MOORLACH UPDATE — End Game — September 1, 2015

It’s the home stretch toward the end of Session. The briefings I received late last night on the bills that will be covered today are more than 1,700 pages! And, there’s the intrigue of the possible gas and managed care organization tax increases. Will the Senate Republican Caucus stand firm? Or will one or more of us be persuaded to bolt? Fun times.

The Sacramento Bee covers the tax topic in the first piece below. The Santa Clarita Valley TV website provides an informational piece from one of California’s State Board of Equalization Board members that mentions our Facebook and Twitter efforts on stopping the gas tax in the second piece below.

Democratic hopes for California tax increases hinge on GOP votes

GOP lawmakers last supported a tax deal in 2009

Gas, cigarette taxes on the table this year

‘Shaming’ and recall threats are part of anti-tax arsenal

By Christopher Cadelago

ccadelago

Jon Fleischman, the conservative activist, blogger and political consultant with the ear of many at the Capitol, was giving another interview to a right-leaning talk radio show one recent afternoon when he was asked about the possibility of Republican lawmakers supporting a tax increase.

“There’s always a chance,” Fleischman said, loosely summarizing a quip he attributed to Mark Twain: “Always hold on to your wallet when the Legislature is in session.”

As the first year of the session winds down with transportation and health care among the issues on the table, whether lawmakers move to boost revenues is among the most intriguing questions on the docket.

Proposals include increasing the gas tax by 12 cents per gallon and raising vehicle registration fees by some $35 a year, imposing a new levy on managed health care plans and adding a $2 tax to each pack of cigarettes. Democrats have also discussed extending temporary sales and income taxes set to expire in 2016 and 2018.

A handful of Republicans would have to join majority Democrats to raise taxes in the special session – a political risk even a vigilant tax-fighter like Fleischman now believes is unlikely.

Yet he warned it was just six years ago when then-Gov. Arnold Schwarzenegger “strong-armed” three Republicans in each chamber to vote to temporarily raise taxes. As part of an effort to close a massive $41 billion deficit in 2009, GOP leaders cut a deal that included about $14 billion a year in taxes despite repeated vows to protect taxpayers.

New circumstances could insulate wayward Republicans from retribution. A ballot measure approved by voters in 2012 allows lawmakers to serve a maximum of 12 years in either the Senate or Assembly, eliminating the need to step down after eight or six years, respectively, to run for the other house. Those terming out of office in some cases won’t run again and don’t have to worry about angering the electorate.

Another difference is a switch to a top-two primary system, which reached the ballot as part of the 2009 deal when then-Sen. Abel Maldonado, R-Santa Maria, sought the change before casting his vote for tax increases. The system could protect an incumbent against a foe from the same party.

Under the old rules, a Republican had to win the party’s primary election to move on. Now, they just have to finish in the top two in June to advance to the November runoff. As long as a Democrat runs, a more conservative GOP challenger likely would have a hard time elbowing out the incumbent.

While the primary system will not shield every incumbent, “it offers an additional base of support for those members that might be tempted to sign on” to a tax-raising deal, said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California.

Republicans might be most inclined to raise taxes to repair deteriorating roads and to reduce traffic, Schnur said. Still, he said, they would want to point to specific improvement projects to ease the commutes of constituents.

“There is a reason that local tax increases pass much more frequently than at the state level, and it’s because voters believe those taxes will have a direct and immediate impact on their own lives,” Schnur said. “It’s an uphill fight (securing a state tax increase), but the top-two primary and the nature of the transportation issue changes the dynamics for the incumbent legislators” who may go up on taxes.

Darrell Steinberg, the former Democratic president pro tem of the Senate, said he has seen Republican votes shift on a host of issues, including immigration and gay rights.

“Some of them got the message that you can’t govern from the far right and be relevant in a blue state,” Steinberg said.

“It always ought to be about what can we get done instead of a reflexive ‘no,’” he added. “More often than not over the last four or five years that has been the trend. There may be limits. I guess we’ll see.”

Even in 2009, when Steinberg helped broker the budget deal, the GOP mustered only the minimum number of votes needed. All six of the GOP lawmakers who voted for the tax hikes in one way or another paid a political price for rebelling.

More recently, Gov. Jerry Brown’s bid to round up enough Republican votes to place a tax on the ballot in 2012 – not to approve one – came up empty. He ultimately worked to qualify Proposition 30 to get it done, arguing to voters that the money was needed to support education.

Most Republicans today would see their electoral chances diminished by supporting a tax increase, said Matt Rexroad, a Republican political consultant in Sacramento. He said the anti-tax pledges many of them sign during campaigns are popular with voters.

“I can’t think of any Republican in the districts they are in right now who it would be favorable to their political future,” he said.

Several current and former GOP lawmakers and their aides said the lack of a yawning budget gap will make it harder to persuade Republicans to support taxes.

Former Assemblyman Roger Niello, a Republican from Fair Oaks, said when he voted with Democrats in 2009 the “consequences at that point, in my opinion, were serious beyond description.”

“We’re not looking at that sort of situation right now, neither with transportation nor with health care,” Niello said. “There are ways to address our transportation needs without increasing taxes, and Republicans have an impact on that by refusing to increase the taxes and driving the discussion on the other solutions.”

Former Sen. Sam Blakeslee, R-San Luis Obispo, said higher gas taxes are a tough sell.

“When it comes to taxing the wealthy, the public is relatively sympathetic to the need for more revenue,” he said. “When you are asking people to pay more at the pump, or when you are asking the working poor or the middle class to pay a heavier share, you run into significant skepticism by the public.”

Republican Assembly leader Kristin Olsen said through a spokesman that the Legislature just passed the most expensive budget in state history “yet ignored core government responsibilities like keeping the roads paved and fulfilling our promise to our state’s neediest medical patients.” The GOP has put forward a plan to begin paying for road repairs with no new taxes, largely by shifting funds from other programs.

In the Senate, GOP leader Bob Huff of San Dimas was prematurely removed last week and replaced with Sen. Jean Fuller of Bakersfield in part over last-minute jitters about a tax deal. Speaking with reporters, Fuller said broadly that Republicans “do not raise taxes,” yet she also did not close the door.

“Anything is possible … (but) especially without efficiencies, especially without guarantees, we are just not in favor of increasing taxes on hard-working families,” she said.

Sen. John Moorlach, R-Costa Mesa, laughed when asked whether the earlier-than-expected leadership change in the Senate would help upper-house Republicans hold the line on taxes. Over the last few weeks, Moorlach, an accountant by trade, has been using numbers from the budget to paint the state Department of Transportation as inefficient. He said the agency has 3,300 to 3,500 engineers too many, and has refused to hire more outside contractors.

Taxes, he said, shouldn’t be a consideration, though he isn’t certain that the 14-member caucus can stick together “without someone bailing.”

