COUPAL: DON’T BLAME PROP. 13 FOR CALIFORNIA’S MENTAL HEALTH CRISIS

The tax-and-spend lobby loves to blame Proposition 13 for all of California’s woes. This has become so routine that we at the Howard Jarvis Taxpayers Association have compiled a “Top 10” list of things for which Proposition 13 is alleged to be responsible.

Keep in mind that these are more than just general complaints that “Prop 13 prevents unlimited taxes on property.” We gladly accept the blame for that one. But most of the attacks lack foundation and many are just flat out laughable.

One of our favorites is the column penned for a small local paper by a physical education teacher who cited Proposition 13 as the reason the shot putters on his track team kept losing the heavy iron balls.  It seems that the young athletes were unable to recover the shots in the high grass, and it was due to Proposition 13 that there was no money to keep the grass trimmed.

Click here to SUBSCRIBE to CA Political Review 

Then there was the columnist who blamed Proposition 13 for the not guilty verdict in the O.J. Simpson murder trial. According to the author’s logic, Proposition 13 prevented Los Angeles from paying enough to hire the best investigators.

Of course, no criticism of Prop. 13 would be complete without bringing up the obligatory trope about how it “starved” education. This myth is harder to kill than a vampire despite incontrovertible data showing that per pupil spending, adjusted for inflation, is at least 30% higher now than the years leading up to Prop. 13’s passage in 1978.

Other societal ills for which Proposition 13 is alleged to be at fault:  The increase in rates of obesity and the reduction in the number of choral singers.  Seriously. We’re not making this stuff up.

Because mental health and the associated homelessness is now the “crisis de jour” in California, it only stands to reason that Prop. 13 would be blamed for that as well.

In an otherwise objective CalMatters piece by Jocelyn Wiener, she contends that the “California tax revolt [led] to austerity,” and that Prop 13 “reduced the amount of money available to counties for a variety of services, including mental health.”

But any reduction in mental health services was far more a result of lack of prioritizing important programs. Moreover, the state itself – possessing an “obscene surplus” according to Jesse Unruh – immediately backfilled local government coffers. Finally, any alleged “austerity” disappeared quickly because, in the wake of Prop. 13’s passage, explosive economic growth created billions in new tax revenue.

Click here to read the full article in the Redlands Daily Facts

Coupal: California is not East Berlin. A wealth tax in California would expedite the exodus.

Daily news reports on the great “California Exodus” are not just from conservative outlets. Left-leaning publications such as the Los Angeles Times and San Francisco Chronicle have recently reported on the outmigration of upper-income citizens who, even if not billionaires, still generate a lot of income tax revenue.

FILE — In a photo provided by Alex Lee for State Assembly 2020, Alex Lee poses for a photo at the Warm Springs Bay Area Rapid Transit station in Fremont, Calif., May 22, 2019. (Vanessa Hsieh/Alex Lee for State Assembly 2020 via AP)

This past week the California Legislature held a hearing on Assembly Bill 259 which would lay the foundation for the imposition of a wealth tax. The companion legislation to AB 259 is a proposed constitutional amendment that would, among other things, effectively sweep away Proposition 13’s limits on taxing property.

Fortunately, the idea that California would be the first in the nation to impose a highly unpopular wealth tax is so radical that the proposal was rejected by Democrats as well as Republicans on the Assembly Revenue and Taxation Committee. It didn’t take long for the Democrat chair of the committee to shuffle the bill to the “suspense” file where bad legislation goes to die.

Coincidentally, the wealth tax hearing occurred on the same day that Gov. Newsom released his proposed budget. Things got a little sparky during the presentation with Newsom pushing hard against the Legislative Analyst’s figure of a $68 billion deficit. Newsom contends that the deficit is “only” $38 billion. (But hey, what’s a $30 billion difference between friends).

