MOORLACH UPDATE — Expensive Super Bowls — February 7, 2016

It’s Super Bowl Sunday! But, there is another game being played. This is the tale of two pension system strategies. There is the public system, of which we are all stakeholders. And there are private sector arrangements, with which should concern only the shareholders of those publicly traded companies. One commonality that should not be missed is that both have voting members. So, it’s time for the Super Bowl of clashing pensions. First up, California’s massive liabilities.

My OC Register editorial submission two weeks ago has generated a number of responses and spinoffs (see MOORLACH UPDATE — State of the Municipalities — January 24, 2016 January 24, 2016January 24, 2016 John Moorlach). One great example was this week’s piece by Teri Sforza of the OC Register (see http://www.ocregister.com/articles/billion-702850-county-year.html).

The San Francisco Chronicle caught the concerns that we’ve been raising for the last year and provided a review in the first piece below. I’ve mentioned the retiree medical unfunded liability before (see MOORLACH UPDATE — $117B Unrestricted Net Deficit — January 9, 2016 January 9, 2016January 9, 2016 John Moorlach). It has since grown by another $2 billion. But, the Governor’s approach to addressing it is tepid, and exasperates the pension plan liabilities. Giving a 7 percent raise and only asking for a 0.5 to 1.0 percent contribution by employees is not enough. The Governor should have had the State pay 2 percent or more of salary and giving minimal or no raises. What’s the point about making a major play on the field that doesn’t even provide the team with a first down?

How can you receive the most generous retiree medical lifetime benefits, the most generous retirement package, and expect a generous raise? The professional engineers union did as they sacked the Governor. They also escaped a downsizing demand (see MOORLACH UPDATE — Money for Nothing — September 2, 2015 September 2, 2015 John Moorlach)! Let’s hope our quarterback calls better plays with the next group of bargaining units.

Next up, Yum! Brands, Inc. and it’s massive cash set asides for key executives. The OC Register‘s Teri Sforza is back with a review of funded deferred compensation plans in the private sector in the second piece below. I responded to her inquiry via e-mail and said this is a common practice and that there are remedies in the private sector. But, the remedies are not necessary for happy shareholders and employees. These remedies provide the closing thoughts of the piece. But, they may only hurt the employees and shareholders of these publicly traded corporations; not every man, woman and child in this state from the public employee defined benefit pension plans.

In this pension plan Super Bowl match up, the private sector is fully funded and adaptable, and garners the win. Unfortunately, the hangover for the losers, you and me, will still be here for decades to come. Let’s hope the voters for the public sector team can draft a better fiscal quarterback for Bowl games after 2018.

Speaking of match ups, Brietbart provides reactions to last evening’s GOP Presidential debate in New Hampshire. I’ve provided the link and my personal reaction. In this battle between Governors and Senators, I believe the Governors made the stronger arguments for their suitability to serve as President of the United States. Now, if only our political system allowed for making quarterback trades between states. . .

Enjoy the game today!

California’s $400 billion debt worries analysts

By Melody Gutierrez

SACRAMENTO — California has come a long way to dig itself out of budget deficits, but the state remains on shaky ground due to nearly $400 billion in unfunded liabilities and debt from public pensions, retiree health care and bonds, financial analysts say.

“Yes, the state’s budget is balanced if you are looking at what they are required to spend cash on this year, but not when you look at their expenses,” said Gabe Petek, a credit analyst with Standard & Poor’s.

The high debt and unfunded liabilities have resulted in the state’s rating lagging behind other states, Petek says. California saw its bond rating rise last year from A+ to AA-, the highest level the state has had in 14 years. Good bond ratings are a sign of a strong budget and financial management and allow states to pay lower interest rates when selling bonds.

“Compared to other states, though, California has one of the lower ratings,” Petek said.

And the reason is clear, he said. It’s California’s debt and liabilities that are concerning financial analysts, particularly the state’s rapidly growing unfunded retiree health care costs, which grew more than 80 percent over the past decade. California has promised $74 billion more in health and dental benefits to current and retired state workers than the state has put aside.

Major liabilities

Without changes, the state estimates that unfunded liability would grow to $300 billion by 2047.

“These liabilities are so massive that it is tempting to ignore them,” Gov. Jerry Brown said last month in his State of the State speech. “We can’t possibly pay them off in a year or two or even 10. And there is little satisfaction in the notion of chipping away at an obligation for three decades to pay for something that has already been promised. Yet, it is our moral obligation to do so — particularly before we make new commitments.”

H.D. Palmer, spokesman for the Department of Finance, said the governor is focused this year on reining in retiree health care costs. The retirement plan is one of the most generous in the nation, covering 100 percent of retirees’ medical costs if they worked for the state for 20 years. Currently, the state pays only for the cost of providing care to retired workers, and does not put money aside for those who will retire in the future.

“The pay-as-you-go model is clearly not going to be sustainable over the long haul, particularly with a workforce that is aging,” Palmer said. “Roughly 1,000 people turn 65 in California each day, a number of those are state workers. What does that mean for the state in terms of long-term fiscal planning?”

Last year, the state successfully negotiated with the professional engineers union to have those workers contribute half of 1 percent to their retiree health benefits in 2017 and 2018 and 1 percent of their salary in 2019. The state will match those contributions.

Pension debt

Engineers, however, will see their contributions offset by a 5 percent raise this summer and a 2 percent raise in 2017.

The engineers union also agreed to increase the amount of time it takes to earn full retiree health benefits from 20 years to 25 years and decrease the coverage the state pays for from 100 percent of premiums to 80 percent. Those changes affect only new employees.

Palmer said the changes along with the prefunding of retiree health will be a model as the state begins negotiations with other unions this spring.

State Sen. John Moorlach, R-Costa Mesa (Orange County) said he’s skeptical that the state’s model for funding retiree health benefits is the right move. Moorlach said offering raises to employees to offset their contribution to their retiree health benefits puts more pressure on the pension system, which pays retirees based on their salaries.

“As we say in accounting, it’s missing the sizzle of the deal,” said Moorlach, a certified public accountant and financial planner.

Moorlach said he’s concerned with the state’s pension debt — the teachers retirement system alone faces a $72.7 billion unfunded liability. The most recent estimate in 2014 for the California Public Employees’ Retirement System shows a $43.2 billion unfunded liability.

Bond debt

Bond debt also has risen substantially in California, with the state’s reliance on borrowing for infrastructure resulting in 1 of every 2 dollars spent on those projects going to pay interest, according to the Department of Finance.

Bonds are approved by voters and generally used to pay for infrastructure, such as building schools and roads.

From 1974 to 1999, California voters approved $38.4 billion of general obligation bonds. Since 2000, voters approved more than $103.2 billion. The state is paying on $86.8 billion in bond debt with another $32.3 billion expected to be issued in the coming years.

In November, voters will be asked to approve a $9 billion school construction bond.

The state has $77 billion in deferred maintenance needed to fix roads, highways and bridges, which Brown said is likely to require a new tax or fee.

All these debts and liabilities should concern taxpayers, said Autumn Carter, executive director of California Common Sense, a Mountain View nonpartisan policy group that does fiscal and budget analysis. When the next recession hits, Carter said, the state’s payments on pensions, retiree health and bond debt will put pressure on social services and other programs.

“There is nothing that says we have to fall into financial ruin,” Carter said. “There is still time to turn it around. We can still attack debt and tackle the cost growth associated with pensions and retiree health care, but we have to be willing to do it.”

Melody Gutierrez is a San Francisco Chronicle staff writer. E-mail: mgutierrez Twitter: @MelodyGutierrez

The making of a CEO’s $232 million retirement

Tax-deferred compensation for the C-Suite makes all the difference

TERI SFORZA, STAFF COLUMNIST

Stuffing one’s face with gorditas from Taco Bell and deep dish from Pizza Hut helps fund the Fortune 500’s most lavish CEO retirement account, according to a recent analysis that may feed fears of income inequality.

David Novak, erstwhile CEO and now executive chairman of the board for fast-food parent Yum Brands, had just $1.6 million socked away in his retirement account as of 2014, according to the company’s public filings. But – thanks to tax code quirks available to top brass but not to Average Joes – he had another $232.6 million stashed in a tax-deferred compensation account, exempt from the annual contribution limits imposed on ordinary 401(k)s.

That put Novak’s total nest egg at $234 million, enough to generate a retirement check of $1.3 million per month through his golden years.

Meanwhile, “hundreds of thousands of his Taco Bell, Pizza Hut, and KFC employees have no company retirement assets whatsoever,” according to the Center for Effective Government and the Institute for Policy Studies.

Yum disputes the latter part of that accusation. More on that in a minute.

The center and institute want to end unlimited tax-deferred compensation for corporate executives, cap how much can be stashed in their retirement accounts and “instead incentivize a dignified and secure retirement for ordinary Americans.”

100 CEOS, $4.9 BILLION

Their study, “A Tale of Two Retirements,” examined data filed with the Securities and Exchange Commission and the U.S. Department of Labor and found that the 100 largest CEO retirement funds were worth a combined $4.9 billion – equal to the entire retirement savings of more than 116 million Americans.

“These massive nest eggs are not the result of CEOs working harder or investing more wisely,” the report says. “They are the result of rules intentionally tipped to reward those already on the highest rungs of the ladder.”

On average, those CEO accounts were worth more than $49.3 million, enough to generate $277,686 monthly retirement checks for each of them, the analysis found.

It’s not just a case of pension envy – though there is always that. These tax-deferred nest eggs also cost the U.S. Treasury, allowing the CEOs to save some $78 million on their 2014 tax bills, the analysis found.

There are three main components that help CEOs feather their retirement nests. The least important is the regular employee pension plan (offered at fewer and fewer private employers these days, for workers at any level). The second is the controversial SERP – supplemental executive retirement plan – which has come under fire from shareholders and is falling out of favor.

The most important vehicle, the report said, was the “executive tax-deferred compensation plans,” similar to a 401(k). That’s where almost half of the wealth lived.

While Average Joes face limits on how much pretax income can go into the 401(k) each year ($18,000 for workers under 50, $24,000 for workers over 50), CEOs and other top executives face no such limits on special deferred compensation plans set up by their companies. Nearly three-quarters of Fortune 500 firms had them for their executives.

“These privileged few are free to shelter unlimited amounts of compensation in these special pots, where their money can grow, tax-free, until they retire and start spending it,” the report says.

YUM RESPONDS

Novak’s ginormous nest egg is essentially the product of longevity, great performance and extremely good luck.

PepsiCo spun off Yum in 1997, and Novak was a senior executive with both companies for a combined 29 years, including 15 as CEO of Yum, said Yum spokesman Jonathan Blum in a prepared statement. The company declined to make Novak available for comment.

Novak’s deferred compensation was directly linked to company performance, and it primarily consisted of bonuses he earned and deferred into Yum stock. That stock appreciated more than 800 percent since the PepsiCo spinoff, Blum said.

“He chose to defer the majority of his compensation in Yum stock as he believes in the long-term growth of the company,” Blum said. He noted that total shareholder returns for Yum were 1,100 percent while Novak was CEO, compared with the S&P 500’s 190 percent return.

Yum also said that every company employee in the U.S. is offered a 401(k) that includes a 6 percent, dollar-for-dollar match, with no vesting period and low fees. That “puts it among the very best in the industry and competitive to any employer.”

Based on data the company provided to the U.S. Department of Labor, 8,828 of Yum’s U.S. employees had account balances in a 401(k) plan at the end of 2014, with average balances of $70,167, the “Tale of Two Retirements” analysis found. If converted to an annuity, that would generate about $395 per month.

At the global level, Yum employs 537,000 people, approximately 87 percent of them part-time, according to its filings with the Securities and Exchange Commission. It does not provide country-by-country breakdowns.

HOW WE GOT HERE

This tale of two retirements is the result of good intentions.

In 1993, Congress responded to outrage over CEO pay by capping the deductibility of executive pay at $1 million. That cap, however, didn’t apply to stock options and other “performance-based” pay.

So companies ramped up use of deferred compensation to beef up executive comp without running afoul of pay caps.

“Companies began shoveling out huge amounts of stock-based compensation, which bloated paychecks and encouraged CEOs to fixate on short-term stock prices,” the report says.

Depending on the employer’s plan, execs can often defer an unlimited amount of pretax salary or bonus into these accounts.