If two Senate Republicans peeled off, he said, “that would really hurt the brand if we let the taxpayers of this state down.” He noted that Republicans only recently prevented Democrats from holding the two-thirds majorities in both houses that would let them raise taxes by themselves.

Fleischman isn’t taking any chances, saying he’s prepared to resort to “shaming” and recall threats if necessary. He said the 2009 deal could have been avoided if activists and donors “went to Defcon 1 before the vote instead of after the vote.”

Among the people he said he’s concerned about is Senate GOP Caucus Chair Tom Berryhill, who recently abstained from a tax measure in committee and did not respond to an interview request. “That tells me ‘I’m the guy to come see if you want to talk about what the framework looks like on a deal,’” Fleischman said.

As he worried about taxpayers’ wallets on the radio show in San Diego, Fleischman implored listeners to call the office of local Republican Assemblyman Brian Maienschein.

Maienschein’s office issued a brief statement: “Assemblymember Maienschein won’t be voting for a tax increase.”

Christopher Cadelago: 916-326-5538, @ccadelago

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Tax News from George Runner

George Runner, R-Lancaster, represents the Santa Clarita Valley and 9 million other Californians on the state Board of Equalization.

MOORLACH UPDATE — Pothole Tax — August 30, 2015

The State of California recently approved the largest annual budget in its history. But, it’s not enough. Therefore, capture recent economic upturns in the regular budget, thus paying for the ever increasing cost of pension contributions. Then implore the taxpayers to accept a separate transportation tax, a "pothole tax," and you’ve covered the pension costs using smoke and mirrors. Brilliant.

The OC Register‘s Commentary section covers the joys of public employee defined pension plans when equity markets take large swings. I addressed this topic six years ago on the same editorial pages in an UPDATE, see MOORLACH UPDATE — Pension Boosts are a Bad Bargain September 16, 2009 John Moorlach. The OC Register‘s piece is the first one below and addresses the recent phenomenon of "pothole taxes" springing up around the state and is now being deliberated in Sacramento.

We should not pay a pothole tax when the California Department of Transportation has some of the nation’s worst performance metrics (see MOORLACH UPDATE — Cost of Engineers — August 26, 2015 John Moorlach). The second piece is from the Murrieta Patch, which recaps the conclusion of another exciting week with Caltrans (see MOORLACH UPDATE — Going Golfing — August 29, 2015 John Moorlach).

OC Register Logo

MARKETS

Stock plunge also shook California’s public pensions

JOHN SEILER — STAFF COLUMNIST

Reality check: Markets not only go up – they also go down.

That’s something all investors realized, again, in the past 10 days as the Dow Jones Industrial Average first crashed more than 1,300 points over three sessions, then recovered a little at the end of last week. These investors included not just individuals, private retirement funds and mutual funds, but taxpayers who are on the hook for public pension funds heavily invested in stocks – especially in California.

Reality still has not dawned in the halls of the California Legislature, which seems to believe every day is “going to Disneyland.”

This year the state treasury was flush with $10 billion in unanticipated revenue. Yet the Legislature even now is meeting for two extraordinary sessions, called by Gov. Jerry Brown, to increase taxes to pave roads and improve medical programs.

But the sessions really are just to cover up the need for spending more on pensions, Sen. John ‍Moorlach, R-Costa Mesa, told me; he’s also a former Orange County supervisor who wrangled for eight years over pensions with the Ornage County Employees Association.

“I’ve been saying on the floor of the Senate, this is not a tax for roads or medical care,” he said. “You can’t call a pothole tax a pothole tax and use it for pensions.” In government, all money is fungible; it can be shifted around by flipping spreadsheet numbers.

Former San Diego Councilman Carl DeMaio, who helped pass pension reform in that city in 2012, said taxpayers get slammed twice during stock downturns. “Not only will you be hit in your own portfolio, you’ll have to write a check for the public employee down the street,” he said. The cost of taxation has to go up – or services have to be cut.

He said what’s needed is pension reform such as the initiative for which he’s gathering signatures to put on the November 2016 ballot. A Republican, DeMaio is teaming with former San Jose Mayor Chuck Reed, a Democrat who passed pension reform in his city (until courts and the City Council shredded the voters’ decision). The initiative is circulating petitions, but already is facing a buzz saw of opposition from public employee unions.

“We need to reform pension benefits so taxpayers are not responsible,” he urged. “Public employees should be responsible.” Among other reforms, his initiative would move the current system toward making public employees half responsible for their own losses, with the taxpayers still on the hook for the other half. It’s a start.

Ultimately, we need to look to the long term, David Crane told me; a Democrat and one of the state’s top public pension experts, he teaches finance at Stanford University. “What matters is long-term growth and decline, not short-term,” he said. And the long term looks dismal.

He said that, to keep its unfunded liabilities from growing, the California Public Employees’ Retirement System must gain a giant 9.7 percent a year for the foreseeable future. Yet its goal is 7.5 percent. And for fiscal year 2014-15, which ended June 30, it grew by just 2.4 percent.

How big are those unfunded liabilities? Last November, Controller John Chiang (now state treasurer) issued a report. It found CalPERS’ unfunded liabilities had mushroomed to $198.2 billion in 2013 from just $6.3 billion in 2003. The latter year was just the beginning of the pensionspiking the myopic Legislature passed in 1999, but which has now caught up with us.

The spiking of 1999 came during the dot-com boom, when the new tech companies, such as Google, supposedly had changed the structure of the economy to prevent future recessions. Reality struck with the dot-com bust of 2000-01. Then with the Great Recession of 2007-09. Now with the August Angst of 2015.
Murrieta Patch

Caltrans Execs Back out of Golf Tournament Amid Criticism

Sen. John Moorlach, R-Costa Mesa, denounced the golf function, saying it was another example of Caltrans wasting taxpayer’s money.

By Alexander Nguyen (Patch Staff)

The director of Caltrans’ Inland Empire office and other higher-ups within the agency on Friday dropped plans to participate in a charity golf tournament in the face of a lawmaker’s criticism that they shouldn’t be spending a workday on the fairway.

“We are not going to attend the tournament, which we had planned to do using our vacation time,” Caltrans District 8 Director John Bulinski told City News Service. “This was planned quite a while ago, and we had elected to do it on our own time.”

The California Transportation Foundation Charity SoCal Golf Tournament is set for Monday at the Dove Canyon Country Club in Orange County. Those slated to attend included Bulinski, Caltrans Director Malcolm Dougherty and Caltrans District 12 Director Ryan Chamberlain — all of whom have since canceled their appearances.

“The tournament raises funds for a number of good causes provided by the foundation,” Bulinski said. “There are scholarships and support programs for families of fallen workers. When I was the District 2 director, two of my employees were killed in a rock slide, and the foundation provided significant support for both families.”

