MOORLACH UPDATE — Oops! — January 19, 2017

The Senate had its first Budget and Fiscal Review Committee hearing first thing Monday morning at 10 a.m. I wasn’t provided with an agenda, other than being informed that it would be a general overview.

I asked a few questions of the Deputy Director of the Department of Finance. One of them related to the effectiveness of the Committee and whether or not items discussed actually had an impact on shaping the Governor’s budget. In what may be described as a patronizing response, I was kindly assured that the process was very beneficial and definitely a collaboration between the Legislature and the Governor’s office. So, I then asked for an "a ha" moment from last year’s budget process where something was discussed and it made an impact on the budget. "I’ll have to confer with staff and get back to you." Another patronizing way to say "no, probably not."

Then Sen. Richard Pan surprised us all with a question about a $1.4 billion "calculation" error (though the headline indicates that it was a $1.9 billion error). He received a similar dismissive response. "We found the error and everything is fine–nothing to see here–let’s move on."

Except that it IS a big deal. Further, as a former local elected official, I take great umbrage when the Governor or the Legislature thinks that it can mess with county budgets. Orange County will bear a big cost because of this error. (I’ll leave the reversal on the Coordinated Care Initiative for another time.)

If the Governor, Legislative Analyst’s Office and Legislature all missed this significant error, how many other errors are missed? Where’s the oversight?

The Associated Press covers this minor "budget dust" miscalculation (the size of the projected deficit!!) and the story is national, including in the Merced Sun-Star and the OC Register, in the first piece below.

In the second piece, the antagonism of those in California’s majority party towards the next leader of the free world, who is registered with the majority party that controls Congress, continues. This time they are poking the incoming Administration with a frivolous mandate to teach about the alleged involvement by Russia in the November elections. Forget about how the United States has been interfering in the conduct and leadership of neighboring nations during my entire life. Will the bill be amended to require textbooks be edited to include that inconvenient information?

When I was in the ninth grade, I enjoyed debate class. My debate partner was Brent Scarborough (who would enjoy a long career with the County of Orange’s Auditor-Controller’s Office). Our course topic during that year was whether the United States could utilize unilateral intervention with smaller nations, in particular those in South America. The U.S.A. has been meddling in the politics and elections of dozens (that we know about) of other countries for decades.

I get criticizing Russia. But, our nation is not blameless in this regard. And, by the way, the test scores of our state’s students is nothing to brag about. Let’s focus on proficiency in the core areas, please. The San Jose Mercury News provides the details in the second piece below.

BONUS: Senate Resolution 8 was on this morning’s Senate Session Agenda. Hostile amendments were submitted yesterday evening that were tantamount to a poison pill. So I passed on bringing up the measure for a vote on the floor today (see MOORLACH UPDATE — Ready to Rumble — January 14, 2017 january 14, 2017 john moorlach).

I will work with the majority party in negotiating their amendments and hope to achieve a satisfactory resolution by Monday afternoon. In the meantime, I thanked President Obama and Vice President Biden on the Senate Floor and welcomed President Trump and Vice President Pence and wished them a peaceful transition. Enjoy the Inauguration tomorrow.

$1.9 billion error adds to California deficit projection

BY JONATHAN J. COOPERAssociated Press

Gov. Jerry Brown’s administration miscalculated costs for the state Medi-Cal program by $1.9 billion last year, an oversight that contributed to Brown’s projection of a deficit in the upcoming budget, officials acknowledged this week.

The administration discovered accounting mistakes last fall, but it did not notify lawmakers until the administration included adjustments to make up for the errors in Brown’s budget proposal last week. The Democratic governor called for more than $3 billion in cuts because of a projected deficit he pegged at $1.6 billion.

"There’s no other way to describe this other than a straight up error in accounting, which we deeply regret," said H.D. Palmer, a spokesman for the Department of Finance.

The agency followed its normal practice by waiting to report the errors in the governor’s next budget, he said.

Brown’s deficit projection was driven by more than just the accounting error, Palmer said, noting that California tax collections came in below expectations for most of the first half of the fiscal year.

The massive hole in the Medi-Cal budget surprised state lawmakers.

"It makes you wonder what else is not right. … When something like this happens, the trust factor gets eroded, and you lose confidence in what’s being provided to you," said Sen. John Moorlach, a Republican from Costa Mesa who serves on the Senate budget committee.

Making up for the Medi-Cal shortfall will mean the state can’t spend money on other priorities, such as college scholarships or paying down long-term pension liabilities, Moorlach said.

The Medi-Cal program, California’s version of Medicaid, is jointly funded by the state and federal governments to provide health coverage for people with low incomes.

It covers one in three Californians, at a total cost of more than $100 billion annually. About a sixth of the money comes from the state general fund and most of the rest from the federal government.

The Department of Finance said it did not account for $487 million in rebates from drugmakers that the state must pay the federal government to reimburse Washington for its share of Medi-Cal drug costs.

The state also miscalculated costs for the Coordinated Care Initiative, an experimental program in seven counties to improve care for a group of high-needs patients eligible for both Medi-Cal and Medicare, the federally funded health plan for seniors and people with disabilities.

Officials double-counted some of the expected savings, leading to a budget hole of $913 million, and undercounted the costs in San Mateo and Orange counties by $573 million.

In his spending plan, Brown proposed eliminating the Coordinated Care Initiative because he said the program was not cost effective, angering counties that said the change would shift $550 million in costs to them.

The initiative’s accounting problems did not affect the administration’s finding that the program should be eliminated, Palmer said.

California lawmaker wants

schools to teach children about

Russian interference in election

The next time California schools update their history textbooks, a Marin County legislator wants to be certain they include a lesson that President-elect Donald Trump has been reluctant to learn: How Russian hackers interfered with the 2016 presidential election.

A bill from Assemblyman Marc Levine, D-San Rafael, will ask the state to adopt high school history curricula based on a recent national intelligence assessment that Russia tried to influence the election by producing fake news and hacking into Democrat Hillary Clinton’s campaign.

In testimony this month, National Intelligence Director James Clapper did not say the alleged Russian hacking changed the outcome of the race, but nevertheless called the actions “an existential threat” to the United States.

High school students need to learn about that threat, Levine said in an interview Wednesday. “We need to make sure that we treat this attack on American democracy with the appropriate significance it has in our nation’s history,” he said.

In 2014, California passed a law requiring the state board of education to consider adopting social studies lessons on the significance of electing the nation’s first black president, Barack Obama. Similarly, Levine said, the state’s Instructional Quality Commission would be asked to develop a lesson on Russian influence in the 2016 election and recommend it to the state board during its next revision of history and social studies standards.

“I’m not going to write the history book myself,” he said.

Another bill, introduced last week by Sen. Bill Dodd, D-Napa, would require schools to teach children “media literacy” — including how to tell the difference between “fake news” and real news.

“During the final, critical months of the 2016 presidential campaign,” Dodd’s bill states, “20 top-performing false election stories from hoax Web sites and hyperpartisan blogs generated 8,711,000 shares, reactions, and comments on social media.”

One Republican lawmaker, Sen. John Moorlach, of Costa Mesa, called the proposed Russian-interference lesson “petty,” an example of “showmanship.”

Asked whether kids needed to learn the difference between real and fake news, he said, “I’d just be happy if we taught kids how to read and write and do arithmetic.”

Read more here: http://www.mercedsunstar.com/news/state/article127304554.html#storylink=cpy

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MOORLACH UPDATE — PEPRA 2 With SB 32 — January 15, 2017

First , let me wish you a pleasant Martin Luther King weekend.

Second, my staff is working diligently on my 2017 Legislative Package. We have more than 90 bill ideas, and growing, but are limited to only 20! But, we’ve already submitted a few bills and resolutions to the desk. We were able to snag the moniker "SB 32" for our "PEPRA II" initiative, as I’m sure no other Senator wanted this particular bill number, which is explained in the OC Register column below.

We should have more details about SB 32 (2017) on my Senate website soon, but national columnist Steven Greenhut starts the discussion. And, what’s really fun, is that he gets the twist that we decided to take.

BONUS: Teri Sforza’s piece is front-page, top-of-the-fold in today’s OC Register, and it includes a helpful graphic that is provided below (see MOORLACH UPDATE — Ready to Rumble — January 14, 2017 january 14, 2017 john moorlach).

OPINION

Moorlach wants to roll back pension debt

By STEVEN GREENHUT / Contributing Columnist

State Sen. John Moorlach, R-Costa Mesa, speaks on a farmworker overtime bill on Aug. 22, 2016, in Sacramento. RICH PEDRONCELLI — THE ASSOCIATED PRESS

SACRAMENTO — There isn’t anything fundamentally significant about 1990, from an ecological standpoint. Nonetheless, California officials long ago set that year as the benchmark against which greenhouse-gas-emissions reductions are judged in efforts to deal with climate change.

Assembly Bill 32, passed in 2006, requires the state to reduce such gaseous emissions to 1990 levels by 2020. Last year, the governor signed Senate Bill 32, which requires the California Air Resources Board to develop rules to roll back greenhouse gases to 40 percent below those ’90 levels by 2030.

AB32 and SB32 are those rare, significant pieces of legislation widely known just by their bill numbers. For the state’s Democrats, they signify California’s trend-setting efforts to battle global warming. For Republicans, they usually mean the implementation of some of the nation’s most cumbersome and costly business regulations.

But now state Sen. John Moorlach, R-Costa Mesa, is having a little fun at the other party’s expense. He introduced a bill that also is named SB32 (hey, it’s a new legislative session). It also is based on a similar backward-looking approach. The legislation deals with his pet issue of unfunded public-employee pension liabilities, which continue to consume local government budgets and rack up a worrisome amount of public debt.

Moorlach wants to bring such debts back even further, to 1980 levels, modeling his pension-reform approach on the state’s greenhouse-gas-reduction approach. It’s clever, provided anyone in the Capitol appreciates the parallels. Unfortunately, the majority party is more interested in being on the cutting edge when it comes to spending public dollars and regulating private businesses than when it comes to getting the government’s own house in order.

At this early stage in the legislative session, the bill includes nothing more than intent language. The bill refers to the Public Employees’ Pension Reform Act of 2013 (PEPRA), which was a modest effort by the governor and Legislature to rein in pension costs. SB32 then announces its intention to “resume the public employee pension reform” that started with that 2013 law. There are no specifics, but Moorlach’s fact sheet goes into detail.

Some of the bill’s ideas were originally floated by Gov. Jerry Brown when he proposed pension reforms in 2012. The governor never fought for the tough items on his agenda, however. Critics argue the 2013 PEPRA law was more about politics than reform. Brown was asking voters to approve an initiative to raise sales and income taxes. But soaring pension debts were front-page news and public trust in the state’s governance was flagging. The leadership offered this as proof it was reform-minded and could be trusted with more cash.

