democratic Party and its candidates have left in support of a “truly progressive” policy agenda.  But even here they are taking environmental regulation too far, to the primary detriment of “working families” and the middle classes, who will bear the brunt of the excessive regulatory burden in increased costs of goods and services that are regulated, particularly energy costs.

AB 32 was a legitimate policy victory for the state and should be celebrated as such.  But how much further should the state take environmental regulation before the rest of the state and the world show at least some willingness to follow.  California is responsible for emitting less than 0.5% of the world’s total carbon emissions, yes less than half of a single a percentage point. So even if California totally eliminated its consumption and production of CO2 emissions, that would represent but a blip in the grand scheme of things worldwide.

We do get benefits from improved air quality and health considerations, particularly around stationary pollution sources.  But California alone cannot save the world from “climate change” even if we totally eliminated CO2 emissions within our borders.  So why are California Democrats in a race to enact the strongest and most costly environmental regulations when there is little indication that the rest of the world and nation will follow anytime soon?  My view is that it is because this represents action on their strongest policy position, however, beyond a certain point, further regulation will only serve to undercut our global competitiveness, while providing marginal benefits to California residents.  “Working families” will be hit the hardest because they pay the greatest portion of their discretionary income in energy costs.

The biggest recent success that California Democratic leaders are pointing to this campaign season is their “victory” in increasing the statewide minimum wage in California from $10 to $15 dollars per hour–a 50% increase.  Economists say that increases in the minimum wage do modestly raise the take home pay of low-wage workers, but in return lead to about a 10% reduction in employment, according recent discussions with economists.  So is this really the great policy victory that it is being billed as by Democratic politicians?  Effectively, trading a very modest increase in wages for those who keep their jobs, while putting other workers out of work.  Touting this increase as genuine social progress may work on the campaign trail, where few people question the results, but the reality is that this was not the great policy victory that it is being billed as.  After all, shouldn’t the end goal be to lift workers out of poverty entirely, not have them making more in their existing minimum wage jobs.

Another recent “success” touted by California Democrats as a victory for “working families” is the expansion of the state’s paid family leave program.  Prior to the expansion, California law already allowed workers to take up to six weeks off from work to bond with anew child or care for sick family members and receive 55% of their wages.  The new measure increases the pay to 60% of wages, starting in 2018, and creates a new classification for low-income workers who make about $20,000 or less annually to receive 70% of their regular pay, according to a Wall Street Journal Report.

The program is funded by worker contributions and estimated to cost about $350 million in 2018, and $587 million annually by 2021, according to a legislative analysis obtained by the Wall Street Journal.  This policy does represent an improvement for primarily low-wage workers but its paid for by higher wage workers.  It is a marginal improvement at best, and will surely be followed up with future legislation to increase length of time allowed and percentages claimed by workers.

As one can see, the recent list of true policy victories for “working families” is pretty short.  And as will be seen is clearly outweighed by all the negative aspects of the “pro-labor agenda,” which is perhaps better defined by the policy solutions that it does not include–namely the state’s most pressing policy problems.  Or put another way, the “pro-labor agenda” comes with a great cost to California, and that cost is a long list of policy problems that are off limits and not subject to negotiation, or even substantive discussion.

 

“Pro-Labor” Politicians Silent on Mounting Pension Problem

CalPERS Board President Rob Feckner has been “under fire” from critics whom believe he does not have the experience nor expertise neccessary to manage the country’s largest public pension fund.pension fund. Feckner is known to have close ties with the state’s labor unions, having held top positions with the California School Employees Association and California Federation of Labor.

The best example of one such issue is the refusal of the California Democratic Party and California Democrat politicians to even acknowledge the magnitude and implications of the state’s pension crisis.  The public position of almost every California Democrat lawmaker is to first not even discuss the “problem,” let alone any solutions.  Yet every financial expert I have talked to, including a consensus of top economists and government professors at Stanford University, say this is the biggest public policy problem in the state.

The pension problem is eating state, and particularly local balance sheets alive, and leaving no additional money to pay for other pressing spending priorities such as infrastructure, roads and education.  Total statewide pension and retiree health care debt is estimated to top $1.3 trillion, according to the Stanford Institute for Economic Policy Research (SIEPR).  Would a “truly progressive” politician allow all government revenues to go to pensions, as opposed to policy programs and priorities that truly benefit California and its citizens?

To further illustrate, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) lost a combined $25 billion in 2015, the deficit between what they said they will earn and what they actually earned.  Both funds are on pace to lose another $25 billion in 2016, potentially more according to early return estimates analyzed by the Bond Buyer.  That’s roughly $50 billion of taxpayer dollars lost in just two years, or almost half of total annual California General Fund spending.  To be clear, this is $50 billion debt that will grow at 7.5% annually and need to be funded by future tax revenues.  This represents a growing expenditure of public dollars that is not available to be spent on truly progressive priorities at both the state and local levels of government.  Perhaps worse, California state and local taxpayers, including “working families,” are on the hook for all loses incurred by both funds.  Why even bother running a 6-month budget process at the Capitol if nobody will so much as lift a finger to stop the state’s pension funds from driving state and local governments off a fiscal cliff?

Of course, these same politicians have likely already come up with some internal justification for not doing anything about this issue, such as “o’well” that is what the unions want, their members apparently know more about what is good for the State of California than every other independent expert who has examined the issue.