Sen. John Moorlach, R-Costa Mesa, denounced the golf function, issuing a statement Friday morning calling the outing another example of Caltrans employees wasting time on the taxpayers’ dime. He called for the transportation agency’s officials to withdraw from the event, citing a report released Thursday by the California State Auditor, which found that from August 2012 to March 2014, a Caltrans engineer spent 55 working days playing golf — and his timesheets were all approved.

“Is Caltrans management that arrogant and tone-deaf?” Moorlach said. “The state auditor just revealed that they have employees golfing 55 days on- the-clock, so in response top management at Caltrans is taking a golf trip?”

Bulinski, a civil engineer who has worked for the California Department of Transportation over two decades, declined to comment on the senator’s accusations.

“All I can say is this is unfortunate. The timing is unfortunate,” Bulinski told City News Service.

Moorlach, a certified public accountant, has spent the past week issuing statements on the need for reform at Caltrans.

He said the auditor’s findings that 62 percent of vetted projects ended up over-budget, accompanied by a report from the state Legislative Analyst’s Office that Caltrans is believed to be over-staffed by 3,300 employees — at an average annual cost of $143,000 per employee — “screams” for attention.

According to the lawmaker, justification for overhauling the transportation agency is all the more apparent as the governor and others seek tax hikes to pay for statewide infrastructure overhauls.

“We simply cannot ask Californians to pay more for road repairs when the agency managing the process is trivializing their authority,” Moorlach said. “The employee mismanagement, waste and fraud of Caltrans must be addressed. I hope executives spend Monday stepping up their game by implementing reforms at Caltrans.”

City News Service

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MOORLACH UPDATE — Going Golfing — August 29, 2015

"You’ve just had the residents of the state of California informed about how your over-staffed engineers have plenty of time to golf while on the clock — What are you going to do next?"

The traditional answer should be, "I’m going to Disneyland!"

In the case of executives from Caltrans, the answer was, "I’m going golfing!" The irony is incredulous! See MOORLACH UPDATE — Caltrans Fairways — August 28, 2015.

Just one day after the State Auditor released findings of a Caltrans engineer golfing 55 days while "on the clock,” my office discovered that Caltrans executives were also scheduled to golf on a workday – this coming Monday. Consequently, my office let the media know how tone deaf and out of touch this bloated department is (see below). The responses from Caltrans were telling and "par for the course."
First, there was no response from Caltrans. Then, in mid afternoon, there was an abrupt decision to pull out of the tournament. Later, Caltrans execs claimed they had done nothing wrong and that they were going to golf on their own personal time. Finally, the Caltrans execs turned their angst on me, taking to Twitter to levy attacks on me personally.

NBC Channel 4 provides a great story on yesterday’s activities in the first piece below. When the fun went viral, with Caltrans Director Malcolm Dougherty going after me with tweets, this caught the attention of the OC Register and the details are provided in the second piece below.

The California Transportation Foundation (see http://transportationfoundation.org/) may be doing good and honorable work. But, imposing on construction companies that do business with Caltrans to underwrite golf tournaments is a topic of interest all onto its own. I was asked to make a contribution, but I could not find an audited financial statement on their website. Guidestar.org was down for maintenance.

Perception is reality. The optics of promoting and participating in a golf tournament within hours of the release of a disturbing state auditor’s report is very disappointing. And Caltrans’ episodic response to news of their own execs scheduled to tee off together on a workday has every indication of a hastily devised coverup. Caltrans is not making it easy for the taxpayers of this state to swallow another tax increase.

FOR IMMEDIATE RELEASE
Friday, August 28, 2015
Contact: Amanda Smith (949-223-5037)
Amanda.Smith
BREAKING NEWS:
In Wake of Employee Golfing Scandal, Caltrans Top Management Scheduled To…Play Golf!

This Monday – Another Workday Golf Outing – Caltrans Top Staff to Tee Off at Posh So. Cal Country Club.
(Orange County, CA) – This Monday, August 31st, Malcolm Doughtery, Director of Caltrans, Ryan Chamberlain, Director, Caltrans District 12, John Bulinski, Acting District 8 Director and others will be golfing at Dove Canyon Country Club in Orange County.

“Is Caltrans management that arrogant and tone-deaf?” asked State Senator John Moorlach. “The State Auditor just revealed that they have employees golfing 55 days on-the-clock, so in response top management at Caltrans is taking a golf trip?”

“Caltrans needs immediate reform,” continued Senator Moorlach. “The situation is so bad that we need to take the step of bringing in an outside management team that will clean house and set this agency right.”

“Caltrans needs to put freeways ahead of fairways,” concluded Senator Moorlach. “How can we ask Californians to pay more for road repair when Caltrans is spending their days golfing on the taxpayers’ dime?”

After the State Auditor released its revealing reportdetailing Caltrans employee mismanagement on August 27th, it is clear golf days are a system-wide issue.

See the Legislative Analyst rip Caltrans at a Senate Committee last week for poor budgeting numbers and no budgeting systems HERE.

Learn more about the key measurers California’s transportation challenges HERE.

About Senator John Moorlach (R-Costa Mesa):
State Senator John Moorlach represents the 37th District of California, is a trained Certified Financial Planner and is the only 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.
Follow him on Twitter and Facebook.

NBC Southern California

Caltrans Officials Pull Out of Golf Tournament After Audit

http://www.nbclosangeles.com/news/local/Caltrans-Officials-Pull-Out-of-Golf-Tournament-After-Audit-323301871.html

By Vikki Vargas

Three high-ranking Caltrans executives said Friday they will pull out of a charity golf tournament scheduled for next week in Orange County, just a day after a state audit found a Caltrans engineer had been golfing when he should have been at work.

The engineer’s use of paid time was something state officials began looking into after another agency employee initially blew the whistle.

That engineer was playing golf for several hours rather than working on 55 of his scheduled days over a year and a half period, the audit found.

State Sen. John Moorlach (R-Irvine) criticized the agency after the report was released.

“If you have 3,500 employees too many what else is there to do? Why not play golf?” he asked.

The tournament scheduled for Monday will be held at the private Dove Canyon Country Club. It is a charity event for the California Transportation Foundation, a group that raises money for children of fallen Caltrans workers.

But Moorlach also questioned the timing of the executives playing in the tournament after the release of the state audit.

“You know, I don’t mind that state employees participate in a golf tournament. I just think it’s inappropriate they do it on a work day,” he said.

Caltrans sent NBC4 a flier about the golf tournament which says "participation is voluntary on personal time."

The agency also said in a statement that all employees must fill out timesheets and activity logs, that "we expect a days work for a day’s pay."

But Moorlach said what the audit uncovered is a reflection of Caltrans’ inability to cut costs and overhead.

“It’s costing us three times the national average to build roads,” he said. “We’ve got $77,000 per mile in administrative costs and we have the fourth highest gas tax, but we have the worst roads in the country.”

