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Why Aren't Unions Fighting California's Bullet Train Boondoggle?

Back in 2008, voters in California approved Prop. 1, a statewide initiative to spend, “$9 billion for building a new high-speed railroad between San Francisco and Los Angeles.”

Total cost, $9.5 billion. Remember that?

Quoting further from the original initiative’s ballot language:

“Bond Costs. The costs of these bonds would depend on interest rates in effect at the time they are sold and the time period over which they are repaid. The state would make principal and interest payments from the state’s General Fund over a period of about 30 years. If the bonds are sold at an average interest rate of 5 percent, the cost would be about $19.4 billion to pay off both principal ($9.95 billion) and interest ($9.5 billion). The average repayment for principal and interest would be about $647 million per year. Operating Costs. When constructed, the high-speed rail system will incur unknown ongoing maintenance and operation costs, probably in excess of $1 billion a year. Depending on the level of ridership, these costs would be at least partially offset by revenue from fares paid by passengers.” (ref. UC Hastings Scholarship Repository, Propositions, California Ballot Propositions and Ballot Initiatives)

Over time, fantasy always yields to reality.

The most recent reputable estimate of High Speed Rail costs come from an in-depth special report published last month by the Los Angeles Times, entitled “$68-billion California bullet train project likely to overshoot budget and deadline targets.”

The title of that special report says it all. California’s High Speed Rail was sold to voters for an amount that is at least seven times less than our most recent estimate of costs, and if the author of the LA Times special report is to be believed, it is very unlikely this project will come in for a total cost under $100 billion.

High speed rail was sold to voters back in 2008 in roughly the same way pension benefit enhancements were sold to naive politicians back around 1999. In both cases, the decision makers were told it would cost next to nothing. Isn’t this called fraud? To sell a good or service to a consumer at a given price, then come back and demand ten times as much money?

Payments on these construction costs will be paid from the California state general fund, and based on a $100 billion total cost and a 5.0% interest rate, that comes out to $166 per year per California resident. Not that much? Unimpressed? Put another way, based on roughly six million taxpaying households in California (about half of California’s 12 million households pay no taxes; their sales tax burden is largely offset by the earned income tax credit), construction of this train will cost $1,084 per taxpaying household per year.

Do you want to pay $1,000 per year for a project that will not alleviate California’s transportation challenges one bit? A project that will lose money forever? A project that will use up massive amounts of capital that could be deployed to achieve literally dozens of other huge and vitally needed infrastructure objectives?

This is where California’s labor leadership, by continuing to support high speed rail as a centerpiece project, are showing how out of touch they truly are with the average working family. Because they are unwilling to fight for major infrastructure investments that would improve the quality of life and lower the cost of living for all Californians; improvements to existing rail, upgraded roads, state-of-the art natural gas and 5th generation nuclear power stations, reservoirs and aquifer storage projects, upgraded sewage treatment plants to produce potable water, and much, much more. If California’s labor leaders care about all workers, they will find the vision and courage to fight for these useful amenities, instead of promoting high speed rail.

20151123-UW-HSR
High Speed Rail CEO Jeff Morales made $477,760 in 2014

A legitimate role for government spending is to make strategic investments that reduce costs for basic necessities. That is what makes a nation prosperous. That is a proper use of public funds. Artificially inflating the costs for energy, water and transportation – which is the current policy of California’s government, abetted by big labor in this state – is a crime against the people of California.

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Ed Ring is the executive director of the California Policy Center.

Union Controlled Legislature Continues Assault on Charter Schools

When it comes to dealing with California’s successful, independent charter schools, powerful, monied special interests – and the lawmakers they fund – prefer a twist on the adage “If you can’t beat them, join them.” Their version: If you can’t beat them, destroy them. This was manifested last month when four Democratic lawmakers trumpeted their introduction of a packet of new bills increasing state regulations over charters, including heightened public reporting requirements, restricting for-profit operations, greater transparency and promotion of employee rights.