Newsom saved his most animated criticism for those who highlight the state’s shortcomings, including the significant outmigration of California’s most productive citizens. He especially targeted the editorial page of the Wall Street Journal, which has never been reticent about commenting on the state’s well-deserved reputation for anti-business bias.

But to his credit, Newsom rejected the notion of a wealth tax – at least for now. For taxpayers, it matters little whether the governor’s stance is motivated by politics or a sincere policy position. Either way, we’ll take it.

The problems with the wealth tax proposal – even as half-baked as it is – are legion. But one issue should be especially troubling to anyone who believes both in fiscal restraint and basic constitutional freedoms. That is, could a wealth tax be applied to people who voluntarily leave the state for the specific purpose of avoiding California’s highest-in-the-nation income taxes? AB 259 contains a provision that applies the wealth tax to every “wealth-tax resident,” defined as someone who “is no longer a resident, and does not have the reasonable expectation to return to the state.”

The question here is not whether a resident of another state can be taxed when they have a “nexus” to California, for example income earned in California or owning property in the state. Rather, what about someone who no longer has any connection to California? The proposal to tax wealth on such people would likely be deemed to violate the U.S. Constitution’s Commerce Clause.

More fundamentally, an “exit tax” could be construed as an impairment to the right to travel. The U.S. Supreme Court affirmed in 1958 in Kent v. Dulles that citizens have a liberty interest in the right to travel: “[t]he right to travel is a part of the ‘liberty’ of which the citizen cannot be deprived without due process of law under the Fifth Amendment …”

Setting aside the practical and legal problems with this or any wealth tax proposal, a fundamental problem is the signal it sends to all productive California taxpayers as well as those in other states who might consider moving here.  California already has a horrible reputation for its treatment of taxpayers and businesses, why would we even consider another punishing tax?

Click here to read the full article in the OC Register

Coupal: Colorado’s lesson to California about tax reform

Can meaningful tax reform advance, or even survive, in progressive blue states? In California, this is not just an academic question. Proposition 13 has been under constant assault since its passage in 1978. But the core of Proposition 13 – the one percent tax rate cap on real property and the two percent limit on annual increases in taxable value – remains unscathed.

Colorado Governor Jared Polis makes a point during a news conference on the west steps of the State Capitol about legislative plans for the upcoming session Monday, Jan. 10, 2022, in Denver.

Prop 13’s popularity over four decades has remained constant even as the California of Ronald Reagan and Pete Wilson has morphed into one of America’s most liberal states. Now, two-thirds of both houses of the California Legislature are held by Democrats, as well as all statewide elected offices. And yet polling suggests that if Prop 13 were on the ballot today, it would still pass by more than 60% just as it did in 1978. (Prop 13 even survived an effort to strip its protections from “evil” corporations when voters rejected the “split roll” initiative in 2020).

In assessing Prop 13’s continued survival in 2024, it is helpful to consider what has happened to established tax reform measures in other states that have drifted from red to blue. In Colorado, the Taxpayers Bill of Rights (TABOR) limits state government revenue growth and it requires taxpayer refunds of any surplus. In 2022, the TABOR surplus refund was $750 per taxpayer. Like Prop 13, TABOR has achieved iconic status with Centennial State voters.

This past November, Colorado’s political leadership thought they had a shot at weakening TABOR because Democrats (and their union allies) were dominant. Politically, Colorado bears a striking resemblance to California, with Democrats holding all constitutional offices and a supermajority of legislative seats (69%). Another similarity is that the political elites in Colorado hate TABOR just as much as the political elites in California hate Prop 13.

That dislike of TABOR drove the Governor and the state’s legislative leader to put Measure HH on last November’s ballot, which would have raised the caps on what the statehouse can tax and spend. Gov. Polis and Democratic legislators were salivating over the additional $42 billion that HH would generate by 2040.

But Colorado voters would have none of this and crushed Measure HH by over 60%. This despite a misleading ballot label (sound familiar?) that Democrats slapped on it in an attempt to fool voters that HH was something that it was not.