Among those planning to attend golf tournament were Malcolm Dougherty, the director of Caltrans, and two of his executives. All three had planned to use vacation time.

Late Friday afternoon they announced they were pulling out completely.

“I say, ‘thank you,’ Moorlach said. “The right move.”

OC Register Logo

CALTRANS AUDIT SPARKS ONLINE FEUD
State Sen. John ‍Moorlach fires off barbs.

BY MARTIN WISCKOL

An online feud between an Orange County lawmaker and the head of Caltrans erupted Friday after the legislator issued a news release criticizing several Caltrans executives’ participation in a benefit golf tournament scheduled Monday at Dove Canyon Country Club near Rancho Santa Margarita.

The brouhaha comes during legislative wrangling over Caltrans’ budget and on the heels of a state audit released Thursday that found a Caltrans engineer played golf 55 times over a 19-month period while he was on the clock.

The engineer retired last month and his supervisor, who signed his time sheet, was scheduled to retire this month, according to Caltrans .

“Is Caltrans management that arrogant and tone-deaf?” state Sen. John ‍Moor‍‍lach, R-Costa Mesa, said in the release. “The state auditor just revealed that they have employees golfing 55 days on-the-clock, so in response top management at Caltrans is taking a golf trip?”

Caltrans Director Malcolm Dougherty fired back on Twitter, “It’s a shame @SenatorMoorlach would call me out for using my time and $ to help @CTFCharity which supports families of fallen trans workers.”

CTF, the California Transportation Foundation, is a private, nonprofit organization.

‍Moorlach and Dougherty exchanged several more tweets.

“How can we ask Californians to pay more for #CARoads when @CaltransHQ spends their days golfing on taxpayers’ dime?” ‍Moor‍‍lach wrote.

Dougherty responded by questioning ‍Moorlach‍’‍s sensitivity and said there was no taxpayer money involved with the tournament participation.

Dougherty then said he had decided not to participate in the tournament. He would, however, make his planned donation to CTF, he said – and challenged ‍Moorlach to do the same.

Asked by phone if he would be matching Dougherty’s contribution, ‍Moor‍‍lach said, “I don’t know.”

CONTACT THE WRITER: mwisckol; @MartinWisckol

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MOORLACH UPDATE — Caltrans Fairways — August 28, 2015

Fore! You just can’t make this stuff up. The State Auditor released an audit report yesterday morning that concluded a Caltrans engineer golfed 55 days instead of working at the office during regular business hours. It turns out that he was working for Caltrans, but two managers did not know if he worked for their department or the other’s. It’s like something out of the movie “Office Space" (see https://en.wikipedia.org/wiki/Office_Space).

If you have more than 3,300 employees too many, why shouldn’t they play golf? What else is there to do? As they say, “Your tax dollars at work.” Are you ready for a tax increase to support more of this fun? Or is it time to do a turnaround for Caltrans? I say, "Freeways, not fairways!" KCRA Channel 3, News 10 ABC, The San Francisco Chronicle, CBS News LA and Courthouse News Service provide the news in the five pieces below, respectively.

For a recap of recent reform efforts, see MOORLACH UPDATE — Cost of Engineers — August 26, 2015.

KCRA

Senator after state audit: Caltrans should cut 3,500 jobs

Caltrans worker says he was paid to play golf instead of work

http://www.kcra.com/news/senator-after-state-audit-caltrans-should-cut-3500-jobs/34961742

SACRAMENTO, Calif. (KCRA) —A new state audit released Thursday revealed California is wasting millions of tax dollars, including paying a Caltrans workers to play golf on taxpayers’ dime.

Watch report: Audit: Caltrans worker paid to play golf on taxpayer dollars

The investigation began with state workers who reported wrongdoing to the state auditor, under California’s Whistleblower Protection Act. The audit found more than $4 million in waste at more than half a dozen agencies.

Click here to view the audit.

California’s highways are crumbling, and there’s talk of raising gas taxes for road repairs. In the meantime, a Caltrans engineer admitted that instead of working, he was out playing golf as much as possible.

The audit found the engineer was on the links during the workweek 55 times during the course of 19 months for four-and-a-half hours a day — enough time to play 18 holes each outing.

A Caltrans supervisor approved his time sheet every time.

"You’ve got a supervisor who’s not doing his job," said Sen. John Moorlach, R-Orange County. "And you’ve got employees out playing golf. And why not? There’s no work to do."

Moorlach told KCRA 3 that instead of raising taxes, California should be cutting 3,500 redundant positions at Caltrans to save $500 million for road repairs.

Moorlach based his figures on a report released by the nonpartisan Legislative Analyst’s Office.

Click here to view the full report by the LAO.

"They appear to be arrogant, sloppy and mismanaged," Moorlach said.

In response to the audit, Caltrans spokesman Will Shuck told KCRA 3, "It’s not acceptable. It’s not funny. And it’s not something that we’re going to put up with."

Shuck said the engineer retired with a permanent letter in his file indicating he was under investigation at the time he left state service, and Caltrans was also cited in the audit for losing taxpayers’ money.

Caltrans undercharged wireless communication companies on the space they rented for their cellphone towers near freeways.

KCRA 3 asked Caltrans what the department is doing to remedy the situation.

"We’re getting the money back, " Shuck told KCRA 3. "We’re re-billing them for the money that they weren’t charged."

But the biggest waste of money, according to the audit, took place inside prison walls.

California Correctional Health Care Services, which is not a state agency, paid $3.2 million for electrical work at the prisons, but the money went to a contractor, who did nothing more than process the invoices of the subcontractor.

"We agree with all of the audit recommendations," said Joyce Hayhoe, of California Correctional Health Care Services.

The audit found many of the billings were vague, but the department paid for them anyway.

"We believe that there are some billings that should have provided more specificity," Hayhoe said. "We have taken those recommendations to heart. We have provided training to all of our staff to make sure, in the future, that the billing is clear."

The state auditor’s office received 1,207 calls or inquiries through the Whistleblower Hotline, by mail and on the auditor’s website.

The auditor investigated 2,932 cases between July 2014 and June 2015, culminating in this most recent report.

KXTV News10 logo.png

Report: State worker worked on his swing on taxpayers’ dime

http://www.news10.net/story/news/local/california/2015/08/28/report-state-worker-played-golf-while—job/71292516/

A Caltrans engineer was playing golf instead of working, according to a new report from the California State Auditor. This happened 55 times between August 2012 to March 2014 — for an estimated four and half hours each day.

"It is not acceptable, it is outrageous," Caltrans Deputy Director of External Affairs Will Shuck said. "He retired and he’s frankly lucky that he retired."

Shuck said the employee worked in District 11 in San Diego. He said a fellow employee reported the extracurricular golfing.

According to the report released Thursday, the engineer retired in July 2015 and worked for the district for at least 16 years. A note was made in the employee’s personnel file that he retired during an active investigation.