 

Treasurer John Chiang has been remarkably silent on the state’s pension issues for the state’s top fiscal statewide elected official. In 2010, while serving as State Controller, Chiang’s CEO sent a letter to the Government Accounting Standards Board (GASB) opposing the recognition of net pension liabilities on public agency balance sheets. Despite Chiang’s opposition, the GASB accounting changes took effect in 2015, and continue to be applauded for providing much needed transparency of pension debt. Chiang has recently unveiled a “debt watch” database of local debt obligations that excludes pension related debt, despite it being the fastest growing local government debt category.

 

California Democrats Refuse to Address the True Causes of CA Housing Crisis

Another major departure from a “truly progressive” agenda, is the unwillingness of California Democrat politicians to address the California housing crisis.  This was clearly demonstrated last week when California Assembly leaders, including Assembly Speaker Anthony Rendon, touted a package of $1.3 billion in new government spending that was intended to address the housing crisis–but it all involved new government subsidies and spending on existing programs for California Democrat “core constituencies” that have clearly failed to address the problem to begin with.

Assembly Speaker Anthony Rendon has stated that his top priority as speaker is alleviating poverty in California. As one of his first acts as Speaker, Rendon proposed $1.3 billion in new state spending on low-income housing subsidies and government run housing programs that are intended to address the state's housing crisis.

Assembly Speaker Anthony Rendon has stated that his top priority as speaker is alleviating poverty in California. As one of his first acts as Speaker, Rendon proposed $1.3 billion in new state spending on low-income housing subsidies and government run housing programs that are intended to address the state’s housing crisis.

 

California’s housing crisis holds the greatest potential to further reduce the standard of living of the poor and middle-classes in California–perhaps more than any other policy area except the pension issue.  As has been discussed in a previous column, the state’s housing crisis is market-driven.  It was created over a number of years, decades even, where the state’s heavily regulated and fee-burdened housing market has failed to build new housing units to meet surging demand, particularly in coastal areas, the Bay Area and Los Angeles.

California Democrats are silent on the causes of what is driving the crisis, appear to have no intention of investigating the true causes of the state’s housing problem, and have given no indication that they are willing to consider any policy changes that would actually address the root causes of state’s housing crisis–beyond providing more taxpayer dollars to the poor to pay for “unsustainable” increases in market-based rents.

Government has essentially created the problem, and the private sector is the only force that can generate the 100,000 units that need to be built on an annual basis to build our way out of the problem.  But no California Democrat, or very few, are talking about the need to address onerous government regulation, crushing development fees, and generally about what the building industry needs to “jump start” the California housing market.

 

CA Democrats Don’t Support Enough Infrastructure Spending

Perhaps the only kind of spending a California Democrat politician does not like is infrastructure spending.  This is largely because the state’s public employee unions shun infrastructure spending because the vast majority of these dollars do not end up in their pockets.

Yet infrastructure spending is critical to building and sustaining a thriving economy and business climate.  All business leaders will tell you that infrastructure spending is needed to improve the state’s business climate.  This is why Silicon Valley leaders are backing transportation sales taxes to pay for roads, which business needs to transport goods.  But infrastructure does not stop there, we need state highways, water storage, state parks, schools, universities, waste water plants, and maintenance of existing facilities that state and local governments all but neglect every year.

What most people don’t realize, and even fewer will admit, is that the state’s infrastructure problem is closely related to the state’s pension problem and public employee compensation issues.  Public employee compensation costs  are consuming all new tax dollars and preventing state and local governments from funding infrastructure projects.  And local sales tax measures to increase infrastructure funding hurt “working families,” assuming they can pass with the “albatross” of the pension issue hanging over them.

Governor Jerry Brown’s January budget proposal only allocated $500 million for the most critical infrastructure maintenance costs (less than 0.5% of General Fund spending), noting that the state needs to start funding massive mounting public employee compensation debts.  Sonoma, Marin, and Mendocino counties have some of the worst road conditions in the state, but are all hamstrung by unsustainable increases in public employee compensation costs and mounting debt from these same issues.

Infrastructure benefits all Californians.  It truly is a public good.  Apart from support for some school bonds, why doesn’t increased infrastructure spending fit into the “pro-labor” agenda?  Simple, it does not benefit the state’s public employee unions, as much as salary and benefits which consume 80% of state and local government spending.  And these same governments can’t afford to pay for it, given unsustainable spending in these same budget categories.

 

CA Democrats Fail to Address Tax Reform

Tax reform is perhaps the toughest issue of all, but holds the greatest potential to lift up the California working families and the middle-classes.  California Forward released a series of reports on the issue and Controller Betty Yee’s Council is scheduled to release a report on tax reform soon.  But you don’t see many California Democrats, or the Democratic leadership out there discussing the need to tackle tax reform.  One exception is Sen. Hertzberg, who has introduced a major tax reform bill to expand the state’s sales tax to services, but again this expands the state’s most regressive tax and would be passed onto consumers.

California Democrats are just as guilty as Republicans in proposing a series of new tax expenditures and exemptions every year that help a select special interest (i.e. the movie industry), but are paid for by everyone else.

The state’s tax system holds the greatest potential to transfer wealth from the rich to the lower classes–which is perhaps the single greatest defining policy of what I thought it meant to be a “progressive.”  But nearly all Democrats shy away from this issue because it upsets business, and is not seen as fitting into their long-term career path of climbing up the ladder in state and/or local politics.  It’s too tough of an issue to attract the Democratic mainstream, and holds little potential for a short-term political payoff, beyond very narrow proposals that benefit special interests.