Taxpayers were played for fools. As soon as the tax hike passed, legislative interest in pension reform evaporated. But the problem hasn’t gone away. When I talked to Moorlach last week, he mused at how the two of us have been having the same conversation about exploding pension debt for nearly a decade now. Instead of fixing itself, the liabilities are rising and the California Public Employees’ Retirement System (CalPERS) now is only 68 percent funded. The problem is getting worse, and the bill is designed to highlight the growing problem.

SB32 will include a variety of sensible approaches. It would freeze cost-of-living adjustments until CalPERS and the California State Teachers’ Retirement System (CalSTRS) are at 100 percent funding levels. It would force pension boards to reduce retiree-medical costs. It would create a citizens’ oversight committee to highlight pension liabilities. It would force CalPERS to reduce the number of “special compensation” categories, which is a fancy term for the way some employees spike their pensions in their final years.

There are other good ideas. The bill would offer as an option a hybrid plan that combines traditional pension elements with 401(k)-style benefits. It would limit the number of highly pensioned “public safety” jobs, thus assuring that only those who truly are in harm’s way receive the benefits, rather than, say, billboard inspectors and myriad other low-risk employees, as is the case today.

The kicker is found in this fact-sheet bullet point: “Require CalPERS to reduce its unfunded liabilities to 1980 levels; to be achieved by 2030.” This is the same model as supporters of the greenhouse-gas-reduction law used. In 1980, the CalPERS unfunded liability was closer to zero. Now it is $169 billion. The debt keeps getting worse.

Moorlach knows the bill has maybe a one-in-1,000 chance of passing in a Legislature dominated by Democrats closely allied with the state’s public employee unions. But it might provide some needed attention to the state’s pension crisis.

If California officials can try to take on the climate of the entire planet, why can’t they tackle their own pension mess? Backers of these climate-change laws have the right idea. Maybe the best way to move ahead is to start looking backward.

Steven Greenhut is Western region director for the R Street Institute. He was a Register editorial writer from 1998 to 2009. Write to him at sgreenhut.

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MOORLACH UPDATE — Ready to Rumble — January 14, 2017

It’s a Scriptural admonition to "count the cost." Several newspapers printed the OC Register‘s Teri Sforza’s piece on the particulars of Federal funds that come back to California in the piece below.

I know what a being a donor municipality is all about. The County of Orange generates the second highest personal income taxes of all the 58 counties in California. Does it get back all that it sends to Sacramento? No. Does Sacramento care? No, as Orange County is a conservative bastion in a very liberal state.

California is a donor state to the Federal government. Does Congress care? Probably not.

Orange County was defiant with Sacramento while I was on the Board of Supervisors (see MOORLACH UPDATE — R&T Code Sec. 97.70 — November 15, 2011 november 15, 2011 john moorlach and MOORLACH UPDATE — VLF Theft — October 1, 2011 october 1, 2011 john moorlach). It didn’t turn out well.

So you don’t see Orange County being defiant with Sacramento, as it could hurt it more. I would think that the same mentality is in place in Washington, D.C. So why exasperate it? Why have even larger opportunity costs from failing to bring back more to the Golden State? Defiance can be very costly (see MOORLACH UPDATE — Art of the Deal — January 13, 2017 january 13, 2017 john moorlach).

But, that’s not all. Here is a listing of the Senate Resolutions that were submitted and voted on during the Swearing-In Session on December 5th:

SR 1 — (Hernandez) — The seating current and newly elected State Senators
SR 2 — (Cannella) — Election of President pro Tempore
SR 3 — (De Leon) — Selection of Rules Committee Members
SR 4 — (De Leon) — Approval of Standing Rules of the Senate
SR 5 — (Galgiani) — Inform the Governor that the Senate is Duly Organized
SR 6 — (Mitchell) — Inform the State Assembly that the Senate is Duly Organized
SR 7 — (De Leon) — Contributions of Immigrants and a Request for Rational Immigration Policies and Opposes Bigoted and Racist Descriptions of Immigrants

For the details of SR 7 see MOORLACH UPDATE — Thirteen! — December 6, 2016 december 6, 2016 john moorlach and http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SR7.

Here is the list of the remaining current Senate Resolutions:

SR 8 — (Moorlach) — Relative to the Peaceful Transfer of Power in the U.S.
SR 9 — (Jackson) — Opposes Defunding of Planned Parenthood
SR 10 — (Nguyen) — Recognize May 15, 2017, as Ao Dai Day
SR 11 — (De Leon) — Change a Member of Rules Committee (Modify SR 3)
SR 12 — (Atkins) — Support for a Woman’s Fundamental Right to Control Her Own Reproductive Decisions and Support Services Provided by Planned Parenthood
SR 13 — (Pan) — Recognize the Lunar New Year Celebration on January 27, 2017
SR 14 — (Pan) — May as Asian and Pacific Islander American Heritage Month

SR 11, a ministerial function, has already been approved.. SR 9 and 12 were heard in the Senate Judiciary Committee, where I serve as Vice Chair, yesterday morning and were approved along party lines (5-2). But, SR 8 is being held up by Senate leadership.

With such a strong negative reaction to the election of our next President, I decided to do a Resolution that welcomes the President-Elect and encourages, just like current President Obama and Senate President pro Tem De Leon have, a peaceful transition (see http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SR8).

Senate Resolutions 7, 9 and 12 have some strong barbs directed at incoming President Trump. SR 8 doesn’t even mention his name and would provide the olive branch that I have been recommending.

I’m hoping to have my Senate Resolution heard on the Senate Floor during Thursday’s Session (it was not included in Tuesday’s agenda). Next week should provide for some fun maneuvering before the Inauguration. Stay tuned.

Is California ready to rumble with incoming President Trump over tax money?

By Teri Sforza,tsforza

If Donald Trump were elected president, Jerry Brown quipped before it actually happened, we’d have to build a wall around California to defend ourselves from the rest of the country.

That was a joke, the governor quickly added. Such a wall would be 1,000 miles long, cost billions and be showy even by Golden State standards.

But the sentiment behind it was no joke at all.

With Trump set to take office next week, California is hastily constructing a legal, philosophical and cultural rampart to protect its progressive agenda from expected attacks by a newly conservative federal government — the bureaucratic equivalent of Sacramento flipping the bird to Washington, D.C.

The state’s strategy includes the California Legislature’s hiring of former U.S. Attorney General Eric Holder and his firm for $25,000 a month.

It might be an expensive gesture. While California pays more in federal taxes than any state, and gets less back from D.C. than it puts in, Trump has threatened to withhold federal dollars from communities that defy him on issues like immigration.

It’s unclear how the conflict will play out (for one thing, no president can direct every dollar spent by the federal government), but the stakes are high.

California relies on tens of billions of federal dollars to help pay for health care, education, social services, law enforcement, infrastructure and other programs. Less money in any of those areas could leave some of the state’s most vulnerable residents reeling.

“This isn’t just Trump versus California,” said Scott Graves, research director for the independent California Budget & Policy Center in Sacramento. “They’re attempting to implement an ideology that would have devastating effects on white working-class voters, seniors and lower-income children in all 50 states. It’s an effort to unravel the social safety net that has been constructed over the past 50 years.”

CHANGE NO. 1: OBAMACARE

In 2015, nearly one-third of California’s $275.3 billion budget — $86.2 billion — came from the federal government, according to the state’s most recent audited financial statements. This fiscal year, federal dollars play an even greater role, fueling 36 percent of state spending.

And that’s just a fraction of the federal dollars pouring into California.

Defunding Obamacare — something federal legislators started to do this week — would blow a $16 billion hole in California’s budget. Brown, who unveiled a new state budget earlier this week, said it’s a hole the state can’t easily backfill.

Folks are waiting, wondering and worrying.

“There’s a part of me that can’t believe, in my heart of hearts, that the people in power who actually understand how things work are going to totally destabilize our health care system in this way,” said Kim Rueben, an expert on state and local public finance at the Urban-Brookings Tax Policy Center at the Urban Institute.

“There’s always some uncertainty when you switch administrations, but it’s amplified because it’s not clear what Trump’s views will translate to,” she added. “(Trump) has said contradictory things.”

Whatever the next move, California is ready to rumble. As Texas was to Barack Obama — Texas sued the federal government over overtime pay rules, immigration policy, transgender bathroom directives — California may be to Trump.

PLANNING A DEFENSE

The California Legislature has hired former U.S. Attorney General Eric Holder and his firm for $25,000 a month.

Holder “will be an important resource as we work with the governor and the attorney general to protect California from the reckless overreach we expect from Donald Trump and the Republican members of Congress who have so cravenly enabled him,” Assembly Speaker Anthony Rendon, D-Paramount, said in a statement.

The Legislature confirmed U.S. Rep. Xavier Becerra, a Congressman since 1992, to replace Kamala Harris as California’s top lawyer on Friday. Becerra says he’ll mount Texas-style opposition to Trump policies, from stop-and-frisk policing to crackdowns on undocumented immigrants to any potential creation of a “Muslim registry.”

“Disturbing statements uttered during the recent presidential campaign have given rise to legitimate fears that the new federal administration might seek to adopt policies that would discriminate against people based on factors such as religious belief,” Becerra said in a nine-page letter to state Assembly members considering his nomination.

“Any such policies would be antithetical to the deepest constitutional values and traditions of this nation — a nation founded in part by men and women fleeing religious persecution.”

Immigration, abortion, climate change, gun control, voting rights — Becerra stands ready to defend the state’s stance on them all, he said. He will use the weight of his office “to protect California’s most vulnerable people.”

The general wisdom is not to pick on someone bigger than you, and it has some Republican lawmakers worried.

“If the majority party continues to poke President-elect Trump with a short stick, then they better be prepared with a Plan B,” said state Sen. John Moorlach, R-Costa Mesa, in a statement. “And, as far as I can tell, there is no alternative plan should these combative moves not be received well by the incoming Trump administration.

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

WHO GETS WHAT?

If this is a David v. Goliath battle, California may be a particularly well-placed to torment the giant, if not quite slay him.

California has one of the largest economies on Earth, state Sen. Kevin de León has boasted. It’s one of 50 states but provides the federal government with an oversize 12 percent of its tax revenues, according to IRS statistics.

And while there are many different ways to slice the numbers, California sends more treasure to Washington, D.C., than it gets in return, according to our analysis and the analyses of many others.

Here’s a breakdown of the fiscal flow:

• Money in: The federal government pours more than a quarter-trillion dollars into California’s governments, residents and businesses each year. The total was $283.6 billion in fiscal 2016, not counting the salaries of federal employees who work here.

About half of that — $143 billion — went to residents as direct payments (such as Medicare and food stamps), insurance payments (unemployment, flood insurance), and other types of assistance (such as reimbursements for prescriptions for veterans), according to the U.S. Treasury Department.

• About one-third of it — $93.3 billion — came as grants, mostly to state and local governments, “to carry out a public project or service.” This pot is considered most at-risk in the current showdown. The biggest chunk of money — $60 billion — went to the state Department of Health Care Services, with transportation, education and social services getting most of the rest.

