Take a scalpel to $345 million in California’s stem-cell research waste

October 10, 2017 By Jon Coupal and John Moorlach 3 Comments

Stem Cell researchJust as good scientists are drawn to conclusions by solid data, the decision whether to spend another $345 million by California’s state-run stem-cell research project should be based on an objective analysis as to whether it would be cost-effective. A rigorous cost-benefit analysis is not only fiscally prudent, it avoids being drawn into the moral dilemmas posed by stem-cell research, especially with respect to cells from human embryos.

Created in 2004 with the passage of Proposition 71, the California Institute for Regenerative Medicine was authorized to spend $3 billion in bond proceeds. But as is typical with most bonds, the interest payments would double the cost to $6 billion. CIRM has made $2.4 billion in grants and used $255 million for administration and prepaid interest — leaving $345 million remaining to disburse.

Should CIRM distribute the remaining $345 million (which, with interest, would amount to $690 million in repayment costs)? Should this remaining pool of funds be doled out?

To read the entire column from the Orange County Register, please click here.

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John Moorlach: “Who’s Your Daddy?” bills

October 4, 2017 By John Moorlach Leave a Comment
When assembling the 2017 top 20 worst bills going to the governor’s desk, there were some 15 that were “Who’s Your Daddy?” bills. I could only include a sampling (see MOORLACH UPDATE — 2017 Top 20 Veto Worthy Bills — ).
Nearly two years ago, I provided an extensive analysis of how the public employee unions run Sacramento (see MOORLACH UPDATE — Blame the Unions — ).  
One of my biggest concerns in this posting was reiterated recently (see MOORLACH UPDATE — What Pension Crisis? — ). “The unions will say it wasn’t our fault. We didn’t vote for it. You guys [the elected officials] voted for it,” said Sen. Moorlach in an interview Monday.
 
Now that they have the supermajority in the Capitol, public employee unions have free rein in California. They are adding incrementally to their power by implementing law changes that will benefit them. I know that to the victor go the spoils. But, in a government structure, decreasing the tools management has is a strategic mistake. And, it will become apparent in an economic downturn, when cost savings need to be pursued in order to save current positions in an agency.
 
Greed blinds. And, as I’ve said on numerous occasions, when money talks the truth is silent.
 
One bill this year really showed the imbalance. It begged the question, “Who’s Your Daddy?” Major League Baseball fans will remember this chant and the accompanying clap routine.  In fact, it even became a segment of a TBS MLB Post Season show.
The bill that set this chant in my brain this session was AB1250, which would greatly increase the cost to counties of personal-service contracts, sharply reducing help given to citizens, especially the poor. We introduced the consequences of the bill to you in this posting: MOORLACH UPDATE — Who’s Your Daddy? — . I provided the fun when I asked this very question in the Senate Governance and Finance Committee meeting.
 
The home team provided an editorial, with Orange County voicing its opposition. I provided my own editorial, on the premise that AB1250 was not being relegated to a two-year bill status and may be resurrected and show up at the last minute on the Senate Floor (it didn’t) in MOORLACH UPDATE: Who Runs Our Government?
 
When a budget trailer bill included an imposition on Tesla, a manufacturer with some 14,000 employees in the Fremont area, I had to ask again.
 
By the final night of session, one Democrat Senator made Bingo cards. The squares were words that may be spoken on the floor. This is one way to while away the hours as this annual exercise drones on past midnight. I heard one square stated, “Sen. Moorlach says ‘Who’s Your Daddy?'” The chant had sunk in.
The OC Register provides the details of the union-assisting bills in my editorial submission.
A common union tactic is to twist something. The headline of a recent post did just that. As Sacramento is brimming with current and retired state employees, the headline was inflammatory, when not factually accurate.  So, I decided to provide a clarification. The good news?  It was printed.
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John Moorlach: What Pension Crisis?

September 27, 2017 By John Moorlach 1 Comment

I sit on the Senate Public Employment and Retirement Committee, which held a joint hearing with its Assembly counterpart earlier this year. During the hearing I asked a very difficult question of Dane Hutchings, the legislative representative of the California League of Cities (see MOORLACH UPDATE — 37th in the 37th — August 9, 2017).