On paper, while the “reforms” use language of responsible government oversight, they represent yet another effort to erase what has made charter schools succeed: Independence from the labyrinth of education codes and laws strangling districts and negatively impacting student achievement.

Since enactment two decades ago, charter schools have faced hostility from teacher unions because most are not unionized, thereby reducing their income stream due to an inability to collect compulsory member dues. Yet charters have been extremely successful in producing academic outcomes for students, largely due to their freedom from the mandates and requirements constraining traditional schools.

Ironically, the bills were introduced within days of the Stanford University Center for Research on Education Outcomes release of a study showing that charter schools outperform traditional schools, particularly in urban areas, reinforcing the understanding that charter schools boost academic outcomes for minority and poor students.

Approximately 550,000 K-12 students are enrolled in California charter schools; an additional 91,000 linger on waiting lists. Parental demand for charter schools has soared, particularly from Latino and African American parents who are more likely to be trapped in chronically underperforming schools. Increasingly, parents are “voting with their feet,” seeking enrollment in charter schools or supporting conversion of “neighborhood” schools into charters.

Independent charter schools provide a striking contrast to traditional public schools through their prioritization of students. California’s education system is plagued with laws protecting the pay, perks and rights of unionized employees and ignoring needs of students. Last year, nine students successfully sued California seeking to overturn several union-backed statutes which combined to deny students a quality education. Hailed as the most significant education civil rights suit in decades, the case, Vergara v. California, is being appealed by teachers unions.

Undoubtedly, there is room for charter school reform. But that is not the intent: These bills are intended to squelch their growth by slashing their independence. They are sponsored by the California Teachers Association, California Federation of Teachers and California Labor Federation, which have been overtly hostile to charter schools.

One bill introduced at last week’s Sacramento press conference would establish charter schools as governmental entities and their employees as public employees, thereby giving them an increased ability to unionize. Not surprisingly, the lawmakers were joined by the CTA, CFT and the California Labor Federation – reinforcing the perception that the bills are more about jobs and dues rather than students and learning.

At the press conference, Assemblyman Roger Hernandez, D-West Covina, stated, “The ability to unionize is a civil right.” What he failed to say is that existing law permits unionization at charter schools, though most employees – about 85 percent – have chosen not to do so. Sadly, Hernandez has yet to speak on the students’ Vergara civil rights lawsuit – presumably because students don’t fund his campaign coffers.

About the Author:  Gloria Romero, a Los Angeles resident, served in the California Legislature from 1998 to 2008, the last seven years as Senate majority leader. Romero is the director of education reform for the California Policy Center. This article originally appeared in the Orange County Register and is republished here with permission from the author.

Public Sector Unions Threaten Owners of LA Times Not to Sell to Koch Bros.

Union excess, echoed with approval by their media allies, especially in liberal San Francisco, has hit an almost absurd level.  Non-union hotels like Hyatt are inexplicably vilified in the liberal press.  The nurses at the University of California’s hospitals, including U.C. San Francisco, have gone on strike, over, among other things, their objections to “unprecedented executive excess.”  U.C officials reportedly say the real reason for the strike is that the union that represents the nurses, the Federation of State, County and Municipal Employees, doesn’t want to change employees’ generous pensions.  “The union has refused to agree to UC’s pension reform started in 2010 to address underfunding of the plan,” said a U.C. spokesperson.  Even the Symphony in liberal San Francisco finds a reason to go on strike, causing cancellation of what was termed a “prominent East Coast tour.”  Something seemingly as docile as the annual meeting of San Francisco-based Wells Fargo Bank is forced out of their own headquarters city, where the meeting has been held each year for 15 years, and placed instead in Salt Lake City, for fear of “Occupy” protesters, cheered on with financial support from the California Teacher’s Association, disrupting the meeting.

But now ten public employee unions including the SEIU, the California Labor Federation and the California Professional Firefighters Association are so worked-up that the conservative Koch Brothers might become owners of the newspaper publishing Tribune Company, the parent company the Los Angeles Times, that they have rallied liberal Democratic legislative leaders to join them in threatening the current largest shareholder of Tribune, Oaktree Capital Management, with retaliatory withdrawal of pension fund investments should Oaktree make the sale.