Most of the remainder — $47.2 billion — is awarded to California businesses that contract with the federal government. Lockheed Martin and Health Net had the biggest contracts, at $3 billion each.

All told, Los Angeles County residents, governments and businesses got $22.6 billion from the federal government last year. Orange County got $7.7 billion; Riverside, $6.1 billion; and San Bernardino, $4.9 billion.

The city of Los Angeles stands to lose a half-billion dollars in direct grants from the federal government over its vow to protect undocumented immigrants. Santa Ana, another self-declared “sanctuary city,” has $123 million on the line.

• Money out: Californians paid $362 billion to the federal government in fiscal year 2015, about $100 billion more than they got back, according to the most recent IRS statistics.

That $362 billion includes income taxes paid by individuals and businesses, as well as payroll taxes (Social Security and Medicare), federal gas taxes, and estate taxes on very large inheritances. It captures nearly all federal revenue — about 90 percent — and is a solid measure to use, according to researchers at the Committee for a Responsible Federal Budget.

Similar comparisons by WalletHub and The Tax Foundation found that California is one of the least “federally dependent” states in the union, which is another way of saying it’s a giver, rather than a taker.

A 20-year snapshot by The Economist found the same to be true over the long haul as well. Between 1990 and 2009 California sent $4.25 trillion to Washington, and got $3.91 trillion back.

MORE THAN TAXES

Still, for all the fear and loathing, Trump’s federal government may turn out to be good for many people in California, if not for their governments, said Rueben, the public finance expert at the Urban Institute.

If Trump follows through on tax reforms that lower the rates on capital gains, dividends and corporate taxes, it would be a big win for California’s tech economy, she said. Promises of big infrastructure spending could create jobs and stimulate the economy as well.

“Individuals might be better off under a new administration,” Reuben said. “It’s just not knowing what it means for everything else.”

In the meantime, California should quit the posturing in what’s essentially a dangerous game of chicken, Moorlach said, and focus instead on reaching across the aisle.

“I can just imagine Trump calling up Jerry Brown. ‘Hey, you know that $3.3 billion you wanted for high speed rail? Never mind,’ ” Moorlach said.

FACTBOX:

CALIFORNIA VS. TRUMP

The Golden State is committing itself to programs the incoming administration is expected to oppose. Here, from Gov. Jerry Brown’s budget proposal for 2017-18, are his plans to counteract the effects of poverty:

California has an extensive safety net for the state’s neediest residents. Since 2012, the general fund has incurred new poverty‑focused obligations totaling about $18 billion annually. The budget continues to fund:

• The rising state minimum wage, which is scheduled to increase to $11 per hour in 2018 and to $15 per hour over time.

• The expansion of health care coverage under the federal Affordable Care Act, which provides millions of Californians with insurance.

• The first cost‑of‑living adjustment for Supplemental Security Income/State Supplementary Payment recipients since 2005.

• The repeal of the maximum family grant rule in CalWORKs, which denied aid to children who were born while their parents were receiving aid.

• Increases in child care and early education provider rates and children served totaling $837 million.

SOURCE: U.S. Department of Treasury, Bureau of Fiscal Services, Fiscal Year 2016

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MOORLACH UPDATE — Art of the Deal — January 13, 2017

The editorial submission to the Washington Examiner caught the eye of the "John and Ken Show" on KFI AM 640 and they invited me on their program yesterday evening (see MOORLACH UPDATE — Stormy Weather — January 12, 2017 january 12, 2017 john moorlach). They also posted a portion of the editorial on their website and gave a kind "at a boy." It’s the first piece below and includes a link to the segment.

I also provided an editorial submission for the Flash Report, which is becoming an annual tradition, and it is the second piece below. I am very frustrated about the 2017-18 California Budget. I’m only allowed some 650 words, but if I were allotted more, I would get into more details about so many areas.

Last week my wife and I watched a movie series on Attila the Hun. The growing size of the pension and retiree medical liabilities and the lack of allocating funding toward road repairs is like a giant army headed toward our fiscal border. The future does not look promising if we do have a recession, as the pension system will feel it too. The joys.

Sen. John Moorlach: ‘California Legislature doesn’t understand the art of the deal’

California’s leaders have already made it clear they’re going to defy any federal mandates that they disagree with during the upcoming Trump presidency.

They’re particularly passionate about immigration, because they have it in their heads that it’s wrong to deport illegals and get our immigration system fixed and under control.

California is already heavily dependent on federal funding. What will happen if the state refuses to go along with the law and loses funding?

State Senator John Moorlach wrote a great Op-Ed column in the Washington Examiner about this:

"Nowhere has Donald Trump‘s ascendency to the presidency of the United States been met with more consternation and frustration than in California. Even Orange County, which has long been known as "the most Republican county in the nation," turned blue this year. Couple this with the newly-earned super-majority status the Democrats will enjoy in the state Legislature and the rest of the nation can expect to see an interesting showdown between the federal government and the largest state in the union…"

Will California learn to compromise and bring an end to divisiveness?

The left always complains about people not coming together, maybe it’s time they stepped up to the plate too.

Read more: http://kfiam640.iheart.com/onair/john-and-ken-37487/sen-john-moorlach-california-legislature-doesnt-15465360/#ixzz4Vf4kLbI9

Read more: http://kfiam640.iheart.com/onair/john-and-ken-37487/sen-john-moorlach-california-legislature-doesnt-15465360/#ixzz4Vf4gUtds

http://kfiam640.iheart.com/onair/john-and-ken-37487/download-the-john-and-ken-show-15465995/

State Senator John Moorlach

Gov. Brown’s budget creates horrendous fiscal nightmare

Posted by State Senator John Moorlach

I had the privilege of meeting with Gov. Jerry Brown on the first day that I arrived in Sacramento as a brand new State Senator. He observed that we needed to find a way to fund transportation improvements.

Three budget cycles later, and the Governor has not put real transportation funding in his budget. His latest budget mentions $4.2 billion. However, it needs a new revenue source to fund it! Let’s use the old euphemism of “contributions from you” versus yet another tax increase for the privilege of driving.

If the Governor were serious about fixing the State’s roads, why doesn’t he start allocating some funding to this task? Why not allocate $500 million out of the $122 billion in the general fund budget?

Why doesn’t the Governor take his role as Chief Executive Officer more seriously and reform a bloated department like Caltrans? Published reports indicate that another $500 million a year is being spent to warehouse some 3,300 Caltrans architects and engineers to do nothing. Lay them off and put this money into asphalt.

Why not downsize Caltrans? Who needs 20,000 employees when 58 counties have their own public works departments to maintain roads? Why don’t we take the $10 billion Caltrans budget and transfer this money to the counties to fix our roads?

Why must we spend billions of dollars on a high-speed rail project that will never pencil out once it is finally completed? Dropping this bad investment would free up a billion or two per year.

California has the money to address roads and other massive obligations, like pension and retiree medical liabilities. But, it’s wasting it. Our Governor laments that the costs for roads and unfunded post-employment benefits are high, but his just released 2017-18 Budget does not allocate one dollar towards drawing down these massive obligations. Not one dollar!

All we received was a warmed over edition of last year’s budget, with a few minor modifications and another warning about the potential of another recession. Never mind the recent Trump Bump in the stock market.

The Governor laments that California has the most progressive tax system in the nation, hitting those who earn the most the hardest. His fix? Put more in the Rainy-Day fund to ride out a possible moderate recession. This is the obvious answer. But, why doesn’t this CEO propose serious changes to the tax system in order to address the revenue volatility?

Why is it that this Governor only talks about the problems? But, he provides no leadership on solving them. We have the worst balance sheet of all 50 states and all I hear from him is how important it is to address global warming? And, the Governor isn’t really fixing this supposed problem, either.

California will walk through another 24 months on budget auto-pilot and have accomplished nothing. No allocation towards our roads, unless taxes are raised to all-time highs and above that of all the other 49 states. No allocation of funds towards a pension debt that is currently some $500 billion (when honest assumptions are utilized) that costs taxpayers 7.5 percent in interest (a stiff price in this current low-interest-rate environment). No additional funds set aside to address an $80 billion unfunded retiree medical liability.

At least California may wind up with a bullet train, but it will require massive taxpayer subsidies after it is completed, whenever that might be.

Poorest balance sheet, poorest roads, most massive liabilities, and a train that will drain additional funding from desperately needed taxpayer services. What a bust. What a dismal legacy. What a massive display of kicking the can down the road.

The next Governor will inherit a horrendous fiscal nightmare. One can only assume that the solution they will bring to the table is more tax increases. Let me wish that person a lot of luck. He or she is certainly going to need it.

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MOORLACH UPDATE — Stormy Weather — January 12, 2017

The two dominant topics here in Sacramento for the first two weeks of the new year are the 2017-18 Budget (or non-Budget) and the defiant response to our incoming U.S. President (see MOORLACH UPDATE — Governor’s 2017-18 Proposed Budget — January 11, 2017 january 11, 2017 john moorlach, MOORLACH UPDATE — Eric Holder — January 5, 2017 january 5, 2017 john moorlach, MOORLACH UPDATE — Peaceful — December 19, 2016 december 19, 2016 john moorlach, and MOORLACH UPDATE — Thirteen! — December 6, 2016 december 6, 2016 john moorlach).

And the biggest shadow over the Capital City has been the rain. There is so much water up here that the weirs into the Yolo Bypass have been opened for the first time since 2006 (see https://en.wikipedia.org/wiki/Yolo_Bypass).

The American Spectator combines all of this fun in the first piece below. And I provide a warning about how Sacramento should respond to President-Elect Donald Trump. In listening to his press conference opening remarks from yesterday morning, he mentioned how he was going to help those states that supported him, as he reflected on the election night results as they were rolling in. My thoughts are in the Washington Examiner in the second piece below​.

California Watch

Stormy Weather: Brown’s Budget Holds Infrastructure Hostage

  • Read online here:

https://spectator.org/stormy-weather-browns-budget-holds-infrastructure-hostage/

Jerry’s drought takes a beating, but he stands firm on his spending preferences.

My neighbors and I just survived a week of flood dangers, as something called an “atmospheric river” led to massive rains throughout northern California. The warmth of the rain in the Sierra Nevada melted a good bit of the snowpack, causing water to rush down the mountains and inundate those of us in the Central Valley.

My “rural hamlet,” as the Sacramento Bee calls it, comprises low-lying grazing land, southeast of the Sacramento metropolitan area. We’re used to watching our pastures occasionally turn into wetlands. But this year, our home’s fate — and the lives of my herd of Nubian goats, and our neighbors’ horses, cows and sheep — rested entirely on the strength of some aged earthen levees, which struggled to hold back the Cosumnes River.