In shaping my question, I used the “F” word – “fraud” – and it caught the attention of CalPERS and its administration. This started a dialogue, which has been very helpful. So, I recently sent two letters, addressed to two separate CalPERS Board members, requesting very specific information (see  https://www.calpers.ca.gov/docs/board-agendas/201709/financeadmin/item-6c-02.pdf and https://www.calpers.ca.gov/docs/board-agendas/201709/financeadmin/item-6c-01.pdf).

Instead of writing back with an affirmative response and attaching the requested data, the matter was put on the agenda of this month’s CalPERS Finance and Administrative Committee meeting (see MOORLACH UPDATE — OC’s Newest Landmark Plaque — September 20, 2017).

The entire segment of the Committee meeting related to my requests is an amazing watch. To have city managers state that they are facing Chapter 9 bankruptcy and even providing the precise upcoming year they may be filing is a massive disclosure. You would think it would be headline news for the local papers where the cities are located. The California Policy Center certainly thought the discussion was disturbing and provides the piece below.

I’m trying to address the pension crisis in California. It’s getting noticed. Let’s hope the testimony of a dozen plan sponsors wakes up the super majority in the Capitol. Also see MOORLACH UPDATE — Pursuing Reforms — August 11, 2017.

BONUS:  If you happen to watch the linked video to the CalPERS meeting, you will observe the public employee unions testify as the concluding witnesses to strong arm those CalPERS Board members who just also happen to be public employee union members. The massive influence of public employee unions in Sacramento is evident and detrimental to the fiscal well being of our state. I discuss this in more detail on Rick Reiff’s most recent “Inside OC” program and it is worth a watch at https://www.youtube.com/watch?v=t-rpMqqQJJE&feature=youtu.be.

DOUBLE BONUS:  I don’t want to be in the “me thinkest thou protesteth too much” category, but crime is going up (see MOORLACH UPDATE — Taken to Task — August 23, 2017). The FBI released the 2016 crime statistics on Monday of this week and the news is not good. Allow me to give you just one of the many links, as I spend a lot of time in Sacramento, at http://www.kcra.com/article/sacramentos-violent-crime-rate-was-higher-than-us-crime-rate-in-2016/12473362.

TRIPLE BONUS:  To date, the governor has not addressed any of the top 20 bills Assemblyman Harper and I have recommended he veto (see MOORLACH UPDATE — 2017 Top 20 Veto Worthy Bills — September 22, 2017).

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John Moorlach: Sacramento has no clue how to solve housing crisis

September 18, 2017 By John Moorlach 2 Comments

Sacramento just doesn’t get it. A housing crisis is not solved with new fees, bonds and local government process overrides.

Let’s talk about housing. KQED provides some of the gory details in a recent piece. But, allow me to elaborate. A quick tip, KQED provides the last act first.

For Senate Bill 3 (and 5), I provided the following abbreviated concerns on the Senate Floor:

  1. Let’s review the housing market over the last 11 years. In Orange County, the median price for a home in 1996 was $221,800. Ten years later, after the subprime mortgage boom (for fun, watch “The Big Short”), the median rose to $739,000. With the Great Recession, the median went down to $498,200 in 2011. And, as of June 2017, it is back to $734,200.
  2. Why the recent resurgence?
    • A slow, but steady rise in job growth.
    • Foreign investors. They came in at the market low as a safe haven.
    • Explaining an increase of all-cash transactions; more than 50% in 2013.
    • This has caused a decrease in home ownership and more renters.
    • Difficulty for developers to obtain entitlements and to build.
    • The other usual suspects, like NIMBYism, CEQA and open space demands.
    • For those lucky enough, try working with the California Coastal Commission.

It makes you wonder, what has Sacramento done to address foreign buyers and entitlement restrictions? And, I can see now why SB 714 (Newman) was removed from the calendar this last week, as it doubles down on taking entitled property for building new homes in the city of Brea and requiring total open space. Boy, this bill was so out of touch, the Democrats had to save the author from himself.  But, I digress.

  1. What is the current dilemma?
    • Americans find the home buying process too overwhelming.
    • They find it too difficult to come up with the down payment.
    • More than other generations, millennials value experiences over ownership.
    • Americans change jobs more often than in previous generations.

With SB 2, Sacramento will be adding to the burdens. Within minutes, the Democrats also voted for AB 166 (Salas), which provides exemptions from the new SB 2 fees. You can’t make this stuff up. And those who qualify are not those going through a foreclosure!

