Expect More Surcharges as Businesses Cope with High California Costs

March 8, 2019 By Susan Shelley 9 Comments

Business costs“Stopped by a Pizza Hut to bring some food in last night and was met with this beauty,” an L.A. Daily News reader emailed under the subject line, “Soon to be all over California?”

Two photos were attached. One showed a bright red sign displayed prominently on the restaurant counter. Printed in bold type was this message: “Service Fee Disclosure – This location includes a service fee on all transactions. The service fee partially offsets the increased cost of operations in the State of California.”

The second photo showed a receipt with a 3.5 percent “service fee” below the subtotal and above the sales tax, and in extra-large letters, “SVC fee partially offsets the rising costs in CA.”

But it’s not “soon to be” all over California. It’s already all over California.

Ground zero seems to be San Francisco in early 2008, when a local law known as the Health Care Security Ordinance went into effect. The law requires any business in San Francisco that has 20 or more employees to set aside funds for workers’ health care.

Many restaurants decided to add an extra charge to customers’ checks instead of raising menu prices. Initially, some restaurants labeled the fee, “Healthy S.F. Surcharge.” Then in 2011 the Board of Supervisors amended the ordinance to require that any restaurant owner adding a “health” or “healthy” surcharge had to spend 100 percent of the money collected on health care. The city attorney investigated dozens of restaurants, leading to a costly settlement in 2013. The surcharges didn’t go away, but the name changed. Today they’re generally called “SF Mandates.”

This year, San Francisco’s Health Care Security Ordinance will cost employers $1.95 for each hour that each worker is paid, unless the employer has 100 or more employees, in which case the rate is $2.93.

The restaurant business is labor-intensive, and the cost of labor in California has been going up.

In 2015, the state mandated that employers give their workers three days a year of paid leave. In the Northern California town of Redding, Che Stedman, the co-owner and executive chef of Moonstone Bistro, began adding a 3 percent charge to customers’ checks to help cover the cost. “That is 24 hours of full paid leave,” he said, “so now every single employee that we have, we have to make sure that we have that money banked.”

Then in March 2016, on the Saturday before Easter, Gov. Jerry Brown cut a backroom deal with labor union leaders and state lawmakers to ratchet up the minimum wage in California to $15 an hour by 2023 for smaller employers, and by 2022 for larger ones. The Assembly Appropriations Committee passed the measure in 90 minutes and within 24 hours it was on the governor’s desk for his signature.

The California Restaurant Association was steaming like a Chinese dumpling but they couldn’t do a thing about it.

Or could they?

“Due to a myriad of legislative and court decisions, some restaurants in California have elected to add a surcharge to their receipts to defray increased costs incurred over the last several years,” begins an article on the association’s website titled, “Understanding and Guidance on Surcharges.” The tone is matter-of-fact. “The increased costs of operating a restaurant can be attributed to minimum wage increases, health care, paid sick leave, restrictive scheduling, cost of food and supplies and increased pay equity between traditionally tipped employees and heart of the house employees.”

The article offers advice on how to calculate taxes correctly and how to avoid getting sued by a city attorney, such as the one in San Diego who filed a slew of cases in 2017 charging some surcharging restaurants with false advertising and consumer fraud.

Last November, a San Diego Superior Court judge ruled in one of these cases that “the surcharge is not unlawful as a matter of law.” Similar rulings followed in similar cases.

Still, the California Restaurant Association recommends that restaurant owners minimize the risk of lawsuits by clearly disclosing the existence of a surcharge on a prominent sign or posting, large and conspicuous enough so that the sign is “likely to be read and understood by an ordinary individual under customary conditions of use and purchase.”

To avoid the problem that San Francisco restaurant owners had with the “health” surcharge, the association recommends keeping the reason for the surcharge as broad as possible, suggesting as one example, “to defray the increased cost of operations.”

“In the State of California,” added the owner of the Pizza Hut in Los Angeles, a city in which businesses also have to deal with a gross receipts tax and a trash monopoly franchise system that has sharply raised the cost of sanitation service.

Stephen Zolezzi, CEO of the Food and Beverage Association of San Diego, said in 2018 that surcharges allow the restaurant industry to send a message.

“Yes, it’s a political statement,” he said. “We’re trying to show people the consequences of legislation that adds to the cost of doing business.”

So the next time you see a “rising costs in CA” service fee on your restaurant receipt, don’t complain to the management. Go online to findyourrep.legislature.ca.gov and get the names and phone numbers of your state Assembly and Senate representatives. Chew them out for passing laws that are running up your bills.