The report also said a supervisor approved the employee’s time sheets for 19 months without knowing the hours he actually worked. During March of 2014, there was also confusion after the employee was transferred to a different division over who was supervising him for a month.

The report states: "Because neither Supervisor A nor Supervisor B believed that Employee 1 was under his or her respective supervision, neither could verify the accuracy of the weekly time sheets that the engineer submitted for this one‑month period."

"Part of the reason that went missing is that he wasn’t filing a daily, a daily activity report, which now is required in a way that it wasn’t at the time," Shuck said.

State Senator John Moorlach said this instance highlights a need for change.

"We’ve got a department that’s inefficient. We’re paying the fourth highest gas tax in the nation and we have the worst roads in the nation," Moorlach said.

He said a few things could be done.

"Maybe we could have a new department head, maybe we shouldn’t have public employee unions running the place, maybe we should be outsourcing a lot more work so that when you have a cycle that is the down cycle that you don’t have to layoff employees, you terminate contracts with outside contractors," Moorlach said. "There’s a lot that could be done, but we can’t just coddle and hold onto employees that are union members just for the sake of protecting them. They don’t work to serve themselves, they work to serve the taxpayers and so we’ve got to change the mindset."

Caltrans insists they are making sure an incident like this won’t happened again.

"Nobody is more indignant than we are," Shuck said. "This is not ok; it’s not acceptable; we’re not going to put up with it."

The report said the main supervisor involved planned to retire in August 2015 with a similar note in his personnel file as the engineer, stating he retired during an active investigation.

Caltrans said in the report it is implementing mandatory weekly submissions of daily activity reports.

Audit: State worker spends 55 days golfing on taxpayers’ dime

By Melody Gutierrez

An engineer for the California Department of Transportation was busy working on his golf swing when he was supposed to be at work, according to an audit released Thursday detailing bad behavior by state employees and public agencies.

State Auditor Elaine Howle’s annual report found 10 substantiated allegations from whistle-blowers with more than $4.2 million in wasted money, improper payments and misuse of work time by public employees.

The Caltrans engineer was found to have played golf on 55 workdays in a 19 month period while his timecard listed him as working. State auditors faulted the engineer’s supervisor for failing to manage the employee or ensure his time sheets were accurate from August 2012 to March 2014.

The employee said he played golf as much as possible – for an estimated four and a half hours a day — during hours the auditor found he was supposed to be working.

The audit also found a month in May 2014 in which no one could account for how much work the engineer had done, if any, because there was a miscommunication about who was supposed to oversee the employee.

The employee will have plenty of time to hit the links now after Caltrans said he retired in July. The agency said it planned to place a letter in the worker’s personnel file indicating he retired during an active investigation. A similar letter would be placed in the supervisor’s file after that employee retired this month, the agency said.

Caltrans has since tightened its policies on timecards and told auditors that they’ve already noted an improvement.

The auditor also found:

An accounting officer at the Employment Development Department typed and printed more than 700 pages of personal letters to one person alone and sent 30 to 97 personal e-mails on a daily basis, which left her little time to do her job. The employee also used her position to assist friends and family who had pending unemployment and disability claims with the state.

The agency attempted to fire the employee, but she resigned prior to being dismissed.

An office supervisor in the Department of Industrial Relations ran a side business selling copied movies and CDs during work hours for seven years while using his work e-mail and office to market and bill for the material. The supervisor kept a catalog of movies he had for sale in a binder at work for customers to peruse.

The employee also sent and received sexually suggestive e-mails while at work and, for a year and a half, printed fliers, class schedules and gift certificates for a coworker’s fitness studio.

The employee resigned while denying wrongdoing. Under a settlement with the Industrial Relations, the agency agreed not to place a notice in the employee’s personnel file that he had been under investigation. The employee was appointed to another state department as a supervisor in December 2014.

Caltrans was faulted for failing to increase rental rates to fair market value for state land rented by Bay Area wireless companies, resulting in California missing out on nearly $900,000 in rental revenue between 2012 and 2014. Caltrans began to collect some of the lost rent, but was unable this month to show how much has been received so far.

The land is rented to wireless companies so that they can install cellular towers and other equipment on certain state highways, such as Interstate 80.

The two mentions of Caltrans’ mismanagement in the state auditor’s report added fuel to Republicans’ calls for the department to downsize as a cost-cutting measure that would help pay for roadway improvements. A 2014 report from the nonpartisan Legislative Analyst’s Office found that Caltrans is overstaffed by 3,500 engineers and that cutting the positions would save $500 million.

Sen. John Moorlach, R-Costa Mesa, said Republicans will continue to fight Democrats’ calls for new taxes to fund road and bridge improvements as long as Caltrans remains bloated and mismanaged.

“I don’t know how this Legislature could dare ask the poor to the rich to pay more gas taxes, more automobile registration fees, it’s unconscionable until we fix this department,” Moorlach said.

The senator added that with Caltrans being overstaffed, “it seems golfing would be a smart thing to do with your time” at work.

Melody Gutierrez is a San Francisco Chronicle staff writer.

E-mail: mgutierrez. Twitter: @MelodyGutierrez

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Report: Caltrans Engineer Was Paid For Playing Golf On 55 Workdays

(Credit: Thinkstock)

(Credit: Thinkstock)

An Orange County lawmaker said Thursday he has “no confidence” in Caltrans’ spending practices after a state auditor found the agency approved the time sheets of an engineer who played golf for 55 workdays while on the clock.

The report dated Aug. 2015 (PDF) from the California State Auditor found the unidentified engineer was paid for working the day shift despite playing golf for part of 55 workdays between Aug. 2012 to March 2014.

The engineer was later reassigned, but he was not directly supervised from early May 2014 to early June 2014 due to “a failure in communication between two senior transportation engineers,” according to the report.

While Caltrans district management was unable to determine exactly where the engineer was how much work – “if any” – was actually performed during this period, a district manager directed the senior transportation engineer to approve the time sheets, the report found.

In a statement, State Senator John Moorlach (R-Costa Mesa) described the report as “another example of desperately needed reform” at Caltrans.

“How can we ask Californians to pay more for road repair without fixing Caltrans?” said Moorlach. “We have no confidence that Caltrans is spending money properly.”

The report comes on the heels of another study conducted by the nonpartisan Legislative Analyst Office (LAO) which found Caltrans to be overstaffed by 3,300 employees at an estimated cost to taxpayers of $500 million annually.

A 2012 investigation by CBS2’s David Goldstein found Caltrans employees drinking alcohol while on the job and doing crossword puzzles. Several veteran employees were suspended as a result of the investigation.