Such thuggery seems not too far afield from criminal racketeering, and stands out as an example of how far California’s major unions will go to silence a different view.  So much for promoting competition of ideas in California!

James V. Lacy is co-founder and managing partner of Wewer & Lacy, LLP.  Wewer and Lacy, LLP focuses on Election Law and Nonprofit Organization Law matters.

Unions Defy CEQA Reformers with Taunting Resolution

Despite their reputation as effective and extensive abusers of the California Environmental Quality Act (CEQA) to pursue economic objectives unrelated to environmental protection, California union leaders are strategically choosing to be vocal activists against CEQA reform.

Union leaders are obviously quite confident that corporate executives and the news media will hesitate to make them accountable for their practice.

The State Building and Construction Trades Council of California, the San Diego and Imperial Counties Labor Council, AFL-CIO, and the United Food and Commercial Workers Western States Council are an essential part of the “CEQA Works” coalition organized by the California League of Conservation Voters to oppose CEQA reform. I predict these unions will be the major funding source for broadcast advertising from CEQA Works to undermine reform proposals. (Expect advertising to run soon on these radio stations.)

On February 11, 2013, the leadership of the California Labor Federation, AFL-CIO unanimously approved a resolution stating its commitment to “protecting the critical components of CEQA that have made it effective.” It was presented by the State Building and Construction Trades Council of California.

CEQA documents for proposed solar power plants in Fresno County as of August 7, 2012. A majority of these documents related to union CEQA objections.

This resolution consists of buzz words, emotive language, and facts taken out of context. Many of the declarations provoke laughter at close examination: for example, the resolution praises union “alliances with local businesses” even though small local businesses undermine private sector unionism by operating free of union work rules and not participating in multi-employer union-administered fringe benefit programs.

(This provision probably alludes to CEQA challenges to Wal-Mart supported by the United Food and Commercial Workers union. As reported in the UFCW Local Union No. 135 newsletter of October 2012, “…pro-business politicians in the California State Senate proposed gutting CEQA, making it much more difficult for us to stop Walmart and similar big-box retailers from coming to San Diego and other places in California.”)

But the resolution also reveals that unions know the psychology of their opponents. From their experience in union corporate organizing campaigns, union leaders recognize how business executives strive to protect their professional reputations and corporate images. The resolution is a warning to any corporate executive advocating for CEQA reform who might be tempted to explain publicly why unions oppose it.

Few California corporate executives have the gumption or rhetorical skill to openly challenge an organization supporting benevolent, humanistic impulses such as “smart and sustainable development,” “public health, especially in low-income communities,” and “protecting local communities, strengthening alliances with local businesses, and promoting the creation of good jobs.”

And as an additional defense from accusations of hypocrisy, union officials strategically included a direct accusation in the resolution that “many of the attacks on CEQA are coming from the same corporations that seek to roll back regulations that protect workers.”

Who would dare to counterattack by pointing out how unions use those regulations as a strategic tool to coerce businesses into collective bargaining?

And it’s not just corporate executives intimidated by the aggressive union counterthrust. Reporters, editors, and newspaper executives who dare to expose union hypocrisy are vulnerable to accusations about poor journalistic practices and reporting of right-wing innuendo.

I sent out two Tweets to present the other side of the story:

Unions oppose #CEQA reform – delaying projects & activities is an essential part of organizing strategy in California http://www.phonyuniontreehuggers.com 

Union resolution to oppose #CEQA reform: subtly stating CEQA’s relevance to unions without detailing how unions use it http://www.calaborfed.org/index.php/site/page/1959 …

These missives were tiny beacons of common sense and fiscal responsibility jettisoned into a maelstrom of leftist commentary on Twitter, to disappear into irrelevance.