The levees held, but it was disconcerting watching the frantic last-minute efforts of local contractors and farmers to shore up levee “boils” and stuff breaches with truckloads of sandbags. It’s no one’s fault but my own that I live on an acreage a half-mile from California’s only undammed major river. But the week’s tribulations put into perspective Gov. Jerry Brown’s news conference Tuesday morning at the Capitol announcing his new budget.

I tried to get there, but was turned back by officials blocking the main bridge over the river. That’s not what turned my thoughts to the governor, who until recently was using the state’s drought to call for more draconian measures to fight climate change. Fear of drought has washed away, despite the insistence of water officials desperate to continue a sense of crisis. The state’s dams — at least the ones officials aren’t emptying to save a few fish — are filling up fast. Some regions have so much water they don’t know what to do with it.

The drought — and the floods — brought to mind the same problem that Brown danced around during his presser. California has a massive infrastructure problem. Our local levees have received some upgrading over the last few years, but huge swaths of this supposedly modern state are dependent on an antiquated system of flood control. The state (and Oregon and the feds) is more interested in leveling dams (in part to save some fish populations) than building new ones.

Other states plan for future growth with impressive infrastructure projects, while California neglects its legacy — and virtually every new project must navigate decades of CEQA (California Environmental Quality Act) lawsuits and environmental impact reports.

California’s system of freeways and bridges is routinely ranked among the worst in the nation. My recent trip to San Jose — a mere 110 miles away — took three and a half excruciating hours. Author Victor Davis Hanson wrote in October about California’s “Highway of Death,” which was recently ranked by a travel site as the deadliest highway in the country. That’s California State Route 99, which connects the cities of the Central Valley from south of Bakersfield to Red Bluff. It is my main thoroughfare. Hanson’s description is no exaggeration.

On Tuesday, Brown was true to form. Every year, he gives a “conservative” budget spiel that annoys the state’s free-spending Democratic legislators and reassures Republicans and the state’s business community. The governor warns about the likelihood of an economic downturn. He pointed to a deficit, and proposed some budget trims to deal with it. He shows charts confirming the state has more down years than up years.

On Tuesday, Brown warned about major unfunded liabilities and other debts and talks about possible losses of federal funds under the incoming administration. He says he wants to keep a lid on creating new programs and assure an adequate rainy-day fund to weather coming economic storms.

Great. But then he releases a budget that includes record levels of spending and throws lots more money at programs desperately in need of reform. He gives the public-sector unions much of what they want. He doesn’t go nearly as far as fellow Democrats would like, but he refuses to tackle California’s overly progressive tax system that depends on the success of a tiny portion of the population to fund the bulk of the state’s programs.

While funding many of the majority party’s priorities — from welfare programs to raises for public employees to efforts to battle climate change — he leaves insufficient resources to deal with the nuts-and-bolts of roads and freeways and water systems. Instead of making this a priority, he shortchanges it and calls for the public to support increased taxes and fees to pay for desperately needed projects.

California’s gas taxes of 57 cents a gallon already are the fourth-highest in the nation, according to a statement from Orange County Sen. John Moorlach, who is a GOP point man on fiscal matters. Furthermore, California spends three times the national average on road maintenance per mile. As the state’s gas tax revenue has grown, its road spending has remained stagnant, the statement explains. Moorlach calls the governor’s approach toward infrastructure “tacky,” in that he uses its underfunding as a means to arm-twist Californians into raising taxes despite the already high rates and low bang for the buck.

The state auditor has pointed to glaring inefficiencies at the California Department of Transportation (Caltrans), an agency with many employees who gather their pay and pensions but have little to do. Brown, a close ally of the public-employee unions, doesn’t try to get rid of the dead weight or further stretch the state’s dollars. Instead, he leverages the pothole-pocked highways and crumbling levees to raise taxes.

In past years, Brown has tried the same “Washington Monument” strategy. That’s when the federal government faces a supposed shutdown and instead of, say, actually shutting itself down, it shuts down tourist attractions. It’s not about saving a few pennies, but about annoying the citizenry to create pressure for more spending. Brown has previously underfunded infrastructure and declared the budget balanced. Then he called a special session to seek higher taxes to pay for roads, etc.

California Democrats now have supermajorities in both houses of the Legislature, which means legislators are going to be pushing for more social-service spending. Infrastructure will get short-shrift again. In the view of some environmental activists and legislators, new infrastructure is a bad thing, anyway. It allows for population growth, which despoils the natural environment. Not every Democrat thinks that way, but it’s a strong undercurrent.

“When will the governor actually make fixing roads a budget priority?” Sen. Moorlach asked, in his post-budget statement. He knows the answer: Never. Nor will levees and water storages be a budget priority, under the current leadership. That means that Californians should expect growing congestion, increasingly dangerous freeways, and an endless risk of flooding for those of us dependent on an old and inadequate levee system.

California Legislature doesn’t understand the art of the deal

By JOHN MOORLACH

Read online here: http://www.washingtonexaminer.com/california-legislature-doesnt-understand-the-art-of-the-deal/article/2611590

Nowhere has Donald Trump‘s ascendency to the presidency of the United States been met with more consternation and frustration than in California. Even Orange County, which has long been known as "the most Republican county in the nation," turned blue this year. Couple this with the newly-earned super-majority status the Democrats will enjoy in the state Legislature and the rest of the nation can expect to see an interesting showdown between the federal government and the largest state in the union.

The tension is already beginning to show. Early posturing by key leaders in California’s majority party indicates that they are gearing up for a long – and tense – four years of resistance. That has been validated by the announcement that the Legislature has hired President Obama‘s former attorney general, Eric Holder. While most of President-elect Trump’s policies are not finalized, early signs suggest they may directly challenge the way things have been done in California – or, at least that’s what the majority party’s "fight versus flight" reaction appears to assume. What we do know is that California appears to be more focused on posturing than on pulling up a seat at the table with the rest of the country.

We also know that governments in this nation do not operate in isolation. In fact, many state budget priorities are dictated by federal funding. Healthcare, transportation and environmental issues are all heating up to be battle areas between the Golden State and Washington. If California bites the hand that feeds it in one or more of these critical funding areas, the onus will be on the state’s Democratic leadership to figure out how to close the gap if there is a loss of federal funds.

What could be jeopardized? Take healthcare, for instance. California receives roughly $20 billion annually through Obamacare. Or transportation. Trump has proposed a massive infrastructure overhaul, but his plan will be met with blowback from deficit hawks and mass-transit may not be made a priority. This could put huge holes in California’s most favorite pet projects, like high-speed rail where $3.3 billion from the federal government goes toward just one of its sections, and a Bay Area Rapid Transit extension.

In terms of climate change, Governor Brown may have the most to lose. The Environmental Protection Act can override state climate policies, big and small. Perhaps it is no surprise then that Governor Brown came out early acknowledging Trump. Brown said in a press release regarding cooperation with Trump, "In California, we will do our part to find common ground whenever possible."

Despite false assurances that California’s economy has recovered, the state’s general fund can’t handle another hit. California has the largest unrestricted net deficit of any of the 50 states. It’s nearly $170 billion, and growing.

And consider that $84.6 billion, out of the $95.9 billion dollars in total federal funding that California is projected to receive in 2016-17 for health and human services, education, labor and transportation, is for local assistance. With the pressures of unfunded pension liabilities overwhelming local budgets, decisions made in the Legislature could put local municipal finances further in peril.

At a time of unparalleled polarization, California now finds itself in the uncomfortable position of being one of the bluest states in a very red nation.

Trump has called on America to bind the wounds of division, asking all Republicans, Democrats, and Independents across the nation to come together as one united people. The Legislature should heed his call.

California’s leaders can ensure that the money they send to Washington makes its way back to Sacramento by forging a healthy and robust relationship.

However, if California decides to draw a line in the sand, Trump, the consummate businessman, might not view California as a very good investment. This will hurt every resident.

There are only a few days left to re-posture and show better leadership, rather than continue with showmanship that resembles a major and dangerous game of "chicken." My hope is that California’s majority party focuses on reaching across the aisle – with an olive branch – for the betterment of the state.

State Senator John Moorlach represents the 37th District of California, is a trained Certified Financial Planner and is the only CPA in the California State Senate.

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MOORLACH UPDATE — Governor’s 2017-18 Proposed Budget — January 11, 2017

This will be my third cycle on providing input on the State’s annual budget. This is my second time to comment on the required January release of the annual budget by the Governor (see MOORLACH UPDATE — Governor’s 2016-17 Proposed Budget — January 8, 2016 january 8, 2016 john moorlach).

The last three years we have provided what I consider the priorities that should be pursued. This year’s analysis is titled “6 Key Measures of California’s Fiscal Health 2017-18” and can be seen at http://district37.cssrc.us/content/6-key-measures-californias-fiscal-health-2017-18. It can also be seen at the Orange County Breeze (see http://www.oc-breeze.com/2017/01/10/95040_budget-primer-6-key-measures-californias-fiscal-health/).

The OC Register made the budget release a front-page story and it is provided below. One observation I would offer is that the Governor is hoping to spend $4.2 billion on roads, and $42 billion over the next ten years, but it will require a funding source, like a gas tax. Consequently, it is an unfunded portion of the proposed budget. I wish a real increase in transportation spending was in the budget. This Governor has only spoken about repairing the State’s roads, he has never reflected it as a real budget priority.

Governor Brown also talks about unfunded liabilities, but his budget doesn’t raise a finger to address them above and beyond the minimum requirements.

Here’s the quote that was included in Politico:

 

— Sen. John Moorlach, R-Costa Mesa: “I wanted to see more on transportation. I wanted to see our unfunded liabilities addressed.”

 

This budget is a bust.  It has no reforms and provides no major effort to right the ship of state.  I see it as a gesture by a lame duck Governor who is riding out his last two years.  That’s strong.  But, I don’t like to see missed opportunities.

 

The Hill, out of Washington, D.C., was present yesterday and provides its perspectives in the second piece below.  It does a service by reiterating the biggest flaw in our revenue sources, the most progressive personal income tax structure in the country and how to ride with it.

 

The OC Register has another online piece on the city of Laguna Beach.  Last year I worked on SB 1463 to assist in the discussion of undergrounding power lines that are along Laguna Canyon Road (see MOORLACH UPDATE —       Rejection/Disappointment — September 27, 2016 september 27, 2016 john moorlach).  This third piece does not mention the need to separate motorists from pedestrians, as there have been a number of tragic fatalities in this city.  I have reached out to the city to see if my office can assist in this priority.

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STATE BUDGET

 

Fiscal caution in age of Trump

 

Brown’s budget is shadowed by belief that California might lose federal money.

By TONY SAAVEDRA
Read online here: http://www.ocregister.com/articles/brown-740814-budget-california.html

 

Caution is the key word in Gov. Jerry Brown’s proposed 2017-18 state budget, just as it has been every year in his second administration.

But the $179.5 billion plan Brown unveiled Tuesday is overshadowed by the first deficit in four years – at $1.6 billion – and the uncertainties of how California might fare in a Donald Trump presidency.