What needs to be done on tax reform?  Simple, you broaden the base and lower the rates, as any expert on tax policy will tell you. California has the highest tax rates in the county on the sales tax and the income tax, up to 9.5% for the sales tax and 13.3% for the income tax.  The sales tax is regressive and hits the poor the hardest, particularly working families who don’t collect any state welfare payments.  The income tax also hits the lower and middle-classes the hardest, as well as small business, in terms of proportion of income and they don’t have the same exemptions and deductions afforded to the rich.

By failing to address the state’s unsustainable spending issues, California Democrats are essentially advocating for future tax increases, that will hit working families and the middle-classes the hardest.  They should be working to ease the tax burden on “working families,” not increase it–that would be “truly progressive.”  Local governments are constantly enacting a series of local fees, mitigations and exactions that negatively impact “working families” and the business community.

To be fair, most California Democrats are hoping for the Prop. 30 extensions to pass which raise $7.5 billion annually, primarily from the wealthy and small business (about $5.5 bil.), but this also includes a 1/4 sales tax increase that will hit the poor and working families (about $1.7 bil.).

This is not tax reform, it’s a general tax increase that lets big business off the hook and hits the average taxpayer and small business the hardest (Note: data from The Economist shows that U.S. corporations are generating the lion’s share of business profits, record profits in fact, higher than any other nation, but not necessarily passing them through to workers).  The reason is that many small businesses (S Corps and sole proprietors) pay taxes through the state’s income tax, while corporations pay through the state’s corporation tax which is so littered with special loopholes and exemptions that some experts say it is “voluntary.”

In short, California’s current tax system contains some progressive elements, namely the income tax, but as a whole the state’s tax system is is not “truly progressive.”  It is loophole-ridden and serves to primarily benefit the rich and big corporations who can take advantage of all its loopholes to the detriment of everyone else (i.e. working families, small business) who pays full boat.  It is largely in conformity with the federal tax code which is even worse as is being discussed at length on the national campaign trail.

 

Significant Policy Change is Difficult But Not Impossible

As one can see, the California Legislature has clearly been marginalized to proposing small, almost insignificant solutions, to address big problems.  And as for the biggest policy problem in California, the state’s unsustainable pension system, California politicians are remarkably silent because any discussion of this issue offends their “friends” in labor.  This is completely ridiculous, and unconscionable to any one who understands the facts of this policy issue, which almost certainly includes Gov. Jerry Brown.

A review of major policy changes enacted over the past 40 years beginning with Prop. 13, shows that significant policy change does happen but it requires bold leadership and a willingness to commit to taking on tough issues over the long-haul, according to a study published by the Kersten Institute.  Most major policy changes do not happen overnight, but the important thing is to at least try.

The critical ingredients of policy changes enacted in the California Legislature are strong leadership from both Legislative leaders and the Governor.  Unfortunately the California Democratic leadership is silent on many of the major policy issues facing California. Gov. Jerry Brown has perhaps the greatest capacity to take on the tough issues, but even he has recently shirked from his initial willingness to think and act big on the tough issues.  Gov. Brown has since decided to just follow the lead of the California Legislature on all but a few pet “legacy issues.”

Gov. Brown did make public employee compensation debt issues the major focus of his January State of the Union Address and is likely to drive a hard bargain in the budget process for increased state payments for retiree health care.  But that’s about it.  The Governor has tried to get CalPER’s to accept some reasonable reforms, but they have refused and he has not made a major issue out of it.

Gov. Brown has been mostly focused on his criminal justice initiative and his two “legacy infrastructure projects,” the delta tunnels and high-speed rail.  The sad reality is that the State of California cannot even pay for its most basic infrastructure needs, particularly in the absence of additional pension and retiree health care reform.  Who needs the delta tunnels and high-speed rail if the infrastructure we have is currently falling into disrepair?

The Governor made road spending a key issue last year, in response to requests by California business leaders and the counties, but has not chosen to connect this to the pension problem, which is the real cause of the “roads crisis.”  The Governor can, and should do more to address these major issues.

So what we really have in California politics is a leadership crisis.  A leadership crisis characterized by the unwillingness of California leaders to address the state’s most pressing policy problems in a substantive way.  Discussion of such issues, if even raised at all, is largely confined to a cursory review, and often followed by proposing a narrow or very piecemeal solution, which may not even represent a step in the right direction.  Other major problems such as pension reform, infrastructure, and tax reform are hardly discussed at all, it’s almost as if they are not even on the radar of Sacramento politicians, even though they loom large in almost every other venue in California, particularly with local governments, the business community and the average citizen.

Another problem is that California has become a “one party state” for all practical purposes which prevents many of their policy positions from being challenged in a competitive election.  The state would benefit by returning to a true two party state as reported by a recent Kersten Institute report.

 

It’s Fine to Be “Progressive,” But Please Be “Truly Progressive”

So the next time you hear a California Democrat politician say “I’m proud to stand with organized labor for working families.” Please question what that actually means, and clarify if that is for the “working families” that are paying California’s taxes, or just those who are partially or fully subsidized from state taxpayers because they are a “core Democrat constituency”?

California has a series of major public policy issues that are going unaddressed and undiscussed in the circles of power in California, all of which have huge implications for “working families” and California’s future as a state.

It is time for California Democrat politicians to start standing up for the “public’s interest,” which includes the lower and middle-classes and what is going to help the state as a whole, not just organized labor.  There is a big difference.  It’s fine to be “progressive,” but please be “truly progressive,” not just “pro-labor.”