“Such is the joy of trying to reduce CEO salaries,” said state Sen. John Moorlach, a certified public accountant. “Those running larger companies are always going to look at ways to transfer income from the corporation to those in the executive suite. The goal is to have a corporate deduction and have the funds transferred be tax-deferred.”

There were laws on the books prohibiting executives from receiving a better retirement contribution than the rank and file, Moorlach noted; tax attorneys simply drafted techniques to get around them.

If Yum’s shareholders don’t like it, they can raise a stink and/or try to remove its board of directors, Moorlach said. If Yum workers don’t like it, they can organize boycotts – which could cost them their jobs, due to declining demand for their products – or work elsewhere. And if consumers don’t like it, they can choose to eat someplace else.

“Then the CEO’s compensation will be adjusted accordingly,” Moorlach said.

Contact the writer: tsforza

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http://www.breitbart.com/california/2016/02/07/2963653/

New Hampshire GOP Debate: California Reacts

by Jon Fleischman

This Tuesday ,voters in the small state of New Hampshire, with a population roughly equivalent to that of San Diego, will head to the polls for the first in the nation primary on the heels of the Iowa caucuses.

Last night, ABC News hosted the GOP debate for seven of the Republican contenders for the Presidency: former Florida Governor Jeb Bush, surgeon Ben Carson, New Jersey Governor Chris Christie, U.S. Senator

Sen. Ted Cruz (R-TX)
, Ohio Governor John Kasich, U.S. Senator Sen. Marco Rubio (R-FL)
, and businessman Donald Trump.

Here is a roundup of thoughts from various California politicos to whom Breitbart News reached out after the debate was over.

State Senator John Moorlach

The underlying theme was constantly repeating that current or former governors would be better than U.S. Senators at serving as the President of the United States. It was a battle between the executives and the legislators. During the past twenty-plus years, I’ve done both, running a county and a county department and now in the State Legislature. On this sole factor, I would favor someone who has or had executive experience.

It turns out that those who are behind in the polls are the executives, Bush, Christie, and Kasich. And they stressed their executive successes. But it’s the senators–Rubio (who received the brunt of this argument), Cruz, Clinton, and Sanders–that were being hammered.

The President of the United States is an executive position. It will be interesting to see if this debate tactic will gain traction in the New Hampshire voting booths.

Jon Fleischman is the Politics Editor of Breitbart California. A longtime participant, observer and chronicler of California politics, Jon is also the publisher at jon.

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MOORLACH UPDATE — Ronald Reagan Day — February 6, 2016

The filing period for the June Primary is rapidly approaching and my campaign is already on. For the latest details, see the Daily Pilot column below and MOORLACH UPDATE — State of the Municipalities — January 24, 2016 january 24, 2016 john moorlach and MOORLACH CAMPAIGN UPDATE — Endorsements — January 21, 2016 january 21, 2016 john moorlach.

I attended the beginning of the Department of Developmental Services Public Hearing on the Closure of Fairview Development Center this morning. The hearing is a requirement in the closure plan process and is scheduled to continue today to as late as 5 p.m. It is in the facility’s auditorium.

My staff also attends public meetings. State-licensed and non-licensed group homes are attracting plenty of attention in the District and in the city of Laguna Beach. This topic is discussed in the Laguna Beach Coastline Pilot, the second piece below. If the city has a recommendation for legislation, my office is open to pursuing it.

BONUS: It is Ronald Reagan Day in California. Today is the 105th anniversary of the birth of President Ronald Reagan. Governor Brown’s Proclamation is provided near the bottom of this UPDATE.

DOUBLE BONUS: The city of Newport Beach recently dedicated Marina Park. On the grounds is the Lighthouse Bayview Cafe. If you are a registered voter in the 37th Senate District, please come on February 26th for a Petition Signing Open House and visit this wonderful new restaurant opportunity on the Newport Peninsula. For a review of the Lighthouse, seehttp://www.latimes.com/socal/daily-pilot/opinion/tn-dpt-me-0129-barbara-venezia-column-20160127-story.html. The invitation is the final item below.

Catching up with Ramos and

Moorlach
By Barbara Venezia

Last Sunday I had a chance to talk with Costa Mesa City Council candidate Lee Ramos in studio on the KOCI radio show "Brunch with Tom and Lynn."

Hosts Lynn Selich and Tom Johnson interview local newsmakers weekly from 11 a.m. to noon.

I hadn’t seen Ramos since he ran for council in 2014.

Since he lost his first bid, Ramos has continued to walk precincts, averaging 15 to 20 miles a week.

He’s meeting residents and chatting about issues. He’s lost about 50 pounds in the process. He looks great.

On Sunday he spoke candidly about the disappointment of losing and said he learned a lot.

Get ready to meet Ramos 2.0.

With him in studio was Costa Mesa Councilman Gary Monahan, who is termed out this year.

Monahan’s lending a hand to the Ramos campaign and held a fundraiser last month at his restaurant, Skosh Monahan’s.

I asked Ramos what he felt the key issue with residents will be this campaign season.

He said "development," and talked about balancing economic growth and residents’ needs.

It will be interesting to see how he plans on delivering this message to win voters in a city divided over this issue.

A quality I liked about Ramos last campaign season was this longtime resident’s span of institutional knowledge, which continues to work in his favor.

But I felt his soft-spoken manner, though engaging on a one-on-one basis, didn’t work as he appeared on stage at the Feet to the Fire Forum, a candidates debate sponsored by the Daily Pilot and the Voice of O.C.

To be competitive this season he’ll need to up his game.

His public deliveries must be more energetic, with quicker sound bites to stay competitive in what could be another crowded field.

I also got to chat with state Sen. John Moorlach (R-Costa Mesa).

He called the house to congratulate my husband, Stan Tkaczyk, on his reappointment to the OC Fair Board. The governor also reappointed Ashley Aitken to a second term.

Like my husband, who is delighted to serve another four years, Moorlach would like to continue as our senator.

Around this time last year, I was writing about his bid for the 37th District seat vacated by Mimi Walters. Moorlach’s opponent was Assemblyman Don Wagner (R-Irvine).

Wagner was pumping out negative campaign mailers which Moorlach called "disingenuous, desperate and dishonest."

It was a contentious battle of the titans right up until the March 17 primary, whichMoorlach won.

Serving out the rest of Walter’s short term, Moorlach now has to run again, but this time he’s an incumbent, which statistics show win most of the time.

But this might not be a slam dunk. Wagner, termed out in the Assembly, by all accounts, is looking to beat those incumbent odds.

Moorlach’s already garnered key endorsements — including one from the Republican Party, which has already offered him use of its conference room for his campaign.

Moorlach’s friends Jim and Johanna Townsend will lend space on their Mesa Drive estate to once again serve as his campaign headquarters.

So is the Wagner-Moorlach thing really just a grudge match?

Maybe.

Moorlach tells me Wagner still hasn’t called to congratulate him on his last win.

Ouch!

Moorlach makes no bones about the fact he’s not thrilled with having to gear up for another campaign — it will take him away from his daily duties, in which he’s immersed.

I asked him if he has a long learning curve in Sacramento.

He said he hit the floor running but had to adjust to the "short time to read proposed bills and do research on them."

Moorlach says colleagues have complimented him on his preparedness, brevity on the floor and debating skills.

"I’ve had excellent camaraderie with both sides of the aisle," he says.

Moorlach’s a numbers guy and made headlines when he brought to light a 2014 report on Caltrans over staffing and overspending.

And he continues to ring a warning bell about unfunded pension liabilities facing the state and local governments — an issue that strikes a chord with voters.

Last go around Wagner’s expensive, negative campaign backfired. It will be interesting to see if he changes up his strategy, or takes the low road again.

If Wagner can’t raise money, or key endorsements quickly, he’d be smart to sit this one out. A two-time loss here could equal political career suicide, and that’s a lot to bet on a grudge match.

BARBARA VENEZIAlives in Newport Beach. She can be reached atbvontv1. Listen to her weekly radio segment on "Sunday Brunch with Tom and Lynn" from 11 a.m. to noon on KOCI/101.5 FM.

Recovery center worries residents near school

By Bruce Alderton

Residents of the Top of the World neighborhood told Laguna Beach officials Tuesday night that they are concerned about a substance-abuse recovery center in the area and the possibility of others moving into the city.

Pillars Recovery operates in the area, which is also home to Top of the World Elementary School.

The principal, Mike Conlon, called the community meeting in the school’s multipurpose room to discuss an issue that is of concern in many Orange County communities. Attending the meeting were Laguna police, planners, the deputy city attorney and a representative from the office of State Sen. John Moorlach’s (R–Costa Mesa). Moorlach’s district includes Laguna Beach.

Residents urged the city to take an active role in promoting legislation that would give it some authority over recovery centers and sober-living facilities.

State-licensed recovery and care facilities differ from sober-living homes in that the former provide supervision, care and treatment and, per state law, must have no more than six residents. City staff must treat these kinds of facilities as single-family homes.

Sober-living homes don’t require care and supervision, and there are no limits on residency.

Laguna has 13 state-licensed recovery centers, with two trying to obtain approval, Laguna’s Assistant Community Development Director Ann Larson said. Larson said she did not know the specific number of sober-living homes, since the operators don’t have to file paperwork with the city or state.

"The only time we find out [about a sober-living house] is when someone calls," Larson told those at the meeting.

In a circulated letter, parents claimed that recovery center patients have harassed and stalked young girls, littered streets with cigarette butts and created parking problems. One man said he found a package containing methadone on his doorstep.

The comments echoed concerns raised last year about short-term renters, those renting a house or portion of a home for less than 30 days at a time. Complaints were that certain renters were wreaking havoc.

Christine Fugate, a mother of two, said Laguna has become "the riviera rehab" and worried about recovery center operators moving into properties once they go on the market, like the house for rent next to her home.

"I don’t want this to happen and happen," Fugate said, adding that "no one here is against treatment for alcohol or drug addiction."

Pillars Recovery operates the Top of the World property, a recovery center, and has another location in Corona del Mar. Staff conducts thorough psychiatric screenings of prospective patients, and once admitted, residents attend group therapy sessions, operators say.

"No clients go outside without supervision," Pillars clinician Linda Friedman told the gathering. "I’m a parent like you guys. I’m trying to help people. I don’t want pedophiles in here."

Parents, and Conlon, said rehabilitation centers should not be located too close to schools.

"It’s definitely a concern," said the principal, who said no crimes have been linked to the Pillars facility. "If I had my way, I would not want it as close as it is" to the school.

Monarch Shores operates a property on Skyline Drive. No representative of the company attended the meeting.

One resident asked Friedman if she would accept a registered sex offender into a treatment program if she knew of the person’s background.

"No, that is not someone I would accept," Friedman said. "If I feel someone can’t get the best care, I recommend treatment in another facility,"

No state law requires operators of licensed treatment facilities to deny services to registered sex offenders, Carol Sloan, California Department of Health Care Services spokeswoman, wrote in an email.

Laguna police logged calls beginning in October, when Pillars opened the Top of the World facility, and compared the number with the same period from October 2014 through January 2015. Police received 26 more calls from Oct. 1, 2015, through Jan. 29, 2016, than the earlier period. Abandoned cars, at 12, accounted for the largest year-over-year increase among categories that included trespassing, theft and burglary.

"I understand the frustration you have," Laguna Beach police Det. Cornelius Ashton said. "With that, these facilities are operating all over the county. The city is working hard to regulate places and find ways to make you feel safer."

Costa Mesa approved a pair of ordinances that requires group and sober-living homes to be at least 650 feet from one another and obtain special city permits. One of those laws has been legally challenged, putting enforcement on hold.

David Mansdoerfer, Moorlach’s district director, urged residents to write or call explaining their concerns as senators craft bills for future legislative sessions.

Ajit Thind, Laguna’s deputy city attorney, said the city is "investigating all possible actions" and indicated a willingness to push for greater local control of group homes.

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MOORLACH UPDATE — Flood of Tax Measures — January 31, 2016

This week, there were two interesting reactions to my last Sunday’s editorial submission to the OC Register (see MOORLACH UPDATE — State of the Municipalities — January 24, 2016
January 24, 2016January 24, 2016 John Moorlach).

The first is a San Jose Mercury News editorial that predicts the pension shortfalls will produce a flood of local tax measures on November’s ballot. This piece was also picked up by Inside Bay Area News out of Oakland and the Daily Democrat out of Woodland. The state is waking up to the "pension taxes" that are being proposed (see MOORLACH UPDATE — Pothole Tax — August 30, 2015 August 30, 2015 John Moorlach).