Susan Shelley is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

Originally published in the Los Angeles Daily News 

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Civil Rights Attorneys Sue over Greenhouse Gas Regulations that Affect Housing

January 19, 2019 By Susan Shelley 7 Comments

urban-housing-sprawl-366c0In what may signal the beginning of the end of alarmism over climate change, a group of civil rights activists is suing the California Air Resources Board. The issue is CARB’s plan to reduce greenhouse gas emissions by effectively limiting new housing construction. The lawsuit says this is driving up the cost of housing, worsening poverty and particularly victimizing minority communities.

The Global Warming Solutions Act of 2006 (Assembly Bill 32), signed by Gov. Arnold Schwarzenegger, committed California to a goal of reducing statewide greenhouse gas emissions. The California Air Resources Board was required by AB 32 to write “scoping” plans every five years detailing how the specified GHG reduction targets would be met.

The 2017 scoping plan includes “guidelines” for new housing that the lawsuit calls “staggering, unlawful and racist.”

The group that is suing is called The Two Hundred. It’s a Bay Area organization made up of longtime civil rights advocates who have spent decades fighting against discrimination. They say CARB’s new GHG housing provisions have a “disparate effect on minority communities,” which is illegal and unconstitutional.

CARB’s provisions “increase the cost and litigation risks of building housing,” intentionally worsen traffic congestion and raise fuel and electricity costs, the activists contend.

The lawsuit says CARB’s scoping plan calls for new housing in “California’s existing communities (which comprise 4 percent of California’s lands).” The idea is to reduce “vehicle miles traveled” by limiting sprawl. But the civil rights activists say this is leading to resegregation of California’s urban areas as older affordable housing is demolished to make way for high-density housing that is unaffordable.

A better solution, the group says, is to build homes on land that is outside the current urban boundaries, but CARB’s 2017 scoping plan is preventing that. Its “guidelines” are helping to block new housing developments.

CARB tried unsuccessfully to get the lawsuit thrown out. Fresno County Superior Court Judge Jane Cardoza issued an order in October allowing it to go forward.

Unless there’s a settlement, the courts will decide whether “California’s climate change policies, and specifically those policies that increase the cost and delay or reduce the availability of housing, that increase the cost of transportation fuels and intentionally worsen highway congestion to lengthen commute times, and further increase electricity costs, have caused and will cause unconstitutional and unlawful disparate impacts to California’s minority populations.”

Not to mention their impact on everybody else.

There are four “GHG Housing Measures” at issue. They attempt to limit “vehicle miles traveled,” set a “net zero” GHG standard for new housing developments and add a “CO2 per capita” measurement to local “climate action plans.” There’s also a set of policies to encourage “vibrant communities.”

CARB says these “GHG Housing Measures” are only “guidelines,” but the lawsuit calls them “unlawful underground regulations” that were imposed without a formal rulemaking process.

Something else that CARB skipped, the lawsuit charges, is the legally required economic analysis that “accounts for the cost of these measures on today’s Californians.”

Yes, civil rights activists are demanding that climate regulations meet the law’s required standard of cost-effectiveness.

But California’s climate regulations can’t meet any standard of cost-effectiveness.

As the lawsuit explains it, “California’s reputation as a global climate leader is built on the state’s dual claims of substantially reducing greenhouse gas emissions while simultaneously enjoying a thriving economy. Neither claim is true.”

The statewide economic growth numbers are misleading, the lawsuit says, because the averages are boosted by capital gains in the wealthy Bay Area tech sector, while most of the state struggles with low wages and high costs. And while Californians were paying too much for housing, fuel and electricity in order to achieve greenhouse gas reductions, other states actually had greater GHG reductions without doing anything.

“California’s climate policies guarantee that housing, transportation and electricity prices will continue to rise while ‘gateway’ jobs to the middle class for those without college degrees, such as manufacturing and logistics, will continue to locate in other states,” the lawsuit states.

This is something new in California. Civil rights activists are attempting to hold climate activists accountable for worsening the housing crisis and increasing poverty.

Maybe it’s the political climate that’s changing.

 is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

This article was originally published by Fox and Hounds Daily

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New Proposed “Voluntary” Tax on the Water You Drink

August 22, 2018 By Susan Shelley 12 Comments

Drinking waterAnother new tax is headed for your water bill, as if it wasn’t high enough already.

Gov. Jerry Brown has been trying to push through a statewide tax on drinking water, the first ever in California history, and as you might imagine, it has been a challenge for him.