Then I warned them about issuing more debt by sharing the following disturbing data from Moody’s Investors Service. Among the 10 largest states in the nation, California joins Illinois and New York as the three worst in all of the following categories:

  1. Debt to personal income – 4.70%, when the median for all states is 2.50%.
  2. Debt per capita – $2,323, when the median is $1,025.
  3. Debt as a percentage of state GDP – 3.94%, when the median is 2.21%

And the state’s own bond credit rating is a measly AA-, just above Illinois, at BBB+. This means that California will be paying higher interest rates than issuing states with top credit ratings.

If this wasn’t enough of a reason to vote against the bond measures, I also gave a lecture on future budget and balance sheet concerns – a “what’s up?” listing:

  1. A $4 billion bond translates into $225 million per year in payments! Where will this come from?  The Senate approved two such bond bills on Friday.
  2. The annual contributions for CalPERS and CalSTRS are also rising.
  3. The Proposition 98 school funding threshold into the General Fund is also rising.
  4. The minimum wage is rising and will impact the budget by $4 billion per year.
  5. The recent voter approved $9 billion bond for school improvements will impact the General Fund by $500 million per year (no wonder the Governor hasn’t released any tranches).

What does all this mean? In a few short years, the General Fund is screwed. But I put it more politely on the Senate floor, stating that “it will be dramatically impacted. Good luck with that.”

Sacramento so much wants California to be like other blue states that are heading for the fiscal precipice, such as Connecticut, Illinois and New York. And quickly. But, this is the wrong race to be in.

You can bet the governor will sign these bills and the monopoly party will pat themselves on the back for once again dealing with a problem with inappropriate solutions. Tragic.

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Who Runs Our Government?

September 14, 2017 By John Moorlach 1 Comment

Many years ago, it became clear to many of us that Sacramento had two parties, the Republican Party and the Union Party. It is amazing how many bills are approved that incrementally give unions, both public and private, more and more territory over management or nonunion private sector businesses.  It’s a testimony to their effectiveness, that such a small portion of the work force can control so much influence. Now that they have so much influence, that the changes they seek are no longer incremental.  In fact, they are swinging for the fences and seem to be closing in on wholesale ownership of the state.  They will use their power to the fullest, following the dictum of “more.” They are proving that they are “the Daddy” around the Capitol.

The most egregious example this year is AB1250. Almost every newspaper in California has opined against this bill. Consequently, it was reported that it has become a two-year bill. Yet, we have been told that AB1250 may come back to the Senate floor today or tomorrow for a vote (also see MOORLACH UPDATE — AB 1250 OC Opposition — September 5, 2017  john moorlach, MOORLACH UPDATE — AB 1250 Labor Dominance — July 13, 2017  john moorlach, and MOORLACH UPDATE — AB 1250 Labor Dominance — July 13, 2017  john moorlach).

With this shadow hanging over the Legislature, I submitted one last editorial in opposition and it was published by Fox & Hounds.
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Moorlach Update – Whistleblower Reaction

September 7, 2017 By John Moorlach Leave a Comment

The Senate voted on nearly 200 bills and then adjourned for the week a few hours ago. The only bill a reporter asked my opinion on was SB51. “Why did I vote against it?”

SB51 addresses a certain category of whistleblowers. Having held this title for my efforts back in 1994, you should know that I like whistleblowers very much. Earlier this year, I wrote a bill to protect whistleblowers in college who were being persecuted, vilified and punished for their political beliefs by college professors and administrators. This was a very real problem in my district. See Senate Bill 677, the Student Whistleblower Protection Act.

Incidentally, my bill died at the hands of the legislator who authored SB51, and she was the only opposing vote on SB677 (it received 2 votes, but the other Senate Judiciary Committee members abstained). You’ve got to love the ironies up here in Sacramento.

While the reporter accurately reflects my comments, focusing on my concerns that there were negative fiscal impacts of the state of California absorbing work undertaken by the federal government, it must also be said that my legislative colleagues need to be a little more circumspect and less reactionary in the work we’re doing in the state capitol. SB51 is another bill in a long list of anti-Trump measures that has no real bearing on fixing our poorly run state.

Yes, we need courageous people to stand up when government messes up, which is often enough. However, a new federal administration has the ability to run its websites as it sees fit as long as it obeys all relevant public information and transparency laws.