What does the Colorado experience with Measure HH portend for California? If anything, it shows that citizens even in deep blue states remain distrustful that politicians will voluntarily control how much they tax and spend. This has direct relevance to California voters who will have an opportunity to advance taxpayer rights with the Taxpayer Protection and Government Accountability Act (TPA) slated for this coming November’s election.

TPA will restore key provisions of a series of voter-approved ballot measures, including Prop 13, that gave taxpayers, not politicians, more say over when and how new tax revenue is raised. Over the past decade, the California courts have created loopholes in long-established tax law and policy. TPA closes those loopholes and provides new safeguards to increase accountability and transparency over how politicians spend our tax dollars.

The reaction to TPA by California’s progressive leadership has been nothing short of unrestrained hysteria. First, their allies in the municipal associations, especially the League of California Cities, began a coordinated campaign of disinformation claiming that the measure somehow restricts the right to vote on tax measures when the opposite was true.

Next, the California Legislature jammed through Assembly Constitutional Amendment 13, a cynical attempt to derail TPA by changing the rules for passing certain kinds of constitutional amendments — specifically, initiatives that protect taxpayers by requiring a two-thirds vote to raise taxes.

Finally, in full realization of both public and private polling revealing that TPA will likely be approved by the voters, Gov. Gavin Newsom and the Legislature filed a lawsuit to knock TPA off the ballot before voters have a chance to weigh in. (So much for Democrats “protecting democracy.”) Serious legal scholars have noted the abject lack of legal merit to this extraordinary ploy but, this being California, nothing can be taken for granted.

Click here to read the full article in the OC Register

Jon Coupal: Illegal immigration is a taxpayer issue

Conservatives are not always in agreement on the contentious issue of immigration. Those of a Libertarian inclination are more accepting of robust legal immigration while others believe that the United States has done more than its fair share of accepting those from other nations. The latter would like to see more progress on assimilation before opening the borders even more.

But two things are certain. First, conservatives will always be characterized by the left as being anti-immigrant – even when they are not – and those on the left rarely distinguish between legal and illegal immigration.

Serious taxpayer advocates can be strong advocates of legal immigration while, at the same time, push back against policies that cost Americans billions, if not trillions, of dollars. A recent piece by Steven Malanga in City Journal entitled “Illegal Immigration’s Terrifying Cost,” is a well-researched review of how illegal immigration is having a negative impact on sound fiscal policy at both the national and state level.

Opposing point of view: America is the land of the free, open the border

Legal immigration isn’t as politicized as illegal immigration because the cost and social ills from the undocumented population are huge. At the forefront of the political battles are the governors of border states, most notably Texas. And while Florida isn’t technically a border state, it has a large undocumented population bringing unique problems that frustrates the political leadership, especially its governor.

Malanga reports that Florida hospitals have incurred hundreds of millions of dollars in uncompensated costs for care to migrants. Governor Ron DeSantis justifiably complains the state’s taxpayers have had to foot the bill so, in response, he has spent public funds to transport thousands of undocumented individuals to so-called “sanctuary” cities on the theory that those states should practice what they preach. “If the policy is to have an open border, I think the sanctuary cities should be the ones that have to bear that,” said DeSantis.

Malanga also reports that “New York, a sanctuary city since 1989, spent $8 million a day throughout much of this year to care for migrants,” and that Boston and Cambridge – both sanctuary cities – had difficulty expanding their shelter system to meet the influx. Costs to taxpayers? $140 million.

For all the billions in additional costs spent nationally responding to the illegal immigration crisis, some far-left states including California, Illinois, and New York, have compounded the problem by extending access for illegal immigrants to social programs like Medicaid – Medi-Cal in California – and other welfare programs. An excerpt from a California Legislative Analyst Report in October noted a line item of “$1.2 billion General Fund for the scheduled expansion of eligibility for comprehensive Medi-Cal services to undocumented residents between the ages of 26 and 49. These amounts are considerably higher than estimated in past budgets.”