Courthouse News Service

Audit Finds California Wasting Millions

By ELIZABETH WARMERDAM

SACRAMENTO (CN) – California’s prison health care operator did not seek competitive bids and wasted $3.2 million of tax money to pay a contractor to shuffle paperwork, the state auditor says.
California Correctional Health Care Services has paid $17 million to upgrade electrical systems in state prisons since 2011, but the work was unlawfully done by a contractor under an existing agreement instead of being put out to bid, the audit states.
The agency "paid the contractor $3.2 million to do nothing more than process invoices of the subcontractor, who performed all of the work," according to State Auditor Elaine Howle’s annual report .
The state also paid for goods and services that were not delivered for nearly a year, violating a prohibition of advance payments. Nor did CCHCS take necessary steps to ensure that the contractor delivered or performed on the agreement, the audit says.
Correctional Health Care did not immediately respond to a request for comment Thursday.
The audit details nine other substantiated allegations from whistleblowers, involving several state departments. In total, the report identified more than $4.2 million in wasted tax money, improper payments and misuse of state time.
It claims that CalTrans allowed an engineer to play golf on 55 days during work hours, on the taxpayers’ dime. The engineer’s supervisor did not manage the now-retired employee or ensure that his time sheets were accurate from August 2012 to March 2014, the audit states.
No one in CalTrans could account for how much work the engineer did in May 2014 because it was unclear who was supposed to be supervising him, the audit found.
CalTrans told the state that it tightened its policy on time sheets in July and has already seen improvements.
State Sen. John Moorlach, R-Costa Mesa, said the results of the audit show that reform is needed at the "troubled agency."
"How can we ask Californians to pay more for road repair without fixing Caltrans? We have no confidence that Caltrans is spending money properly. None. When you’re overstaffed by 3,300 employees, I guess the only thing you can do is play golf," Moorlach said.
The audit also found that the agency did not increase rents to reflect the fair market value of state land rented by telecommunications companies in the San Francisco Bay Area, costing the state nearly $883,000 from July 2012 through September 2014.
It found that an office services supervisor in the Department of Industrial Relations ran a side business on his state computer, selling copied DVDs and duplicated CDs during work hours. The supervisor kept a catalog of movies he had for sale in a binder at work for customers to look through.
The audit found that the same employee sent and received sexually suggestive emails during work hours and used department resources to print materials for a co-worker’s fitness studio.
He resigned after he was questioned, and Industrial Relations agreed not to put anything in his file about the investigation. Two months later, he was appointed as a supervisor in another state department.
An accounting officer at the Employment Development Department typed and printed more than 700 pages of personal letters to one person, sent 30 to 97 personal emails on a daily basis, and used her position to assist friends and family who had pending unemployment and disability claims with the state, the audit found.
The auditor also found that the Department of Corrections and Rehabilitation and the prison system’s medical branch, Correctional Health Care, paid three salaried chief psychologists a total of $96,000 in extra pay and leave credits for being on call or for returning to work after their shifts ended.
Despite being told that these employees were not entitled to extra compensation under the state’s labor agreement, officials continued the overpayments, according to the audit.
The report also found that field division staff at the Department of Water Resources improperly disposed of surplus state property that would cost at least $5,300 to replace, and that the Chula Vista Veterans Home wasted money when it bought a piece of equipment for nearly $50,000 that it has rarely used for five years.

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MOORLACH UPDATE — Cost of Engineers — August 26, 2015

Last week’s Senate Transportation and Infrastructure Development Committee hearing on SBX1-9 was observed and fact-checked by Union Watch in the first piece below (see MOORLACH UPDATE — Pothole — August 19, 2015 John Moorlach).

A bill can be killed at any Senate Committee at which it is heard. If you only have one Committee to discuss the bill before it goes to the Senate Floor, then a strategy that can be used by the opposition is to misrepresent the facts, act incredulous that a bill of this nature is even being discussed at all, and remind everyone that you are the leader of a public employee union. This is what occurred. It may not be ethical, but in Sacramento it works.

For a refresher on SBX1-9 and the mismanagement of Caltrans, please review the following:

* MOORLACH CALTRANS UPDATE — Dan Walters — August 24, 2015 John Moorlach

* MOORLACH CALTRANS UPDATE — Senate Hearing Video Clips — August 20, 2015
August 21, 2015 John Moorlach

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

* MOORLACH UPDATE — Turn Your Radio On — August 14, 2015 John Moorlach

* MOORLACH UPDATE — Transportation Strategies — August 13, 2015 John Moorlach

* MOORLACH CALTRANS UPDATE — Cost Overruns — August 12, 2015 John Moorlach

The Sacramento Bee provides the outcome of the annual Republicans versus Democrats Softball Game in the second piece below. It includes a link to the video, which includes my photo-bombing the Democrats Team Photo. It was a fun evening and I even played First Base for a few of the final innings. It is a good strategy to let the Democrats win once each decade. Last night was that one time for this decade.

Union Watch

Caltrans Union Spokesman Understates Engineers’ Cost by $71M

By Robert Fellner

In a hearing on Senator Moorlach’s SBX1-9 (Responsible Contacting for Caltrans) bill, Ted Toppin of the Professional Engineers in California Government (PECG) made a series of demonstrably false claims regarding the cost of Caltrans engineers.

Toppin claimed that the cost of a fully-loaded engineer – including all wages, benefits and even the cost of their office and service truck – was $116,000. A review of the department’s 2014 payroll data reveals that the average cost for a “transportation engineer” was $128,638. This is only for regular transportation engineers and excludes any engineer with a preface such as senior, supervising, principal, etc. Additionally, it understates their total cost as it does not include the cost of their trucks and office space.

In 2014, Caltrans had 5,646 full-time regular transportation engineers on their payroll. Consequently, Toppin understates the cost of employing engineers by at least $71,000,000 per year for the department.

The highest compensated regular transportation engineer received $213,000, with principal transportation engineer, Kenneth Terpstra, leading all classifications of engineers with $243,000 in total compensation.

Later, Toppin is incredulous at the notion that a state engineer could make $138,000 a year, stating that, “There is no state engineer in this state, making $138,000 a year…I think it probably tops out for top engineers at around $110,000.”

Here it is clear Toppin is speaking about all categories of engineers, not merely the regular transportation engineers analyzed above. It is also likely he is referring to wages only, not total compensation. To be even more charitable, we will also assume he is referring to “regular pay” only, and in addition to excluding benefits, will also exclude any overtime earnings or supplemental wages classified as “other pay.”

Given the above, how does his claim contrast against the 2014 payroll data?

Six engineers received regular pay in excess of $138,000 last year and 1,581, or nearly 20% of all engineers, received over $110,000. If we include total wages, those numbers rise to 69 and 2,101, respectively.

Finally, Toppin expressed regret that the director of the department makes only $169,000 or so. He might be pleased to know that thanks to the incomparably generous leave policies offered by California’s public sector, the director was able to cash in roughly $80,000 worth of unused leave to boost his 2014 pay to $247,000, for a total compensation package of $302,000.