I only have one minor correction to offer. I was referring to an anticipated $250 billion Unrestricted Net Deficit for the State of California on its June 30, 2015 Comprehensive Annual Financial Report’s Basic Financial Statements.

The second reaction goes in the opposite direction. The OC Register has a Letter to the Editor from a public employee union representative. While I understand his angst over facing a pension system that is woefully underfunded, I have to point out that he misrepresents the facts.

For example, he says that having union members pay in more toward their retirement has “solved” the problem. Not so. Even Governor Jerry Brown in his State-of-the-State address referenced the unfunded pension problem as needing potentially 20-years to pay down. That’s not a problem solved. In fact, the unfunded liabilities increased by $24 billion for CalPERS and CalSTRS just this past year.

This writer also states that my bill to increase Caltrans outsourcing from 10% to 50% would add to the problem. That’s just not factual either. Caltrans has 10,000 engineers on staff. The state’s Legislative Analyst’s Office found that Caltrans’ engineering department is overstaffed by 3,300 personnel at a cost of nearly half a billion dollars yearly. Contracting out for these positions would allow flexibility and dramatic cost savings. These extra 3,300 engineers also would not be a draw on the state’s pension plan.

Caltrans is responsible for about $10.5 billion annually. By contrast, the County of Riverside is responsible for some $7.5 billion and only has 9 engineers. California, Caltrans is bloated and the union knows it. So it has to identify that Caltrans does no-bid contracts, showing that things are even worse than expected. And somehow that is my fault. You’ve got to love obfuscation.

For a little fun on this topic, see:

MOORLACH UPDATE — Bay Bridge Bloat — October 29, 2015 October 29, 2015October 29, 2015 John Moorlach

MOORLACH UPDATE — Katy Grimes — September 23, 2015 September 23, 2015 John Moorlach

MOORLACH CALTRANS UPDATE — Facts vs. PECG — August 18, 2015 August 18, 2015
John Moorlach

MOORLACH UPDATE — SBX1-9 — July 18, 2015 July 18, 2015July 18, 2015 John Moorlach

MOORLACH UPDATE — Blame the Unions — November 9, 2015 November 9, 2015 November 9, 2015 John Moorlach.

San Jose Mercury News

Inside Bay Area

Daily Democrat

California braces for flood of tax measures

By Andrew McGall

Tax propositions might rain down on Bay Area residents like an El Nino downpour this year as cities, counties, school districts and agencies try to persuade voters to pay for improved transit, smoother roads, school repairs, city building rehab, and bay water and wildlife conservation.

Transportation authorities in Contra Costa, Solano, Santa Clara and Santa Cruz counties are planning sales tax elections. Santa Clara County is also talking about a sales tax to help the homeless.

BART directors plan a $3 billion bond measure in Contra Costa, Alameda and San Francisco counties. AC Transit directors are talking about a bond measure for the bus system’s Oakland to Richmond area. An obscure SF Bay Restoration Authority led the rush to the ballot box with a nine-county parcel-tax measure for the June election.

The Walnut Creek City Council and the Walnut Creek School District are discussing measures; so are Orinda, Lafayette and its school district. Not to be left out: the city of Hayward and the Hayward Area Recreation and Park District.

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On top of that not necessarily complete list, Gov. Jerry Brown has said that the state needs new taxes and fees to maintain its transportation systems. The legislative fist fight between Democrats and Republicans over taxes vs. reallocating existing money has led to months of inaction.

An initiative petition campaign has qualified for the November ballot a $9 billion statewide Public Education Facilities Bond Initiative for new and modernized school and community college facilities.

"It does seem somewhat unusual," said Mark Baldassare, president of the Public Policy Institute of California. "Anyone thinking about asking voters to raise taxes or fees is aiming for the November 2016 ballot" that will draw more voters, he said.

Low voter turnout has plagued California elections in recent years, he said. Los Angeles city elections in March drew just 10 percent of eligible voters.

Historically low bond rates might also be driving governments to the ballot box, he said, before the Federal Reserve starts ramping up interest rates.

The rush to get a hand into residents’ wallets unnerves taxpayer advocates.

"Why didn’t anyone tell me it was open season on taxpayers?" asked Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association.

He challenged the bay conservation measure as one that many would pay for but that would most benefit the corporations ringing the bay shoreline, not the people in the outer reaches of the bay.

The "Clean and Healthy Bay Ballot Measure" on the June ballot would charge residents $12 a year, raising $25 million a year for 20 years to reduce trash and pollution, improve water quality, restore habitat, improve shore access and protect against floods.

Another taxpayer advocate cast a gimlet eye over the ballot prospects and said he was appalled. "We’re certainly challenged just to keep track of them," said Jack Weir, president of the Contra Costa Taxpayers Association.

The problem he and others see is the growing burden of paying for underfunded public employee retirement benefits.

Under new rules that require public agencies to account for their unfunded pension liabilities, the state pension deficit could reach $250 billion, state Sen. John Moorlach, R-Costa Mesa, said in a Jan. 24 Orange County Register column.

That figure does not include the hundreds of cities, school districts, community college districts and utility districts, each with pension obligations, he said.

As the public agencies try to meet new requirements to fund that debt, they have less available for the services they are meant to provide, Weir said. That sends them to voters pleading for more money.

"We have to solve the problem," he said. "We can’t continue to spiral into fiscal insolvency."

Pension woes driving down the cities? Maybe, maybe not, said a state expert.

"We have 482 cities, and it is hard to make a general statement," said Mike Coleman, a fiscal adviser for the League of California Cities and the California Society of Municipal Finance Officers.

"Each community is in a different place on pension and health benefits," he said.

And, until the final decisions come down, it won’t be possible to say whether it will be an unusual election year.

Whatever happens, Weir said putting such a number of tax measures before voters would lead many to say, "Hell, I can’t afford this," and vote no on all of them.

SB9 not in taxpayers’ interest

Re: “Report: Pensions drowning California and its cities” [Opinion, Jan. 24]: When public pension funds suffered during the recent recession, new state legislation required state and local employees to begin paying more money into the pension plan with lower benefits for future hires. On average, a state engineer pays out of pocket around $800 a month for his or her pension benefit. The result is that the investment assets of CalPERS and other retirement plans are now larger than ever.

Problem solved, but not for state Sen. John Moorlach, R-Costa Mesa. While claiming he is “an accountant and a CPA” and it is “irresponsible” to make “unaffordable commitments” by providing pensions to retired public servants, he quietly introduced Senate Bill 9.

Currently, Caltrans overspends by more than $100 million per year by issuing no-bid contracts for engineering and related services, such as the design and inspection of our state highways and freeways. A state engineer costs the taxpayers $116,000 per year, including pay, benefits and overhead. To outsource the same work to a private engineering company through no bid contracts, the costs are $237,000, not including the cost of advertising and awarding the contracts. Caltrans outsources nearly 1,000 jobs per year, putting the annual additional cost at more than $100 million.

SB9, introduced by Sen. Moorlach, would mandate that Caltrans outsource five times the current level of contracting, increasing the excess cost to more than half-a-billion dollars per year, all through contracts without competitive bidding.

He says the problem for taxpayers “is now staring us straight in the face.” The real problem for taxpayers is Sen. Moorlach himself and his desire to cut jobs, cut pensions and irresponsibly overspend your tax dollars and mine.

Mark Sheahan

Sacramento

President, Professional Engineers in California Government

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MOORLACH UPDATE — Not An Easy Thing — January 29, 2016

Doing "a noble thing," as Stephen Birmingham wrote in his classic book, "Our Crowd – The Great Jewish Families of New York," for someone stepping aside to allow someone else to move on is "like all noble things, it was not an easy thing."

Yesterday, at the conclusion of the Senate’s fourth Session of the week, Senator Marty Block stood up to make a point of personal privilege. He announced that he would not be running for a final term, thus allowing his opponent the ability to avoid a nasty and expensive race. He wanted his Senate colleagues to hear it first.

This was Sen. Block’s seat to win and he had full support of his Democrat colleagues. But it appears that he weighed the decision and explained that it was for party unity. If this is the case, then it was a noble thing to do.

I believe that Sen. Block is a very classy guy and I enjoy working with him. I am sorry that he is concluding his career in Sacramento. I went up to him after his announcement and I teased him with a term of endearment that I give to everyone who retires or moves on, including my interns. I said "hey, quitter." Now there will be many reading this and will smile because they were or still are the recipient of this moniker when we see each other. It’s what I do.

The Sacramento Bee must have been within hearing distance, as it was included in their electronic version of the article below. The dead-tree version dropped the paragraph.

I have been through this exercise myself. I did something similar when both Mimi Walters and I were considering running for the open Orange County congressional seat. Had I stayed in that race, we would have had a bruising inter-party battle. But Mimi and I are like minded on most issues, and she had started the race much earlier than I. I was also very focused on my job as a County Supervisor. So, in the interest of party unity, I stepped aside. It was not an easy thing.

I took the time to tell Sen. Block how honored I was to work with him and shared my admiration for his professionalism. I wish him much success in the years ahead.

Marty Block will not seek re-election to California Senate

Fellow Democrat Toni Atkins challenged Block for his seat in September

Senate Democrats backed Block, but he trailed in fundraising

Block: ‘It just didn’t make sense for us to be fighting’

Averting an intraparty battle with the outgoing Assembly speaker, state Sen. Marty Block announced Thursday that he will not seek re-election.

The San Diego Democrat said there were too many similarities between him and Toni Atkins, the Assembly colleague challenging him for his seat, to justify continuing in the race.

“The more I thought about it, the more it just didn’t make sense for us to be fighting,” Block said. “We can do so much more to move our agenda forward, an agenda we share, by working together.”

It’s rare for an incumbent to be challenged by a member of their own party, but Atkins, who is termed out of the Assembly this year, announced her candidacy back in September in bombshell fashion. She said Block had promised to serve only one term in the Senate, clearing a path for her in 2016, and was reneging on their deal, a claim that Block denied.

Senate Democrats stood behind Block publicly, but his lower political profile and smaller campaign reserve made him an immediate underdog against Atkins. Block said Thursday that he and Atkins had long since moved past the controversy over the disputed deal.

In a statement, Atkins said she “was as surprised as his colleagues with Senator Block’s announcement” and “will work very hard to measure up to the standards” set by senators from the district.

Block added he felt no pressure from the party to drop out.

“I guess I’m ready,” he said. “I’m ready to go to the next thing.”

Making his announcement from the Senate floor Thursday morning, Block said he had “greatly enjoyed every moment” with his colleagues, who flooded him with hugs and well wishes.

“Hey, quitter,” Sen. John Moorlach, R-Costa Mesa, joked. Sen. Jerry Hill, D-San Mateo, clapped Block on the back and told him, “You did a nice job. A very nice job.”

A former university professor and community college trustee, Block said he hopes to continue working on higher education policy, particularly the development of community college bachelor’s degrees, which California is now piloting because of a bill he authored in 2014. Block said he is looking at several potential career opportunities not in elected office, but could not yet discuss them publicly.

Note to Block and Gov. Jerry Brown: California Community Colleges Chancellor Brice Harris is retiring in April.

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MOORLACH UPDATE — State of the Municipalities — January 24, 2016

The ugly moment has finally arrived. Certified Public Accountants who audit municipalities are now required to disclose the truth about the severity of unfunded actuarial accrued liabilities resulting from defined benefit pension plans. And the "State of the Municipalities" will be a cause for alarm to the residents of our nation’s cities, counties and states, as their audited financial statements are made public.

I addressed this Balance Sheet concern more than four years ago (see MOORLACH UPDATE — Financial Restatements — August 29, 2011 august 29, 2011 john moorlach). It is the topic of my editorial submission to the OC Register in the first piece below.

The topic may explain why Gov. Jerry Brown mentioned California’s $220 billion in unfunded liabilities in his "State of the State" speech Thursday morning, which is covered in the second piece below in the Murrieta Patch and Lake Elsinore-Wildomar Patch. (On the overstaffing at Caltrans, see MOORLACH UPDATE — Caltrans Fairways — August 28, 2015 august 28, 2015 john Moorlach and MOORLACH UPDATE — Transportation Strategies — August 13, 2015 august 13, 2015 john moorlach).