Bear in mind that all the costs for social welfare programs are exclusive of the billions in additional costs to the education system, criminal justice system, and emergency services. For example, consider the recent incident involving the fire that shut down the 10 freeway in downtown Los Angeles. Venice Neighborhood Council board member Soledad Ursua wrote in a piece for City Journal that “of the LAFD’s $854 million annual budget, roughly $427 million is spent on homeless-related fires. If Los Angeles simply enforced its existing fire code, it would protect businesses and save taxpayers millions of dollars.” Much of the homeless population in Los Angeles consists of undocumented individuals.

Malanga also refutes the argument that the public costs associated with illegal immigration are offset by the taxes the undocumented pay. First, much of the compensation paid for work performed by undocumented workers is “under the table” and remains untaxed. But the real “flaw in this reasoning is that immigrant households already receive tens of thousands of dollars in government benefits, just by virtue of being in the United States, and that what most get in support far outweighs any taxes they pay.”

Click here to read the full artucle in the OC Register

Bad outcomes are the consequence of bad laws, whether intended or not

With hundreds of new laws going into effect next year, the saying that “there ought to be a law” is taken way too seriously by California politicians. Regrettably, there is one law lacking – a binding requirement that forces legislators to think about the unintended consequences of the bills they enact.

Here are a couple of examples.

It shouldn’t be surprising that the Legislature sent billions of dollars in new spending to Gov. Gavin Newsom’s desk this session. But it was a pleasant surprise that he vetoed some of the worst, stressing it was “important to remain disciplined when considering bills with significant fiscal implications” as the state faces “continuing economic risk and revenue uncertainty.”

That random act of sanity even earned him some praise in the media with reporters suggesting that the governor was exhibiting a more moderate streak in preparation for a possible presidential run. But two bills he did sign show that his supposed fiscal discipline was short-lived.

Assembly Bill 1228 raises the hourly minimum wage for fast food workers to $20 and Senate Bill 525 raises the minimum wage for healthcare workers to $25. Taxpayer advocates and other fiscal conservative warned that these two government mandates would significantly increase costs and that those costs would be passed onto the consumer like an indirect tax.

That’s exactly what is happening. Both McDonald’s and Chipotle recently announced that they will be raising prices in California in response to the state’s minimum wage increase. While McDonald’s didn’t specify how much prices would increase, Chipotle said it would be a “mid-to-high single-digit” percentage. You can bet that other fast-food restaurants will be doing the same soon.

As for the increase for health care workers mandated by SB 525, even the state’s own Department of Finance opposed it out of concern for “significant economic impacts” and the bill analysis stated that its fiscal impact was “unknown.” The Legislature passed it anyway and now we know that SB 525 will cost $4 billion in the 2024-25 fiscal year alone. About $2 billion of that is coming directly out of the General Fund while the rest will be paid out of federal Medicaid funds.

The L.A. Times called it “one of the most expensive laws California has seen in years and comes as the state faces a $14-billion budget deficit that could grow larger if revenue projections continue to fall short.” Meanwhile, Bloomberg reported that “California is poised to fall well short of its budget forecasts as the recent stock market slump erodes the state’s tax revenue.”

Did the governor actually know what he was doing when he signed these two costly bills? Maybe it’s wrong to assume that the higher price tags are simply “unintended consequences.” It is just as likely that he was aware of the impact to taxpayers and consumers but intended to reward political allies in labor organizations that can help further his political ambitions.

Senate Bill 616, also signed by the governor, greatly expanded mandated sick leave for employees of private-sector companies. The bill imposes new costs and leave requirements on employers of all sizes, by nearly doubling existing sick leave mandate, which is in addition to all other enacted leave mandates that already have small employers throughout the state struggling to implement and comply.