The budget reflects the governor’s attempt to keep key projects funded despite tax revenue that isn’t rising as quickly as it was two years ago. Brown said Tuesday the plan doesn’t consider what President-elect Trump might do with the Affordable Care Act and the reluctance of California’s leaders to deport immigrants – two issues that could affect federal funding to the state.

“We can’t budget what hasn’t happened yet,” Brown told a roomful of reporters.

Federal subsidies to Medi-Cal currently top $16 billion. And the federal government could penalize California for its stance on deportation by pulling back on other subsidies.

“We’re going to have to hold on to our hat here. This is going to be a rough ride,” Brown said. “Whatever happens, we’re going to live with it.”

Fiscal trepidation isn’t new to Brown. In each of his annual budget proposals – which trigger legislative negotiations that typically end in May with a revised spending plan – he’s followed a similar recipe: cautious spending while boosting state emergency reserves.

The latest proposal pushes the state’s rainy day fund to $7.9 billion, nearly two-thirds of the governor’s original goal.

“Revenues are precarious and he’s properly acknowledging it,” said state Sen. Jim Nielsen, R-Gerber, Senate budget vice chairman. “The governor is really being restrained. We have to be very careful and sensitive to looming deficits.”

Tax revenue in California relies heavily on spending, particularly by the affluent. It is growing, though not at the pace once envisioned by budget planners. Analysts say it is still too early to predict a recession, even a mild one, but they agree the governor can’t be too careful, especially with a looming X-factor like Trump.

“The proposal reflects a much deeper level of uncertainty than in prior years,” said Chris Hoene, director of the California Budget and Policy Center, an independent think tank.

It’s a budget that is “safe, conservative and leaves the legislators room to maneuver when they know more about factors they can’t control,” Hoene added.

While mostly holding the status quo, some programs took big hits.

Brown held back $400 million that could provide some affordable housing because he and legislators couldn’t agree how it should be spent.

Brown also eliminated $33.4 million for California to expand medical residencies in underserved communities. This is the first year of a three-year, $100 million investment in the program, which also is on the chopping block.

“We are highly disturbed that these critical dollars have been eliminated,” said Carmela Castellano-Garcia, chief executive of California Health+ Advocates. “We are struggling to have the primary care that we need to serve.”

Additionally, the governor’s office plans to delay implementing a bill that would increase access to mental health care.

Some critics expressed frustration that Brown isn’t setting aside more money for future debt even as it doesn’t spend more on key programs.

“I respectfully disagree with the priorities set forth in the proposed budget,” said state Sen. Janet Nguyen, R-Garden Grove, in a written statement.

“In my opinion, in light of the Governor’s forecast that revenues are slowing, we should demonstrate fiscal responsibility by more aggressively building our rainy day fund, paying down the more than $240 billion in debt and sustaining programs that are important to Californians; among them education and healthcare.”

Hoene, the budget analyst, said the poor probably will bear the brunt of any federal backlash.

“There’s really no way to predict what’s coming from the federal government,” Hoene said. So “we have a budget with a lot of placeholders.”

Some called the spending plan overly cautious, especially pension reformers, who said Brown was ignoring a long-term pension deficit of $260 billion.

“He’s not moving the dial. He’s not taking any major initiatives to reform California,” said state Sen. John Moorlach, R-Costa Mesa. “He’s going to ride it out, and the next governor will have to deal with this mess.”

Moorlach chided Brown for “not spending a penny” on California’s long-term pension debt or unfunded liability.

“It’s the elephant in the room,” he said.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, likened Brown’s pension strategy to “talking about the color of a house without acknowledging it has termites.”

On transportation, the budget reflects $4.2 billion in improvements.

But Moorlach and others said that is not enough to even begin repairing California’s crumbling roadways.

Moorlach said state money found for Medi-Cal and child care could be better spent on the roads.

“These people that benefit from Medi-Cal and child care will have to pay a higher gas tax,” Moorlachsaid. “The governor hasn’t made transportation a priority.”

Staff writer Margot Roosevelt contributed to this report.

Contact the writer: tsaavedra@scng.com

 

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California faces budget gap amid uncertainty over Obamacare

BY REID WILSON 
READ ONLINE HERE: THEHILL.COM/HOMENEWS/STATE-WATCH/313579-CALIFORNIA-FACES-BUDGET-GAP-AMID-UNCERTAINTY-OVER-OBAMACARE

 

SACRAMENTO, Calif. — California Gov. Jerry Brown (D) on Tuesday proposed billions of dollars in cuts to state programs as falling revenue growth drives tax collections hundreds of millions of dollars under projections.

The cuts are aimed at eliminating a $2 billion budget gap. That’s a far smaller deficit than the $27 billion hole Brown inherited when he took office in 2011, but it represents a reversal of fortune after years of revenue growth fueled by a booming stock market.

“California has the most progressive tax system in the United States. We do ask those who make the most money to pay the highest percentage of taxes. But as a corollary, we have one of the most unreliable revenue bases in the entire country,” Brown said Tuesday. “It requires we keep a very close eye on the balance of our budget. And while we have sometimes the highs, they are followed always by the lows.”

Personal and corporate income taxes and sales taxes have all fallen short of budget projections, said Michael Cohen, Brown’s finance director. California relies disproportionately on capital gains tax revenue, meaning the state is unusually dependent on the performance of the stock market.

The budget proposal anticipates spending $122.5 billion over the next year, slightly below the $122.7 billion California spent last year.

California’s revenue forecasts have fallen short of projections in five of the last seven months. At the same time, Brown said, state budget projections could be thrown into chaos if Republicans in Congress roll back the Affordable Care Act, which provides billions of dollars to California’s Medicaid programs.

“I know the Republicans are on that track [to repeal the ACA], but the reality is going to be far more difficult and far more disruptive than they’re expecting,” Brown said. “If they do go down that road, it will be extremely painful for California.”

Medi-Cal, the state’s Medicaid program, anticipates spending $102 billion over the next year. The federal government covers most of those costs under Obamacare’s Medicaid expansion program, money that could be at risk if Congress makes significant changes to existing law.

Some Republicans applauded Brown’s cautious approach, but they warned that changes to the Affordable Care Act at the federal level were likely to cost California more than Brown’s budget anticipates.

“If ObamaCare blows up, we’re going to have real trouble,” said state Sen. John Moorlach (R), who represents Orange County. “Maybe the play is, let’s try to unwind this in a humane way.”

Brown’s budget proposal, which now goes to the Democratic-controlled legislature for months of negotiations, calls for cutting back projected growth of some state programs. It also adjusts money that would go to public schools under Proposition 98, a voter-passed measure in 1988.

Brown will ask legislators to implement some new taxes and fees, including a gas tax hike that would bring in $5 billion over a decade and a $65 fee on new vehicle purchases. Voters in November approved other new revenues, including a $2 per pack increase in cigarette taxes and an extension of tax hikes on the wealthiest Californians first passed several years ago.

And Brown plans to ask the legislature to extend California’s cap-and-trade program beyond its current 2020 sunset date. The program has raised billions of dollars in auction proceeds to reduce greenhouse gases, and Brown’s budget anticipates another $2.2 billion in sales.

The proposal also plans to set aside more than $1.1 billion for California’s rainy day fund. By the end of the budget cycle, Brown’s budget anticipates having set aside $7.9 billion for the next economic downturn, about 6 percent of the entire state budget.

State budget analysts anticipate continued growth in coming years, though at a slower rate than in the best years of the current economic recovery.

“California is growing, but less than we expected,” Brown said. But, he warned: “We’re now in almost the third-longest recovery” in post-war history. “So a downturn is inevitable.”

“We’re on the cusp of a financial calamity, and the governor senses it,” Moorlach said.

Brown said even a modest downturn could cost the state $18 billion in lower tax receipts.

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Laguna Beach stories to watch in 2017

By ERIKA I. RITCHIE 
Read online here: www.ocregister.com/articles/city-740777-laguna-beach.html

 

Here are four topics expected to generate interest in Laguna Beach in 2017.

Utility undergrounding

City Manager John Pietig made it clear during the Dec. 13 City Council meeting that burying utility lines along Laguna Canyon Road and other parts of the city are a priority. The improvements, he said, will reduce the risks of wildfires caused when downed utility lines ignite brush and vegetation.

Pietig and the City Council decided that at least $1 million of the $2.2 million of the expected funds generated by Measure LL – which raised transient occupancy hotel taxes to pay for city services and operations – would be used to fund undergrounding.

Pietig’s focus on citywide undergrounding follows a veto of legislation by Gov. Jerry Brown in September. The bill – spearheaded by state Sen. John Moorlach on behalf of the city – would have required the state to identify areas most at risk for wildfires and would have required the California Public Utilities Commission and Department of Forestry and Fire Protection to develop enhanced plans to prevent fires from utility and power lines in Laguna.

Laguna Beach City Council member Bob Whalen traveled to Sacramento several times to testify before committees regarding the legislation. He vowed to continue his efforts despite Brown’s veto.

City officials called for citywide undergrounding of utilities after a 15-acre wildfire in July 2015 that started when trees fell into utility wires, causing a power surge that sparked flames. Whalen said the city “dodged a bullet” with that fire thanks to favorable winds and firefighters’ efforts. He said he immediately contacted Southern California Edison and urged the utility company to partner with the city to reduce the imminent threat of fire.

Laguna Beach is the only city in the state to make a formal appearance in the PUC fire safety proceedings. Laguna Beach Fire Chief Jeff LaTendresse has testified at commission proceedings urging Laguna Beach be reclassified to a high fire-hazard area.

Earlier this year, the PUC placed Laguna Beach in a low fire-hazard area, meaning that the city would not receive priority for mitigation measures.

Public input for the Downtown Specific Plan

The Planning Commission is reviewing a comprehensive plan to enhance and preserve Laguna’s downtown – an area considered the city’s social, cultural and civic hub. The commission is expected to review more of the plan on Wednesday. The final review by the City Council is planned for October.

In July, MIG, an urban planning firm presented ideas for building height, landscaping and crosswalks. The company also suggested possible uses for two parcels along Broadway near the intersection of South Coast Highway and Main Beach. In one case, they suggested the gas station now there might not be the best use of the area. Instead, they said, a two-story building including restaurants and public plazas might be a better fit. MIG also reviewed parking.

The Downtown Specific Plan was adopted in 1989 after several years of work by a citizens advisory committee to identify significant planning issues and develop a policy base. The plan has been amended nine times. In 2000, the area was expanded to include the Boys & Girls Club on Laguna Canyon Road and the Civic Art District.

Village entrance

City Council will review the Village Entrance Project as part of a joint meeting with the Planning Commission Feb. 1. The City Council is expected to give final approval this summer and project completion is planned for 2020.

City staff will present a new alternative that includes elements of two options the City Council previously reviewed. This third option is expected to bring the cost closer to the $6.5 million target.