The third piece brings us back to the Commentary section of the OC Register. For background on the subject matter, see MOORLACH CAMPAIGN UPDATE — Endorsements — January 21, 2016 January 21, 2016January 21, 2016 John Moorlach and MOORLACH CAMPAIGN UPDATE — Fifty Percent Plus One — March 18, 2015 March 18, 2015 John Moorlach.

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Report: Pensions drowning California and its cities

Possible fixes include lower benefits, outsourcing, tax hikes.

By JOHN ‍MOORLACH
CONTRIBUTING WRITER

Get ready California. Without very much fanfare, the proverbial one-ton Government Accounting Standards Board gorilla has entered the room.

As the result of years of discussions over how best to account for the growing unfunded liabilities owed by government pensions systems, municipalities for the first time ever must include the unfunded actuarial accrued liability of their defined-benefit pension plans in their annual financial reports.

Orange County is one of the first municipalities to release its audited financial statements under the new rules. It is provided in a document known as the Comprehensive Annual Financial Report (see ac.ocgov.com/info/financial/cafr/2015).

The latest financial report is historic, and every resident should be interested in what it has to say. Although the county had a relatively stable year financially, the bottom line dropped like a rock when accounting for the pension liability. In fact, the bottom line fell to depths it has never reached before.

That’s what the GASB can do, and that’s why I’ve been warning Orange County taxpayers for over a decade that we must address our unfunded liabilities.

Orange County got a good start by reforming its retiree medical liabilities in 2006. Working with the public employee unions, the county reduced its unfunded liability by $1 billion and is now saving taxpayers $100 million a year. This is an achievement that I am very proud of. But it’s a small drop in the bucket compared with the arrival of the one-ton gorilla in the latest financial report.

With the inclusion on its balance sheet of the county’s unfunded accrued liability for its defined-benefit plan, the positive Unrestricted Net Assets – at a historic high of $331 million last year – went to a historic low negative Unrestricted Net Deficit of nearly $3 billion for fiscal year 2014-15, which ended June 30. This is a swing of $3.3 billion, resulting in the worst documented financial position in Orange County’s 126-year history.

We’re talking a gorilla twice the size of the bankruptcy losses Orange County incurred in 1994. Communicated a different way: If every one of Orange County’s 3.1 million residents chipped in $1,000 each, the county would be at the break-even point.

Fifty-seven other counties soon will be reporting their audited financial statements, and we can expect the same results on their balance sheets. The pension liabilities are that massive. This gorilla is no respecter of location or size. Cities will also be rocked into financial reality within the next few days or weeks.

GASB should have required the reporting of these unfunded liabilities for the past three decades, but failed to do so. Now they are being dropped in, and the wake of the splash is truly of tsunamic proportions.

It gets worse. California will be releasing its own CAFR in April. The Unrestricted Net Deficit last year already was $117 billion. Once the state’s unfunded liabilities are revealed and accounted for, expect the deficit to hit the $250 billion area. A quarter of a trillion dollars – that’s roughly $6,400 for every man, woman and child in California.

And we haven’t even thrown in your city, your school district, your community college district and your utility districts, like water and sanitation. The numbers will be so dramatic that you’ll see newspaper articles announcing the sad news.

Since public employee pension plans are reliant on the performance of the nation’s stock markets, the past few weeks on Wall Street mean that future audited financial statements may have even worse news to share.

I’m an accountant and a CPA. I’ve counseled for years that, just like spending more than you receive is irresponsible, so, too, is making unaffordable commitments to pay something in the future. The debts of maintaining a bloated government and providing overly generous pension benefits to government employees has a cost. And for the first time ever, governments must quantify that cost in their annual audited financial reports.

GASB is finally allowing municipalities to come closer to telling the truth about their total financial pictures. And those municipalities can tell their constituents that they will be tightening their belts, setting aside a larger rainy-day fund or, as government prefers to tell you, that more taxes are needed.

Taxpayers, we have a problem. And it needs to be addressed. It is now staring us straight in the face in the annual audited financial statements. The pension debts are no longer hiding in the shadows. The GASB gorilla has arrived.

What is there for our municipalities to do? More cuts and benefit modifications should be pursued. Outsourcing should be expanded. The public employee unions should negotiate to reduce pension benefit formulas for current employees, which is the best alternative. If municipalities experience unforeseen financial calamities, then it may even require a bankruptcy judge to approve a reorganization plan. Ask the city of Detroit how that worked for them.

The sooner these ideas are pursued, the better. Or expect continued pressures to increase car, gasoline, sales and income taxes.

John Moorlach represents the 37th State Senate District.

Murrieta Lawmakers React to Governor’s State of State

“In one breath, the governor stated we have a $7 billion surplus, and in the next said we need to raise taxes,” Melissa Melendez said.

By Renee Schiavone

By PAUL J. YOUNG, City News Service:

Gov. Jerry Brown’s State of the State address Thursday lacked a “real world” view of California’s future, a Riverside County lawmaker said, while another criticized the governor’s tax policy, and a third felt his priorities fell short on higher education.

“The Legislature was listening to how rosy the state’s economic outlook was,” Sen. Jeff Stone, R-Palm Desert, said after the address. “Sadly, those of us in the real world see higher gas prices, a sinking stock market and many of us fear about our economic futures.”

Stone pounced on the governor’s exhortation that “sooner rather than later, we have to bite the bullet and enact new fees and taxes” to pay for transportation infrastructure improvements.

“The radical special interests seem to have taken control of our state,” Stone said. “We need to build more roads and fix the ones that are broken … We can do all that without raising taxes.”

Assemblywoman Melissa Melendez, R-Lake Elsinore, said she was encouraged to hear the governor’s call for “greater savings,” but like Stone, was dismayed by his mention of more taxes.

“In one breath, the governor stated we have a $7 billion surplus, and in the next said we need to raise taxes,” Melendez said. “What we need is a re-evaluation of our priorities and an end to treating the taxpayers like an ATM. We have the money; let’s fix our roads and do right by the people of California.”

Assemblyman Jose Medina, D-Riverside, praised Brown’s call for “fiscal responsibility,” but was let down that the State of the State address offered no indication of the governor’s desire to boost in-state resident enrollment within the University of California system, as well as on Cal State and community college campuses

Medina noted that almost 16 percent of the undergraduate population in the UC system last year was comprised of nonresident students.

“This is troubling, and the University of California must do better to serve our highly qualified California students,” the assemblyman said.

Brown noted that, thanks to Proposition 30, spending on public schools and community colleges had increased 50 percent in the last four years. He regretted that UC tuition had doubled in the last 15 years, but did not offer any proposals on how to reduce higher education costs.

The governor struck a cautious tone on overall spending and the need for restraint.

“Here at the state capitol, we often think we have more control over things than we actually do. But the truth is that global events, markets and policies set the pace and shape the world we live in,” Brown said. “The challenge is to solve today’s problems without making those of tomorrow even worse.”

Brown said it was “imperative” to build up the state’s Rainy Day Fund in the event of a recession that could happen anytime.

“I was pleased to hear the governor again reiterate his commitment to fiscal restraint and building up the budget reserve,” said Sen. Richard Roth, D-Riverside. “I also believe that, in our region in particular, reasonable investments are absolutely critical.”

As in the previous legislative session, Roth is pushing this year for increases in the number statewide judicial positions. His last proposal to fund a dozen new judgeships was vetoed by the governor in October.

“Inland Southern Californians have been severely under-served in this area for many years, and the impact on the delivery of justice has been dire,” Roth said.

Brown complained of ongoing income inequality and the “disappearance of many middle class jobs” in the midst of “globalization” and “technological change.” He highlighted the problem of “outsourcing higher- paying jobs” to other countries but did not touch on how the influx of undocumented immigrants has impacted the job market or imposed a greater strain on state resources, as critics are quick to point out.

The governor acknowledged a “moral obligation” to pay down the $220 billion in unfunded retirement and health liabilities for state workers, but said there was little that could be done except “chip away” at the debt.

Sen. John Moorlach, R-Costa Mesa, has repeatedly called for reducing government bloat to hold down liabilities. In August, the certified public accountant circulated a state audit showing Caltrans has “3,500 more employees than it needs.”

Brown closed his address with an emphasis on water infrastructure and the environment. He expressed confidence in the “Water Action Plan” implemented to deal with the drought and said he remained open to suggestions on how to improve water storage and delivery.

The governor said it was necessary to “radically de-carbonize the economy” for the sake of the environment, as called for in the Paris Climate Agreement in which he had a hand last month.

Stone, Moorlach other Republican lawmakers counter that the state’s stringent environmental regulations already keep pump and electricity prices artificially high as a result of taxes and carbon trading costs.

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Wagner wrong to challenge Moorlach

By DAVID L. BAHNSEN / Contributing writer

When a politician puts his personal interests ahead of the public good, it’s always ugly. It’s even worse when you once stood together with him and fought the good fight.

That’s why the conservative Lincoln Club of Orange County has taken a principled stand against Assemblyman Don Wagner. Wagner has said he will run against our sitting Republican State Sen. John Moorlach. The club’s board endorsed Moorlach unanimously.

Moorlach is a legend in Orange County government. As a young CPA, he – and he alone – predicted the Orange County bankruptcy of 1994. In the aftermath, Moorlach was appointed treasurer-tax collector to clean up the mess. Moorlach was the only person who had a plan that would work.

Just Google the names of John Moorlach and his predecessor, Robert Citron, and the search results will show college-level textbook references to Moorlach’s skillful moves that pulled Orange County out of bankruptcy.

Later, when Moorlach was elected county supervisor, he worked to fix another looming financial threat – runaway public employee pensions.

Moorlach pushed for openness in negotiations, pulling back the veil so that taxpayers can see public employee contract negotiations. He also built consensus to reform the county’s retiree medical obligations, saving taxpayers $100 million a year.

Moorlach did his duty for Orange County. When the 37th state Senate seat opened last year, he decided it was time to bring his brand of truth-telling to Sacramento. In a three-candidate special election, including Assemblyman Don Wagner, voters made a strong statement by giving Moorlach over 50 percent of the vote on the first ballot.

We see the same Moorlach in Sacramento as we have in Orange County. In his first nine months, Moorlach led the effort to block a gas tax increase – and won. He’s fought more deficit spending. And he’s exposed waste and excess at Caltrans and agitated for wholesale reform there.

That’s why he’s been called “the fiscal conscience of the state Legislature” by a leading news site.

But none of that matters much to Don Wagner. Last week, he filed to run against Sen. Moorlach once again, this time in the 2016 primary for the seat’s full four-year term.

So, why does Wagner feel the need to challenge a conservative, a Republican, and an incumbent of Moorlach’s stature and put personal ambition before party?

Even worse, Wagner gratefully takes government union money. He’s courting the big union bosses for campaign cash – the same people who spent hundreds of thousands of dollars attacking Moorlach in last year’s Senate special election.

The union bosses want to send the message that any Republican who tries to reform the out-of-control public employee pension system will be their target. And Wagner wants to help them.

Wagner is happy to shed Republican blood. Taxpayers and conservatives will back Moorlach; Wagner will be backed by big government union bosses.

For Wagner, it’s only about Wagner. He’ll force Republicans to spend valuable campaign funds that should be spent elsewhere, winning swing seats to keep Democrats from capturing supermajorities in the state legislature and passing their tax hikes at will. Wagner doesn’t seem to care.

Just about every Orange County Republican elected official and organization supports John Moorlach for re-election to the state Senate. Many of them once endorsed for Don Wagner for Assembly. Now, they are shaking their heads in disappointment.

Don, it’s time: Turn away from the dark side.

David L. Bahnsen is a director of The Lincoln Club of Orange County.

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MOORLACH CAMPAIGN UPDATE — Endorsements — January 21, 2016

The campaign is on. Regretfully, defying the Republican Party policy of not challenging an incumbent in good standing, Assemblyman Donald Wagner has announced that he wants a rematch.

Fortunately, I am gathering outstanding endorsements and my opponent is garnering the wrath of Republican leaders who are not amused with his decision.

The Daily Pilot announces the latest for my 2016 re-election efforts in the piece below.

Political Landscape: Moorlach announces endorsements for state Senate reelection bid

By Daily Pilot Staff

State Sen. John Moorlach (R-Costa Mesa) recently announced a slew of endorsements in his reelection bid for the 37th District in June.

The former Orange County supervisor, chosen for the Senate position during a special election in March 2015, has been endorsed by the Orange County Republican Party, Orange County Taxpayers Assn. TaxPAC, Orange County Lincoln Club and Howard Jarvis Taxpayers Assn.

