Props 1, 2 Will Fail to Mitigate State Housing Crisis

Housing apartmentIt’s been two and a half years since Gov. Jerry Brown jolted the debate on California’s housing crisis by saying much more private-sector construction was the only realistic way to address the crisis, not the old Democratic recipe of building a relative handful of subsidized housing units that help a small percentage of those in need. “We’ve got to bring down the cost structure of housing and not just find ways to subsidize it,” he said in January 2017 in criticizing previous state policies.

Brown sought to make it much easier for home-builders to clear regulatory hurdles. In September 2017, Senate Bill 35 by Sen. Scott Weiner, D-San Francisco – which reflected the governor’s priorities – was enacted. It holds that cities could not put up new obstacles to projects with proper zoning so long as they contained at least 20 percent of units at lower price levels.

And in the last two months, Brown has signed a series of new housing measures with similar goals – most notablyAssembly Bill 2923, which will make it much easier for the Bay Area Rapid Transit authority to follow through with its plan to build 20,000 new housing units by 2040 on 250 acres BART owns nears its transit stations.

Legislature renews emphasis on subsidized housing

But when it comes to Tuesday’s election and major housing initiatives, it’s back to the old Democratic playbook. Both the key measures meant to increase housing – placed directly on the ballot by votes of the Legislature – involve government-subsidized construction.

Proposition 1 authorizes the issuance of $4 billion in general obligation bonds. The biggest chunk – $1.8 billion – would go toward building apartment-type residences. $1 billion would go to loans to veterans. Both infrastructure and homeownership programs would receive $450 million each. And $300 million would go to build housing for farm workers.

The official state voting guide’s analysis estimates that this will create access to housing for 55,500 families.

Proposition 2 would allow the state to divert funds from 2004’s Measure 63 – which generates about $2 billion a year for mental health programs from an income tax surcharge on the very wealthy – to pay back over 30 years up to $2 billion in bonds to build housing for the homeless and those at risk of being homeless.

The official state voting guide’s analysis doesn’t estimate how many people would gain housing as a result. But based on Proposition 1’s estimate that $1.8 billion could create about 30,000 apartment units, $2 billion should be able to provide around 33,000 units.

Bonds would fund 88,500 units; 2 million needed

The combined net effects of the two measures: providing housing to about 88,500 families over the life of the two bond measures in a state that a 2016 McKinsey consulting group report said has a shortage of 2 million housing units.

The small increases in housing that Proposition 1 and 2 would create are consistent with the criticisms that have been made of California’s state housing policies since at least 2003. That’s when the Public Policy Institute of California released a report that said affordable housing programs focused much more on establishing a process for such housing than on actual results. It said it was “unrealistic” to think such an approach could have a significant effect in increasing affordable housing.

No recent polling has been done on Propositions 1 and 2, but they’re widely expected to pass easily. That’s in keeping with the record of bonds placed directly on the ballot by the Legislature.

This article was originally published by CalWatchdog.com

The Money Man Exits the Lobby

John Mockler cast a long shadow over the modern history of public education in California. “I once suggested in print that California needed a constitutional amendment requiring [John] Mockler to live forever,” wrote Zócalo Public Square columnist Joe Mathews of the man who authored Proposition 98, the 1988 constitutional amendment that earmarked 40 percent of the general fund budget for K–12 education. Mathews did not get his wish, of course. On March 3, at the age of 73, Mockler died of pancreatic cancer and prominent Californians marked the passing of a legend.

State Superintendent of Public Instruction Tom Torlakson called Mockler a “giant.” He was the “brilliant wonk” responsible for steering $65.7 billion to public schools in the coming year, $5 billion more than last year, wrote Sacramento Bee editorial page editor Dan Morain. He was a man who “cared deeply about schools.” Governor Jerry Brown tweeted that Mockler “knew education law like no one else and was able to put school finance on a solid footing that endures even today.” Former governor Arnold Schwarzenegger called Mockler “a true champion for our children,” and a man who was “honest and provided excellent advice on how best to improve our educational system.”

Aside from Prop. 98, Mathews observed in his obituary, Mockler was “deeply grounded in the realities of kids” and “he also had a great devotion to facts.” But more than a few important facts were missing from the eulogies, most notably Mockler’s lucrative career as a lobbyist. Mockler personified the stereotype of the “revolving door” in politics, moving back and forth every few years from consulting and lobbying to the public sector. In the mid-1960s, Mockler became a consultant to the state assembly’s education committee, and from 1974 until 1977 he served as a senior staffer to Wilson Riles, the state superintendent of public instruction. In 1977, Mockler left Sacramento for a post with the Los Angeles Unified School District, the second largest in the United States. One year later, Californians passed Proposition 13, which limited the power of government to raise property taxes, which were a prime source of revenue for schools. Mockler was not a fan. In 1980, he formed Murdock, Mockler and Associates, a lobbying firm specializing in education policy. But before long, he returned to government as Assembly Speaker Willie Brown’s education adviser from 1983 to 1985, when public education reform was a raging issue.