People are fed up with new taxes. That was demonstrated very convincingly in the June recall of state Sen. Josh Newman, D-Fullerton.

All the political tricks that were employed to save him — delaying the election, allowing voters to withdraw their signatures on petitions, lifting the cap on campaign contributions from other politicians — failed to prevent voters from firing the politician who cast a critical vote in favor of a huge increase in gas and car taxes.

That tax hike will face its own reckoning in November, when voters will have the opportunity to repeal it by passing Proposition 6, a ballot measure that also mandates voter approval of any future attempts to raise those taxes.

But despite the clear anger of the voters, or perhaps because of it, the trickery continues.

The water tax proposed in Senate Bill 845 would be “voluntary.”

Here’s the trick: Unless you opt out of paying it, you’ll pay it.

How do you opt out? It will be up to each “community water system” to figure that out, but you can bet the cost of the new paperwork will be added to your water bill some other way.

The purpose of the drinking water tax is to provide clean water for about a million rural residents in areas where the groundwater is contaminated.

That’s certainly important, and you’d think the state would fund that priority with some of the tax money Californians already pay.

You’d be wrong. California’s not run that way. Instead, you pay the highest state taxes in the nation, Sacramento spends all the money on things voters would never approve, and then for anything voters think is important, Sacramento insists on a new bond or tax.

Read your ballot this fall. Politicians are pleading for billions more to pay for water, veterans’ housing and children’s hospitals. No need to ask for more money to pay for state salary increases and Caltrans featherbedding — that’s covered already.

Connected to the proposed water-tax legislation is SB844, which would impose fees on dairy producers and companies that manufacture or distribute fertilizer.

The money would be deposited into the same “Safe and Affordable Drinking Water Fund” set up by the bill that imposes the water tax.

But the dairy and fertilizer producers get something extra for their money: protection from pesky regulators at state and regional water boards

SB844 prohibits certain enforcement actions for “causing or contributing to a condition of pollution or nuisance for nitrate in groundwater.”

The Agricultural Council of California and the Western United Dairymen are in support of these bills, as are the various environmental justice groups that are sure to receive grants from the new pot of money.

The Association of California Water Agencies opposes the legislation.

Nobody asked the water customers for their opinion, but if you’d like to give it to them, call your representatives in the state Assembly and Senate. You can look up their names and contact information at findyourrep.legislature.ca.gov. Don’t delay.

In Sacramento in August, legislation moves like you-know-what through a goose.

 is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

This article was originally published by Fox and Hounds Daily

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Cap and trade is looking more and more like a tax

February 16, 2018 By Susan Shelley 7 Comments

cap-and-trade-mindscanner-sstockThe veneer that keeps everybody from seeing that the cap-and-trade program is really just a tax is coming unglued.

Mayor Eric Garcetti blasted out an email newsletter happily announcing that the Jordan Downs public housing development in Watts will be refurbished with money from the hidden tax you’re paying for gasoline and electricity.

Watts will receive a $35 million grant of cap-and-trade funds, which Garcetti said will help make “dreams come true” with “improved quality of life, a renewed focus on public health, and better access to affordable housing.”

The city said the work on Jordan Downs will include rebuilding “distressed” units, creating recreational programs, and opening “about 165,000 square feet for retail.”

The funds will also pay for solar panels, a food waste prevention program, and 10 electric buses.

The cap-and-trade money comes from the state’s Greenhouse Gas Reduction Fund, which takes in revenue from the sale of allowances to emit greenhouse gases. The allowances, sold at state auctions, are purchased by companies that generate electricity, refine petroleum, make cement and process food. The prices of those things in California now include the cost of buying these permits to emit greenhouse gases.

Other states don’t do this, but in 2006, to save the planet from global warming, California passed a law to require a reduction in greenhouse gas emissions. Under the mandate now set in current law, greenhouse gas emissions statewide must be 40 percent below 1990 levels by 2030.

To achieve this goal, the California Air Resources Board developed the cap-and-trade program. It puts a statewide limit on GHG emissions, and businesses that are under the law are required to have a permit for each ton of GHG emitted. Every year fewer permits are issued, and the minimum price is a little higher.

The money that’s paid to the state for these permits looks a lot like a tax. But a state appeals court ruled that it’s not a tax, because it’s not compulsory. Any business that doesn’t want to pay it, the court reasoned, could simply go out of business.

Now you know why other states don’t do this.