The unintended consequences of mandates such as SB 616 on California’s businesses, both large and small, is evident from countless media reports about the Great California Exodus as productive citizens and businesses move to other states. California’s unemployment rate is higher than the national average and our poverty rate, when the cost of living is taken into account, is the worst in the nation.

Click here to read the full article in the OC Register

California Taxpayers Cool to Costly Climate Bond

In addition to last week’s record-busting $310 billion dollar budget, the legislature is also advancing a $15 billion “Climate Bond” to appear on the ballot sometime in 2024. This “climate bond” should be viewed with a great deal of skepticism by California voters for several reasons.

First, why is a bond – any bond – necessary? Despite a drop off in state tax collections, California continues to produce massive amounts of tax revenue from the highest-in-the-nation income tax rate, highest state sales tax rate and highest gas tax. Taking on further debt makes little sense.

Moreover, this proposal is inconsistent with the principles of sound debt financing. Bond financing can be justified where the cost of a major infrastructure project – at either the state or local level – is greater than could be funded directly from general fund revenues without making significant reductions in service. But proponents have not made the case for why this grab bag of various projects couldn’t be financed from the general fund.

Second, an important consideration for the issuance of public debt is interest rates. Borrowing costs today are higher than they have been in years and while Wall Street bond brokers and bond holders will profit from more California debt, voters have to decide if it is in California’s best interests.

Third, under Article XVI of the California Constitution a statewide bond measure must be limited to “some single object or work to be distinctly specified in the act.” The “climate bond” here is authorized by Assembly Bill 1567, which is entitled the “Safe Drinking Water, Wildfire Prevention, Drought Preparation, Flood Protection, Extreme Heat Mitigation, Clean Energy, and Workforce Development Bond Act of 2024.” This bill is a 25-page listing of various projects ranging from restoring the Tijuana River to providing residential housing for California Conservation Corps members. Even under the most liberal interpretation of “single object or work,” this bond measure doesn’t comply.

Fourth, the fact that a substantial amount of the proceeds from the bond are intended to be used for programs rather than brick-and-mortar infrastructure violates the principle that the “single object or work” should have a useful life that extends beyond the term of the debt repayment. This climate bond is like a family taking out a 30-year mortgage to pay for groceries.

Fifth, California has a horrendous track record of not keeping its promises when it comes to bond measures. The clearest example is California’s High-Speed Rail Project, viewed internationally as the biggest boondoggle on earth. Proposition 1A in 2008 promised Californians a super-fast train that would travel between Los Angeles and San Francisco in about two and a half hours; the ticket price would be about $50; the total cost of the high-speed rail would be about $40 billion; and there would be significant private-sector support –money from investors – to build the project. After 15 years, HSR has yet to hit any of its benchmark promises.

Numerous other bond measures have failed to live up to the representations made to voters, including several water bond proposals that promised the construction of surface water storage projects.

Even more troubling than the broken promises related to bond measures is the fact that California courts will do little to enforce those promises. This was starkly evident in several lawsuits over the high-speed rail project when the courts failed to intervene despite conclusive evidence that the terms of the ballot measure were being violated.

Sixth, general obligation bonds should only be placed on the ballot when the level of total debt is within prudent limits that will not affect the state’s bond rating or solvency. If California experiences even a mild recession, that will increase the percentage of the general fund necessary to pay debt service. If the state’s “debt service ratio” exceeds levels palpable to Wall Street, that could increase the cost of borrowing on top of the already high interest rates.

Click here to read the full article in the OC Register

California’s shakedown government expands under Gavin Newsom

If you thought Governor Gavin Newsom’s new gas tax, SBX1-2, was about punishing big, bad oil companies, it’s not. It’s actually about much more – and none of it is good news for taxpayers.

For those who weren’t paying attention last week, SBX1-2 was Newsom’s attack on California’s oil producers who, he alleges, have been gouging consumers with high gas prices. This is horrible legislation, not only for its substance, but also for how it became law. The bill’s unusual number, SBX1-2, is the first giveaway that this was not normal legislation, but rather the product of a “special session,” which Newsom called last December.