In all seriousness, while this may be a problem for some, pulling politically controversial links claiming “scientific consensus” on climate change off of a federal government website does not rise to a level of concern for me. As far as I can tell, the information hasn’t disappeared and is available to those that need it. Indeed, all of the scientific data prepared by scientists, often with government grants in government institutions or institutions of higher learning, is redundantly saved and shared in numerous places and any concerns of it being lost are absurd and rise to the level of hyperbole. I tried to address this issue during the very predictable debate over cap and trade on my website, as I prefer providing more information to you, rather than less.

The Mercury News provides my response. Next week we’re anticipating going through more than 300 more bills. The fun life continues.

John Moorlach, R-Costa Mesa, is a state senator representing the 37th District.

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Pensions: The high cost of ‘socially responsible’ investment policy

August 14, 2017 By Steven Greenhut 5 Comments

Calpers headquarters is seen in Sacramento, California, October 21, 2009. REUTERS/Max Whittaker

SACRAMENTO – A newly released report from the California Public Employees’ Retirement System confirms that, fulfilling the Legislature’s directive to divest from coal-related investments, the pension fund has now largely exited from coal stocks. But as news reports this week suggest, this “socially responsible” investment policy has come at a price, as coal stocks soar under the Trump administration’s fossil-fuel-oriented energy policy.

The Public Divestiture of Thermal Coal Companies Act of 2015 required CalPERS to “identify, engage and potentially divest from companies meeting the definition of ‘thermal coal companies.’” The pension fund was directed to do so “consistent with its fiduciary responsibilities,” providing some wiggle room for the fund, whose primary duty is to maximize investment returns to make good on its public-employee pension obligations.

Nevertheless, CalPERS promptly identified two dozen publicly traded companies that generate at least 50 percent of their revenue from mining thermal coal, as required by the law. As the recent report explains, three companies adapted their business model and redirected their investments toward clean energy. As such, they were exempt from divestment. CalPERS had no holding in eight other companies identified under the act.

But 14 companies “failed to indicate applicable business plan adaptations, or failed to respond to CalPERS engagement efforts and were subject to divestment,” according to the report. As the Sacramento Bee explained, “stocks for 13 of the 14 companies are worth more than they were a year ago when the pension fund was divesting from the industry.” The shares of one of those firms were trading at 15 times their April 2016 levels.

There’s little question that the act was designed to achieve a social goal, rather than one related to increasing CalPERS’ investment returns. “Coal combustion for energy generation is the single leading cause of the pollution that causes global climate change,” said the bill’s author, Sen. Kevin de Leon, D-Los Angeles, as quoted in the Senate bill analysis. He added that coal is “a leading cause of smog, acid rain, and toxic air pollution” and that “most U.S. coal plants have not installed these technologies.”

CalPERS’ investment staff tends to oppose socially oriented investments, but the CalPERS board has the final say. The issue was debated at the CalPERS Board of Administration meeting in May. The Sacramento Bee reported on union officials who criticized the policy at the board meeting. “We cannot afford to lose funding for law enforcement officers in exchange for a socially responsible investment policy,” said Jim Auck, treasurer of the Corona Police Officers Association.

This isn’t the first time that there’s been tension between the fund’s politically oriented investment goals and its desire to increase investment returns. At a board meeting last year, CalPERS investment officials argued for an end to a 16-year ban on tobacco-related investments made by the system’s own investment officers. (Tobacco investments by outside firms were still allowed.) Because tobacco stocks had rebounded since 2000, news reports estimated that the pension fund had lost about $3 billion because of that decision. The fund’s total investments are valued at more than $300 billion.

Instead of following the investment team’s advice, the CalPERS board continued to ban tobacco investments and also decided to divest about $547 million in tobacco-related investments handled by outside firms. That decision also was based on social goals. Advocates for tobacco divestment argued that CalPERS ought not invest in firms that sell deadly products.

At the time, the tobacco-divestment decision was particularly controversial because CalPERS faced investment returns of a measly 0.61 percent. Now, with CalPERS’ latest returns showing a robust 11.2 percent gain, it makes continuing with the coal divestment plan – and other socially oriented investment strategies – an easier option to pursue.