And next time you hear a California Democrat politician say they are “fighting organized labor” in Sacramento, take my word for it, “organized labor” already has the keys to the kingdom–so there is really no need to fight for them in Sacramento–it’s really just an exercise of preaching to the choir.

About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change

 

Unions Still Selectively Finding Environmental Calamity in California Solar Projects

Out of nowhere comes a new, well-funded champion of Mother Earth. A group called “Monterey County Residents for Responsible Development” has submitted two sets of letters and exhibits to Monterey County alleging serious deficiencies in its environmental review for the county’s first large solar photovoltaic power plant, the 280 megawatt California Flats.

Obviously the Monterey County Planning Commission agreed with county staff that the group’s fastidious objections under the California Environmental Quality Act (CEQA) weren’t credible. Commissioners voted 8-0 on January 14, 2015 to approve the project despite a last-minute “document dump” from lawyers representing the mysterious worried residents.

There has been one brief reference to this group in one local newspaper article. Monterey County community, business, and political leaders are generally unaware of the group, who comprises it, and why it is so concerned about nature.

What can the developer – First Solar, based in Tempe, Arizona – possibly do to mollify such a group and move the project forward, free of legal obstructions? The general public may not know, but regular readers of www.UnionWatch.org have probably already figured out who is behind the front group calling itself “Monterey County Residents for Responsible Development.”

The formulaic and obviously phony name of this unincorporated organization is a giveaway. For those who need additional clues, the name of the law firm representing these concerned residents is Adams Broadwell Joseph & Cardozo, based in South San Francisco.

CURE Reference in 2015-01-13 California Flats CURE Comment on FEIR

Yes, construction unions are at it again. In this case, California Unions for Reliable Energy (CURE) – a project of the State Building and Construction Trades Council of California – is joining a few unknown individuals to object to the California Flats solar photovoltaic power plant.

Surely the power plant developer knows what it needs to do to shake off this obstacle. In electronic folders and e-mail in-boxes, a Project Labor Agreement template waits to be printed out by a First Solar representative for a signature of surrender, followed by a signature of triumph from a union representative.

But will the additional cost of construction imposed by the union Project Labor Agreement (and the complementary 30-year union Maintenance Labor Agreement) make the project financially infeasible for First Solar? Is there extra government money somewhere available to subside union monopolies for “green energy” projects?

California may struggle to reach its ambitious greenhouse gas emissions reduction goals under Assembly Bill 32, the California Global Warming Solutions Act of 2006. In a few years, when California state agencies and local governments are compelled to intrude on residents’ personal behavior in order to reach those goals and save the planet, Californians can ironically blame the California Environmental Quality Act (CEQA) and the refusal of the legislature and governor to restrain union abuse of this law for financial gain.

Primary Source Documents

September 22, 2014 – California Flats Solar – California Unions for Reliable Energy (CURE) Comments on Draft Environmental Impact Report – Letter

September 22, 2014 – California Flats Solar – California Unions for Reliable Energy (CURE) Comments on Draft Environmental Impact Report – All Exhibits

December 23, 2014 – California Flats Solar – Monterey County Response to California Unions for Reliable Energy (CURE) in Final Environmental Impact Report

December 24, 2014 – California Flats Solar – California Unions for Reliable Energy (CURE) – Request for Records from Monterey County

January 13, 2015 – California Flats Solar – California Unions for Reliable Energy (CURE) Comments on Final Environmental Impact Report – Letter

January 13, 2015 – California Flats Solar – California Unions for Reliable Energy (CURE) Comments on Final Environmental Impact Report – All Exhibits

January 14, 2014 – California Flats Solar – Staff Report to Monterey County Planning Commission

Monterey County Resource Management Agency – Planning Department – Major Projects – California Flats Solar

California Unions for Reliable Energy (CURE) – State Building and Construction Trades Council of California – Website

Adams Broadwell Joseph & Cardozo – Website

First Solar – Website

News Coverage of Project, Including Article with One-Paragraph Reference to “Monterey County Residents for Responsible Development”

Major Solar Farm Proposed for Southeast County Ag LandMonterey County Weekly – March 7, 2013

Solar Farms on HorizonSalinas Californian – July 2, 2013

Voices of Opposition Surface as Solar Farm Proposal for South County Moves ForwardMonterey County Weekly – July 3, 2014

Draft Report Lays Out Details of Proposed California Flats Solar FarmMonterey County Weekly – August 14, 2014

Bid for Monterey County’s First Utility-Grade Solar Farm Releases Draft EIRMonterey County Herald – August 15, 2014

Monterey County Solar Farm Proposal Attracts Praise, CriticismMonterey County Herald – December 28, 2014

A separate letter from a law firm representing an organization called Monterey County Residents for Responsible Development also raised concerns about the potential for avian species such as the golden eagle and the Swainson’s hawk to mistake the reflective surfaces of the solar arrays for water, trees and other habitat, and injure themselves flying into them.

South County Solar Farm Gets Planning Commission Thumbs-Up – Monterey County Herald – January 14, 2015

Planning Commission Unanimously Recommends Approval on South County Solar FarmMonterey County Weekly – January 15, 2015

Background on Union “Greenmail” Against Solar Power Plants and Other Projects Using the California Environmental Quality Act (CEQA)

Did Unions Hasten Demise of California’s Solar Thermal Power Plants? – www.UnionWatch.org – July 16, 2013

Unions Extensively Interfere with California Solar Photovoltaic Power Plant Permitting – www.UnionWatch.org – July 20, 2013

Revised List of Union Actions in 2013 Under the California Environmental Quality Act (CEQA) – www.UnionWatch.org – September 3, 2013


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Cap and Trade Revenue to Fund High Speed Rail?