No one affirmed my comments by citing a CEQA lawsuit filed on January 22, 2013 by the new, shadowy “Fresnans for Clean Air (FRESCA)” in Fresno County Superior Court alleging that the Fresno City Council failed to adequately assess the environmental damage caused by contracting out garbage services. No one asked about the status of the CEQA lawsuit filed on December 14, 2012 by the Laborers Union (LIUNA) Local No. 783 and “Concerned Bishop Residents” in Mono County Superior Court alleging that the Mono County Board of Supervisors failed to adequately assess the environmental damage caused by an upgrade of the Mammoth Pacific Unit 1 geothermal power plant.

Unions dumped these CEQA objections at a meeting of the United Port of San Diego Board of Commissioners on September 19, 2012.

No one mentioned the notorious CEQA document dumps in May 2012 and in September 2012 by the San Diego County Building and Construction Trades Council and UNITE HERE Local Union No. 30 against the proposed San Diego Convention Center Expansion Phase 3. In November, the unions announced “settlement agreements” that failed to address almost all of their environmental objections – including rising sea levels resulting from global warming – even as the unions obtained separate labor agreements for construction and hotel and hospitality services.

One of the declarations in the California Labor Federation resolution asserts that “claims of rampant CEQA litigation are wildly exaggerated since there is an average of only 200 CEQA (sic) per year” and that “only 1% or fewer projects subject to CEQA involve litigation of any sort.” While this statistic is deceptive in many ways, it doesn’t indicate how unions slow down projects using CEQA before ever reaching the point where their law firms need to file a lawsuit. There won’t be a union-instigated CEQA lawsuit to block the San Diego Convention Center Expansion Phase 3 – the preliminary activity under CEQA was enough to win the labor agreements.

The typical tactic used by exploiters of CEQA is “document dumps,” where an attorney submits a huge stack of CEQA objections at the last possible moment, sometimes with meek apologies. As a lawyer in California said to me last week, “The unions are at the point now where they don’t even need to submit comments about Environmental Impact Reports. The union law firm sends a public records request asking for the company’s application for a permit, and the company then calls up the law firm to arrange for a Project Labor Agreement.”

The web site www.PhonyUnionTreeHuggers.com was established by the Alliance for a Cleaner Tomorrow (ACT) in 2012 to document labor union involvement in CEQA environmental objections to proposed projects. Entries are based on actual legal documents that are hyperlinked for reference. The web site also includes the following news articles to show that once in a while, the truth leaks out about union CEQA exploitation:

Protests Over Valley Solar Projects Called a Ploy” – Fresno Bee – April 29, 2012

“Labor Coalition’s Tactics on Renewable Energy Projects Are Criticized” – Los Angeles Times – February 5, 2011

“Debate Brews in California Over Unions And Power Projects” – Platt’s Electric Power Daily – October 29, 2009

“A Move to Put the Union Label on Solar Power Plants” – New York Times – June 18, 2009

“Greenmail: Independent Builders Accuse Unions of Coercion” – Central Valley Business Journal – December 2007

“Union Staffing Demands Dim Market for Solar Panels” (Op-Ed) – Los Angeles Business Journal – October 8, 2007

“Unions Wielding Environmental Law to Threaten Foes” – Sacramento Business Journal – January 29, 2006

“Suits in California Delay Wal-Mart Supercenters” – Associated Press – March 20, 2005

“Pressure by Labor Group Alleged” – Sacramento Bee – September 19, 2004

“Struggle Over Power Plants” – Los Angeles Times – September 6, 2004

“Union Group Comes Under Fire at CEC [California Energy Commission] Workshop” – Energy Newsdata’s California Energy Markets – August 20, 2004

“Roseville OKs Labor Agreement for Power Plant” – Sacramento Business Journal – July 22, 2004

“Unions Push Roseville for Power Plant Pact” – Sacramento Business Journal – July 18, 2004

“No Strong-Arming” – Sacramento Business Journal (editorial) – July 18, 2004

“Unions Have Power Over Energy Plants” – Tri-Valley Herald (San Francisco: East Bay) – March 18, 2002

“Power Grab” (Editorial) – Wall Street Journal – February 15, 2001

“Blame Unions for Blackouts” (Op-Ed) – Engineering News-Record – January 29, 2001

“Unions Play Part in Power Crisis” – Bakersfield Californian – December 23, 2000

Kevin Dayton is the President and 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.