"John Moorlach has been very effective in fighting against higher taxes and in working for a leaner, more efficient government," Howard Jarvis President Jon Coupal said in a statement. "His expertise as a CPA and certified financial planner is sorely needed in our Legislature."

State Assemblyman Don Wagner (R-Irvine) is the second declared candidate for the seat. His endorsements were not available Wednesday.

Wagner was the second-leading vote-getter in 2015 but lost to Moorlach by about 4,700 votes.

The 37th District includes Costa Mesa, Newport Beach, Irvine, Tustin and portions of Huntington Beach.

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MOORLACH UPDATE — $117B Unrestricted Net Deficit — January 9, 2015

The Governor’s Budget proposal is still the top story (see MOORLACH UPDATE — Governor’s 2016-17 Proposed Budget — January 8, 2016 january 8, 2016 john moorlach).

Early Thursday morning we provided information to the media and we could see fingerprints from this effort at the press conference, during the question and answer segment between the media and the Governor.

Our press release is in the California Political Review piece, which is the first one below.

For interviews done by the Sacramento Bee, see http://www.sacbee.com/news/politics-government/article53555500.html.

For a front-row seat editorial review of the Budget press conference, see the San Diego Union Tribune piece, the second below.

The third piece is from the Banning-Beaumont Patch, which addressed a couple of the concerns raised in our press release. The fourth and fifth pieces, from QuadrangleOnline.com and Farandu Life, are edited down to show only my quotes.

Yesterday morning former Orange County Assessor, Webster Guillory, received his sentence (see MOORLACH UPDATE — Outstanding Public Servant — November 19, 2015 november 19, 2015 john moorlach). I’m glad the judge was sensitive to the legacy provided to Orange County by Mr. Guillory. It’s reported in the OC Register in the final piece below.

Senator Moorlach: California

‘Net Financial Position: $117

Billion DEFICIT—Brown Still

Confused

By Stephen Frank

When you read the news stories today about the proposed $170 billion budget that the really confused Guv Brown is requesting think about the “surplus” he is claiming and the “reserves” he is financing. Then think about this, “CA’s “net” financial position is a $117 billion deficit, ($3,014 per person) according to the most recent Comprehensive Annual Financial Report (CAFR).”

I bet not a single media will tell the truth that we are running a massive deficit every year—in fact, we have been running deficits EVERY years since 1998. That is why, per the State Treasurer, we have a $1.5 trillion debt.

Then to make it worse, CalPERS has been lying about its return on investment. “NOTE: For the 2014/15 fiscal year, CalPERS planned for a 7.5% rate of return, but only managed a 2.4% rate of return.” Again, the media refuses to tell the public the truth. Government lies—get used to it.

WhiteHouseMoney

SIX KEY MEASURES OF CALIFORNIA’S FISCAL HEALTH

Senator Moorlach’s Notes on Analyzing the Governor’s Coming Budget Proposal
Senator John Moorlach, 1/7/16
1. California’s Net Financial PositionCA’s “net” financial position is a $117 billion deficit, ($3,014 per person) according to the most recent Comprehensive Annual Financial Report (CAFR).

This figure should be positive for healthy organizations. It’s derived by tallying the state government’s assets (monetary funds, investments, buildings, roadways, bridges, parks, etc.) and subtracting its obligations. The last positive number CA had was Gov. Pete Wilson’s last term with $1.5 billion in net assets.

CA now ranks among the worst states, just above Illinois, whose net position is a negative $68.3 billion, or $5,335 per person. Illinois’ finances are so bad, they’re telling lottery winners that they have to delay their payments.

2. Estimates of CA Unfunded Pension Liabilities
CalPERS: $ 96.7 billionCalSTRS: 72.7 billion

UC Pensions: 12.1 billion

NOTE: For the 2014/15 fiscal year, CalPERS planned for a 7.5% rate of return, but only managed a 2.4% rate of return.

3. Current Unfunded Retiree Medical Liability CA has the nation’s highest unfunded retiree medical liability at $71.8 billion.
4. CA’s Transportation Infrastructure

5. CA’s Business & Economic Competitiveness

  • CA has the nation’s highest income, sales and gas taxes, when cap and trade is included. CA also has the highest corporate tax in the Western United States and the 14th highest property tax. According to the Tax Foundation’s 2015 Facts and Figures (link is external), that puts California fourth in overall tax burden on a per capita basis.
  • For the 11th year in a row, CA was named the worst state for business in a survey of 500 CEOs by Chief Executive Magazine.
6. Budget Leftovers From Last Year

CA is not reimbursing doctors enough for Medi-Cal visits. Therefore, doctors have stopped taking Medi-Cal patients. Rather than use $1.1 billion from this last year’s $7 billion increase in general fund spending from the year before to backfill the Medi-Cal system, the legislature instead tried to raise cigarette taxes by $2 per pack to fund this shortfall.

In January 26, 2009, the California state government borrowed $10 billion from the federal government to cover its Unemployment Insurance Fund. As of June 3, 2015, it still owed $8 billion. The 2015 interest payment on the loan totaled $174.5 million. By leaving this unpaid, CA employers are now being forced to cover the payments through increased federal unemployment payroll taxes.

About Senator John Moorlach (R-Costa Mesa):
State Senator John Moorlach represents the 37th district of California, is a trained Certified Financial Planner and is the only trained CPA in the California State Senate. He gained national attention 20 years ago when he was appointed Orange County Treasurer-Tax Collector and helped the County recover from its bankruptcy filing – at the time the largest municipal bankruptcy in U.S. History.

Recession fears drive Brown’s budget

Same old budget approach: Spend more, but hold line on permanent programs

Mugshot of Steven Greenhut
By Steven Greenhut

There was almost no need to attend the Capitol press conference where Gov. Jerry Brown released his 2016 to 2017 budget given that it played like a rerun from last year and the year before. To the chagrin of some and applause of others, Brown stuck to the same themes. He wants to spend more, but mainly on one-time expenses that don’t lock the state into deficits in case of an inevitable recession. He made it clear a downturn is coming.

Governors don’t usually warn about recessions when times are good, but Brown held up a chart – the same basic one he displayed every year – with the title: “More permanent spending, combined with recession, would be devastating.” It shows that since 2000 the years with budget deficits outnumber those with surpluses. And the sum of those deficits – nearly $40 billion in 2009-2010, for instance – are seven times larger than surpluses.

“If you’re a betting person, you can easily conclude that deficits are more likely than surpluses…,” Brown said. “But embarking on new permanent commitments that will be … something that’s expected to continue … and you get a recession you get a $43 billion deficit within three years.” He said recoveries usually last five years – and this current one has gone on longer than that.

These are sobering words, especially given that legislative leaders from his party are chomping at the bit to spend more money given the budget is showing a decent surplus. Brown described his budget as being in good shape, but said, and he emphasized the word, it’s only relative. It’s better than past budgets, but the state is not out of the woods, yet.

“All things considered, Brown’s most important political ally continues to be the stock market,” observed the Los Angeles Times. That’s true – but the market hasn’t been much of a friend since the beginning of January. The markets posted their worst-ever start to a New Year in history, and were in a free fall at the time of the press conference. That reinforced the governor’s point – bad times always are just around the corner.

The governor was his usual funny self. When discussing ballot measures such as marijuana legalization and gun control, he retorted: “Don’t smoke marijuana when using your gun.” He also seemed firm in his opposition to extending the “temporary” Proposition 30 tax hikes. That was music to the ears of legislative Republicans. Same with his plan to pitch in another $2 billion to the state’s rainy day fund.

Republicans focused their critique on the ongoing political battle over a proposed tax on managed care organizations. Brown needs some GOP votes to approve a tax on health plans in response to demands from the federal government. Boosting the tax would make the state eligible for more than $1 billion in continued matching funds, and the governor said he would use the dollars for programs for the developmentally disabled.

But Republicans have accused the governor of unfairly tying the tax hike to such spending. “It’s a shame that this governor continues to use our most vulnerable and unfortunate citizens as pawns in a political chess game to further raise taxes here in California,” said Sen. Joel Anderson, R-El Cajon, in a statement. Republicans also complained about an insufficient emphasis on transportation funding.

There’s nothing much new there, either. Nor in the statements from Democratic legislators, who praised the budget but nudged the governor for more spending on social services. For instance, the chairmen of the Latino Caucus, Assemblyman Luis Alejo, D-Salinas, and Sen. Ben Hueso, D-San Diego, said the budget “continues to address many of the state’s pressing needs” but pledged to “continue our advocacy for the restoration of programs and policies … that constitute the social safety net for the less fortunate in our communities.”

Myriad interest groups sent out their usual statements calling for more funding for their pet projects. The California School Boards Association applauded the additional $3.2 billion the budget earmarks for public schools, but said the state still lags most other states in school spending. The Health and Human Services network held statewide rallies demanding more spending for anti-poverty programs.

The governor’s general-fund budget tops $122 billion (an increase of 5.6 percent from last year) and the total budget tops $170 billion. Those are big numbers. Sen. John Moorlach, R-Orange County, said the state faces a $117 billion deficit when its unfunded pension and medical-care liabilities are considered. The governor plans to negotiate with state employees over those medical liabilities but has little in store for pension debts, which will get worse if the stock market continues its slide.

So this is no time to go on a spending binge. That message may be a repeat from last years, but it’s always a good one to keep in mind.

Greenhut is the Union-Tribune’s California columnist.

Patch Banning-Beaumont Patch

RivCo Leaders Respond to Governor’s Proposed $122.6 Billion Budget

Local leaders met the governor’s budget proposal with modest reviews this week.

By PAUL J. YOUNG, City News Service:

Riverside County lawmakers Thursday offered a tepid response to the $122.6 billion budget blueprint released by Gov. Jerry Brown, lauding his desire to restrain spending but questioning some of his other goals.

“I am pleased the governor continues to demonstrate moderate fiscal restraint in his 2016-17 spending plan,” said Assemblywoman Melissa Melendez, R-Lake Elsinore, who serves as vice chair of the Assembly Budget Committee. “However, I remain concerned with the direction of some of his proposed spending priorities.

“Continued economic growth and new jobs for middle and low-income Californians depend on good roads, improved water infrastructure designed to handle future droughts, well-funded classrooms built to meet the needs of today’s workforce and paying off unemployment insurance debt that is crippling employers.

“As we progress through this budget process, I will continue to advocate for responsible budgeting that reflects the core interests of California’s working class families.”

Brown’s 265-page plan touted the “elimination” of the $26.6 billion on- budget deficit that he inherited in 2010, as well as the fact that “education funding is at its highest level ever,” and that nearly $400 million would be available to “low-wage working families” in the form of earned income tax credits. But the governor cautioned the Legislature against big spending proposals.

“It would be shortsighted in the extreme to now embark upon a host of new spending only to see massive cuts when the next recession hits,” he said, pointing out that another recession probably is “not far off.”

Brown called for boosting the state’s rainy day fund by $2 billion for contingencies and allocating $740 million for Medi-Cal.

He wants K-12 spending at $10,591 per student — a nearly 50 percent increase over funding levels of five years ago. The governor is also advocating a cap on state tuition for University of California and Cal State campuses, holding fees at 2011 levels.

“I am pleased to see the plan includes a proposal to hold tuition and fees at current levels,” said Assemblyman Jose Medina, D-Riverside. “More needs to be done, however, in order to ensure high-quality education and increased access at our public colleges and universities. The January budget is merely the initial framework. I look forward to working with the governor and my colleagues to continue to prioritize higher education.”

Sen. Richard Roth, D-Riverside, praised the “critical investments” planned for educational services but stressed the need for Brown to lead the way in making “smart investments that will create jobs and improve the quality of life for all Californians.”

Assemblyman Eduardo Garcia, D-Coachella, generally was supportive of the governor’s plans — particularly a proposed $80 million investment for restoration of the dying Salton Sea — but he hoped for a detailed review of policies and programs to “assess how they contribute to reducing the state’s current economic disparities.”

The governor will press for an $807 million commitment to make improvements to levees, parks, prisons and other state facilities. He also submitted a $36 billion infrastructure improvement plan to fix California’s highways and roads — ranked near the bottom nationally — over the next decade.

“It appears that the governor has proposed a budget that reflects the tenuous nature of our economy (and) has sent a signal to entrenched Sacramento special interests that there is not a blank check for government expansion,” said Sen. Jeff Stone, R-Palm Desert. “I look forward to adopting a final spending plan that reigns in spending, protects public safety, helps pay for needed infrastructure improvements … and avoids any attempt to raise taxes.”