Liberals and good government advocates frequently decry citizens’ mistrust in government, especially in California. Over the last decade and a half, numerous surveys have confirmed that voters distrust government on several levels including waste, corruption and lack of responsiveness to legitimate public needs.

The recent criminal exploits – both actual and alleged – of three California state senators is going to add fuel to the fire of outrage on the part of voters when it comes to their attitudes about government.

But outright corruption certainly isn’t the only cause of voter angst. Even if conduct falls short of criminality, the “pay to play” culture in Sacramento leaves most voters feeling like penniless souls standing outside of the expensive restaurant (Chez Capital) looking in through the window at all the politically connected fat cats being fed scrumptious meals.

And nothing frustrates knowledgeable voters like being fed outright falsehoods by our elected leaders. On this latter count, let’s add the absurd contention by the Brown Administration that the diversion of $250 million of “cap and trade” revenue to the High Speed Rail project will help California advance its climate change agenda.

For the purpose of this article, let’s assume that anthropogenic climate change is real, meaning that activities of man are having a global impact on weather. (Of course, some of us can still actually distinguish between correlation and causation, but that’s beside the point).

As most people know, California’s response to climate change was AB 32, itself subject of ongoing litigation. At the core of AB 32 is the requirement that Greenhouse Gas (GHG) emissions be reduced 80% of 1990 levels by 2050. The agency charged with implementing AB 32, the California Air Resources Board (CARB) has created a “cap and tax” program that sucks hundreds of millions of dollars out of the private sector economy annually.

But CARB’s program has created a “cache of cash” that has politicians salivating like a Pavlov puppy. Brown’s desperate attempt to fund HSR – even for a short period of time – has him gazing longingly at the money that CARB has generated, supposedly to pay for programs that actually reduce GHGs.

And make no mistake, California’s High Speed Rail project is in trouble. After a series of hostile court rulings and the unwillingness of Congress to throw good money after bad, the most famous boondoggle in California history appears to be hanging on by a thread. But for reasons unknown, Governor Brown has doubled down on the “Train to Nowhere.”

Keeping in mind that everything we’ve been told about the HSR project has been exposed as a lie (from total cost, trip times, availability of revenue from the federal government and private investors, ridership projections, etc.) Brown now heaps on another whopper: HSR is a legitimate project for use of cap and tax funds because it will reduce GHG.

But no one, and we mean no one, actually believes this. The Legislature’s own Legislative Analyst stated that “we find that there is significant uncertainty regarding the degree to which each investment proposed for funding would achieve GHG reductions.” And in a report issued just last week, the Reason Foundation blows the doors off the contention that HSR will reduce GHG emissions. Indeed, the very construction of the project will generate a vast amount of GHG: “High-speed rail (HSR) construction will create substantial GHG. HSR, which is forecasted to begin operations in 2022, cannot reduce GHG emissions before AB32’s 2020 horizon and the project’s construction must [itself] purchase credits through the cap and trade program.”

When pundits wonder why Californians don’t trust government, Brown’s plan to divert a potentially illegal source of revenue to a potentially illegal public works project probably qualifies as Exhibit A.

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.

Unions Virtually Alone in Love with California High-Speed Rail

Even close observers of the California High-Speed Rail Authority have struggled to track developments for the state’s planned bullet train. The debacle began in November 2008, when 52.7% of California voters approved Proposition 1A and triggered serious planning for what could be the most expensive construction project in human history. With that kind of money at stake, unions were obviously inspired to be part of this boondoggle.

Kings County Says No to CaHSRThe California High-Speed Rail Authority has become justly notorious for backroom deals, secretive administrative actions, and lack of transparency. But most Californians are at least vaguely aware that the project has been mismanaged and misrepresented.

Proposition 1A – placed on the ballot by the California State Legislature – authorized the State of California to borrow $9.95 billion to begin design and construction of a $45 billion complete high-speed rail system linking San Francisco, Los Angeles, San Diego, and Sacramento. Including interest payments, the Proposition 1A commitment was estimated to be $19.4 billion to $23.2 billion for bonds to be paid back over 30 years. According to Proposition 1A, that money borrowed by the state was supposed to be supplemented with significant funding from the federal government, private investors, and municipal governments.

Proposition 1A also promised that the bullet train would be able to travel non-stop from San Francisco to Los Angeles in 2 hours, 40 minutes. Presumably many Californians who voted for it – including the 78.4% of San Francisco voters who approved it – imagined a fast train speeding between two world-class cities along the median of Interstate 5. They were wrong.

Here’s the current appalling status of California High-Speed Rail:

1. The California High-Speed Rail Authority has spent $587 million on consultants as of September 30, 2013. The California State Treasurer has sold at least $703 million worth of bonds (Buy America Bonds and perhaps others) for California High-Speed Rail as of May 13, 2013.

2. The estimated cost has been dramatically revised. Instead of being $45 billion for the entire system, it is now $68 billion just for the line between San Francisco and Los Angeles, and the high-speed rail will be “blended” with other commuter rail lines at the beginning and end of the route. One group has estimated that the entire system may exceed $200 billion if bond interest is included and the federal government does not provide additional grants.