Finding Common Ground With Private Sector Unions

The California Labor Federation has a membership of more than 1,200 unions, representing over two million workers. And the first of seven key issues they list on their legislative agenda for 2012 is supporting high speed rail. As they put it, “Building high speed rail will grow our economy and create long-term jobs. An estimated 450,000 jobs in operations, maintenance, ticketing, and services will be needed to keep HSR up and running.”

It is difficult to imagine economic thinking more well intentioned yet fundamentally flawed. What private sector unions want, ideally, is to work cooperatively with government and industry to help create well paying jobs. But high speed rail will incur far more economic costs than economic benefits. Massive construction projects, using public/private financing mechanisms, have to benefit the economy. Otherwise they are examples of private gain – high paying jobs for workers who happen to belong to unions involved in the construction and maintenance of the project – in exchange for socialized loss – higher taxes that lower the disposable income of everyone else.

Policy activists who are critical of unions must understand that there are two crucial debates they are engaged in with unions. The first one is an economic argument – convincing union leadership that encouraging free market competition will lower the cost of living for everyone, and that when this happens all workers benefit. This is a tough sell, despite being entirely accurate. But the second debate, which regards what projects unions should be putting at the top of their legislative agenda, is much easier, because all projects create jobs.

During the great depression, massive infrastructure projects were completed that delivered millions of jobs, but they also delivered amenities to society at large that yielded long-term economic dividends. Hydroelectric dams increased the availability of water for irrigation and the supply of electricity. Rural electrification delivered cheap and clean power to homes and businesses across the country. New roads and bridges resulted in cheaper and faster movement of people and goods. From new school buildings to new civic stadiums, the public/private projects of the 1930’s helped make affordable education and entertainment more accessible to millions. These infrastructure investments put millions of people to work, but they also fundamentally transformed America’s economy, enabling everyone less expensive access to water, power, transportation, education and entertainment.

There is no possibility whatsoever that high-speed rail can compete in California with existing air travel services. It will lose money forever.

The legislative agenda of unions in California should indeed prioritize public/private partnerships to create high-paying jobs, but they should promote projects that will lower the cost of living in California. This is the win-win formula that results in accelerated economic growth and a higher standard of living for all workers, in addition to delivering construction jobs today. Here are examples of such projects – and none of these would cost anywhere near the $100 billion that is the new minimum estimate for high-speed rail:

(1) Build desalination plants off the Southern California coast:
Desalination technology has advanced to the point where it is now possible to desalinate a cubic meter of seawater using less than 2.0 kilowatt-hours of electricity. Put another way, the energy necessary to desalinate seawater is now less than the energy currently required to pump an equivalent unit of seawater over the mountains from the California aqueduct into the Los Angeles basin. Because the California current is one of the biggest ocean currents in the world, the brine that would be discharged as several gigatons of fresh water were recovered each year from seawater would have an insignificant environmental impact. The brine could be discharged through pipes that would run atop the seabed with the outfall 10+ miles offshore where the California current would disperse it immediately. Desalination is a key element towards delivering cheap water again in California, and like nuclear power, claims that desalination is prohibitively expensive are based more on the cost to overcome regulatory hurdles and lawsuits, not the actual construction costs, and certainly not the operating costs.

(2) Develop new surface storage and aquifer storage for storm runoff:
California’s system of reservoirs provide ample fresh water to agriculture, industry and residential/commercial users in years with normal rainfall, but inevitably there are cycles of drought when the existing water storage infrastructure is inadequate. It is probably possible to add another 5 million acre feet of storage without resorting to high dams by identifying areas within the Central Valley where runoff can be collected in great bulk and kept there until spring irrigation draw-downs begin, or systematically transferred to underground aquifers. The capacity of underground aquifers to store water in California is still poorly understood, but California’s water commission estimates there could be 10 million acre feet or more of underground water storage capacity in California. There is plenty of runoff, even in drought years, that isn’t being harvested. To allow California’s agricultural industry access to cheap, abundant water (agriculture consumes well over 80% of the fresh water diverted in California), better storage of storm runoff is essential.