Mr. Toppin’s inaccurate testimony before the Senate committee fits a pattern best epitomized by the Legislative Analyst’s Office: “the overarching numbers given by Caltrans are not supported by data.”

Given the poor grasp on matters as straightforward as personnel costs, it is little wonder there exists deep skepticism about whether Caltrans is providing taxpayers with the best value possible for their tax dollars.

Robert Fellner is the Director of Transparency Research at the California Policy Center.

VIDEO: California Democrats trounce Republicans in legislative softball game

http://www.sacbee.com/news/politics-government/capitol-alert/article32439450.html

By Jeremy B. White

jwhite

California Democrats finally replicated their electoral dominance on the softball diamond, crushing their Republican rivals 24-10 during a Tuesday night charity softball match at Raley Field..

Despite controlling every statewide office and majorities in both houses of the State Legislature, Democratic lawmakers have consistently lost the annual legislative softball game. But they broke through this year, thanks in part to strong performances from most valuable players Freddie Rodriguez, D-Pomona, and Autumn Burke, D-Los Angeles.

The proceeds from the game go to the The Boys and Girls Club of Greater Sacramento. Organizers beat their goal of raising $20,000 by game day, pulling in at least $25,000 and selling a record number of tickets.

Jeremy B. White: 916-326-5543, @CapitolAlert

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MOORLACH UPDATE — Play Ball — August 25, 2015

We’re in the final three weeks of the Session. And there are two Special Sessions. The LA Daily News and the LA Daily Breeze point out that the bills proposed for the Senate’s Public Health and Developmental Services Committee (Special Session 2) seem to be experiencing an obvious bias. Their editorial piece is the first below.

The second piece is from the Associated Press and has hit a number of fine media outlets. You don’t have to be a serious sports fan to be familiar with Tony Gwynn and his early demise, attributed to baseball’s dirty habit, chewing tobacco. Fortunately, the Major League Baseball teams in California have responded with appropriate policy changes. So, making it a law seemed like an overstep. It is even an infringement over personal liberties. If you’re not concerned about the potential cancerous effects of tobacco on your body, who is Sacramento to tell you how to conduct your personal business?

Giving you something less to chew on made it to the San Francisco Chronicle, FOX News – Channel 11 – Los Angeles, ABC News – Channel 7 – Sacramento, Capital Public Radio, and The Washington Times

Since we’re talking baseball, the annual softball game of Republicans versus Democrats is this evening. I’ll be playing, so keep me in your thoughts and prayers.

LA Daily News

Dailybreeze_2

All developmental funding bills — even Republicans’ — should get a fair shot: Editorial

(Getty Images)

It surely looks as though partisanship is getting in the way of the state’s commitment to take care of its most vulnerable citizens.

We’d like to think that observation is mistaken, but so far all the signs are there.

While bills introduced by Democrats are sailing through the state Senate’s special session on health care and developmental services, a couple of GOP bills are languishing in inattention. In fact, they’re not yet even scheduled to be heard.

And one of those Republican bills offers the best hope for a quick, desperately needed boost in funding for developmental services. It’s the only bill that offers any hope for relief this year, in fact.

Senate Bill X2-4, by Sens. Jim Nielson, R-El Dorado, and Jeff Stone, R-Murrieta, directs that any state revenues above the amount projected in the state budget go to fund Medi-Cal and developmental services — after allocation of the amount required for schools under Proposition 98 and for the rainy-day fund under Prop. 2, of course.

And extra revenue has been flooding into the state treasury — $66 million more than was projected in July, the first month of the new fiscal year, according to the California Department of Finance.

SB X2-4 is a perfectly logical way to come up with some quick funding to prevent further deterioration in the hard-pressed developmental services system. It doesn’t take any budgeted funding away from any other area. It is only “extra” money that would be applied to these serious needs.

SB X2-11, by Stone, allocates any money saved by closing developmental centers to developmental services. There’s not much to argue against in that — other than that it won’t help until sometime next year.

And yet …

The bills are not yet even scheduled for their second readings before the Senate’s Public Health and Developmental Services Committee, according to the offices of the sponsors and Sen. Ed Hernandez, D-West Covina, chair of the committee.

Why not?

Last Wednesday five bills, all dealing with smoking and sponsored by Democrats, sailed through the health and developmental committee on party-line votes. On Monday, two bills by Hernandez and one by fellow Democrat Mike McGuire were to have their third readings, making them ready to be voted on.

The bills by Hernandez state the Legislature’s intent to properly fund Medi-Cal and developmental services. But they don’t come with any money.

SB X2-4 does.

We call upon Hernandez, an optometrist whose highest priority is health care, to bring SB X2-4 and SB X2-11 before his committee.

The bills would pass the body, we’re confident. SB X2-4, for example, is co-authored by all four Republicans on the committee — Sens. Nielsen, Joel Anderson, Mike Morrell and John Moorlach — so it would need ayes from just three of the nine Democrats.

Surely Hernandez would vote for it. So should Democratic Sens. Jim Beall, Isadore Hall, McGuire and Lois Wolk — each of whom signed Beall’s February letter in support of the Lanterman Coalition’s plea for a quick 10 percent funding hike and a sustainable restructuring of rates. (The Democrats on the committee who didn’t sign Beall’s letter, besides Hernandez, are Mark Leno, Holly Mitchell, Bill Monning and Richard Pan.)

If they don’t vote for it, we — on behalf of their constituents — will want to know why.

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California could ban smokeless tobacco in pro baseball

California lawmakers are voting to ban a once-common practice in Major League Baseball, the use of chewing tobacco.

The state Senate on Monday approved a bill prohibiting the use or possession of smokeless tobacco products on the playing field during a professional baseball game or practice.

Republican Sen. John Moorlach of Costa Mesa says professional baseball already voluntarily bans the product.

Democratic Sen. Mark Leno of San Francisco says AB768 puts a good practice into California law.

The measure passed 24-14.

Senators also approved prohibiting the sale of vapor products to anyone under age 18, even if they don’t contain nicotine.

Democratic Sen. Ed Hernandez of La Puente says vendors often target younger customers with candy-flavored vapors. The Senate passed AB216 on 35-2.

Both bills return to the Assembly.

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MOORLACH CALTRANS UPDATE — Dan Walters — August 24, 2015

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In Case You Missed It…

Dan Walters: California’s high fuel taxes and bad roads

Sacramento Bee
August 22, 2015
[Excerpts]

“A cogent – and perhaps unanswerable – question punctuates the political machinations over raising billions of new dollars to repair California’s deteriorating highways.”

“How is it that California motorists are paying some of the nation’s highest fuel taxes, but the highways they use are among the nation’s worst?”

“Including federal gas taxes, Californians are paying just under 61 cents a gallon, the fourth highest in the nation. That doesn’t include another dime a gallon in “cap-and-trade” carbon fees that, if added, would make California the highest-taxing state.”