For California politicians, the cap-and-trade funds are like a gift from heaven. Gov. Jerry Brown is spending them on the bullet train, which is barred by law from being funded with a tax increase. And the Legislature can hand out the rest of the loot to local governments and organizations seeking funding for pet projects.

To help spend the money, lawmakers created a committee called the California Strategic Growth Council and tasked it with advancing the revitalization of local communities. The SGC oversees the Transformative Climate Communities program, which considers grant applications from community groups, like the Watts Rising Collaborative, an advocacy organization made up largely of departments of the city government.

So your city tax dollars are being spent to lobby for cap-and-trade funds that come from the extra money you’re paying for electricity, gasoline and anything that’s made or moved in California.

Some of the $35 million grant for Watts will be spent to connect residents with new jobs created by TCC projects, and in a hint of how the spending will work out in practice, the funds will also be used for a “displacement avoidance plan” which will provide resources to “educate residents about their housing rights.” In other words, gentrification.

But nobody’s admitting that. It’s all under the banner of fighting climate change.

The president and CEO of the Housing Authority of the city of Los Angeles, Douglas Guthrie, said the Housing Authority is “proud to be leading this transformational initiative to build a healthier Watts” with “greenhouse gas reduction strategies.”

It’s just a tax. All of California accounts for only 1 percent of worldwide greenhouse gas emissions, so cutting emissions to 40 percent below 1990 levels is an exercise in futility, if what you’re really worried about is climate change.

Politicians are not really worried about climate change.

The cap-and-trade program is turning into a tax for community redevelopment and for a plain old slush fund. It doesn’t help Earth’s climate, but it does real damage to California’s business climate. Cap-and-trade is a hidden tax on energy that is making everything in California more expensive than in other states.

The biggest challenge for regulators is to prevent the prices of the allowances from going up too sharply. It might bring the game to a crashing end if people noticed the economic damage they’re enduring. When the voters put two and two together, things can heat up fast.

 Columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

This article was originally published by Fox and Hounds Daily

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Cap and trade is looking more and more like a tax

February 10, 2018 By Susan Shelley 9 Comments

The veneer that keeps everybody from seeing that the cap-and-trade program is really just a tax is coming unglued.

Last weekend, Mayor Eric Garcetti blasted out an email newsletter happily announcing that the Jordan Downs public housing development in Watts will be refurbished with money from the hidden tax you’re paying for gasoline and electricity.

Photo courtesy of Eric Garcetti, Flickr.

Photo courtesy of Eric Garcetti, Flickr.

Watts will receive a $35 million grant of cap-and-trade funds, which Garcetti said will help make “dreams come true” with “improved quality of life, a renewed focus on public health, and better access to affordable housing.”

The city said the work on Jordan Downs will include rebuilding “distressed” units, creating recreational programs, and opening “about 165,000 square feet for retail.”

The funds will also pay for solar panels, a food waste prevention program, and 10 electric buses.

The cap-and-trade money comes from the state’s Greenhouse Gas Reduction Fund, which takes in revenue from the sale of allowances to emit greenhouse gases. The allowances, sold at state auctions, are purchased by companies that generate electricity, refine petroleum, make cement and process food. The prices of those things in California now include the cost of buying these permits to emit greenhouse gases.

Other states don’t do this, but in 2006, to save the planet from global warming, California passed a law to require a reduction in greenhouse gas emissions. Under the mandate now set in current law, greenhouse gas emissions statewide must be 40 percent below 1990 levels by 2030.

To achieve this goal, the California Air Resources Board developed the cap-and-trade program. It puts a statewide limit on GHG emissions, and businesses that are under the law are required to have a permit for each ton of GHG emitted. Every year fewer permits are issued, and the minimum price is a little higher.

The money that’s paid to the state for these permits looks a lot like a tax. But a state appeals court ruled that it’s not a tax, because it’s not compulsory. Any business that doesn’t want to pay it, the court reasoned, could simply go out of business.

Now you know why other states don’t do this.

For California politicians, the cap-and-trade funds are like a gift from heaven. Gov. Jerry Brown is spending them on the bullet train, which is barred by law from being funded with a tax increase. And the Legislature can hand out the rest of the loot to local governments and organizations seeking funding for pet projects.

To help spend the money, lawmakers created a committee called the California Strategic Growth Council and tasked it with advancing the revitalization of local communities. The SGC oversees the Transformative Climate Communities program, which considers grant applications from community groups, like the Watts Rising Collaborative, an advocacy organization made up largely of departments of the city government.

So your city tax dollars are being spent to lobby for cap-and-trade funds that come from the extra money you’re paying for electricity, gasoline and anything that’s made or moved in California.