Stone’s Republican colleague, budget hawk Sen. John Moorlach of Costa Mesa, said he was most concerned by what was missing in the governor’s to-do list, including rectifying the state’s ballooning unfunded pension obligations, which are carried off-budget and total an estimated $181.5 billion.

Moorlach, a certified public accountant, also worried about the lingering $8 billion that California owes the federal government for unemployment insurance debt incurred during the Great Recession and the high gasoline taxes that Californians pay — without commensurate investment in transportation infrastructure.

The cumulative pump tax is 56 cents per gallon, according to the California Energy Commission. State oil producers and transporters are also saddled with cap-and-trade obligations, requiring them to purchase “allowances” to do business under California’s strict environmental regulatory apparatus. How much of those expenses are passed on to consumers is a matter of dispute.

Brown said he will endeavor to expand that cap-and-trade program in the next fiscal year.

quadrangleonline.com

California Governor Brown proposes $170.7 billion state budget

Alexandra Douglas

Brown provides enough so the California State University and University of California systems won’t raise tuition.

John Moorlach of Costa Mesa, said he was most concerned by what was missing in the governor’s to-do list, including rectifying the state’s ballooning unfunded pension obligations, which are carried off-budget and total an estimated $181.5 billion.

California governor to propose increased funding for education

Reynardo Barbero

John Moorlach, R-Orange County, said the state faces a $117 billion deficit when its unfunded pension and medical-care liabilities are considered.

Former Orange County assessor Webster Guillory sentenced to community service for misdemeanor election fraud

By MARTIN WISCKOL / STAFF WRITER

Former county Assessor Webster Guillory will serve 240 hours of community service and pay a $500 fine for committing two misdemeanor counts of election fraud, a Superior Court judge ordered Friday.

A jury in November found Guillory guilty of wrongly signing two candidate nominating petitions for his failed 2014 reelection bid. His signatures indicated that he had collected the names on the nominating documents from voters. Although he did circulate two petitions, he signed two others that he had not circulated.

Guillory claimed it was an honest mistake, but the jury agreed with the prosecutor that he signed petitions he knew he hadn’t circulated himself.

Following the sentencing hearing, Guillory, 71, said he had not decided whether to appeal the conviction but sounded upbeat about simply serving the sentence. Before losing the election, had served 30 years as a county employee, including 16 as assessor.

“After 30 years, they’ve asked me to do a little more,” he quipped. “That’s fine.”

He faced a maximum penalty was two years in jail and a fine of $2,000, but Deputy District Attorney Brock Zimmon noted Guillory’s years of unblemished county employment in requesting community service, court fees and a $1,000 fine.

Noting Guillory’s long service to the county and his lack of criminal background, Superior Court Judge Thomas Glazier knocked the fine down to $500 but kept the community service and court fees. He denied the requests of Guillory attorney John Barnett for a post-verdict acquittal and for a new trial.

“This court finds that there is substantial credible evidence … to prove the crimes charged beyond a reasonable doubt,” Glazier said.

District Attorney Tony Rackauckas‘ office originally filed three felony counts against Guillory two months before the November 2014 election — charges that were then trumpeted by the campaign of opponent Claude Parrish.

Guillory, who had outpolled former Board of Equalization member Parrish by 2 percentage points in the June primary, lost the November runoff by 6 points. Guillory beat Parrish by 8 points in 2010.

Following Guillory’s loss and before going to trial, Superior Court Judge Gassia Apkarian ruled that there was insufficient evidence for the three felonies and instead allowed prosecutors to proceed with two misdemeanors.

Some — including state Sen. and former county Supervisor John Moorlach — have criticized prosecutors for spending the time and resources pursuing what they say were technical violations. But Rackauckas Chief of Staff Susan Schroeder has responded that her office has a responsibility to prosecute wrongdoing where they found it.

Rackauckus and Parrish are Republicans. Guillory is not affiliated with a party.

Asked Friday if he thought there was a political motive behind the prosecution, Guillory said: “I’m not going to get into that. I’m happy it’s over and done with.”

Guillory had been planning to retire last year but made a last-minute decision to seek re-election when his preferred successor decided not to run.

Contact the writer: mwisckol@ocregister.com

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MOORLACH UPDATE — Governor’s 2016-17 Proposed Budget — January 8, 2016

Governor Jerry Brown released his 2016-2017 Budget yesterday morning and it provides for some interesting reactions. There is much to discuss, but I provide some thoughts in the first piece below, as The FlashReport allowed an opportunity to address two areas of concern that will shape this year’s debate on the budget.
Also see http://www.flashreport.org/index.php?doDate=20131204.

The Sacramento Bee provides numerous reactions, see http://www.sacbee.com/news/politics-government/capitol-alert/article53523005.html, and I’ve provided mine in the second piece below.

Two more editorial boards weighed in on the repurposing of Prop. 63 tax revenues, the Long Beach Press Telegram and the Los Angeles Daily News and the Daily Journal. For a video update on this topic, see

and watch starting at minute 24:30.

Prop. 63 is a surcharge tax for taxpayers with one million dollars or more in taxable income. This revenue source is to be used for programs to address mental illness. In Orange County, these programs are designed to be new and creative, but not to supplant. Consequently, I have participated in the initial announcement of the proposal and hope to shape it in a proper direction.

Governor’s Budget: Early

Battle Lines on Taxes

Yesterday, Governor Jerry Brown released his 2016-17 budget proposal to the legislature, and in that budget he anticipates approximately $7.6 billion in new spending over the previous year’s approved budget.

The fact that we have increased revenues to the state should be good news for California taxpayers, as the additional funds should take away any pressure to raise taxes.

But, that’s not how Sacramento logic works.

In addition to incorporating the increasing revenues, the Governor’s budget also renews the call for even more taxes – bringing back the car tax and further increasing the gas and diesel taxes – and using those tax increases to address the lack of maintenance of our highways and bridges.

That’s where we’ll see the early battle lines being drawn between Republicans and legislative Democrats.

Last year, we pointed out that California already has the nation’s 4th highest gas tax, and when the new cap-and-trade taxes are added in, the state’s gas tax, and gas prices, are the nation’s highest.

We also pointed out that, in the 6 years following the Great Recession, gas tax revenue grew by $1.75 billion, but road spending remained stagnant.

And, we presented data that showed California’s road spending efficiency needs work. California currently spends three times the national average on maintenance per mile of roadway, yet our roads continue to rank among the worst in pavement condition and congestion.

We are constantly reminded that one-third of the state’s residents now live at or below the poverty line. The last thing these Californians need is even higher taxes to pay for road repairs – repairs that should already be covered by current gas tax revenues.

Another ongoing battle line is the Governor’s call for a managed care organization (MCO) tax. When asked to explain this tax by a reporter, the Governor politely declined because he felt it was too complex to discuss.

Let me try to describe what is occurring. The United States government wants California to tax managed healthcare providers to pay a state tax that will be matched by Federal funds. The Governor claims that it will be a wash. That is not accurate, but we have yet to see the details that have been negotiated between the Governor’s office and major healthcare providers, like Kaiser Permanente. But, expect your already high medical premiums to increase should this tax be approved.

Throughout his budget presentation, the Governor made one thing clear. There apparently is not enough in revenues to meet the state’s needs, and Republicans’ unwillingness to support tax increases for roads and federal matching health care dollars is real the problem.

What?

The Governor is increasing the annual budget by more than $7 billion, but he could not allocate funding to these two critical areas?

California is already the least economically-competitive state in the nation. Our regulatory and tax rates are among the highest. Businesses and higher-wage jobs continue relocating out-of-state. For the 11th year in a row, California was named the worst state for business in a survey of 500 CEO’s by Chief Executive Magazine.

The worst thing we can do for our economic competitiveness and for working families is to continue adding even more taxes. That difference on taxes should be the defining issue between the two parties in the 2016 legislative session.

Taxes are high enough. It’s time to protect the families in this state from paying a high tribute just because the weather is great.

This Republican, along with my colleagues, are standing in the breach for California’s families. If roads and health care are important to Governor Brown, then his budget would have reflected that priority. It does not.

Gov. Jerry Brown’s proposed budget: Rapid response

BY ALEXEI KOSEFF

Here are some responses to Gov. Jerry Brown’s proposed budget:

Sen. John Moorlach, R-Costa Mesa:

Every California family know that our state is a very expensive one in which to live. That includes our state government, which has the nation’s highest income and sales taxes, and now the highest gas taxes when adding the new cap and trade taxes.

With $7 billion in revenues above last year’s budget, we can’t ask these families to pay even more in higher gas taxes. That will be a major difference between Senate Republicans and the Governor.

I appreciate the Governor’s concern for our fiscal future, particularly if the economy takes a downturn. That’s why we must take care of our priorities with current revenues, and that includes a well maintained infrastructure that will accommodate commerce and job growth.

A new plan to end California’s sad state of homelessness: Editorial

At least two aspects of a proposed plan to spend $2 billion to fight the scourge of homelessness in California fit the bill for the right approach to the problem.

First, the proposal takes the “housing first” tack that many experts on mental health and addiction have long said is the best initial way to tackle the issue.

There is simply no way to expect people to be able to get treatment for the problems many of them face with illness, drugs and alcohol until they have roofs over their heads.

This includes many of the tens of thousands now living on the streets, along the freeways and in unsafe riverbeds in Southern California.

The housing-first approach provides those who are experiencing homelessness “assistance to find permanent housing quickly and without conditions,” according to The National Alliance to End Homelessness.

It’s the “without conditions” aspect that is key. While it may make would-be do-gooders for the homeless feel better to offer what they see as the “carrot” attitude of: “We’re here to help you just as soon as you stop drinking,” that is in fact a “stick” approach, punitive in its very nature.

Housing initiatives in Seattle and elsewhere have found that simply by getting homeless alcoholics into subsidized apartments, many stop drinking as much as they did on the streets on their own. In fact, some stop drinking altogether once staying warm and dry is not a daily problem.

A famous inebriate in downtown Seattle did just that after his 25 years on the streets came to an end.

“He no longer had to worry about violence or finding a place to sleep. He met with a counselor who encouraged him to drink less. By his second year at 1811 Eastlake, John decided he was going to stop drinking, and he did,” an analysis in the online magazine Pacific Standard found. Others doing as did John “means huge taxpayer savings on arrests, hospitalizations and welfare.”

Second, the plan floated this week by state Senate President Pro Tem Kevin de León, D-Los Angeles, would take the $2 billion to build homes for homeless people with mental illnesses from existing fundsgenerated by Proposition 63.

This 2004 voter-approved proposition levied a 1 percent income tax on Californians earning $1 million or more per year to pay for mental health services. That means the money would come without seeking new taxes or other revenue sources.

Not that the plan, which could fund the construction of about 10,000 new housing units around the state, will necessarily come about easily.

There are complexities to it, including floating a bond measure that would require about $130 million in annual debt service from about $1.8 billion in annual Prop. 63 revenue.

It would also require negotiations with Gov. Jerry Brown, who unveiled his own annual budget plan Thursday.

But the good news is that the Democratic state Senate leader was joined by two Republicans, Sen. Bob Huff of San Dimas and Sen. John Moorlach of Costa Mesa, at the press conference announcing the plan.

All of us need to work together to solve the problem of homelessness.

Its human tragedies surround us daily, real people in flimsy tents with rickety shopping carts, as we go about our own relatively secure lives.

OP-ED: Housing the homeless

A bipartisan group of California state senators on Monday offered a powerful $2 billion housing plan to combat the appalling level of homelessness, particularly among severely mentally ill people in this rich state.

By making the announcement on the first business day of 2016, Senate President Pro Tem Kevin de Leon, D-Los Angeles, made clear his budget priority for the new year. No issue is more worthy of the Legislature’s attention.

Twenty-five years ago, then-San Francisco Mayor Art Agnos spoke about “compassion fatigue,” the idea that residents in that liberal city had grown sick and tired of panhandlers and homeless people. The problem has only gotten worse.

Now, a fifth of the nation’s homeless population calls California home, an estimated 114,000 people. Two weeks ago, we learned of the death of 5-month-old Sivam Lekh, the son of an often-homeless, drug-addled woman. In October, we read about 77-year-old Genevieve Lucchesi, who died in a sleeping bag in midtown. We cannot become inured to these deaths and call ourselves civilized.

