UC Pension Crisis Creates Teachable Moment

November 25, 2014 By Jon Coupal 2 Comments

Californians have abysmally low levels of civic engagement as evidenced by the recent election where voter turnout set an historic low.  And the widespread disengagement of California’s younger voters is even worse.

True, in 2008 California’s youth turned out in large numbers to elect Barack Obama as president.  And in 2012 they turned out again because, in addition to Obama being up for reelection, Proposition 30 was on the ballot.  Proposition 30, which gave California the highest income tax rate and highest state sales tax rate in America was, ironically, entitled Temporary Taxes to Fund Education.

During the Proposition 30 campaign, Governor Brown traveled to several university campuses to push the massive tax hike promising that passage would prevent tuition hikes. California’s college students, being as gullible as they are idealistic, believed the promise hook, line and sinker.  So much for critical thinking.

But perhaps California’s younger voters are finally getting wise to all the broken promises of tax-and-spend politicians and that might explain, in part, why they stayed home in this last election.  And sure enough, their increasing cynicism is proving to be well founded.

Despite the massive tax hikes ostensibly to keep higher education affordable, the University of California Board of Regents just announced a sizable increase in tuition.  And UC students are none too happy.

Turns out that the driving force behind these hikes is the growing unfunded liability of UC’s pension fund and other items of questionable compensation.  Allysia Finley with the Wall Street Journal explains:  “UCs this year needed to spend an additional $73 million on pensions, $30 million on faculty bonuses, $24 million on health benefits and $16 million on collectively bargained pay increases. The regents project that they will require $250 million more next year to finance increased compensation and benefit costs.”

Moreover, Finley reveals the extraordinary level of waste in the UC system:  “Ms. Napolitano [President of the University of California] says that the UCs have cut their budgets to the bone, yet her own office includes nearly 2,000 employees—a quarter of whom make six-figure salaries. An associate vice president of federal government relations earns $273,375 a year, plus $55,857 in retirement and health benefits, according to the state controller’s office.  Thirty professors at UC Santa Cruz rake in more than $200,000 in pay, and most faculty can retire at 60 and receive a pension equal to 75% of their final salary. More than 2,100 retirees in the university retirement system collected six-figure pensions in 2011.”

At the moment, the outrage expressed by students in their protests – one of which resulted in a shattered glass door outside a meeting of the UC Regents – seems a bit unfocused.  They’re angry but, aside from the mere fact that their education costs are rising, many are not clear about the causes.

In a weird way, UC’s pension crisis might be the ultimate teachable moment for college students who typically have little grasp of anything related to public finance.

So, students, here’s the scoop:  There’s no such thing as a free lunch.  Public employee compensation is expensive; especially pension costs that you will be paying long after those of us who are older are long gone. Government waste, fraud and abuse in California is a real problem.  Those who pay taxes – a lot of taxes – have choices where to live and move their businesses – and that may not be in California.  Debt means future costs.  You might like the idea of High Speed Rail but you might want to study both the costs and viability of any megaproject before you hop on board.

And finally, don’t buy into any promise by any politician about what they are going to do for you without first figuring out what they are going to do to you.

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.

This article was originally published on HJTA.org

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Look Who Is Living Like the One Percent

November 19, 2014 By Jon Coupal 5 Comments

The far left smugly promotes a cartoonish image of upper income individuals as those who enjoy limousines, expensive wine, travel and lavish parties.  If one listens long enough to so-called “progressives,” one may begin to imagine that all rich people look like Uncle Pennybags, the little tycoon mascot of the Parker Brothers Monopoly game.

The myth, as perpetrated by progressives, is that the wealthy got to the top by cheating the little guy, gaming the system and evading taxes.  Of course, under this view, the rich are unquestionably evil and the very rich are known as the “One Percent.”  You don’t get any more evil than members of the One Percent.  (Unless, of course, an extremely wealthy individual devotes millions of dollars to advance Al Gore’s view of global warming, in which case they get a pass and advance directly to Go).

Given this myth – and its perpetuation by main stream media – it is ironic how many of those associated with government, most of whom share the far left ideology, are living like the cartoon version of the One Percent.