After no action on Newsom’s declared “crisis” for months, the bill was jammed through in less than a week. There were no meaningful hearings, no public testimony, no opportunity for those directly impacted to present opposing views. Because the legislation was moved during a “special session,” it was able (by design) to avoid many of the procedural requirements of normal legislation. This was a shameful display of raw political power which, thanks to one-party rule, is now all too common.

As for substance, SBX1-2 sets a new speed record in California’s headlong rush toward Soviet-style central planning. The Newsom gas tax law creates a new agency under the California Energy Commission with powers to investigate petroleum companies and impose new penalties, costs and regulations. This new agency is vested with the authority to decide how much profit oil and gas businesses are allowed to make.

SBX1-2 is a gross insult to taxpayers. First, the Legislature’s own analysis projects that it will cost nearly $10 million annually with a minimum of 34 new enforcement bureaucrats. Specifically, according to the Assembly Appropriations Committee, “this bill will result in significant ongoing costs to the [California Energy Commission] in the millions of dollars annually, to develop rules and review data submissions; to establish and administer the Advisory Committee and the Division; to exercise its new authority to set a maximum margin; and to administer a penalty, if created.”

But this cost is a bargain compared to what the creation of this new Orwellian agency will do to the price of gas and other petroleum products. The regulatory scheme created by SBX1-2 is almost certain to disrupt California’s energy market and threaten the reliability of the state’s already fragile fuel supply.

More fundamentally, ponder the notion of the heavy hand of state government judging what an “excessive” profit is. What industry is next? Will there be a new state agency to put a price cap on automobiles? (Oh wait, there is already a bill that would do that).

But SBX1-2 poses another threat that few are talking about. If the Covid era taught us anything it is that government-declared emergencies – real or imagined – create more opportunities for corruption.

Recall that during the pandemic when no-bid contracts were being handed out, behested payments on behalf of the governor surged. These are “donations” for charitable or governmental purposes that are specifically requested by elected officials, often from companies with business before the state. In 2020 alone, hundreds of millions were “donated” at the “behest” of the governor. The practice was so pervasive it even caught the attention of the Los Angeles Times which wrote that “many of the donors have other business before the governor, received no-bid government contracts over the last year or were seeking favorable appointments on important state boards,” which “creates the appearance of a pay-to-play system.”

With SBX1-2, one can easily envision politicians extorting petroleum companies to give campaign contributions or “behested payments” as “protection” money. (“That’s a nice refinery you have there. It would be a shame if something happened to it.”)

Click here to read the full article in the OC Register

Jon Coupal: Political Reform For Some But Not For All

Over the years, this column has exposed the myriad ways that the California Legislature enacts laws, not for the public benefit, but to cement progressive political power with one-party rule. A lawsuit filed last week in the Sacramento Superior Court illuminates yet another example.

A coalition of business groups is challenging Senate Bill 1439 (Glazer), signed into law last year. The legislation, which took effect on January 1, requires city and county elected officials to recuse themselves from certain decisions that would financially benefit any entity or person that donated over $250 to that official’s campaign in the past year.

Specifically, SB 1439 amends the Political Reform Act of 1974, which prohibits an officer of an agency from accepting, soliciting, or directing a contribution of more than $250 from any party while a proceeding involving a license, permit, or other entitlement for use is pending before the agency. The new law is targeted mostly toward developers and other real estate interests which, rightly or wrongly, are perceived to make use of “pay to play” tactics, especially at the local level.

But prior to the enactment of SB 1439, the term “agency” was defined to exclude those entities whose members are directly elected by the voters. The thinking is that members of local legislative bodies, particularly city councils and county boards of supervisors, are directly accountable to voters, and citizens can either recall or reject for reelection politicians perceived to be unduly influenced by special interests.

SB 1439 removed the exception for local government agencies, thereby subjecting elected officials to the same prohibition as other officials. But despite what may have been good intentions, SB 1439 is flawed and may end up being invalidated.