Confronting the slow-motion crisis, de Leon, joined by several other politicians, announced the proposal on Los Angeles’ Skid Row, a festering example of California’s failure to solve homelessness.

De Leon’s predecessor, Darrell Steinberg, was at his side, as were two Republican state senators. Steinberg, a candidate for Sacramento mayor, endorsed the plan to raise the $2 billion by leveraging the billions raised by Proposition 63, a voter-approved initiative he promoted in 2004 to help severely mentally ill people.

Proposition 63 generates $1.8 billion a year by imposing a 1 percent income tax on people earning $1 million or more annually. The Legislature would take 7 percent of the Proposition 63 money, about $130 million, to finance $2 billion in revenue bonds to build housing for severely mentally ill homeless people.

The $2 billion would provide 10,000 to 14,000 housing units, as much as $200,000 per unit. That might seem high, but taxpayers already pay dearly for homelessness in added health care and policing costs, and in lost economic development.

Counties would be expected to compete for the funds. Presumably, areas with the largest number of homeless people — Los Angeles, San Francisco and other urban areas including Sacramento — would receive much of the money.

Sen. Bob Huff, R-Diamond Bar, and Sen. John Moorlach, an Orange County Republican, attended the news conference. As an Orange County supervisor, Moorlach used Proposition 63 money to implement that county’s version of Laura’s Law, a statute that allows judges to order treatment for mentally ill people who have a history of incarceration and hospitalization.

De Leon’s proposal is aimed at providing housing first. Once people have roofs over their heads, de Leon said, social workers would offer services including mental health care and drug treatment.

Democrats would do well to listen to Sen. Pat Bates, R-Laguna Niguel. Bates sees a need to spend some money on housing that caters to formerly homeless people who seek drug- and alcohol-free housing.

Getting chronically homeless people off the street ought to be the priority. But California should not reject funding for programs simply because they require that residents be drug- and alcohol-free. Keeping drugs and alcohol away from severely mentally ill people is especially important.

De Leon’s proposal comes amid protests by so-called homeless advocates at Sacramento City Hall and arrests over the weekend. Pointless protests do nothing to solve the problem of homelessness. Spending $2 billion to provide housing would. It’d also provide a powerful statement that the people of this state care about the least fortunate among us.

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MOORLACH UPDATE — More Prop. 63 Repurposing — January 6, 2016

As the initial Chair of the Orange County Commission to End Homelessness, I have a concern about this critical topic. Remember, I was sworn into the California State Senate last March at the Orange County Rescue Mission. Also see MOORLACH UPDATE — C2EH — December 11, 2013 december 11, 2013 john moorlach and MOORLACH UPDATE — Homelessness Review — December 19, 2013 december 19, 2013 john moorlach).

As the Chair of the Orange County Criminal Justice Coordinating Committee for most of my eight years as a County Supervisor, I had a keen interest in Prop. 63 (2004), the Mental Health Services Act, and how it interfaced with our public safety efforts.

And, having successfully worked with former Sen. Darrell Steinberg to see the passage of SB 585 in 2013, giving counties the ability to fund for assisted outpatient treatment, I helped make Orange County the second to adopt Laura’s Law in 2014.

For background on Laura’s Law, see MOORLACH UPDATE — Laura’s Law Journey — August 11, 2014 august 11, 2014 john moorlach, MOORLACH UPDATE — SD U-T on Laura’s Law — June 6, 2014 june 6, 2014 john moorlach, and MOORLACH UPDATE — Laura’s Law Resolution Passes — May 13, 2014 may 13, 2014 john moorlach).

For more on Senate Bill 585, see MOORLACH UPDATE — Laura’s Law Variants — February 10, 2014 february 10, 2014 john moorlach and MOORLACH UPDATE — Kelly Thomas Reverberations — January 15, 2014 january 15, 2014 john moorlach.

When Senate President Pro Tem Kevin de Leon invited me to attend his press conference to repurpose some of the Prop. 63 tax revenues as security for a bond to immediately build housing for the mentally ill, I said I would. I also said I would like to drill into the details and, hopefully, find a bipartisan solution that makes good fiscal sense. Now that we have been provided with all of the details, my staff and I are doing a review to see if all of the components are supportable. As a conservative, I want any solution to actually solve the problem, and I want any monies spent to be efficient and effective, without adding to California’s already high tax burden nor contributing to the state’s spending excesses.

The connection between chronic homelessness and mental illness is agreed to by most. And, California municipalities are spending a considerable amount of funds for incarcerating the homeless or paying for their medical care in our already busy emergency rooms. In fact, the largest housing provider of the mentally ill in Orange County is the Orange County Jail. Consequently, looking at alternatives is something that I am prepared to do.

My first day traveling back to the Capitol found me spending the morning in Skid Row. Directly before the press conference, I had the good fortune to pay a visit on an old friend, Herb Smith, who is the CEO of the Los Angeles Mission. Herb provided me with an impressive tour of the LA Mission’s facilities.

The press conference was covered by the Sacramento Bee, in the first piece below and an editorial on this new initiative in the second piece. Also see http://www.sacbee.com/news/politics-government/capitol-alert/article52957540.html for a brief video. It also gave me an opportunity to publicly thank former Senator Darrell Steinberg for his authorship of SB 585.

The Sacramento Bee also has a piece on how the Republican State Legislators are leaning in this year’s Presidential race, see http://www.sacbee.com/news/politics-government/capitol-alert/article53209460.html. The "At a Glance" portion is the third piece below.

Senate Democrats propose $2 billion plan for homeless

Senate leader wants to build homes for homeless people with mental illnesses

Proposal comes before Gov. Jerry Brown releases budget plan this week

“We totally oppose this,” says Proposition 63 advocate

Read more here: http://www.sacbee.com/news/politics-government/capitol-alert/article52957540.html#storylink=cpy

BY DAVID SIDERS

dsiders

In an opening to this year’s budget negotiations at the Capitol, Senate Democrats on Monday proposed a $2 billion bond to build homes for homeless people with mental illnesses.

The measure would be funded by Proposition 63, the existing, 1 percent income tax on Californians earning $1 million or more per year to pay for mental health services.

Senate President Pro Tem Kevin de León said at a news conference in Los Angeles that the money could fund construction of at least 10,000 housing units statewide.

The proposal comes before Gov. Jerry Brown releases his annual budget plan this week. Brown, a relatively moderate Democrat, has clashed with lawmakers of his own party in previous years over funding for social services.

Deborah Hoffman, a spokeswoman for Brown, said in an email that “the administration is supportive of efforts to empower local governments to tackle homelessness, poverty, and mental health issues in our communities and we will take a close look at the proposals in this package.”

In addition to the $2 billion bond, de León, D-Los Angeles, said he will push for $200 million in general fund revenue over four years to pay for rent subsidies for homeless people and will seek to increase in the Supplemental Security Income/State Supplementary Payment grants that help low-income seniors and people with disabilities. The measure would not have to go on the ballot, but would part of the budget negotiations with Brown.

His predecessor, Darrell Steinberg, the Sacramento Democrat who wrote Proposition 63, called the housing plan “the boldest proposal to reduce homelessness in a generation, if not longer.”

De León cast the proposal as a bipartisan effort. He and Steinberg were joined in Los Angeles by two Republican senators, Bob Huff and John Moorlach.

Huff, of San Dimas, said, “We’re trying to do something about a persistent problem.”

Nearly 30,000 chronically homeless people live in California, more than one-third of the nation’s total chronically homeless population, according to federal estimates.

Senate Democrats estimate annual debt service on a $2 billion bond would require about $130 million of about $1.8 billion in annual Proposition 63 revenue.

Proposition 63, passed by California voters in 2004, has been hailed by mental health advocates as an irreplaceable source of funding, while facing persistent criticism about oversight. Last year, the Little Hoover Commission faulted the state for bureaucratic and technological shortcomings it said made it difficult, if not impossible, to analyze the effectiveness of spending under the measure.

In a separate report in 2013, state Auditor Elaine Howle said that because of minimal oversight, California has “little current assurance” that funds directed to counties have been used effectively.

Rose King, a political consultant who helped craft Proposition 63, said that before the state starts spending money on housing construction, it should repair a mental health system that she said fails to reach many Californians who need it.

“We totally oppose this,” she said.

David Siders: 916-321-1215, @davidsiders

Senate offers a powerful $2 billion plan to fight homelessness

$2 billion plan to house homeless mentally ill people is a powerful statement of priorities

Senate leader Kevin de León is right to invite Republicans to work out details

Californians must not become inured to the plight of mentally ill homeless people

BY THE EDITORIAL BOARD

A bipartisan group of California state senators on Monday offered a powerful $2 billion housing plan to combat the appalling level of homelessness, particularly among severely mentally ill people in this rich state.

By making the announcement on the first business day of 2016, Senate President Pro Tem Kevin de León, D-Los Angeles, made clear his budget priority for the new year. No issue is more worthy of the Legislature’s attention.

Twenty-five years ago, then-San Francisco Mayor Art Agnos spoke about “compassion fatigue,” the idea that residents in that liberal city had grown sick and tired of panhandlers and homeless people. The problem has only gotten worse.

Now, a fifth of the nation’s homeless population calls California home, an estimated 114,000 people. Two weeks ago, we learned of the death of 5-month-old Sivam Lekh, the son of an often-homeless, drug-addled woman. In October, we read about 77-year-old Genevieve Lucchesi, who died in a sleeping bag in midtown. We cannot become inured to these deaths and call ourselves civilized.

Confronting the slow-motion crisis, de León, joined by several other politicians, announced the proposal on Los Angeles’ Skid Row, a festering example of California’s failure to solve homelessness.

De León’s predecessor, Darrell Steinberg, was at his side, as were two Republican state senators. Steinberg, a candidate for Sacramento mayor, endorsed the plan to raise the $2 billion by leveraging the billions raised by Proposition 63, a voter-approved initiative he promoted in 2004 to help severely mentally ill people.

Proposition 63 generates $1.8 billion a year by imposing a 1 percent income tax on people earning $1 million or more annually. The Legislature would take 7 percent of the Proposition 63 money, about $130 million, to finance $2 billion in revenue bonds to build housing for severely mentally ill homeless people.

The $2 billion would provide 10,000 to 14,000 housing units, as much as $200,000 per unit. That might seem high, but taxpayers already pay dearly for homelessness in added health care and policing costs, and in lost economic development.

Counties would be expected to compete for the funds. Presumably, areas with the largest number of homeless people – Los Angeles, San Francisco and other urban areas including Sacramento – would receive much of the money.

Sen. Bob Huff, R-Diamond Bar, and Sen. John Moorlach, an Orange County Republican, attended the news conference. As an Orange County supervisor, Moorlach used Proposition 63 money to implement that county’s version of Laura’s Law, a statute that allows judges to order treatment for mentally ill people who have a history of incarceration and hospitalization.

De León’s proposal is aimed at providing housing first. Once people have roofs over their heads, de León said, social workers would offer services including mental health care and drug treatment.

Democrats would do well to listen to Sen. Pat Bates, R-Laguna Niguel. Bates sees a need – as does The Sacramento Bee’s editorial board – to spend some money on housing that caters to formerly homeless people who seek drug- and alcohol-free housing.

Getting chronically homeless people off the street ought to be the priority. But California should not reject funding for programs simply because they require that residents be drug- and alcohol-free. Keeping drugs and alcohol away from severely mentally ill people is especially important.

De León’s proposal comes amid protests by so-called homeless advocates at Sacramento City Hall and arrests over the weekend. Pointless protests do nothing to solve the problem of homelessness. Spending $2 billion to provide housing would. It’d also provide a powerful statement that the people of this state care about the least fortunate among us.

Read more here: http://www.sacbee.com/opinion/editorials/article53023180.html#storylink=cpy

Read more here: http://www.sacbee.com/opinion/editorials/article53023180.html#storylink=cpy

California Republican lawmakers’ presidential pick: ‘I don’t know’

Republican legislators still largely undecided on whom they support for president

Those who have a preference overwhelmingly back Marco Rubio

Two legislators like Ted Cruz, who leads polling in California

Read more here: http://www.sacbee.com/news/politics-government/capitol-alert/article53209460.html#storylink=cpy

AT A GLANCE

Which presidential candidate do California Republican lawmakers support?