The project – decades in the making – looks to aesthetically improve the city’s entrance on Laguna Canyon Road at Broadway and Forest Avenue. The plan is to enhance the location and include parking and space for the public facilities. Improvements include landscaping, a pedestrian and bicycle pathway and exterior renovation of the historic sewage treatment plant.

The city has worked on ways to spruce up the area for decades. There have been dozens of public meetings and walking tours to gather feedback.

ACLU lawsuit

In 2015, the American Civil Liberties Union sued Laguna Beach in federal court over the city’s treatment of disabled homeless people.

The ACLU is asserting that the city is required to provide permanent supportive housing for homeless individuals who are mentally or physically disabled and feel they can’t stay at the alternative sleeping location in Laguna Canyon. The ACLU also claims that the city is prohibited from enforcing state and local anti-camping laws against persons lodging on public property who cannot gain access to the sleeping location.

The case is set for trial on April 25. The parties are in the process of completing discovery and other pretrial preparations, said City Attorney Phil Kohn.

Rulings from the federal court are expected on motions that were previously argued and taken under submission. These include a motion by the plaintiffs for class-action certification and motions by both the plaintiffs and the city for summary judgment. The court’s rulings will likely have a bearing on the ultimate issues for trial and may influence settlement discussions, which are at a standstill.

Contact the writer: 714-796-2254 or eritchie@scng.com or on Twitter:@lagunaini

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MOORLACH UPDATE — Lupus Awareness — January 6, 2017

I only pursued two resolutions in my rookie season, which ended on August 31, 2016. The first one was to recognize May as California Lupus Awareness Month (see MOORLACH UPDATE — CRP and SR 65 — May 2, 2016 may 2, 2016 john moorlach).

Well, this simple gesture will now find me scheduled to be in San Jose on the night of Saturday, January 28th. If you live in the Bay Area, I would love to encourage you to consider attending the Lupus Foundation’s 4th Annual Purple Ribbons Award Dinner, as they have adopted the color purple (see http://www.lupus.org/action/put-on-purple).

The Masters of Ceremonies is a weather announcer for NBC Bay Area, so they have kindly noticed this event in the piece below.

Lupus Foundations 4th Annual Purple

Ribbon Awards

http://www.nbcbayarea.com/on-air/community/Lupus-Foundations-4th-Annual–409823425.html

On January 28,2017 the Lupus Foundation is hosting and featuring the great event, The 4th Annual Purple Ribbon Awards which honors individuals who have made outstanding contributions to the lupus community. NBC’S very own Rob Mayeda will be the emcee for this event.

These individuals personify LFNC’s vision of bridging the gap between life with lupus today and life without lupus tomorrow. The event is taking place in San Jose, at the Marriott downtown located on 301 Market Street. Join us for an evening of celebration from 6 pm to 9 pm and help us honor individuals who have made outstanding contributions to the lupus community.

Along with these amazing people and life stories a live band will be in attendance as well as some important figures in the lupus community including the face of lupus Jane Tiphayachan, Sen. Moorlach who was helpful to the legislation passing for lupus awareness, Rose Flores for being an outstanding community service member, Christy Sandburg, researcher and lead pediatrician at Stanford University.

Event details: Saturday January 28th

Where: San Jose, Downtown 301 Market Street Marriot.

Attire: Cocktail

Event time: 6 pm to 9 pm.

To purchase tickets click here.

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MOORLACH UPDATE — Eric Holder — January 5, 2017

The first day of the 2017 Senate Session was a dramatic one. The Daily Journal reporter called back, as the level of defiance had risen with the retention of former United States Attorney General Eric Holder, and is the first piece below (MOORLACH UPDATE — Talking Pension Tax — January 4, 2017 january 4, 2017 john moorlach). The reporter and I had an interesting conversation, but believed that one of my points really had to be made.

After the Floor Session, I went into a two and one-half hour staff meeting to review our legislative package. But, before we could get rolling, a press release was certainly required for this decision by the Democrats’ leadership. After all, why should innocent bystanders be hurt by Sacramento’s actions? Such as a Federal discontinuance of funding for high speed rail? Or even a request for a reimbursement of prior grants? But, more importantly, how might it impact our counties and cities? So I wrote something down and it is provided by the Orange County Breeze, with a fun graphic, in the second piece below.

It was picked up by the Fresno Bee, which provides the political color of the topic, in the third piece below. And, the Sacramento Bee opined on the matter in the fourth piece below. It looks like it should be a crazy/fun year.

Legislature’s hiring of Obama’s attorney general raises questions

By Malcolm Maclachlan
Daily Journal Staff Writer

SACRAMENTO — The Democrat-controlled state Legislature’s decision to hire former Obama administration Attorney General Eric H. Holder Jr. raises questions about how California’s collection of top attorneys will work together, and if the move will spark or avoid more litigation with the incoming Donald J. Trump administration.

The announcement was made just one day after Gov. Jerry Brown nominated U.S. Rep. Xavier Becerra, D-Los Angeles, to become California’s next attorney general. A spokesperson for Brown declined to comment on the news.

Assembly Speaker Anthony Rendon, D-Paramount, Senate Pro Tem Kevin de León, D-Los Angeles, and other state Democratic leaders have praised Becerra since Brown announced his nomination just over a month ago. The Assembly has scheduled Becerra’s first confirmation hearing for Jan. 10.

According to a Tuesday engagement letter, Covington & Burling LLP — the Washington, D.C.-based firm where Holder is now a partner — will serve as "special counsel. The deal will focus on "three areas of immediate concern:" immigration, health care and environmental policy.

The timing of the announcement was coincidental, said Rendon’s press secretary, Kevin Liao, based on both houses having signed the agreement.

"The AG is the chief law enforcement officer for the state, but does not represent the Legislature," Liao said. "We are seeking legal counsel that will specifically represent us as we explore legal means for defending California. The goal of this is to complement and supplement the AG’s work, not replace it."

Besides "putting the Trump administration on notice," Holder could advise the Legislature on how to craft laws to avoid being sued by Trump’s Department of Justice, said UC Davis School of Law Professor Carlton F. W. Larson.

The letter from Covington says the project will be led by Holder, former California U.S. Rep. Howard Berman, now a senior advisor at the firm, and partner Daniel M. Shallman. It states "the Legislature will be our client" and not "the executive branch or any regulatory body."

The state Legislature will pay $25,000 a month between Feb. 1 and April 30. The letter calls for Covington to offer "our wide array of regulatory experts as appropriate in helping the Legislature to develop legal strategies." Litigation "would not fall within the scope of this undertaking."

The fee is "eminently fair and consistent with industry standards," Liao said. Each house will pay half of the costs from "existing funds."

Holder was President Barack Obama’s attorney general from 2009 to 2015. He spent much of that tenure fighting state-federal battles with Republicans.

Some Republicans have pointed to Holder’s successful 2010 suit to block a tough Arizona immigration law as a blueprint for why California’s efforts to set its own path on immigration may fail.

Holder also fought an Alabama county, accusing it of violating the Voting Rights Act. That case eventually resulted in a U.S. Supreme Court decision that overturned parts of the act.

Covington also has offices in San Francisco and Redwood Shores, and frequently represents companies and states against the federal government.

The Legislature maintains its own staff of almost 90 attorneys in the Office of the Legislative Counsel. That office will sometimes get involved in litigation, but is more focused on day-to-day duties such as drafting bills and determining if legislative proposals are constitutional.

The Legislature also sometimes hires outside attorneys to help with lawsuits, such as personnel cases.

A more high-profile example came about 15 years ago when the state Senate hired outside attorneys to help litigate energy price manipulation claims against Enron Corp.

Steven Maviglio, founder and president of Forza Communications in Sacramento who was Gov. Gray Davis’ press secretary during the energy crisis, said the Enron situation was different because the Legislature had helped create the energy crisis with deregulation but disagreed with Davis about how to fix it.

"There was a frosty relationship between the governor and the Legislature on those issues," Maviglio said.

He sees the contract with Holder as more complementary: "He knows about the administration and Becerra knows about Congress. That’s a potent combination."

Retaining Holder could serve as a "stopgap" measure while waiting for Becerra to get confirmed and staff up the state Department of Justice, said Jon D. Michaels, a professor at UCLA School of Law.

While the Legislature lacks the in-house legal resources someone like Holder can provide, Michaels warned that Democrats should think about how they would view it if Trump or a Republican governor did something similar.

"I worry about the message being sent when a state, especially a state like ours with a deep legal talent pool, hires privately," he said.

Senate Judiciary Committee vice-chair John Moorlach, R-Costa Mesa, said he is concerned about taxpayers footing the bill for Holder.

But he’s more concerned about the state risking billions of dollars in federal funds by provoking the new administration, and is cautiously optimistic about de León’s comments that Holder will help defend the state’s finances.

"My mother always said, ‘Sometime you’ve got to spend a dime to save a quarter,’" Moorlach said. "But if Eric Holder is being retained to poke a sharp stick in the eye of the president, then that’s a mistake."

malcolm_maclachlan

California State Senator John Moorlach asserts Democrats jeopardize federal funding

Read the full article here: http://www.oc-breeze.com/2017/01/04/94821_john-moorlach-asserts-democrats-jeopardize-federal-funding/

The decision by California Democratic legislators to hire former US Attorney General Erick Holder could mean Democrats jeopardize federal funding.

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

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

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

About Senator Moorlach

State Senator John Moorlach represents the 37th District of California, is a trained Certified Financial Planner and is the only 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.

Valley GOP legislators decry Dems’ hiring of Holder to battle Trump

Read the full article here:http://www.fresnobee.com/news/local/article124624609.html

BY TIM SHEEHAN

tsheehan

Republican legislators, including those in the Valley, are unhappy that Democratic leaders of the state Senate and Assembly have signed a deal to hire the nation’s former top legal gun “in defense of our values and constitutional guarantees” against President-elect Donald Trump’s forthcoming administration.

State Senate President Pro Tem Kevin de León, D-Los Angeles, and Assembly Speaker Anthony Rendon, D-Paramount, issued a statement explaining their rationale for unilaterally hiring former U.S. Attorney General Eric Holder and his Washington, D.C., law firm as an outside legal counsel in what they foresee as likely head-butting over policy issues between the state and the Trump administration.

“With the upcoming change in administrations, we expect that there will be extraordinary challenges for California in the uncertain times ahead,” de León and Rendon said. “This is a critical moment in the history of our nation. We have an obligation to defend the people who elected us and the policies and diversity that make California an example of what truly makes our nation great.”

Read more here: http://www.fresnobee.com/news/local/article124624609.html#storylink=cpy

Read more here: http://www.fresnobee.com/news/local/article124624609.html#storylink=cpy

The two Democratic leaders hired Covington & Burling LLP, which includes Holder among its partners, for an initial three-month term at $25,000 per month starting Feb. 1. Holder served as attorney general under President Barack Obama from 2009 to 2015. He had previously been with the firm before joining the Obama administration.
Read more here: http://www.fresnobee.com/news/local/article124624609.html#storylink=cpy

One of the two Assembly assistant Republican leaders from the Valley, Jim Patterson of Fresno, was critical of the Holder hiring.