(3) Widen and upgrade interstate freeways:
Along with interstate freeway upgrades, widen and upgrade all major freeways, highways and boulevards in California. Widen and retrofit bridges and tunnels. California needs smart lanes on upgraded roads, not the “bullet train.” As energy becomes abundant and cheap – and technology guarantees this will occur – the most convenient personal transportation appliance ever conceived, the automobile, will become even more indispensable. Cars of the future will be not only clean operating and fuel efficient, but will go faster than ever and be capable of operating on autopilot. To participate in this revolution in transportation, Californians need to upgrade their roads, not attempt to discourage people from using them by neglecting their maintenance, upgrades, and expansion.

(4) Upgrade existing rail corridors:
It is not necessary to develop bullet trains for passenger transportation in a state that will never have more than 50 million people living along an 800 mile corridor. But fast intercity rail, using existing track that is upgraded to tolerate speeds of 120 MPH is a viable proposition, particularly if these upgraded rail lines are also still utilized for faster freight transportation, which will always be more efficient via rail. Diverting public funds into bullet trains is folly, when immediate returns would accrue to investments in better roads and better existing rail.

(5) Streamline permitting process to allow more oil and gas drilling, and more mines and quarries:
California has abundant energy and mineral resources, but nothing can be developed without years of permit applications and legal battles. As a result, basic raw materials have to be imported at far greater cost than necessary. Making development of mineral resources in California more expensive than virtually anywhere else on earth robs Californians of jobs, and constitutes a drain on every facet of California’s economy that relies on these resources.

(6) Build nuclear power plants:
The latest generation of nuclear power technologies are safer than ever, and there is an abundant supply of nuclear fuel within North America. Adding a few nuclear power stations in California would have a dramatic impact on the price of electricity. Claims that nuclear power is more expensive than alternative energy are based more on the cost to overcome regulatory hurdles and lawsuits, not the actual construction costs, and certainly not the fuel costs. Nuclear power development is a key element towards delivering cheap energy again in California.

(7) Build an LNG terminal off the California coast:
Along with new North American sources of natural gas from shale, there is abundant natural gas around the world, and a global market exists for liquified natural gas that is transported by tanker. A few years ago an LNG terminal was proposed to be built fourteen miles off the coast in Ventura County, but was nixed by California’s legislature. By receiving LNG tankers several miles offshore, and piping in the less hazardous gaseous fuel, this terminal would not pose any threat, however remote, to onshore communities, and would allow California to further diversify their sources of this abundant and clean fossil fuel.

By pushing for high-speed rail which will never come close to ever operating at a profit, the current agenda of California’s union leadership is to create more jobs that are essentially parasitic. They will impose new costs to society to benefit a relatively small number of workers, but make everyone else poorer. It doesn’t have to be this way.

California’s union leadership should recognize that by successfully pushing for infrastructure projects that pay for themselves, they can not only create new jobs, but foster long-term economic growth. This, in turn, will enable perpetual job creation. But if they do this, they would have to take on the powerful environmentalist lobby, for whom high-speed rail is virtually the only project they seem to favor.

Union leadership should also recognize that as long as they are unwilling to take on the environmentalists, and push for projects that lower the costs for water, power, transportation – the basic necessities for all consumers – they are doing the bidding of the corporate special interests. These quasi-monopolies benefit from environmentalism run amok, because it means they avoid competition as long as new projects remain on the drawing board. It means they can charge exorbitant prices for commodities that ought to get cheaper every year.

For private sector unions – who value jobs in construction – to remain relevant and forge new partnerships, they will have to divorce themselves from the environmentalist lobby, which has become extreme, and from the public sector union agenda, which prefers to allocate resources to inflated pay and pensions for government workers over investing taxpayer’s money in public/private infrastructure projects.