Marco Rubio:

Pat Bates, Bob Huff, Jim Nielsen, Janet Nguyen, Andy Vidak; Travis Allen, Ling-Ling Chang, James Gallagher, Tom Lackey, Kristin Olsen, Marc Steinorth

Ted Cruz:

Shannon Grove, Matthew Harper

Undecided:

Joel Anderson, Jean Fuller, Ted Gaines, John Moorlach, Mike Morrell, Sharon Runner; Katcho Achadjian, Catharine Baker, Frank Bigelow, Bill Brough, Rocky Chávez, Brian Dahle, Beth Gaines, David Hadley, Brian Jones, Young Kim, Eric Linder, Brian Maienschein, Devon Mathis, Chad Mayes, Melissa Melendez, Jay Obernolte Jim Patterson, Don Wagner, Marie Waldron

Declined to say:

Scott Wilk

Did not respond:

Tom Berryhill, Anthony Cannella, Jeff Stone

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MOORLACH UPDATE — Numbers 1050 and 49 — January 2, 2016

The year of our Lord 2016 has arrived. On the way in, my District staff is once again making itself available to constituents in Laguna Woods. It will be on January 11th and the OC Register provides the notification in the first piece below.

On the way out, the annual Daily Pilot Top 103 was released. In years past, almost two decades past, those being recognized would receive a little more in the way of introduction. It looks like we’re now down to names and titles. The Daily Pilot would even provide a lunch for those recognized and given T-shirts with their number proudly displayed. But, if you’re on the list, who cares? We understand that times are different for print media, and we are grateful for the recognition!

I’ve been fortunate to be named to the list a few times. Sometimes in the top 10. This year I’m number 49. Last year I was number 32. I guess getting elected to the State Senate is not as important these days. I’ve dropped to number 49. Now I’m wondering if I may be the first Costa Mesa resident elected to the State Senate? Maybe one of our Historical Society archivists can let me know?

It’s an honor to be included. For a few prior year’s lists, see MOORLACH UPDATE — Seeking Shelter 2014 — December 26, 2014 December 26, 2014December 26, 2014 John Moorlach, MOORLACH UPDATE — Daily Pilot 103 — December 27, 2013, MOORLACH UPDATE — Number 57 — December 26, 2012, MOORLACH UPDATE — Happy New Year! — December 31, 2011, MOORLACH UPDATE — 2010 Review — January 3, 2011, and MOORLACH UPDATE — Thanksgiving — November 26, 2009, an addendum to MOORLACH UPDATE — Coastal Commission — November 13, 2009 November 13, 2009March 8, 2013 John Moorlach). The entire list is provided in the second piece below.

BONUS: When I started my California Historical Landmark hobby, where I visit and photograph the plaque and the site, I used to do local day-trips on my birthday. That’s when I was just starting and unvisited landmarks were plentiful. I was able to resurrect this tradition last month. Orange County has a new landmark with Crystal Cove and I celebrated a portion of my birthday there. With so few left for me to photograph, this was a special and big deal.

The plaque was dedicated two years ago, but it is not installed in a monument (a project for me after the November election) and it is not even up on the State’s website (see http://ohp.parks.ca.gov/?page_id=21387). From left to right are me, my wife, Trina, my District Office Scheduler Aly John, my Assistant District Director Scott Carpenter, and Costa Mesa residents Dan and Nancy Worthington. Dan has provided Crystal Cove with invaluable volunteer service over the past year. More on that later.

LAGUNA WOODS

Constituent assistance: Representatives of Sen. John ‍Moor‍‍lach, California’s 37th District, will be at Laguna Woods City Hall on Jan. 11 in the council chambers from 3 to 5 p.m. City Hall is at 24264 El Toro Road. For information call 959-639-0500.

Jennifer Karmarkar jkarmarkar  

The DP 103: Who made news and lent influence in 2015

Here is the annual Daily Pilot 103, a list of those who made news and lent influence in 2015.

Named are the year’s newsmakers, as well as those who stayed out of the limelight but still made an impact. Thanks go to everyone who suggested names.

Of course, there are more people who make a difference than there are spaces on the list but there is no way to include them all. Please tell us who we forgot by commenting online or sending in a letter to the editor at dailypilot.

1.) Diane Dixon: The Newport Beach mayor and her Team Newport allies ushered in a year of political challenges to the status quo — some would say for the better, others would argue unnecessarily, but all would agree that 2015 was the end of business as usual.

2.) Keith Curry: The Newport Beach councilman accused Team Newport of grandstanding for political gain, particularly when it came to ordering an expensive audit of the Civic Center.

3.) Scott Peotter: The Newport councilman circulated an email critical of the U.S. Supreme Court ruling on gay marriage, drawing criticism from civil rights advocates — and some on the council — but he ultimately avoided censure.

4.) The Rev. Canon Cindy Voorhees: Despite her congregation losing its church on Via Lido, the St. James the Great Episcopal leader kept her flock together as they held services in the park and at a local museum.

5.) John Caldecott: Newport-Mesa Unified’s former H.R. director was fired after alleging officials miscalculated pension formulas; he then won a court ruling ordering that related documents be made public.

6.) Steve Mensinger: Costa Mesa’s mayor presided over the city’s ever-present political battles regarding everything from sober-living homes and relocating motel families to new residential development and approving a new library.

7.) Katrina Foley: The Costa Mesa councilwoman, who often countered with the council majority, negotiated extra assistance to displaced motel families and continued her advocacy for Costa Mesa High School athletics and arts.

8.) Donald Bren: The Irvine Co. chairman continued to refresh signature properties, while also introducing conservation measures like hybrid-powered buildings and water-sipping apartment plumbing.

9.) Paul Watkins: The longtime Newport Beach attorney and volunteer was named citizen of the year.

10.) Kathy Esfahani: A leader within the Costa Mesa Affordable Housing Coalition, she helped lead protests against a decision that will displace long-term tenants of the Costa Mesa Motor Inn without adding any new low-income housing for them.

11.) Mark Serventi and Greg Pappas: The co-owners of Newport Beach’s Woody’s Wharf challenged in court a city-ordered ban on dancing and extended hours.

12.) Chris Yelich: The principal at Banning Ranch developer Brooks Street Builders agreed to a California Coastal Commission directive to go back to the drawing board and scale down the proposed residential development.

13.) Steve Ray: The executive director of the Banning Ranch Conservancy stepped up the grass-roots campaign for preservation and campaigned against the proposal to build homes.

14.) Anton Segerstrom and Sandy Segerstrom Daniels: The managing partners of C.J. Segerstrom & Sons (South Coast Plaza) continued the family legacy after the passing of the company’s beloved founder, Henry Segerstrom.

15.) Rob Sharpnack: Costa Mesa’s new police chief was selected from inside the ranks.

16.) Joyce LaPointe: The Costa Mesa Police Department veteran became the CMPD’s first female lieutenant.

17.) Jay Johnson: The Newport Beach police chief announced his retirement.

18.) Russell Turner: UC Irvine men’s basketball coach led the Anteaters to their first NCAA Tournament berth.

19.) Jay Humphrey, Rick Huffman and Cynthia McDonald: The Costa Mesa First founders began circulating a ballot proposal that would require voter approval for major developments.

20.) Amy Senk: The thorough, accurate and dedicated Corona del Mar Today editor plans to stop blogging Jan. 1.

21.) Tom Hatch: Costa Mesa city CEO.

22.) Dave Kiff: Newport Beach city manager.

23.) Scott Poster: Newport Beach fire chief.

24.) Dan Stefano: Costa Mesa fire chief.

25.) Sandy Genis: Costa Mesa councilwoman.

26.) Jim Righeimer: Costa Mesa mayor pro tem.

27.) Gary Monahan: Costa Mesa councilman.

28.) Tony Petros: Newport Beach councilman.

29.) Duffy Duffield: Newport Beach councilman.

30.) Kevin Muldoon: Newport Beach councilman.

31.) Edward D. Selich: Newport Beach councilman.

32.) Frederick Navarro: Newport-Mesa superintendent.

33.) Dana Black: Newport-Mesa school board president.

34.) Karen Yelsey: Newport-Mesa school board.

35.) Vicki Snell: Newport-Mesa school board.

36.) Walt Davenport: Newport-Mesa school board.

37.) Martha Fluor: Newport-Mesa school board.

38.) Judy Franco: Newport-Mesa school board.

39.) Charlene Metoyer: Newport-Mesa school board.

40.) Howard Gillman: UC Irvine president.

41.) Dennis Harkins: Orange Coast College president.

42.) Michael Beals: Vanguard University president.

43.) Erwin Chemerinsky: UC Irvine Law School dean.

44.) Jacob Haley: Principal, Costa Mesa High School.

45.) Ernesto Munoz: Costa Mesa public services director.

46.) Matt Harper: State assemblyman.

47.) Mike Scheafer: Costa Mesa Sanitary District board president.

48.) Gary Sherwin: Visit Newport Beach CEO.

49.) John Moorlach: State senator.

50.) Michael Halt: Principal, Estancia High School.

51.) Sean Boulton: Principal, Newport Harbor High School.

52.) Kathy Scott: Principal, Corona del Mar High School.

53.) Deborah Davis: Principal, Back Bay High School.

54.) David Martinez: Principal, Early College High School.

55.) Bob Wilson: Departing Vanguard University athletic director.

56.) Robert Braithwaite: Hoag Hospital CEO.

57.) Dr. Allyson Brooks: Medical director of Hoag Women’s Health Institute.

58.) Gerardo Mouet: Orange County Fair Board chairman.

59.) Nick Berardino: Orange County Fair Board member.

60.) Ashleigh Aitken: Orange County Fair Board member.

61.) Stan Tkaczyk: Orange County Fair Board member.

62.) Douglas La Belle: Orange County Fair Board member.

63.) Barbara Bagneris: Orange County Fair Board member.

64.) Sandra Cervantes: Orange County Fair Board member.

65.) Robert Ruiz: Orange County Fair Board member.

66.) Kathy Kramer: Orange County Fair and Event Center CEO.

67.) Rob Dimel: Costa Mesa Police Officers Assn. president.

68.) Shawn Dewane: President, Mesa Water District.

69.) Robert Dickson: Costa Mesa Planning Commission chairman.

70.) Steve Rosansky: Newport Beach Chamber of Commerce CEO.

71.) Ed Fawcett: Retired Costa Mesa Chamber of Commerce CEO, president

72.) Kyle Woosley: Costa Mesa Chamber of Commerce CEO, president

73.) Linda Leonhard: Corona del Mar Chamber of Commerce CEO.

74.) Tom Johnson and Lynn Selich: Hosts of "Sunday Brunch with Tom and Lynn" on KOCI.

75.) Diane Hill: United Neighbors newsletter publisher.

76.) Geoff West: A Bubbling Cauldron blogger.

77.) Bob McCaffrey: Newport Beach activist.

78.) Dave Ellis: Newport Beach political consultant.

79.) Charlene Ashendorf: Costa Mesa volunteer.

80.) Evelyn Hart: Newport volunteer.

81.) Robin Leffler: Costa Mesans for Responsible Government.

82.) Ann Parker: Costa Mesa community activist.

83.) Julie Mercurio: Moderator, Costa Mesa Public Square Facebook page.

84.) Tom Pollitt: Newport-Mesa Tea Party.

85.) Jean Watt: Newport Beach activist.

86.) Barry Friedland: Costa Mesa Brief.

87.) Mary Spadoni: Costa Mesa community activist.

88.) Mike Glenn: Newport Beach blogger/activist.

89.) David A. Grant: President, Coast Community College District.

90.) George Argyros: Businessman and philanthropist.

91.) Rick Francis and Tammy Letourneau: Costa Mesa assistant city CEOs.

92.) David Girling: Chairman, Newport Beach Harbor Commission.

93.) Diane Daruty: Newport-Mesa Spirit Run director.

94.) Jeff Herdman: Newport activist.

95.) Dean O’Malley: President, Jetpack America.

96.) Dana Rohrabacher: U.S. representative.

97.) The Rev. Sarah Halverson-Cano: Fairview Community Church.

98.) The Rev. Amy Aitken: Costa Mesa, First United Methodist Church.

99.) George Murdoch: Newport general manager of utilities.

100.) Tony Dodero: Cosa Mesa city spokesman.

101.) Kim Pederson: Costa Mesa Parks and Recreation Commission chairman.

102.) Mario Marovic: Stag Bar owner.

103.) Coyotes: Feral canines.

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This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District.

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