Regarding coal, CalPERS isn’t the only state agency to pursue divestment. Last summer, California Insurance Commissioner Dave Jones launched his Climate Risk Carbon Initiative, which called for any insurance companies that do business in California to divest “voluntarily” from most of their thermal-coal investments. The state vowed to publicize the names of companies that didn’t comply and ramped up mandatory reporting requirements.

Insurance commissioners regulate insurers to assure they have the resources to pay any claims. Yet the department’s divestment request clearly had a social (and some say political) goal. Jones justified it by arguing that such investments put the companies at risk. “As utilities decrease their use of coal and other carbon fuel sources … investments in coal and the carbon economy run the risk of becoming a stranded asset of diminishing value,” he said in a statement.

But critics of the policy, including a 2016 study by this writer, note that insurers are invested in extremely conservative positions, mostly in fixed-income bonds, and that even the insurer with the largest percentage of coal-related investments (TIAA-CREF) had only 1.76 percent of its total assets in such holdings. Furthermore, the value of the stocks already reflects the well-known uncertainties that the insurance commissioner raised. Jones’ office argued, in response, that “since 2011, coal prices, cash flows, and company valuations have fallen sharply thus adversely affecting and bankrupting numerous coal companies.”

The broad question, especially for CalPERS, is the one raised by the union officials at the recent board meeting: Are the political and social gains of divesting from these industries worth the costs in investment returns?

Chief investment officers “invest for value and don’t appreciate being hamstrung by legislators who don’t know how to manage a diversified portfolio,” said Sen. John Moorlach, R-Costa Mesa, who voted against Sen. de Leon’s divestment act. “I think I’m the only legislator who managed a $7 billion portfolio. And the studies I’ve seen have shown that social investing has produced lower returns.”

Despite the recent good-news returns, CalPERS has an enormous amount of unfunded liabilities – the shortfall in assets to make good on all the long-term pension promises made to government employees. The system is only funded at around 68 percent. This should be of concern not only to the agency, the Legislature and public employees who depend on a CalPERS retirement, but to California taxpayers. Ultimately, they are the ones who will pay for any pension shortfalls.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

The article was originally published by CalWatchdog.com

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Democrats want to extend health coverage to undocumented immigrants

June 10, 2017 By Elizabeth Aguilera 14 Comments

Health for allCalifornia’s Democratic legislators want to extend health benefits to undocumented young adults, the continuation of an effort that ushered children without legal status into the state’s publicly funded health care system last year.

It is unclear when the program would start or how much the state would spend if the proposal, which could cost up to $85 million a year, is approved by Gov. Jerry Brown. Lawmakers are working out details ahead of their June 15 deadline for passing a new budget.

The plan would provide full-scope coverage for 19-to-26-year-olds who qualify for Medi-Cal, the state’s name for Medicaid. Currently, the federally funded program covers only emergency visits and prenatal care for undocumented residents. Under the proposal, revenue from taxes on tobacco products would absorb expenses for all other coverage.

Democratic Sen. Ricardo Lara of Bell Gardens has been one of the strongest voices for expanded care. In 2015, he pushed for coverage for all adults. That proposal was changed to admit only undocumented children; it took effect last year. This year, he said in a recent video message to supporters, “We are going to make the final push to ensure we capture our young adults.”

Supporters’ ultimate goal is to include all undocumented adults, said Anthony Wright, executive director of Health Access California, a health care consumer group backing the proposal.

“We believe without coverage people are sicker, die younger and are one emergency away from financial ruin. It has consequences for their families and their communities — both health and financial consequences,” he said.

The plan would mean that undocumented children currently in the program would not age out at 19, putting low-income undocumented immigrants on a par with those allowed to stay on their parents’ insurance under Obamacare until they are 26.

Sen. John Moorlach, a Costa Mesa Republican, opposes an extension of benefits. One reason is financial. California doesn’t have “a balance sheet we can brag about,” he said, citing the state’s debt load, among other reasons.

Secondly, he disapproves of illegal immigration. Moorlach migrated to the U.S. legally as a child with his family from the Netherlands.

“I’m kind of offended that we feel an obligation to pay for expenses for those who did not come through the front door,” he said. “I certainly have compassion and want to help people in need, but I’m having difficulty, as a legal immigrant, because we are already in such bad fiscal shape.”

Advocates argue that undocumented immigrants help propel California’s economy with their labor and the taxes they pay, and that they cost the state money when they don’t work because of illness or when they end up in the emergency room.