A recent news report from the Associated Press reveals that California’s health insurance exchange, Covered California, has awarded $184 million in no-bid contracts, including several worth a total of $4.2 million that went to a consulting firm, The Tori Group, whose founder has strong professional ties to Covered California’s Executive Director Peter Lee.  Other no bid contracts were awarded to a subsidiary of a health care company Lee once headed.

Isn’t this the kind of insider dealing that the radical left accuses the “Evil Rich” of using to build their fortunes?

Then there is what CBS investigative reporter David Goldstein discovered about the lifestyle of some California State University administrators. Seems they have been spending hundreds of thousands of dollars, donated for the purpose of supporting students’ educations, on amusements like fancy parties, alcohol, season tickets to the Hollywood Bowl and top restaurants.   No doubt members of the One Percent will be asking why they were not invited.

Showcasing the hypocrisy of some who vilify the wealthy is a very public critic of the One Percent, Randi Weingarten, President of the American Federation of Teachers, who takes down almost $560,000 in yearly compensation.   Her union paid nearly $120,000 to a limousine service last year, according to federal financial disclosures.

Then there are the two-dozen Sacramento lawmakers winging their way to posh resorts in Maui to attend “conferences,” with expenses being paid for by special interests with business before the Legislature.  Living large, indeed.

Not to be outdone, Sen. Kevin de Leon was sworn in as state Senate leader at a ceremony at the Walt Disney Concert Hall in downtown Los Angeles to which 2,000 guests were invited.  Invitations to the event called it an “Inauguration.”  Usually Senate leaders are sworn in at a low key ceremony on the Capitol steps.

After the ceremony, guests attended a reception in a blocked-off street outside the concert hall where free food and drinks were provided.  Sounds like de Leon just picked up the Chance Card allowing him to advance to Boardwalk, the most expensive property on the Monopoly board, where he will, no doubt, rub elbows with Uncle Penneybags.

So all this talk about how those in the private sector are greedy and those in the public sector are altruistic is, quite simply, balderdash.  The sad fact is that the public sector is just an inviting environment for self-serving behavior – if not more so.  The difference, of course, is that we the taxpayers pay for the latter.

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.

This piece was originally published on HJTA.org

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It’s Scary Season Again — Property Tax Season

November 8, 2014 By Jon Coupal 2 Comments

For many the real scare this time of years is not the monsters at our doors on Halloween but the property tax bill in the mail box.

Fortunately, as a direct result of Proposition 13 which limits increases in a property’s assessed value to two percent annually, most property owners have a good idea what their tax bill will be even before opening the envelope.  However, like we do every year about this time, the Howard Jarvis Taxpayers Association reminds taxpayers to carefully examine their latest property tax bill.  Although not common, assessors sometimes do make mistakes.

Taxpayers should understand the various charges and make certain that they are not being assessed for more than they are legally obligated to pay.  The best way to check a tax bill is to have your previous year’s bill handy for reference.

Checking the bill is especially important for those who bought their homes a few years ago at the height of the market.  If the current home value is actually lower than the assessed value shown on the tax bill the owner is entitled to file for a reduction in taxes.

Typically the property tax bill will show three categories of charges. They are the General Tax Levy Voted Indebtedness and Direct Assessments.

General Tax Levy

The General Tax Levy is what most people think of when talking about property taxes. It is based on the assessed value of land improvements and fixtures.  This charge usually makes up the largest part of the tax bill and it is the amount that is limited by Proposition 13.

Proposition 13 passed overwhelmingly by voters in 1978 established a statewide uniform tax rate of one percent of assessed value at the time of purchase and limited annual increases in assessed value to no more than two percent. From a practical standpoint this means that once the base year value of your property is established the General Tax Levy cannot be increased more than two percent each year. This allows all property owners to predict their property tax bills into the future and budget accordingly.

The best way to check to make sure that your current General Levy of Assessment is correct is to compare it with the previous year’s bill. The increase should be no more than two percent unless there have been improvements to the property like adding a room to a house or if you previously received a “reduction in value.” This bears repeating: Because the real estate market in many parts of California is recovering many homeowners who previously received a temporary reduction in “taxable value” from their assessment may now see an increase in their tax bill more than two percent from last year.  But in no case will the taxable value be more than the initial Prop 13 base year plus two percent annually from the date of purchase.  Although that may seem unfair, keep in mind that while the reduction was only temporary, the savings you received when your property was worth less are permanent.