Some of the $35 million grant for Watts will be spent to connect residents with new jobs created by TCC projects, and in a hint of how the spending will work out in practice, the funds will also be used for a “displacement avoidance plan” which will provide resources to “educate residents about their housing rights.” In other words, gentrification.

But nobody’s admitting that. It’s all under the banner of fighting climate change.

The president and CEO of the Housing Authority of the city of Los Angeles, Douglas Guthrie, said the Housing Authority is “proud to be leading this transformational initiative to build a healthier Watts” with “greenhouse gas reduction strategies.”

It’s just a tax. All of California accounts for only 1 percent of worldwide greenhouse gas emissions, so cutting emissions to 40 percent below 1990 levels is an exercise in futility, if what you’re really worried about is climate change.

Politicians are not really worried about climate change.

The cap-and-trade program is turning into a tax for community redevelopment and for a plain old slush fund. It doesn’t help Earth’s climate, but it does real damage to California’s business climate. Cap-and-trade is a hidden tax on energy that is making everything in California more expensive than in other states.

The biggest challenge for regulators is to prevent the prices of the allowances from going up too sharply. It might bring the game to a crashing end if people noticed the economic damage they’re enduring. When the voters put two and two together, things can heat up fast.

Susan Shelley is an editorial writer and columnist for the Southern California News Group. Reach her at Susan@SusanShelley.com and follow her on Twitter: @Susan_Shelley.

This article was originally published by the Orange County Register

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California’s Infrastructure Boondoggles Continue

January 24, 2018 By Susan Shelley 7 Comments

High speed rail constructionEvery news story about the bullet train seems to be accompanied by a photo of workers building a viaduct in Fresno County.

This does nothing to dispel the impression that high-speed rail in California is actually a Marx Brothers movie.

Groucho: Over here is a viaduct leading over to the mainland.

Chico: Why a duck?

Groucho: I say that’s a viaduct.

Chico: All right, why a duck? Why a duck? Why not a chicken?

The latest news from the Marx Brothers is that the 119-mile Central Valley section currently under construction is $2.8 billion over budget.

That brings the estimated cost of the first phase to $10.6 billion and the cost of the entire project to at least $67 billion. Voters were told in 2008 that the high-speed train from San Francisco to Los Angeles would be completed for $40 billion, but more than a quarter of that money is gone and it’s not out of Fresno yet.

The train may not be going anywhere, but the project’s chief executive moved on in June, shortly after promising that there was no truth to a leaked federal report warning that the train was on track for cost overruns of more than $2 billion.

The new CEO, at a salary of nearly $385,000, is Gov. Jerry Brown’s transportation secretary, Brian Kelly. He says part of his job will be to “restore credibility” to the high-speed rail project, which would be a startling break with tradition.

Part of the problem in the Central Valley, the rail authority now says, is that construction began before all the land was acquired. This decision, which HSR executives promised not to repeat, was made because federal funds would have been lost if a deadline for the start of construction was missed.

That turned the negotiations for land into a W.C. Fields movie, “Never Give a Sucker an Even Break.”

The federal deadline for starting construction was just one of many safeguards that were put in place to try to prevent the rail authority from wasting billions of dollars on a half-finished train to nowhere. Sadly, Gov. Jerry Brown and the HSR authority found ways around all of them.

Another questionable infrastructure proposal from the Brown administration, the so-called California WaterFix, is also running into budget difficulties.

The original plan called for spending $17 billion to construct two huge tunnels under the Sacramento-San Joaquin River Delta. The idea was to get around the restrictions on pumping water from the delta to the Central Valley and Southern California, restrictions that have cut the flow of water in half since the 1980s.

The pumping restrictions resulted from lawsuits and settlements to protect declining populations of smelt and salmon, forcing another population — the people of California — to pay more for water, and for everything that’s produced with water, like food. Now billions will be spent to capture and clean up stormwater and groundwater, which wouldn’t be needed if California’s state and federal water projects hadn’t been shut down to protect the cast of “The Incredible Mr. Limpet.”

Some water districts refused to pay for the twin-tunnel project, so the Brown administration may downsize California WaterFix to one tunnel. It would still cost billions of dollars, but proponents would like you to know that none of the money will come from taxpayers. The whole thing will be billed to water users.

Californians who want to save money should take W.C. Fields’ advice: Never drink water.

 is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

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Making housing more expensive to build won’t make it more affordable

January 11, 2018 By Susan Shelley 1 Comment

Housing apartmentOnly a politician could believe that making housing more expensive to build will create more affordable housing.