3. The California State Treasurer cannot sell the Proposition 1A state bonds because a judge determined in November 2013 that the California High-Speed Rail Authority failed to comply with the law. While the California High-Speed Rail Authority has already obtained $2,942,000,000 from the federal government, possibly under false pretenses of a commitment to matching funds, the Republican majority in the U.S. House of Representatives is intent on stopping further grants until the Authority gets its act together. No private investors have emerged – corporations want to GET money from the Authority through contracts, not give it money to be squandered. Cities in the San Joaquin Valley where the line will be built first have no money to invest in it – Fresno is nearly bankrupt.

4. Governor Jerry Brown desperately included $250 million in his 2014-15 budget for California High-Speed Rail to be obtained from “Cap and Trade” allowances paid by emitters of greenhouse gases as part of the California Global Warming Solutions Act of 2006 (Assembly Bill 32 or AB 32). But the project is expected to increase greenhouse gas emissions during four years of initial construction. The Authority claims it will earn the Cap and Trade funds because offsets from its tree planting program (as well as other activities such as “cleaner school buses and water pumps in Central Valley communities”) will allow it to produce “zero net emissions.”

5. With the “blended” plan, there are serious challenges to achieving the 2 hour 40 minute travel time required in law. An analysis claiming that the time can be met includes the train going over the Tehachapi mountain range (north of Los Angeles) at 150+ miles per hour. There is idle talk about digging a long tunnel for the bullet train through the seismically-active San Gabriel Mountains from Palmdale to Los Angeles, but this is probably to lull citizens of Santa Clarita into believing the rail won’t go through their town.

6. To the surprise and confusion of hipster high-speed rail supporters in San Francisco and Los Angeles, this bullet train will be a local, with stops at least in Merced, Fresno, Hanford or Visalia, Bakersfield, and Palmdale. In June 2013, the Authority awarded a $970 million contract (with provisions for an additional $55 million) to Tutor Perini/Zachry/Parsons (a joint venture) to design and build the first 29-miles of the high-speed rail between Madera and Fresno by February 2018. People are supposed to be able to ride the high-speed rail between Merced and Palmdale by 2022.

7. The California High-Speed Rail Authority erred by awarding the first design-build contract for a 29-mile stretch that includes 25 miles in one segment assigned for environmental review (Merced to Fresno) and four miles in another segment assigned for a different environmental review (Fresno to Bakersfield). While it received full environmental clearance for the 25-mile stretch, it has not received clearance for the 4-mile stretch. In December 2013, the federal Surface Transportation Board rejected a secretive request from the Authority for an exemption to environmental review. If it can’t get the federal exemption, the Authority’s design-build contract is in jeopardy.

8. Owners of 370 parcels that the California High-Speed Rail Authority needs for the first 29-mile stretch are apparently resisting or holding out on selling their property. At last report in mid-December, the Authority had allegedly closed escrow on five parcels. The Authority has now received authorization from the California Public Works Board to possess two parcels through eminent domain.

Based on these eight points alone, who would still be eager to proceed with this project besides Governor Jerry Brown, the corporations seeking contracts, and a scattering of citizens committed to various leftist causes related to urban planning and environmentalism? Unions.

Union supporters at California High-Speed Rail Congressional field hearing in Madera on May 31, 2013.

Union supporters at California High-Speed Rail Congressional field hearing in Madera on May 31, 2013.

In a backroom deal, without any public deliberation or vote, the board of the California High-Speed Rail Authority negotiated and executed a Project Labor Agreement (called a “Community Benefit Agreement”) with the State Building and Construction Trades Council of California. This agreement gives unions a monopoly on construction trade work and certain construction-related professional services.

In a January 16, 2013 email about the Project Labor Agreement to the former chairman of Fresno County Economic Opportunities Commission, the Small Business Advocate of the California High Speed Rail Authority stated the following:

The Community Benefits Agreemeent (CBA) is an internal administrative document that was not necessarily intended to be circulated for public comment, however, that doesn’t mean you cannot provide me your input. The document was added to Construction Package #1 and Addendum 8 and I’ve attached it herein for your convenience. It includes regulatory compliance and is being reviewed by the Federal Rail (sic) Administration.

There is no evidence available to show that the Federal Railroad Administration approved the Project Labor Agreement, as required by law. But the final version of the agreement was signed in August 2013. No board member or administrator of the California High-Speed Rail Authority has commented in a public meeting about the agreement that will give unions control of most of the claimed 100,000 job-years of employment over a five-year period.

When State Senator Andy Vidak, with Congressman David Valadao, held a press conference critical of California High-Speed Rail on January 17, 2014 at the site of the eventually-to-be-demolished Fresno Rescue Mission, there were protesters: construction union leaders, lobbyists, public relations officials, and activists. The Fresno Bee reported this about the press conference:

In a news release prior to the announcement, Vidak indicated that his goal is to kill the bullet train. He tempered his in-person remarks, however, as he faced a crowd that included both high-speed rail critics from his home area in Kings County and a couple dozen representatives of labor unions who support the project…Rail supporters, some clad in hard hats and safety vests, booed Vidak as they wielded their own signs proclaiming high-speed rail as “good for the local economy, good for air quality and good for jobs.”

The Fresno Business Journal reported this about the press conference:

Dillon Savory, an advocate representing several local unions, commented after the event that high-speed rail would not only provide needed jobs, but it would help improve the Valley’s air, which has been heavily polluted this winter. Also, the cost of roadwork in the area is about double the cost of high-speed rail, making road construction less cost effective, Savory said. Savory criticized the anti-high-speed rail forced for trying to pit rail against water. He said the greater issue is putting people back to work with decent paying jobs. He said many union workers are only finding temporary work for about two weeks at a time. That is not putting food on the table, he said.