If in doubt about the current value of your property, check sales of comparable homes in your neighborhood.  If homes like yours are selling for less than the valuation on your latest bill contact your county assessor and ask that the value and resulting tax be adjusted to reflect true current value.

Voted Indebtedness

Voted Indebtedness is made up of those bonds and per parcel taxes approved by the voters.

Local general obligation bonds for libraries parks police and fire facilities and other capital improvements are repaid exclusively by property owners. Because a minority of the population is required to pay the entire amount the California Constitution of 1879 established the two-thirds vote for approval of these bonds. This assures a strong community consensus before obligating property owners to repay debt for 20 or 30 years.

Until the year 2000 local school bonds also required a two-thirds vote but the passage of Proposition 39 lowered the vote to 55 percent. (Of course this did very little to improve schools as was promised). Because the 55 percent requirement guarantees that most school bonds will pass regardless of merit many homeowners are seeing a significant increase in the Voted Indebtedness column on their tax bills.

Less common than bonds are per parcel taxes — although this could change as a result of efforts by the Legislature to make parcel property taxes easier to pass. These are taxes on property ownership not on property value. Under Proposition 13 they require a two-thirds vote and are also listed either under “Voted Indebtedness” if they are being imposed to repay bonds or under “Other Levies” if they are for operational expenses of a local government entity.

Direct Assessments

Ironically under the system in place for over a century property taxes go into the general fund and are used for local services unrelated to property. For services to property such as sidewalks and sewers we pay extra. These charges are known as direct assessments.

Because of Proposition 218 — the Right to Vote on Taxes Act placed on the ballot by the Howard Jarvis Taxpayers Association in 1996 — property owners must be given a meaningful say in approving new assessments. Before an assessment can be imposed or increased property owners must be informed in writing and be given the opportunity to cast a protest vote on the new assessment or assessment increase.

For more information regarding your property tax bill go to HJTA.org and click on Frequently Asked Questions then scroll down to “About Property Tax Assessments”.

If you have a question about your property tax bill you should contact the office of your county assessor. It’s your money and you have a right to be certain that your bill is correct.

This piece was originally published on HJTA.org

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.

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Could the High Speed Rail Ruling Imperil the Water Bond?

October 28, 2014 By Jon Coupal 6 Comments

Proposition 1, the $7 billion water bond, has broad support from both Democrats and Republicans.  Unlike the previous version of the bond – which had an $11 billion cost – the updated version has less pork and a few more promises for actual water storage.  While HJTA opposed the previous version (and indeed we signed the ballot argument against it) we have taken no position on Proposition 1.  Our neutrality is compelled, at least in part, by the recognition that California does indeed have legitimate needs for improvements in our statewide water infrastructure.

But now we have a new concern.

The California Supreme Court has recently declined to hear an appeal in one of the many lawsuits challenging the California’s High Speed Rail project.  This is a case we originally won in the trial court which blocked the issuance of the High Speed Rail bonds because the project bore no relationship to the project that was promised to the voters back in 2008.  But in a ruling that stunned taxpayers, the Court of Appeal reversed the trial court which correctly found that the Constitution expressly requires the state prove that issuance of the bonds is “necessary or desirable.”   This constitutional mandate ensures that government lives up to the promises it makes to the voters.

A proper interpretation of the California Constitution would require voter approval of, not just the amount of the debt, but specification of the project to be funded.  In our lawsuit, we argued that the current HSR plan so deviates from the proposal presented to voters in 2008 that voter approval of the former proposal should not be deemed approval of today’s plan.  We presented evidence showing that today’s plan is not the true high-speed train that voters were promised.  The HSR bond measure promised that the project would be built with federal and private matching funds.  But today’s plan calls for a system that is not truly “high speed” and is funded primarily by California taxpayers.  (And, by the way, the projected costs have now tripled).