The legislation’s legal problem is that it may be an impermissible attempt to amend the Political Reform Act without a vote of the People. PRA was an initiative and, as such, may only be amended by a popular vote or by legislation to further the purposes of the Act. Defenders of SB 1439 will argue that the removal of the exemption for agencies whose members are elected by voters is indeed consistent with the overall purposes of the Act.

But how can it be “consistent” with the original Political Reform Act when that law specifically exempted elected officials from this provision?

Moreover, courts are skeptical of arguments that legislative amendments to the PRA “further its purposes.” The Howard Jarvis Taxpayers Association won such a lawsuit in 2019. That dispute began in 2016 when the Legislature passed, and the governor signed, Senate Bill 1107, which purported to amend a part of the PRA that expressly prohibited public funding of political campaigns.

SB 1107 attempted to reverse the ban by permitting public funding of political campaigns under certain circumstances. Because SB 1107 was so clearly contrary to the letter and spirit of the Act, Howard Jarvis Taxpayers Association challenged the 2016 law as an improper legislative amendment of a voter initiative. Taxpayers prevailed in both the trial court and the Court of Appeal.

In addition to the questionable legality of SB 1439, taxpayers have reason to be concerned that the law tilts the playing field by allowing some power players to continue to engage in “pay to play.”

SB 1439 is limited to situations “involving a license, permit, or other entitlement for use,” applying to “business, professional, trade and land use” as well as “all contracts” and “all franchises.” By far the biggest “pay to play” problem in California involves public sector labor unions shoveling boatloads of cash to their preferred candidates.

Leaving no doubt that labor organizations have special protection from this law, SB 1439 defines “license, permit, or other entitlement for use” to include “all contracts,” but then specifically excludes union contracts with the phrase, “other than competitively bid, labor, or personal employment contracts.”

Finally, adding insult to injury, lawmakers made sure to exempt themselves from the provisions of SB 1439, defining “agency” to “not include the courts or any agency in the judicial branch of government, the Legislature, the Board of Equalization, or constitutional officers.”

Click here to read the full article in the OC Register

The latest threats to direct democracy in California

Since 1911, Californians have possessed powerful tools to control indolent or corrupt politicians. The rights of direct democracy — initiative, referendum and recall — are enshrined in the California Constitution for reasons that are just as compelling in 2023 as they were more than a century ago.

But make no mistake, politicians hate direct democracy and view it as a threat to their political power or, at a minimum, as an intrusion on their legislative responsibilities. It is no surprise, then, when legislators introduce proposals to weaken direct democracy, and this legislative session is no different.

Last month, progressive legislators introduced Senate Constitutional Amendment 1 to gut the recall power. Under current law, voters can recall a state officer by majority vote and, in the same election, elect a successor with a plurality of the vote. In addition, the state constitution prohibits a public official who is the subject of a recall election from being a candidate for successor.

In a fundamental change to the Constitution, SCA 1 would leave an office vacant in the event of a successful recall until a replacement is elected in a special election, or if there is insufficient time to hold a special election, the office would remain vacant for the remainder of the term. This deprives voters of knowing who might replace the officer they are recalling and creates a new concern that a public office could remain unfilled with no one to perform the duties of that office.

In addition, under SCA 1 the rules would be different for a gubernatorial recall. If a governor is removed from office in a recall election, the lieutenant governor becomes governor for the remainder of the unexpired term. In a one-party state like California, this renders a recall for governor nearly pointless.

If SCA 1 sounds familiar, it is nearly identical to SCA 3, which was introduced in the last legislative session but, fortunately, did not progress very far. Perhaps the reason the proposal stalled last year is the realization that, as a proposed constitutional amendment, it would have to be approved by a majority of the statewide electorate. Public polling reveals that Californians support direct democracy, including the right to bounce bad politicians.