Mockler, a liberal Democrat, rejected the conclusions the National Commission on Excellence in Education reached in A Nation at Risk. In Mockler’s view, public education was not drowning in a “rising tide of mediocrity.” He often decried what he called the “California schools suck industry,” and people “who make their living hand-wringing about how bad California schools are.” Mockler persisted with his belief in the Golden State’s excellence until the very end. “If a kid goes out and steals a lunch, you’re going to hear about that,” Mockler said. “But how about a headline saying 93 percent of students went to school today and got along just fine? You’re not going to hear about that.” But Mockler also knew that evaluation was not his strong suit. “I feed the pig,” Mockler would often say when he lobbied for L.A. Unified. “Other people weigh the pig.”

In Mockler’s world the problem was simple: the education establishment was underfunded and needed more money—always. That was also the default position of the California Teachers Association and State Superintendent Bill Honig, who recently told the Los Angeles Times, “back in the ’80s we were so frustrated by the underfunding of schools.” Mockler conceived Prop. 98 as an “antidote” Prop. 13. Yet the school establishment’s complaints about poor funding persisted. So did the public’s complaints about dysfunctional and dangerous schools. Prop. 174, the Parental Choice in Education Initiative, appeared on the 1993 ballot as the antidote in turn to Prop. 98. At a San Francisco conference, I heard Mockler fulminate against the measure. The jovial man who joked that Prop. 98 would help send his own kids to Stanford was opposed to low-income parents choosing the schools their children would attend. Voters soundly rejected the choice initiative and preserved the status quo.

Soon afterward, Mockler formed the lobbying firm of Strategic Education Services, where his clients included the Association of American Publishers, California Public Radio and Television, the Los Angeles County Office of Education, and the California Association of Administrators of State and Federal Programs. Another client was L.A. Unified, not known as a bastion of achievement or accountability. Mockler’s lobbying connections came in handy when he served a brief stint as secretary of education and later executive director of the State Board of Education under Governor Gray Davis. There he would play a key role in selecting the textbooks the state would purchase. For some observers, that was troubling. San Jose Mercury News education reporter Jessica Portner noted that Mockler, “established personal financial relationships with lobbyists for the publishing industry.” After joining the board, Mockler “received loan payments from two textbook industry representatives who purchased his lobbying firm.” Portner also reported that Mockler co-owned a Bodega Bay vacation home with state school board member Marion Joseph. She remained on the state board after Mockler left, retaining “significant sway over which texts are selected.”

Whether those texts were any good is subject to debate. But as Portner saw it, they were certainly more expensive. The average price of English textbooks for students in kindergarten through eighth grade ballooned 212 percent in inflation-adjusted dollars between 1990 and 2002; the price of math books climbed 156 percent over the same period. Mockler never complained. Nor did he ever experience the sort of legal trouble that took down his friend Honig in 1993, when he was convicted of felony conflict-of-interest charges—specifically, making contracts in which he had a financial stake.

Californians should remember Mockler as a government success story in the style of Robert Klein, the real estate tycoon who made out well with Proposition 71 and the California Institute for Regenerative Medicine. Likewise, environmental zealot Peter Douglas gained a veritable state within a state in the California Coastal Commission. Like that pair, Mockler wielded great power but never once had to face the voters. His career confirms that California’s government education system has a for-profit subsidiary a clever insider can exploit for a lot of money, working both sides of the table.

Brown’s 4th Inaugural Looks to CA Past, Future

Gov. Jerry Brown’s unprecedent fourth, and final, inaugural address had an aura of “Back to the Future” about it. Given at 10 a.m. this morning before the assembled Legislature, he looked back to his first inaugural address 40 years ago; and to the gubernatorial inaugural in 1959 of his father, Pat Brown.

He also recalled, among other things, “the discovery of gold … the Transcontinental Railroad, the founding of great universities … oil production … the State Water Project.” The latter was a singular accomplishment of his father.

These were echoes of the items on his own agenda, including, “We are leaders in renewable energy and efficiency … we are building the nation’s only high-speed rail system … we are confronting the drought and longer-term water issues.”

He added that he helped push through Proposition 1, the $7 billion water bond. “And I’m proud to report that as a result, by the end of the year, we will be investing in long overdue water projects,” he said.

For any governor, the primary issue is the state budget. On Friday, Brown will issue his budget proposal for fiscal year 2015-16, which begins on July 1. He looked back at the parlous state of the budget when he took over the governor’s office four years ago, “Then, the state was deep in debt – $26 billion – and our unemployment rate was 12.1 percent. Now, the state budget, after a decade of fiscal turbulence, is finally balanced – more precariously than I would like – but balanced.”