“Health care is a right,” said Ronald Coleman, director of government affairs for the California Immigrant Policy Center, an advocacy organization and supporter of the proposal. “These are folks we are investing in through the California Dream Act and through other programs our state offers, and it makes sense to invest in our future, which our young adults will be.”

Estimates vary for how many people this expansion of Medi-Cal would serve and what the costs would be. Each house of the Legislature has passed its own version of the proposal, with differing figures attached.

The Assembly allocated $54 million a year to cover an unspecified number of additional enrollees, with a July 2017 start date. The Senate proposed $63.1 million in the first year, beginning in 2018, and $85 million annually thereafter, also without specific population numbers.

Coleman’s center, which is working closely with lawmakers on the issue, estimates about 80,000 new people would be eligible, and the cost would be around $54 million a year. That assumes the federal Deferred Action for Childhood Arrivals program continues, because it provides access to Medi-Cal. If  DACA were eliminated, the figures would increase to about 100,000 eligible people and about $84 million in annual costs, Coleman said.

The governor’s proposed budget does not include the proposed expansion or any money for it.

Kevin, a 19-year-old Angeleno who asked that only his first name be used because he lives in California illegally, wants the proposal to succeed. He has been working for more than a year to distribute information about Medi-Cal children’s coverage to immigrant families.

He meets all but one of the requirements for DACA: He was not in the country before June 15, 2007. He arrived in the U.S. in 2011 at age 14 from Guatemala, on a visa that later expired. He graduated high school, has no criminal record and is now majoring in Business Administration at California State University, Los Angeles.

“There’s this misunderstanding that young people are healthy,” said Kevin, who suffers from eczema. He worries about the chronic condition flaring up. “When it gets worse, it doesn’t let me do anything with my hands.”

He is enrolled in a county health insurance program for low-income residents, but he can’t afford a dermatologist. He can barely pay for the prescription lotion he uses for the eczema and sometimes goes without it.

“We are trying to have a better economic standard, and we are like the building blocks of this society,” he said. “Having health insurance will allow us to focus more on school and do our regular day-to-day activities. A healthier society works better for everyone.”

If lawmakers can now agree on details, a consensus proposal will go to the full Legislature for approval. The deadline for that is June 12.

This piece was originally published by CalMatters.org

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Why California’s Finances Could Derail Their Energy Plans

January 26, 2017 By Todd Royal 7 Comments

Energy power linesAccording to State Senator John Moorlach, R-Costa Mesa, California has real financial problems that need to be immediately addressed. A self-described Truman Democrat, Joel Kotkin, in a recent syndicated article echoes the same sentiments. Some of the problems are California has the highest taxes overall in the nation, worst roads, underperforming schools, and the recent budget has at least a $1.6 billion shortfall.

Moreover, depending on how the numbers are analyzed California has either a $1.3 or a $2.8 trillion outstanding debt. This is before counting the maintenance work needed for infrastructure, particularly roads, bridges and water systems. Yet tax increases aren’t covering these obligations, and even the bullet train project, which held so much promise when it was passed are now billions over budget.

However, the financial strain also has California’s net financial position running a $169 billion deficit according to the Comprehensive Annual Financial Report, which puts California ranked last in the nation. Deferred maintenance on our state roads and highways is roughly $59 billion. Estimates of California’s unfunded pension liabilities – assuming a rate of return – above 5% has CalPERS at $114.5 billion, CalSTRS at $76.2 billion and UC Pension at $12.1 billion.

California in addition has the highest unfunded retiree medical liability in the nation, second highest gas taxes when cap and trade is added, highest corporate and individual income taxes, and lastly has the worst business competitive environment in the U.S. as well.

Our biggest issue of all could be that our nation’s unfunded pension liabilities have reached upwards of $5.6 trillion with California’s share at $956 billion. These above-mentioned sobering assessments of our state’s financial and societal health are reasons to question why California has become an outlier of progressive policies – particularly when it comes to energy – with renewable energy being at the forefront of our overall energy portfolio.