But in Los Angeles, that’s what Mayor Eric Garcetti and the City Council are asserting. In December, they approved a new “linkage fee” on new development aimed at raising $100 million per year toward a goal of building 1,500 units of new affordable housing annually.

Don’t bother with the math. They didn’t.

The idea of a linkage fee, which exists in some other cities, is to get money from developers whose projects will displace residents in existing housing or generate a need for additional housing, something that could happen if a new workplace was built.

Hardly anybody is building a new workplace in Los Angeles unless it has a drive-through, but play along.

The “linkage fee” in Los Angeles won’t specifically be linked to the impact from a project. It’s simply a new fee for building in the city.

The early draft of the linkage fee, which has been on Mayor Garcetti’s wish-list since 2015, would have imposed the same fee for similar developments regardless of where they were located in the city. But some council members objected to the one-size-fits-all charge.

So the final version divides the city into “high-market” areas like downtown, Venice and Brentwood, and “low-market” areas like South Los Angeles.

The linkage fee for office, hotel, retail and other commercial buildings is $3 per square foot in low-market areas, $5 per square foot in high-market areas.

For residential developments, the fee is even higher: $8 per square foot in a low-market area, $15 per square foot in a high-market area.

The money will go into the city’s Affordable Housing Trust Fund, and city officials say they’ll spend it to build hundreds of units of affordable housing.

Unfortunately, the number of Los Angeles residents who are in need of affordable housing is in the tens of thousands, and those are just the people sleeping on the sidewalks.

Meanwhile, the cost of all other new housing will go up, because developers have to pay these huge new linkage fees just to be allowed to build it.

There are two ways that residential developers can avoid the fees. One is by reserving a percentage of units in their projects for low-income renters. The other option, which is also available to developers of commercial projects, is to get out of Los Angeles and build somewhere else.

Many cities in the Southern California region don’t have linkage fees and don’t treat the construction of a commercial or residential building as a sin that requires some sort of political or financial penance.

In some places, local governments even offer incentives for developers and businesses, to encourage building and hiring.

That’s rare in Los Angeles, where the breathtaking decay of the city is considered incentive enough.

The state Legislative Analyst’s Office has done extensive research into the problem of housing affordability in California, including a detailed report released in the spring of 2016 titled, “Perspectives on Helping Low-Income Californians Afford Housing.”

“The scope of the problem is massive,” the report said, “Millions of Californians struggle to find housing that is both affordable and suits their needs. The crisis also is a long time in the making, the culmination of decades of shortfalls in housing construction. And just as the crisis has taken decades to develop, it will take many years or decades to correct. There are no quick and easy fixes.”

The LAO concluded that while “affordable housing programs are vitally important to the households they assist, these programs help only a small fraction of the Californians that are struggling to cope with the state’s high housing costs.”

To build public-subsidized affordable housing for the 1.7 million low-income California households that spend more than half their income on rent would cost more than $250 billion, by the LAO’s estimate.

But the problem is not just math, it’s logic. When it becomes more expensive to build housing, then less housing is built, and what is built is more expensive.

The LAO report said the real solution is more housing construction, and the scale of the problem can only be matched by privately built, market-rate housing.

“Doing so will require policy makers to revisit long-standing state policies on local governance and environmental protection, as well as local planning and land use regimes,” the report concluded.

So there really is something the government can do about housing affordability. It can get out of the way.

This article was originally published by Fox and Hounds Daily

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Will China’s new recycling standards mean higher taxes in California?

October 30, 2017 By Susan Shelley Leave a Comment

RecyclingDo you know where your recyclables go when they leave your blue bin?

Would you believe China?

But that’s about to change. In July, China notified the World Trade Organization that on Jan. 1 it will impose much stricter quality standards and will turn away shipments that don’t make the grade. In recycling, quality refers to how much non-recyclable material is mixed in with the recyclables. Anything non-recyclable is a “contaminant” that has to be removed in a sorting process. The stricter the standard, the slower and more costly the processing.

Recyclables are sold like any other commodity. Prices fluctuate according to demand. In order for recycling to be financially sustainable, the value of the recyclables has to exceed the cost of picking up the stuff, sorting it, shipping it, and recycling it into something that can be sold and shipped to someone who can use it.

In 2016, California shipped recyclables with a value of $21 million by air to Japan, the United Kingdom and Germany. Trash worth $108 million went by rail or truck to Mexico. But $4.6 billion worth of recyclables, 15 million tons, were shipped out from California’s ports. By far the greatest share of our recyclables, 62 percent, went to China.