Budget limitations

This included soon making “the last payment on the $15 billion of borrowing made to cover budget deficits dating back to 2002.” He was referring Proposition 57 from the March 2004 ballot, part of the program of Arnold Schwarzenegger, elected governor five months earlier in the famous recall election of Oct. 2003, initiated to patch up a $40 billion budget deficit.

At the time, state Sen. Tom McClintock (now a U.S. representative) and others warned Prop. 57 delayed needed cuts to the budget and saddled future budgets with its repayment. That proved the case when the Great Recession hit in 2008-09 and radical budget-cutting was needed, including to pay for Prop. 57.

Also in 2004, Schwarzenegger pushed Proposition 58, the California Balance Budget Act, a rainy-day fund to cushion future budget deficits. It was sold by Schwarzenegger as a guarantee Prop. 57’s bonds would not just be used for future spending. But Prop. 58 proved unenforceable.

In today’s address, Brown touted his own Proposition 2, which voters passed last fall. He said his new budget will include “saving $2.8 billion in the state’s new constitutionally protected Rainy Day Fund.”

Whether Prop. 2 proves durable, or falls to future budget pressures the way Prop. 58 did, remains to be seen. But after Prop. 2 was passed, “S&P raised the state’s credit rating from A to A-plus, citing the stability offered by Proposition 2,” reported the Sacramento Bee.

Pension reform

The biggest threat to balanced budgets remains the state’s pensions. Brown said:

“We have to face honestly the enormous and ever growing burden of the many commitments we have already made. Among these are the costs of pensions and retiree health care, the new obligations under the Affordable Care Act, the growing government costs of dealing with our aging population, bonded indebtedness and the deferred maintenance on our roads and other infrastructure. These specific liabilities reach into the hundreds of billions of dollars.

“My plan has been to take them on one at a time. We have now taken steps to deal with the unfunded teachers’ pensions and those of the public employees. For the next effort, I intend to ask our state employees to help start pre-funding our retiree health obligations which are rising rapidly.”

No details were provided, but they presumably will be forthcoming in Friday’s budget proposal. But as the U-T San Diego reported recently, the $4.5 billion yearly deficit of the California State Teachers’ Retirement System already is digging in to state and local school budgets:

Administrators say they’re at a loss for how they’ll come up with the cash, which for some districts could be tens of millions per year. …

“Some school districts in San Diego County highlighted the sticker shock in so-called “interim midyear” budget reports released this month that show escalating contributions from teachers, school districts and even the state as a way to dig the teachers’ retirement fund out of debt over the next several years.”

Projects

Brown touted two of his favorite projects, high-speed rail and reducing greenhouse gases. Construction on the rail begins on Friday. But Brown gave no indication where money for the $68 billion project will come from above the $9 billion from the Proposition 1A bond voters approved in 2008; and $3.5 billion from President Obama’s 2009 stimulus package.

The new Republican majority in the U.S. Senate is as hostile to any more funding as is the House of Representatives that again will be controlled by the GOP. There is no private funding.

Brown promoted the state’s continuing efforts to reduce greenhouse gases:

“The United Nations’ Intergovernmental Panel on Climate Change, backed up by the vast majority of the world’s scientists, has set an ambitious goal of limiting warming to 2 degrees Celsius by the year 2050 through drastic reductions of greenhouse gases. If we have any chance at all of achieving that, California, as it does in many areas, must show the way. We must demonstrate that reducing carbon is compatible with an abundant economy and human well-being. So far, we have been able to do that.

“In fact, we are well on our way to meeting our AB32 goal of reducing carbon pollution and limiting the emissions of heat-trapping gases to 431 million tons by 2020. But now, it is time to establish our next set of objectives for 2030 and beyond.”

But California comprises only 2 percent of the global economy. No other state has anything like AB32, the Global Warming Solutions Act of 2006. And neither does any other country, besides some movement in Europe. Certainly, rising powers China and India are not being inspired by California to retard their ambitious rise out of poverty.

Upbeat

There also were, possibly, only minor hints in his Fourth Inaugural of whether he might run for president for the fourth time. But he might have been testing themes of progressive, prudent governance. He touted raising the minimum wage and “real protections for our hardworking immigrants, including the issuance of long-awaited driver’s licenses.”

And he ended on a cautious, even frugal, yet upbeat note:

“With big and important new programs now launched and the budget carefully balanced, the challenge is to build for the future, not steal from it, to live within our means and to keep California ever golden and creative, as our forebears have shown and our descendants would expect.”

It could be a compelling narrative in Democratic primaries should he choose to run against Hillary Clinton and Elizabeth Warren. After President Nixon and President Reagan, will Brown seek to become California’s third Oval Office occupant?

This article was originally published on CalWatchdog.com

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