“The Democrats like to say, ‘We’re leading the world,’ but nobody is following us,” Patterson told The Bee on Wednesday. “Nobody is following our taxation policies, our energy policies.”

He accused de León and Rendon of “declaring war on the federal government and the rest of the country, and declaring war on 5 million people who didn’t vote for them.”

Statewide, Democratic candidate Hillary Clinton outpolled Trump by a huge margin, rolling up more than 8.7 million votes to just under 4.5 million for Trump. But the Central and Southern San Joaquin Valley went to Trump, who garnered a collective 382,107 votes from Fresno, Kings, Kern, Madera, Merced and Tulare counties, compared with 355,578 for Clinton.

Assemblyman Joaquin Arambula, D-Kinsgburg, was not involved in the Holder hiring, nor was he consulted by the Assembly leader, according to Arambula’s chief of staff, Hans Hemann. But Arambula expressed hope for continuing to foster cooperation with the federal government through the Valley’s representatives in Congress.

“I plan on working closely with the Valley’s congressional delegation to find areas of common interest,” Arambula said. “As the new chair of the Assembly Budget Subcommittee on Health and Human Services, I look forward to the opportunity to work with our federal and state representatives to ensure programs better serve the people of the Central Valley.”

Holder will lead efforts “in helping the Legislature develop legal strategies regarding potential actions of the federal government that may be of concern to the state of California,” according to the firm’s engagement letter with the legislative leaders. Also on the team will be former Rep. Howard Berman, a Democrat from Los Angeles, and Daniel Shallman, a founding partner of the firm’s Los Angeles office.

According to the engagement letter, three of the chief policy areas on which the state anticipates potential clashes with a Trump presidency are immigration, health care and the environment. De León and Rendon said in their statement that the firm’s role will be “advising us in our efforts to resist any attempts to roll back the progress California has made” on climate change, civil rights and other issues.

The legal bill is being evenly split between the budgets of the Senate and the Assembly, and Senate and Assembly leaders jointly said that “given the urgency, intensity and complexity of the work, these terms are eminently fair and consistent with industry standards.”

Patterson said he considers the hiring “a terrible decision” and “a waste of money.”

Read more here: http://www.fresnobee.com/news/local/article124624609.html#storylink=cpy

“To my thinking, it’s unprecedented. We already have a (state) attorney general’s office with a multimillion-dollar budget, but this looks to be hiring some kind of political operation,” he said.

“And it’s costly as a political move; it does nothing to help California have influence with the federal government,” Patterson told The Bee. “It unnecessarily shuts the door on California being at the table to talk about how the Environmental Protection Agency gets reformed or how federal water projects get reformed.”

State Sen. Andy Vidak, R-Hanford, tried to take a more tongue-in-cheek approach to criticize the Holder hiring, comparing it to the expansion of the U.S. in the 19th century “that drove numerous outlaws, carpetbaggers and card cheats westward as the country was growing tired of these individuals who primarily thrived on taking things away from others.

“The killing of jobs in resources industries (such as oil, agriculture and mining) and the attempts to repeatedly violate the Second Amendment finally reached a point of rebellion as demonstrated through the victory of Donald Trump in many previously ‘safe’ Democrat states throughout the nation,” Vidak added.

Kevin Liao, a spokesman for Rendon, told The Bee that the speaker and de León began exploring the possibility of hiring outside counsel soon after the November election.

The hiring came without a vote of either legislative house or the Democratic caucuses, “but some members were engaged in discussions with the speaker,” Liao said. “The members were in their districts and it was not easy to communicate with them.”

Liao said other law firms were considered for the work, but he declined to identify them.

“What stood out about Covington was the diversity of both their policy and legal experience,” he said.

“And having Eric Holder, the former attorney general and the country’s top law enforcement officer, as a partner certainly doesn’t hurt,” Liao added. “We couldn’t get Obama, but we went with the second-best option.”

Republicans in other parts of the state also lambasted the two Democratic leaders.

“If the majority party continues to poke President-elect Trump with a short stick, then they better be prepared with a Plan B,” said state Sen. John Moorlach, R-Costa Mesa. “We cannot and must not jeopardize federal funding to our state, counties and cities. They cannot afford it, especially with increasing pensions costs at the door.”

Assembly Republican Leader Chad Mayes of Yucca Valley said the controversy is “a distraction from the very real problems facing everyday Californians.”

“Donald Trump did not cause California’s transportation crisis, nor did he play a role in our state’s sky-high housing costs,” Mayes said. “Democrats should focus on these real-world problems instead of wasting taxpayer money to score political points before the president-elect even takes office.”

Tim Sheehan: 559-441-6319, @TimSheehanNews

Democrats lawyer up as they prepare to confront Trump

Read the full article here: http://www.sacbee.com/opinion/editorials/article124626824.html

BY THE EDITORIAL BOARD

Senate and Assembly Democratic leaders clearly are taking seriously the notion that they should never show up at a showdown underprepared.

Speaker Anthony Rendon of Paramount and Senate President Pro Tem Kevin de León of Los Angeles have retained former Attorney General Eric Holder and his high-end law firm, Covington & Burling, to defend the state against what they see as a likely domestic enemy – Donald Trump.

As Democrats prepare to face down Trump, who better to hire than the lawyer who until recently headed the Department of Justice and some of his partners? Holder, the attorney general for much of President Barack Obama’s tenure, would be a worthy opponent for President-elect Trump’s nominee as attorney general, Sen. Jeff Sessions of Alabama.

Read more here: http://www.sacbee.com/opinion/editorials/article124626824.html#storylink=cpy

Other lawyers written into the Senate and Assembly’s agreement with Covington are no slouches, either. One is former Rep. Howard Berman, a Los Angeles Democrat. Another is Dan Shallman, the brother one of de León’s top political advisers and a former assistant U.S. attorney in Los Angeles who led a significant Southern California public corruption prosecution.

The move is not without risks. Some Democrats worry that Rendon and de León are being too pugilistic and too public in their willingness to fight. Republicans warned that Democrats risk finding the fight for which they seem to be spoiling, and losing.

“If the majority party continues to poke President-elect Trump with a short stick, then they better be prepared with a Plan B,” Sen. John Moorlach, a Costa Mesa Republican, said in a statement. “And, as far as I can tell, there is no alternative plan should these combative moves not be received well by the incoming Trump administration.”

There’s also a question of duplication. Gov. Jerry Brown has nominated Rep. Xavier Becerra to replace Sen. Kamala Harris as California’s attorney general. Becerra, who is expected to be confirmed later this month, had been the fourth-highest-ranking Democrat in Congress and is steeped in Beltway issues. The California attorney general’s office has plenty of fine lawyers who can defend the state’s interests.

But the Legislature is its own branch of government. And Rendon and de León are well within their rights to hire their own counsel.

For now, their move is more bluster than blunderbuss, as evidenced by the amount of taxpayer funds the Legislature is earmarking for Covington: $25,000 a month for three months starting Feb. 1, with a limit of 40 hours per month.

The $25,000 is a blip to a firm of Covington & Burling’s size, and it represents a fraction of the Legislature’s $300 million annual budget. The contract is written so that billings could rise, and lawyers’ fees can add up quickly – Holder reportedly bills at $1,700 an hour. The stakes are huge.

Trump and the Republican-controlled Congress have made clear their intention to unravel the Affordable Care Act. That could cost California $21 billion and upend health care coverage for nearly 5 million Californians.

In addition to having expertise in government-funded health care programs, Covington lawyers are steeped in immigration and environmental law, and in the issues surrounding firearms – all topics near and dear to California Democrats. At a minimum, Covington litigators could slow efforts to unwind Obama administration policies that benefit California.

Rendon and de León no doubt are confident that the electorate is on their side. Trump lost to Hillary Clinton in California by 4.2 million votes. Although some Trump supporters say he should be taken seriously but not literally, de León and Rendon are wise to take Trump at his word. Their decision to hire Holder and Covington carries some risk. But the risk would be far greater if they were caught flat-footed if and when Trump starts to make good on some of his promises.

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MOORLACH UPDATE — Talking Pension Tax — January 4, 2017

The new year is starting out with a bang. The Marin Independent Journal, in the first piece below, gives a nice shout out for my "pension tax" stance (see MOORLACH UPDATE — Thumbs Down on Pension Tax — December 27, 2016 december 27, 2016 john moorlach and MOORLACH UPDATE — Pension Tax Begins — December 21, 2016 december 21, 2016 john moorlach).

I discussed the pension tax with John and Ken on KFI yesterday afternoon. I made their headline — "It’s our first show of the year! Ghoul Pool 2016 results, Ghoul Pool 2017 picks, Pension reform with Sen. John Moorlach, and more!" (Listen to my interview HERE).

The second piece is from the Daily Journal and sets up the fun bills the Legislature will be debating in the coming days and weeks as California begins to react to our new incoming United States President (also see MOORLACH UPDATE — Peaceful — December 19, 2016 december 19, 2016 john moorlach).

Marin IJ Editorial: At least one lawmaker is talking about ‘pension tax’

Credit Orange County lawmaker John Moorlach for shining a bright spotlight on a surprise tax increase that starting in April will be on car owners’ registration bills.

Moorlach, a Republican and a staunch critic of the way the state has handled workers’ pensions, says a $10 increase, buried in the state budget, will go toward covering the state’s rising tab for the California Highway Patrol officers’ retirement plan.

Moorlach says the state, with lawmakers’ and the governor’s blessing, is using the state car tax to raise the revenue needed to cover its growing cost — an estimated $415 million this year.

The governor’s office said in June the increase is needed to cover the rising cost of CHP pensions and to prevent “significant” cuts to CHP’s ranks and to Department of Motor Vehicle offices.

The increase was approved with little public attention, maybe because it’s only $10, at least to start, and because we don’t know how many other state fees are being quietly raised because of the state’s rising pension costs.

Our local representatives, Assemblyman Marc Levine and state Sen. Mike McGuire, did little to inform their constituents of the increase, both before and after the budget was voted for and signed.

It is an expense that the owners of 27.7 million vehicles in California now have to cover, keeping promises made to CHP officers, who play an important role in helping keep our state safe. But that doesn’t mean state taxpayers have to be happy about those promises made with little oversight and less foresight that are taking bigger and bigger bites out of the state budget.

The state’s annual bill for CHP pensions has grown from 13 percent of the cost in 2000 to 50 percent today. That’s largely due to changes approved in 1999 that allowed officers to retire at age 50 with pensions, as much as 90 percent of their highest compensation for as long as they live.

It wasn’t supposed to cost taxpayers more. Lawmakers said returns from state investments would cover the cost of the change. Then the dot-com stock bubble burst — there was a national recession.