Seaborne exports of all commodities from California ports in 2016 totaled 63 million tons, with a vessel value of more than $89 billion. Recyclable material accounted for 24 percent of the commodities exports by weight, 5 percent by value.

Some garbage is worth more than other garbage. Mixed paper, cardboard and paperboard made up 59 percent of the weight, but ferrous and non-ferrous metals accounted for 62 percent of the value.

CalRecycle, the state agency in charge of tracking these things, doesn’t know exactly how much of the garbage on the ships originated in California, and it doesn’t have precise numbers for local jurisdictions – reporting is supposed to start in 2019 – but Californians generated an estimated 76.5 million tons of waste material in 2016. The agency says 42.7 million tons were “disposed,” meaning buried in landfills, and the remaining 33.8 million tons were “source reduced, recycled or composted.” At least a third of the 33.8 million tons was exported to overseas markets.

Last year, according to CalRecycle, the overseas shipping of recyclables created 2.1 million metric tons of greenhouse gases.

In 2011, California adopted a law that set a statewide goal of 75 percent recycling by 2020. But it’s not happening. CalRecycle reported in August that California’s overall disposal—garbage that goes to landfills—increased in 2016 for the fourth consecutive year.

Why? Some of the factors cited by CalRecycle include “relatively low disposal costs, declines in global scrap values for recyclable commodities, and limited in-state infrastructure.” The agency also blamed “increased consumption” resulting from an improving economy.

That should be good news, but CalRecycle isn’t happy.

“Even as California continues to push towards new and more aggressive recycling targets, CalRecycle has not seen a meaningful decrease in the total amount of disposal since 2009,” the agency lamented.

California’s recycling rate has fallen from 50 percent in 2014 to 47 percent in 2015 to 44 percent in 2016. That’s the lowest rate since the 75 percent goal was established in 2011.

CalRecycle says the only way we’re going to hit the 75 percent target is if more than half of the solid waste that is currently disposed is “source reduced, recycled or composted.”

But how?

In its August report, CalRecycle suggests …

Click here to read the full article by the L.A. Daily News

 columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

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Did Sacramento break the law in transportation tax rush?

April 21, 2017 By Susan Shelley 21 Comments

los-angeles-freewaysDid lawmakers break the law when they passed Senate Bill 1, the transportation tax increase?

There’s a quaint provision in the California Constitution that reads, “A person who seeks to influence the vote or action of a member of the Legislature in the member’s legislative capacity by bribery, promise of reward, intimidation, or other dishonest means, or a member of the Legislature so influenced, is guilty of a felony.”

By the time Gov. Jerry Brown finished twisting arms and greasing palms to pass a massive transportation tax hike, that antique language was on the curb like a broken grandfather clock waiting for a bulky-item pickup.

Brown and legislative leaders promised a billion dollars for specific local projects in the districts of wavering lawmakers, and one termed-out Republican senator made a deal for a law to protect people in his profession — civil engineering, not the profession you’re thinking of — from liability in construction lawsuits.

It’s not easy to prove a quid pro quo, Latin meaning “something for something.” People don’t typically leave a written record that says, “I’ll vote for this if you vote for that.”

But one thing is different this time. In November, California voters passed Proposition 54, a measure aimed at guaranteeing transparency in state lawmaking. Prop. 54 says bills must be in print and online in their final form 72 hours before the Legislature votes on them.

The transportation tax increase, SB1, was posted online on April 3. If the Legislature was going to meet its self-imposed deadline to pass the bill on April 6, not one word of it could be changed before the vote.

So all the wheeling, dealing, greasing, and “promise of reward” had to go into a separate bill.

And it did.

SB132 contains a billion dollars of “that” which was negotiated in exchange for a vote on “this.”

Not only is it in writing, there are many statements on the record from lawmakers that their vote for the transportation tax was explicitly tied to a promise from the governor and legislative leaders that the “thats” would be delivered.

Are the deals spelled out in SB132 a violation of the law under Proposition 54? They are effectively amendments to SB1 that were written into a different bill. If that’s legal, then the 72-hour requirement that voters just added to the state constitution has already been thrown to the curb with the rest of the grandfather clocks.

Before the truck comes to pick up the garbage, we should retrieve that language about bribery and reward and see if it applies to outgoing Sen. Anthony Cannella’s deal to condition his vote for SB1 on the passage of SB496, a bill Cannella authored to protect “design professionals,” including civil engineers, from lawsuits stemming from future work. “Anthony is a civil engineer,” Cannella’s official bio states.