In 2013, Savory was the manager for the successful union-backed campaign to defeat a ballot measure (Measure G) supported by the Mayor of Fresno that would have allowed the city to outsource garbage collection. The political professionals are getting involved.

When the groundbreaking ceremony occurs for California High-Speed Rail, perhaps in an abandoned Madera County cornfield seized through eminent domain by the Authority, expect thousands of construction union workers to be bused in to block and neutralize any protesters. Governor Brown cannot suffer any more embarrassment over this boondoggle and debacle.

Bullet train path through Kings County farmland.

Bullet train path through Kings County farmland.

Sources

California Streets and Highway Code Section 2704.09 (implemented by California voters in November 2008 as Proposition 1A, as authorized by Assembly Bill 3034 (Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century)

Top-40 Donors to Campaign to Convince California Voters to Borrow $10 Billion to Start Building High-Speed Rail

Election Results by County: Proposition 1A (2008)

May 7, 2008 Senate Appropriations Committee legislative analysis for Assembly Bill 3034 (source of estimated costs of bonds, including interest payments)

American Recovery and Reinvestment Act of 2009 (ARRA) High Speed Rail Awards

July 2012 – California’s High-Speed Rail Realities: Briefly Assessing the Project’s Construction Cost, Debt Prospects, and Funding (“The Realistic – No Additional Federal Funding scenario results in a total debt burden of $203 billion between 201 3 and 2058.”)

February 11, 2013 California High-Speed Rail Authority memo “Phase 1 Blended Travel Time”

A Preliminary Timeline of Activity Concerning What Will Be $9.95 Billion Borrowed through Proposition 1A Bond Sales for California High-Speed Rail

June 2013 – Contribution of the High-Speed Rail Program to Reducing California’s Greenhouse Gas Emission Levels (includes “plans to plant thousands of new trees across the Central Valley” and “cleaner school buses and water pumps in Central Valley communities”)

November 15, 2013 – Project Update Report to the California State Legislature (source of report that $587 million was spent on consultants)

November 25, 2013 California High Speed Rail Authority Bond Validation Lawsuit Ruling

November 25, 2013 – Tos Fukuda Kings County v California High-Speed Rail Prop 1A Part 1 Ruling

November 25, 2013 Tos Fukuda Kings County v California High-Speed Rail Prop 1A Part 2 Ruling

California High-Speed Rail – Fresno to Bakersfield Surface Transportation Board Exemption Letters

Project Labor Agreement (Community Benefits Agreement) for California High-Speed Rail – Addendum 8 in Bid Specifications – December 26, 2012

Project Labor Agreement (Community Benefits Agreement) for California High-Speed Rail – Final – August 13, 2013

February 27, 2013 Fresno County Economic Opportunities Commission Chairman Wonders Why No Input Into California High-Speed Rail Authority Project Labor Agreement

Vidak Rails Against Bullet-Train Plan, Met by Bipartisan Crowd at Fresno EventFresno Bee – January 17, 2014

Vidak Calls for High-Speed Rail RevoteFresno Business Journal – January 17, 2014

California High-Speed Rail Scam

Past Articles in www.UnionWatch.org on Unions and California High-Speed Rail

Unions Creep Closer to Monopolizing California High-Speed Rail Construction – December 6, 2012

Watch Union Official’s Rude Antics at California High-Speed Rail Conference – January 15, 2013

Unions Await Fantastic Return on High-Speed Rail Political Investments – January 22, 2013

Exposing the Plot Behind Project Labor Agreement for California Bullet Train – April 30, 2013

Unions Defend California High-Speed Rail Project at Congressional Hearing – June 4, 2013

California Construction Unions Circumvent Public Scrutiny of Project Labor Agreements – September 17, 2013

 


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

 

Bipartisan Solutions For California

When Governor Jerry Brown, back in the 1970′s, suggested that California should have its own aerospace program, he was dubbed “Governor Moonbeam,” and the moniker has stuck to this day. That’s too bad, because at the time Gov. Brown made that statement, California had the most robust aerospace infrastructure in the U.S. The nexus of companies in Los Angeles – Northrop, Hughes, Rockwell, TRW, plus the branches of dozens of others – the launch complex at Vandenberg, the vast resources of land in the Mojave including Edwards AFB – made California a natural location to further America’s space efforts.

Today half of the companies noted above have been driven out of California by over-regulation, and instead of talking about mining the asteroids for platinum, Jerry Brown is talking about bullet trains to nowhere. Before you laugh at the Gov. Moonbeam’s original idea, consider California-based entrepreneur Elon Musk, founder of SpaceX. This private aerospace company, which is already supplying launch vehicles to NASA, is now rolling out their “Falcon Heavy,” the largest launch vehicle since the Saturn V moon rocket.

The asteroids will be explored and mined by robotic spacecraft within a few decades. And much of the ingenuity and entrepreneurship, risk capital, and high technology will be coming from California. Imagine if California’s dawning recapture of the lead in aerospace technology, following her existing lead in biotech and info-tech, were encouraged by California’s laws and regulations instead of occurring in spite of them?

There are two steps towards putting California back on track. Both relate to public policy: One, reform California’s government and make it more business friendly, two, set a government project agenda that emphasizes infrastructure over pay and benefits for government workers. These steps will lower the cost of living for all California residents.