So how does the high court’s inaction impact today’s Proposition 1, the Water Bond?  The fact that the judiciary will not uphold expressed requirements in a bond proposal raises the specter that, no matter what a bond proposal promises about what will be built with the bond proceeds, those promises are meaningless.  In other words, when California voters are asked to approve a bond, are they just approving debt for any purpose at all?  This is the very definition of a blank check.

As the result of California Courts refusing to uphold the language of the High Speed Rail bonds, the opponents of any bond proposal, at either the state or local level, need only point to High-Speed Rail to remind voters that promises in a voter approved bond proposal are meaningless and unenforceable.

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.

This article originally appeared on HJTA.org

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Two Nov. 4 races critical for maintaining Prop. 13

October 21, 2014 By Jon Coupal 3 Comments

It’s late October and that means there are a lot of people out there wearing masks. But this isn’t about Halloween. This is about all the fake taxpayer interests – organizations and candidates – who are trying to gain an advantage in the upcoming election by portraying themselves as defenders of homeowners and Proposition 13.

At some level, we at Howard Jarvis Taxpayers Association ought to be pleased that others are attempting to use our name and the Prop. 13 label. This fakery, if nothing else, is an acknowledgment that taxpayer issues are very important to voters – even in a left leaning state like California. After all, isn’t imitation the sincerest form of flattery?

Perhaps.  But we should not – and will not – countenance deception.

Exhibit A in the “fake” category is in the hotly contested state senate race in Orange County between Janet Nguyen and former Assemblyman Jose Solorio.  Nguyen is a solid pro-taxpayer candidate and Solorio is a typical liberal politician who would, if given the chance, repeal Prop. 13 in a heartbeat.  The problem for Solorio is that this district is in Orange County whose voters are more conservative and hostile to higher taxes.

That is why Solorio has enlisted the services of none other than Governor Jerry Brown himself to do both radio and television ads in a flailing effort to convince voters that, no – he really does like Proposition 13.  But recent polling suggests that Orange County voters aren’t fooled and that HJTA’s strong endorsement of Janet Nguyen is far more powerful than the Governor’s push for Solorio.  (The fact that Solorio consistently received “Fs” on HJTA’s legislative report card while he was in the Assembly makes his attempt at deception particularly difficult.)

This contest is critical for the preservation of Proposition 13.  It is the most high stakes race in the entire state because if Janet Nguyen wins, this will prevent the tax-and-spend California Legislature from passing tax increases at will and placing anti-Proposition 13 constitutional amendments on the ballot.

In addition, it’s not just candidates who attempt to hold themselves out as pro-taxpayer just to fool voters.  In the current election cycle, a group we’ve never heard of before is selling its endorsement in favor of local tax hikes and left leaning candidates.  The so-called “California Republican Taxpayers Association” has no bona fides as a legitimate taxpayer association.  Moreover, its use of the word “Republican” has party officials incensed and strongly considering litigation for trademark infringement.

Finally, the most unusual attempt at deception we’ve seen this election is a mail piece from Democrat Sharon Quirk-Silva who is running against pro-taxpayer Republican Young Kim.  Like the Nguyen-Solorio race, this is a battle being fought in mostly conservative Orange County. And, like Solorio, it is hard for Quirk-Silva to hide her anti-Prop 13 animus.  So what is her strategy?  Simple – she puts her name beside Howard Jarvis Taxpayers Association in a mail piece which simply notes that both she and HJTA support Proposition 2 – a mostly meaningless initiative on the November ballot.  (Prop. 2 is a marginal improvement to the state’s existing “rainy day” fund law so we support it.  Note, however, it is not the hard spending limit we would prefer).

By putting her name next to HJTA, is Quirk-Silva attempting to associate herself with the “gold standard” of California taxpayer groups Apparently so.  But this plan could easily backfire by giving Young Kim an opening to inform voters that it is she who has the endorsement of the HJTA Political Action Committee.

These examples are but a few of the often silly efforts at attempting to trick voters into believing that anti-taxpayer interests are not what they really are.  Voters need to be aware of this treachery.  Fortunately, most know who to trust.  And it sure as heck isn’t the candidates and groups who are “Jarvis Jesters.”

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.

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