Maybe you’re thinking it won’t pass. He was ahead of you. Language was added to the billion-dollar spending bill, SB132, to make it “operative” only if SB496 is enacted.

In addition to the billion dollars of “reward” written into SB132 on April 6, the bill was amended on April 5 to add $1 billion for “augmented employee compensation.”

Yes, another $1 billion of “compensation increases and increases in benefits” for state workers was slipped in while everyone was wondering where the state spent all our transportation taxes.

Talk about being taken for a ride.

Susan Shelley is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

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Ways in Which a Trump Victory Could Benefit California

November 18, 2016 By Susan Shelley 8 Comments

donald-trump-2On Jan. 20, when Donald Trump takes his hand off the Bible and picks up the phone, he could cause a near-seismic upheaval in California just by changing some federal rules and implementing new policies.

Let me break the news to you gently: it might work out well.

The federal government continuously writes stacks of regulations that cause consumers to pay more for everything than they otherwise would. But because of the length of time between the writing and the paying, it can be hard to recognize the cause and effect.

For example, your bill from the Los Angeles Department of Water and Power is higher because of federal regulations interpreted by California regulators to prohibit the use of ocean water for cooling power generation plants on the coast. We’re paying billions of dollars to convert three coastal generating plants, a project that began in 2011 and is scheduled to continue for decades. If the new administration modified those regulations, Los Angeles residents could save a small fortune.

If you’ve noticed that food is a lot more expensive, consider that because of federal regulations, the water supply was cut off to California’s breadbasket, the once-prosperous agricultural goldmine of the Central Valley.

Members of Congress from the area have introduced legislation over and over again to adjust federal law to override those regulations. Most recently, the Western Water and American Food Security Act was attached to the bill that funds the Interior Department. But President Obama has threatened a veto, arguing that the regulations are necessary to protect species like the Delta smelt.

The regulations could easily be changed if the new administration chooses to make abundant food production a policy priority over the protection of the smelt.

Other federal regulations have led to arguably impossible targets for further reducing fine particles, like dust and soot, in the air. To meet these goals, state regulators have repeatedly tightened the requirements for new diesel engines, raising the cost of trucking and the price of everything that’s moved by truck. The U.S. Environmental Protection Agency has even enforced California’s rules on out-of-state trucking firms when state regulators lacked jurisdiction.

Similarly, federal regulations have caused the South Coast Air Quality Management District to write up a new list of proposed tax increases to raise up to $14 billion. The bureaucrats need the money for policies and plans that are required in order to avoid federal sanctions for missing air-quality targets. But under a new administration, there’s an opportunity to take the bureaucracy off auto-pilot and look carefully at what we’re doing to ourselves. Some regulations may no longer be reasonable or necessary, and the cost may not be justified.

Federal rules that discourage the use of coal have made electricity more expensive, raising the cost of living for everyone. The next president’s policies could lower your utility bills.

Policy changes from the new administration will save taxpayers money in other ways, too.

A 2011 report from the U.S. Government Accountability Office said California paid $1.1 billion in 2009 to incarcerate criminals who were in the country illegally. The cost to Los Angeles County that year was $139 million.

President-elect Trump was criticized by California’s legislative leaders for his plan to immediately deport up to 3 million criminals who are in the country illegally. Senate President pro Tem Kevin de León and Assembly Speaker Anthony Rendon wrote in a joint letter, “We will lead the resistance to any effort that would shred our social fabric or our Constitution.”

But what is the argument for not deporting convicted criminals who are in the country illegally? How does that shred the social fabric or the Constitution?

Maybe California politicians should start working now on how they’re going to explain to voters that they rejected federal funds that could have been used for education, transportation and health care because they wanted to protect criminals who are in the United States without legal authorization.

It’s long past time for California’s leaders to give some thought to the damage caused by policies that have gone unquestioned because their cost didn’t become clear until years later.

From housing to energy to transportation to health care to law enforcement to education, federal policies and regulations have consequences that are sometimes both unintended and disastrous. A new administration is an opportunity to take a fresh look at everything.

It might just work out well, even for California.

And here’s the punchline: By 2018, the state’s Democratic politicians will be taking credit for it.

Susan Shelley is a columnist for the Southern California News Group. Reach her at Susan@SusanShelley.com and follow her on Twitter: @Susan_Shelley.

This piece was originally published by the L.A. Daily News

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