It would be an ironic blessing if California’s bloated, dysfunctional state and local governments were to financially implode sooner than anywhere else in the U.S., because it would mean Californians would be the first to come out recovered on the other side. It will be a painful transition, but manageable if investments into projects that lower the cost of living are made at the same time as austerity measures are imposed on government workers and recipients of government entitlements. Here are solutions for California:

(1) Balance State and Local Government Budgets:

(a) Lower the wages of all state and local government workers by 20% of whatever amount they make in excess of $50,000 per year. Lower the wages of all state and local government workers by 50% of whatever amount they make in excess of $100,000 per year. Include in “wages” ALL forms of compensation.

(b) Impose special tax assessments on state and local government pensions in the amount of 50% of all pension payments in excess of $60,000 per year and 75% of all pension payments in excess of $100,000 per year.

(c) Require 75% of all school employees to be teachers in a classroom. Raise average class size to 30 students per classroom by abandoning the failed policy of “mainstreaming” virtually all students, and by separating students into classes based on their academic performance.

(d) Faithfully implement the welfare and entitlement policies already adopted by most other states during the Clinton administration.

(2) Change the Rules in Sacramento:

(a) Implement fundamental curbs on the rights of public sector unions, including:  Grant all public sector workers the right to opt-out of union membership and payment of any union dues including agency fees. Prohibit government payroll departments from collecting union dues. Allow all public sector employees to negotiate their own wages and benefits and not be bound by collective bargaining terms if they wish. Prohibit public sector unions from negotiating over long term benefits, and require all current wage and benefit agreements to expire at the end of the term for the elected officials who approved the agreements. Prohibit public sector unions from engaging in political activity of any kind.

(b) Discontinue the planned “CO2 auctions,” which are nothing more than a way to redistribute money from middle class ratepayers to bankers, phony green entrepreneurs, and public sector payroll departments. Repeal AB32. Crucially, lift the crippling burden of land use regulations that keep the prices of homes and commercial property ridiculously high in California.

(c) Revisit all business-friendly recommendations made by business associations such as the bipartisan California Chamber of Commerce. This would not include compromise positions in support of public sector unions and crony capitalist environmental regulations. This would include banning mandatory project labor agreements or requiring union only contractors on government funded projects.

(3) Use government surpluses to engage in public works, and streamline permitting for private infrastructure investments, that LOWER the cost of living for everyone:

(a) Rebuild California’s aqueducts and develop additional aquifer and surface storage for runoff harvesting. Build desalination plants on the southern California coast. Upgrade existing dams and pumping stations. Permit farmers to contract with California’s urban water districts to sell their water allocations. Create water abundance and make water cheap.

(b) Build new power stations. Whether this is a joint project with Nevada to establish nuclear power stations in the vicinity of Yucca Mountain, or building new natural gas fired power plants, the immediate establishment of an additional 20%+ of generating capacity in California would allow a lowering of utility rates and make California a net exporter of electricity.

(c) Enable development of offshore oil and gas using slant drilling from land. It is no longer necessary to develop offshore drilling rigs to extract energy reserves. There are cost-effective ways to bring this energy onshore without the risk of an oil spill from an offshore platform.

(d) Enable development of natural gas reserves in California.

(e) Enable development of mines and quarries in California.

(f) Build additional pipeline capacity into California to import and export natural gas to and from elsewhere in North America.

(g) Permit development of a liquid natural gas terminal at least 10 miles off the California coast. Get California onto the global LNG grid to import and export natural gas and further diversify sources of energy and income. Create energy abundance and make energy cheap.

(h) Upgrade existing roads, bridges, and freeways. Begin working on “smart lanes” that will facilitate cars driving on autopilot.

(i) Instead of developing a bullet train – something that might be worth experimenting with once everything else on this list is done and Californians have money to burn – upgrade California’s existing freight and passenger rail infrastructure. When practical, integrate passenger and freight service on common rail corridors in large cities where high population densities make passenger rail economically viable. Complete a passenger rail link from Bakersfield to Los Angeles. Increase the speed of intercity passenger rail to 100+ MPH, which can be done on upgraded but already existing track.

Implementing policies designed to lower the cost of living is a perilous undertaking. Because it involves increasing the supply of all basic commodities and services including taxes, housing, energy, water and transportation, it lowers profits and can contribute to a deflationary economy. But by lowering the cost of living, despite the fewer dollars earned by our public sector workers, or by our private sector workers employed by corporations competing in the global economy, the overall standard of living may actually improve.

The solution for California is to develop infrastructure to lower the cost of living at the same time as deregulation is encouraging economic growth. Because California enjoys so many gifts – natural resources of staggering abundance and diversity, and an economy that is the technological leader in the world – the solutions described here, though painful, will ensure California survives and thrives during what are sure to be challenging years ahead.

During the 21st century there are two competing models of economic growth. The path we’re on involves artificially inflating the prices of all basic commodities. Staying on this path will reduce global competition, empower entrenched global elites, and consolidate the power of public sector unions, monopolistic corporations, and global bankers. Economic growth will be slow, and in terms of genuine productivity, it will be an anti-competitive age of control by the few over the many, and a sad utilization of the great technological advances we have seen in recent decades.

The alternative economic model for California is to adopt policies that dismantle monopolies, nurture competition, and encourage new development of land and resources. If costs for basic commodities are lowered instead of raised, capital is released to finance completely new industries, from space commercialization and development to life-extension and other fundamental advances in medicine. This will cause rapid and sustainable economic growth, unprecedented per-capita prosperity, even faster technological advancement, and a renewed golden age.