Of course, lawmakers’ strategy of quietly approving the increase and not having it go into effect until April might ease the political heat.

Built into the increase is an annual, automatic cost-of-living increase.

Moorlach, a public pensioner himself, deserves credit for being forthright and honest about the increase, its purpose and its importance, both in covering a growing budget gap and a budgetary maneuver that we are all paying for.

Incoming attorney general may be granted new powers

By Malcolm Maclachlan
Daily Journal Staff Writer

California will soon have a new attorney general, who may have several new powers and responsibilities if the state Legislature gets its way.

Gov. Jerry Brown officially nominated U.S. Rep. Xavier Becerra, D-Los Angeles, on Tuesday after Kamala D. Harris took her oath of office as a U.S. senator.

Becerra, whose intended nomination was announced last month, was quickly embraced by a state Democratic establishment as a key opponent for the incoming administration of President-elect Donald J. Trump.

Within a day, Becerra had issued his much-quoted challenge to Trump to "come at us."

Sen. John Moorlach, R-Costa Mesa, said he is worried that Democrats’ desire to pick fights with Trump could result in the federal government withholding or delaying funds the state depends on in its "precarious" budget situation.

Brown, Moorlach said, has been a fiscally conservative Democrat whom many Republicans have seen as someone they could work with. But the nomination of Becerra and the rhetoric around it are potentially worrying signs, Moorlach added.

"That might be a signal that he is ready to be combative," Moorlach said. "Now he has to figure out what the plan will be if Donald Trump is not amused."

The state Legislature is clearly in a feisty mood. When they reconvened on Dec. 5, Democrats quickly introduced several bills that appeared designed to provoke the Trump administration — and a resolution charging him with pursuing "policies of ethnic cleansing."

More substantively, several bills seek to enable a more activist attorney general’s office.

At least two could pit the office against federal immigration officials. SB 29 would prohibit local law enforcement in California from housing people detained on immigration charges in private facilities.

It would also give the attorney general and district attorneys the power to bring civil actions against immigration detention facilities that violate the rights of detainees.

SB 54 would repeal current law that calls on local law enforcement to inform federal immigration officials when they arrest noncitizens on drug charges — and would charge the state Department of Justice with creating "model policies" for local police to follow instead.

Bill O. Hing, a law professor and director of the Immigration and Deportation Defense Clinic at the University of San Francisco, said he could envision scenarios where SB 29 or other legislation aimed at Immigration and Customs Enforcement could lead to court battles with the federal government.

"I do believe an aggressive Trump Department of Justice might challenge some of the state’s provisions that call for non-cooperation with ICE," Hing said.

Cameron Smith is a former legislative counsel for the man Trump has announced as his pick for U.S. attorney general: Sen. Jeff Sessions, R-Alabama.

Court battles over immigration may be less likely than some think, Smith said.

"It’s important to remember, Sen. Sessions is a federalist," said Smith, now general counsel and state programs director for the R Street Institute, a conservative research organization. "He believes in states’ rights."

Unless a law called for local police to directly interfere with ICE, Smith said, Sessions probably wouldn’t sue. One example he cited would be a law stating that California would not recognize deportation orders or turn over people specifically demanded by federal authorities.

Hing and Smith agree that Sessions would have little grounds or inclination to challenge two much-publicized bills seeking to provide better legal representation for people facing immigration proceedings.

AB 3 would provide money to train immigration lawyers. SB 6 would establish a legal fund to pay immigration defense attorneys.

Smith instead pointed to the decision by California voters to pass Proposition 64 legalizing marijuana. There is "a pretty clear conflict between federal and state law" that would allow Sessions to intervene using the Supremacy Clause of the U.S. Constitution, Smith said.

Prop. 64 also gives new duties to the state attorney general, including pursuing civil penalties against licensed marijuana companies that violate the law, periodically reporting on the industry, and interpreting conflicts between federal and state law.

Several newly-proposed bills also give new watchdog power to the office. SB 19 would force the Public Utilities Commission to get the attorney general’s approval before hiring outside legal counsel.

AB 43 would impose a tax on those who contract with state prisons, then charge the attorney general with ensuring it was not passed on in higher fees. AB 72 would appropriate funds for the attorney general to enforce fair housing laws.

But much of Becerra’s time could also be spent on an area where Harris was active: environmental policy.

In fact, his battles could resemble fights Harris fought against the George W. Bush administration early in her tenure. For instance, Harris sought a waiver for California to impose tighter emissions standards on cars. The waiver was eventually granted by the Barack Obama administration, and runs out in 2020.

UC Davis School of Law Professor Albert C. Lin said California and several other states are likely to sue if Trump seeks ways to reverse Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007), the U.S. Supreme Court decision that forced the U.S. Environmental Protection Agency to regulate greenhouse gases as a pollutant.

malcolm_maclachlan

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MOORLACH UPDATE — Copyright 2017 — January 3, 2017

It’s 2017 and the Senate Session starts tomorrow. Let me address a sample of what I have accomplished in 2016 and discuss one of my bills that becomes effective this week. I’ll do it through a different type of mention.

One of my hobbies is book collecting. One newer area of specialization has become acquiring books in which I am mentioned. I know, it sounds narcissistic. But, starting life as a humble accountant, I never expected to ever be mentioned in a newspaper article, let alone a book.

Most of the mentions revolve around the Orange County bankruptcy protection filing. As you can imagine, I’m mentioned in numerous books (see MOORLACH UPDATE — Book Inclusions — October 1, 2015 october 2, 2015 john moorlach). A classic is When Government Fails: The Orange County Bankruptcy by Mark Baldassare (see MOORLACH UPDATE — Property Tax Due Date — April 10, 2013 april 10, 2013 john moorlach).

Last month, I received a copy of a book from its author, Jo Carrillo, Professor of Law, University of California, Hastings College of the Law. I believe this is maybe the first time that an author has done this. And, I’m very grateful, as text books are not inexpensive.

Professor Carrillo’s book has nothing to do with the Orange County bankruptcy! It deals with a subject matter where one of my two signed 2016 bills, SB 1255, had a major impact in our state.

The book is Carrillo’s Cases and Materials on California Community Property Law – Marriage, Property, Code – Eleventh Edition; West Academic Publishing, Copyright 1966, 1971, 1977,1983,1988, 1994, 1999, 2003, 2008, 2011, and 2017.

The book also came autographed and with a very kind letter:

Dear Senator Moorlach,

My specialty is property law and California community property law. I write to say that I was relieved when you introduced Senate Bill 1255; and I am very pleased at the addition of Section 70 to the California Family Code.

I hope you will accept this casebook as a token of my appreciation for your efforts on behalf of California families.

If you ever feel that I can be of help in your legislative efforts, please contact me.

Sincerely yours,

Jo Carrillo
Professor of Law

Talk about an amazing Christmas present. Thank you, Professor Carrillo!

Thanks also go to Bruce and Lisa Hughes, of Hughes & Hughes, Attorneys at Law (see http://hughesandhughesca.com/) for bringing the idea of writing SB 1255 to my attention (MOORLACH UPDATE — Attaboy — August 5, 2016 august 5, 2016 john moorlach). Bruce and Lisa were my Becker CPA Review Course instructors back in 1977/1978! Note: One of the four parts of the C.P.A. exam is Law.

My Becker CPA Review course started in the fall and I would attend in the evenings. The course was taught at the former Masonic Temple in downtown Santa Ana, one block from where I would later spend 20 years of my career in the Civic Center.

One memorable highlight was during a break and being able to catch a glimpse of the 1977 World Series between the LA Dodgers and the NY Yankees (see https://en.wikipedia.org/wiki/1977_World_Series). The things one remembers after nearly 40 years. Another highlight, besides meeting Bruce and Lisa Hughes, was meeting my dear friend Paul Gorman. He would also eventually work for the County, in the Treasurer’s Office, for some twenty years and has just started with the Orange County Superior Court. But, I digress.

Thanks also go to my staff. In particular, Rob Nash, a recent graduate of McGeorge School of Law in Sacramento. He did an excellent job of recruiting the proper associations to support our bill. He also obtained outstanding legal witnesses for the many committee meetings where the bill was presented. He was well mentored through the process by my Chief of Staff, Lance Christensen.

booklinkTransparentSpacer.gif

SB 1255 resulted as a response to a California Supreme Court decision. It is partially explained in Chapter 7, page 568. Chapter 1, pages 27 and 28, set the stage with the following paragraph:

The Supreme Court employs one Chief Justice and six Associate Justices. There were 7,907 filings last year, with 85 written opinions. In the area of community property law, once the Supreme Court writes an opinion, practitioners in the field may bring pressure on the Legislature to consider the wisdom of that opinion. For example, recently the Legislature abrogated the opinion in Marriage of Davis, 61 Cal. 4th 846, 352 P.3d 401 (2015). There were many reasons for abrogating Davis, some historical, some theoretical. But the primary and final reason cited by the Legislature is that the Davis majority opinion sought to draw a bright line rule in an area–marital dissolution–where bright line rules can be and often become a source of injustice. With that rationale, the Legislature ratified the current practice of empowering trial court judges with a broad grant of discretion.

Chapter 3, page 185, provides the topic at hand in Section 4. Earnings and Accumulations While Living Separate and Apart, A. The Bare Statute, dealing with California Family Code Section 771 and 772 and the newly added Section 70. Here are the three pertinent paragraphs:

Davis changed the state’s historical approach by requiring parties to establish separate residences in order to be considered living separate and apart for purposes of California Family Code Section 771. After Davis, a separate property claimant invoking California Family Code Section 771 needed proof of a separate residence, a new lease for example, to establish date of separation. The rationale in Davis was problematic; it returned California to a past where the word of third parties weighed more heavily in deciding date of separation than did the perceptions of the parties themselves. Plus, in a state with the highest or near highest cost of housing Davis attempted to draw a bright line rule ostensibly to reduce legal costs and, astonishingly, to make it easier for lawyers. Notwithstanding the fact that a marriage may continue even after one spouse moves out of the marital home, as discussed above, establishing a separate residence in order to have proof of date of separation is no easy financial task for a great number of couples. Parties would likely need available cash to pay their current rent or mortgage plus more cash to pay move-in costs for a spouse to establish a separate residence (first and last month rent, security deposit, utility start-up costs, parking, and so on).

Davis was decided on July 20, 2015. Senate Bill 1255 was introduced by Senator Moorlach on February 18, 2016. It was amended in the Senate on May 5, 2016. It passed the Assembly on June 1, 2016. On July 25, 2016, S.B. 1255 was approved by the Governor and chaptered by the Secretary of State to add a new section–Section 70–to the California Family Code to clarify the meaning of "date of separation."

As per California Family Code Section 70, date of separation now means the date that "a complete and final break in the marital relationship has occurred." Evidence of intent or conduct can be subjective or objective. "[I]n determining the date of separation, the court shall take into consideration all relevant evidence."

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