At one time California was the leader in sensible environmental, education, manufacturing and cultural polices, but those days have seemingly passed. As the country moved to the right during the recent election, California has entrenched itself as the stronghold of the left-leaning, progressive movement. Nowhere has this played itself out than in California’s embrace of global warming with AB 32 and SB 32. Both energy policies are known to restrict economic growth, and make all forms of energy more expensive. Whether you believe or not in global warming and climate change, California’s embrace of the fundamental tool for economic growth – affordable, scalable energy – has now become harder than ever to achieve with the voters, California legislature and Governor’s full embrace of these policies.

At this time California isn’t creating middle or upper middle class jobs, except in the northern California region. With San Francisco leading the way. Apple just announced they are creating 2,000 jobs in Arizona with firms such as Toyota, Tesla and Carl’s Jr., having followed suit the last few years. Recent labor announcements about California creating 21,600 private sector jobs in December turned out to be a false narrative.

According to payroll processing company Automatic Data Processing Inc. working with Moody’s Analytics Inc., put the figure at only 2,400 “goods producing types of jobs.” Meaning that nine out of ten jobs created were service sector, minimum wage paying levels jobs.

With this type of employment opportunities being created how are Californians expected to pay for an energy portfolio that strongly relies on renewable energy? This could be turned around with great paying careers that the oil and gas industry provides. As an example, according to Russell Gold’s book “The Boom,” page 62, the average oil-field worker made $91,400.

Renewable energy at this time doesn’t work on the type of basis that could power neighborhoods, cities, counties, or this state. Additionally, renewable’s technology hasn’t solved a number of key issues for energy security, reliability and scaling at a cost effective measure to reach all California markets.

These main problems are: 1) storage of excess energy, 2) intermittent weather issues when using wind and solar, 3) generous tax credits needed for profits (Tesla as an example), and 4) modernizing the grid needs to take place, because renewable energy causes surges that California’s grid isn’t able to handle from over 38 million Californians.

As California relishes its role fighting the new President, it is hard to imagine his administration doing anything to assist California lowering its energy costs. It’s not hard to imagine that if you live in Los Angeles, San Francisco or other expensive coastal enclaves that a $200,000 a year salary isn’t enough once taxes are paid. Therefore, why is California nudging the new President towards confrontation?

Gun control, immigration, and even snubbing him at his inauguration, members of the California Congressional delegation are playing a dangerous game. Joel Kotkin has many times called California’s energy policy an amalgamation of “green clergy, or a clerisy.” Trump also has control over federal dollars. California is expected to receive $105 billion this year, with $78 billion going to health and human services programs. Likewise Trump has nominated pro-fossil fuel advocates to the Departments of State, Energy, Interior and the EPA. It doesn’t seem wise for California to not want to work with the Trump administration on opening up parts of California to energy exploration to assist with politically disagreeable problems now in the mix.

California has billions of gallons of oil and trillions of cubic feet of natural gas sitting off our coastlines and in the Monterrey shale. Jobs aren’t being created that can sustain working families, infrastructure is lagging and our energy portfolio isn’t functioning correctly to contain costs.  Our high-energy costs are one of the biggest factors why companies and CEOs are leaving California.

Many astute energy observers believe California will need to cut 100,000 jobs and increase energy prices to meet our ambitious climate goals. These goals could be met with moving towards natural gas and nuclear-powered plants.

A desirable goal for the new year would be for voters to begin considering voting for moderate, business-friendly Democrats, and sensible environmental Republicans who believe in an all-of-the-above approach when it comes to energy policy.

This perfect amalgamation of animosity rapidly approaching California could be mitigated with sensible, low-cost energy policies that benefit all of California.

Todd Royal is a geopolitical risk and energy consultant based in Los Angeles.

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Senator Moorlach Cautions Majority Party on the Costs of the Holder Hire

January 5, 2017 By CPR Editors 21 Comments

attorney-general-eric-holderSACRAMENTO – Senator John Moorlach, R-Costa Mesa, provided the following statement regarding the legislative Democrats’ decision to hire former U.S. Attorney General Eric Holder as their next line of defense against the incoming Trump Administration.

“If the majority party continues to poke President-elect Trump with a short stick, then they better be prepared with a Plan B. And, as far as I can tell, there is no alternative plan should these combative moves not be received well by the incoming Trump Administration.

“We cannot and must not jeopardize Federal funding to our state, counties and cities. They cannot afford it, especially with increasing pensions costs at the door.”

The above statement was sent out in a press release from the office of state Sen. John Moorlach.

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