Another threat to direct democracy is an effort by the municipal bond industry to obscure the true cost of tax hikes and bond measures.

Senate Bill 532, introduced by Sen. Scott Wiener, D-San Francisco, seeks to weaken two existing transparency bills, Assembly Bills 809 and 195 (by then-Assemblyman Jay Obernolte, 2015-2016), sponsored by the Howard Jarvis Taxpayers Association. Taken together these bills state that for all local tax and bond measures, the rate of the tax, its duration and the total amount of money to be raised are disclosed right on the ballot label. While SB 532 continues to include most of this information, for local bonds and tiered special taxes it relegates it off the ballot label and buries it in the separately mailed voter information guide. When confronting special taxes that will be on tax rolls for decades, it is imperative that voters have as much information as possible.

Click here to read the full article in the OC Register

What If There Is No Next Big Thing for California?


From its founding, California has been a special place, especially its ability to grow and foster new companies and industries that lead the world in their respective fields. Much of this has been driven by the spirit of entrepreneurship and innovation that found a unique home here.

Of course, the first “Big Thing” for California was the Gold Rush of 1849, attracting risk takers willing to cross two thousand miles of hostile territory with no guarantee of survival, let along success. Following closely behind the prospectors were the blacksmiths, shop keepers, farmers and cattlemen to serve the exploding population.

Once fully industrialized, California maintained its reputation as the place where innovation could fully flourish. But companies and industries have a predictable life cycle and are never static. They start small, and then grow exponentially, after which they mature and stabilize. The growth period, of course, is the most dynamic. That’s when the innovators themselves and ultimately their stockholders make substantial profits and employees grow in number and income.

For the last 60 years, California has always had an industry or two in that growth cycle. First it was the oil companies and the Hollywood studios. Aerospace came next, then the first round of technology companies like Hewlett Packard, Intel and Cisco. As they matured around 20 years ago, along came the current wave of tech companies like Google and Apple to surge past them.

In serial order, one new industry after another grew up in California just as the prior wave had crested and was settling into maturity. This trend has not just benefitted the economy and employment. These industries have powered the revenue to the state for decades. The rapidly growing companies have provided a lot of people with very high incomes from stock, stock options and incentive-based employment. Because California’s revenue is so dependent on high-income earners, the recent budget surpluses have largely been driven by these enormous tech incomes.

But now, the current wave of tech companies is maturing. Layoffs at Facebook and Twitter and Salesforce are ongoing. The median income at Facebook is reportedly $394,000, which has meant lots of tax revenue for the state. Some political leaders suggest that we shouldn’t worry about the California economy and assume that there will be another big industry to grow up here to fill that hole in the budget.

But what if that doesn’t happen this time?

What if there is no next wave to replace the maturing Google and Apple? The promising industries of ride sharing and food delivery are struggling, as is autonomous driving. Maybe something like ChatGPT is coming, but there are no assurances there, either.

While there will almost certainly be some “next big thing”, we can no longer be certain that that “thing” will be California-based. Despite high taxes, high cost of everything and onerous regulations, the educated and tech savvy workforce has kept many companies here. However, now those people can be hired remotely by a business in Arizona. Or, whereas once a Californian didn’t want to move out of state, now moving the family to Florida may not look so bad. That spirit of entrepreneurship and innovation that was such a part of California’s culture is eroding at the same time other places are finding their footing with creative growth.

The good news is that this future is avoidable. That culture of entrepreneurship still exists. Innovation and enterprise can still be found and grow here. It may be trite to say, but it only needs a government that will get out of its way rather than suppress its dreams. Yes, it means less regulation and lower taxes. But it also means a government focused on empowering those who produce in order to ensure that there is revenue for public services as well as providing a reasonable safety net for those in need. It may also mean more emphasis on the present local economic climate than the global climate changes estimated in the future. Remember when we had the best schools and police forces in the country? We do. It wasn’t that long ago.

Click here to read the full article in the Los Angeles Daily News