“Meanwhile, data from the Federal Highway Administration place California’s highways as among the worst in physical condition.”

“The Legislature’s budget analyst says that Caltrans’ new construction units are overstaffed by 3,000-plus employees – which, of course, their union disputes. But it illustrates the culture – and perhaps siphons off money that should be spent on fixing roads we already have.”

“If Brown and legislators want motorists to pay even more – the lead Democratic bill would raise the gas tax by a whopping 12 cents a gallon – they should fess up on why maintenance has been neglected. They should also explain how they’ll keep it from happening again.”

CLICK HERE to read the full Dan Walters column.

See videos below of the Senate hearing for Senator Moorlach’s Caltrans reform bill.

VIDEO: Senator Moorlach Introduces Reform
VIDEO: Legislative Analyst Rips Caltrans Poor Accounting Practices
VIDEO: Caltrans Union Representative Struggles With Budget Data

If you would like to request an interview with Senator John Moorlach, please contact Amanda Smith at Amanda.smith.

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

MOORLACH CALTRANS UPDATE — Senate Hearing Video Clips — August 20, 2015

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#CALTRANS WATCH

August 20, 2015

VIDEO: Non-Partisan Legislative Analyst Exposes Caltrans for Shoddy Budget Practices, Poor and Inflated Data

Yesterday… the California State Senate held a remarkable hearing on Senator Moorlach’s Caltrans reform bill, where the non-partisan Legislative Analyst’s Office took the unprecedented step of exposing Caltrans for "poor" and "inflated" budget data.

  • Highlights of this presentation can be seen in this VIDEO.
  • Senator Moorlach’s presentation on his Caltrans reform bill can be seen HERE.
  • For even more fun, watch this VIDEO of the Caltrans Public Employee Union representative speaking against reforms, only to be discredited by actual data.
  • Watch this LINK where Committee Chair, Senator Jim Beall (D-San Jose), demands accountable data "before" dealing with the Caltrans budget.

FOR IMMEDIATE RELEASE: Aug 20, 2015
MORE INFORMATION, Contact Amanda Smith
Amanda.Smith

###

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About Senator John Moorlach (R-Costa Mesa):
State Senator John Moorlach represents the 37th District of California, is a trained Certified Financial Planner and is the only 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.
Follow him on Twitter and Facebook.
Copyright © 2015 Senator John Moorlach, District 37, All rights reserved.
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MOORLACH UPDATE — Pothole — August 19, 2015

It was a fun opportunity to present my first bill this morning. Including those who testified in support and opposition, it lasted nearly an hour. The members of the Senate Transportation and Infrastructure Development Committee asked good questions of me, a representative from both the Legislative Analyst’s Office and Caltrans. A representative of the Professional Engineers in California Government (PECG) also provided some fun discussion.

It became glaringly clear that Caltrans needed to be much more transparent. The discussion was very illuminating. And the votes went as predicted. The Republicans were supportive and the Democrats opposed.

The first piece below is from the Flashreport and it provides a great treatise on SBX1-9. It makes you wonder how someone could vote against the bill.

It is followed by our press release.

The second piece is from Digital Communities, which provides a discussion on how I spent yesterday afternoon: enjoying a hearing on drones flown at fires.

FLASHREPORT

…on California’s most significant political news…

Katy Grimes

The Road to Caltrans is Pitted With Potholes

Posted by Katy Grimes

As the California Legislature returned from summer recess yesterday, top on most political insiders’ minds is Gov. Jerry Brown’s special legislative session to increase taxes through approval of a group of transportation bills. Brown and Democrats claim the tax increases are needed ostensibly to improve California’s deplorable roads and crumbling bridges, long neglected by Caltrans. However, it was Brown who failed to properly fund transportation needs through the new budget – the largest state budget in California history.

Sen. John Moorlach R-Costa Mesa, says the “transportation” special session appears to be an exercise “designed to pressure legislators into supporting a tax hike on gasoline – even though Californians already pay the nation’s highest taxes.” And especially concerning is this regressive tax would hurt low income families, and the working poor the most. “How can you do this to the poor?” Moorlach asked. “This takes a larger percentage of their budgets.”

The Democratic Party claims to be for the poor, but continues to impose regressive, higher taxes that cannot be offset by higher hourly minimum wage or welfare benefits.

Moorlach, the Legislature’s only CPA, is correct. “We’re trying to say something needs fixing. You can’t have the highest tax rates and the worst roads,” Moorlach said in an interview Monday. “With 62 percent of Caltrans projects over budget, our Caltrans CEO isn’t really reining it in at all.”

“While we find that Caltrans has achieved some successes in delivering individual projects and has made minor improvements to the COS program in recent years, the program generally lacks accountability and is not operating efficiently,” the Legislative Analyst’s Office wrote in The 2014-15 Budget: Capital Outlay Support Program Review. “For example, the Governor’s proposals would result in the program being overstaffed by about 3,500 full-time equivalents (FTEs) beginning in 2014-15, at a cost of more than $500 million.”

Before the recent LAO report, the California State Auditor sounded the warning gong: “Based on our review of the data provided by Caltrans, 62 percent of the projects that completed construction in fiscal years 2007–08 through 2009–10 had support costs that exceeded their respective budgets. These overruns totaled more than $305 million of the $1.4 billion in support cost expenditures for the projects that completed construction during these fiscal years.”

These ignored warnings, together with Gov. Brown’s special session tax increase proposal, led Sen. Moorlach to introduce Senate Bill X1-9. It will be heard in the Transportation Committee’s Special Session meeting on Wednesday.

Senate Bill x1 9 prohibits the use of one-time, nonrecurring funds to support permanent ongoing state positions within the Department of Transportation. This bill also requires Caltrans to increase contracting for architectural and engineering services decreasing the use of permanent civil service positions for this workload.

Moorlach said his bill is about the breadth of contracting opportunities, and not about how the bidding process actually works.

However, “if no-bid contracting is something that Caltrans does as a policy, then there is even more restructuring that needs to be done within this agency,” Moorlach added. “According to Caltrans regulations on their own contracting policy, there are several stages of qualifying contracts and if Caltrans is following the process, then there are negotiations and the cost should be held to reasonable levels.”

Mismanaged Reckless, Unrestrained Caltrans

Caltrans is a mess. I’ve been covering the mismanaged agency for many years. In 2013, Caltrans Director Matthew Dougherty was reconfirmed by the Senate, despite overwhelming evidence of gross mismanagement during his leadership. It was under Dougherty’s watch and decades in management at Caltrans that many mishaps, corruption, mistakes and cover-ups have taken place. The San Francisco Oakland Bay Bridge, destroyed by the 1989 Loma Prieta earthquake, took 24 years and billions in cost overruns to rebuild. To this day, the faulty construction of the bridge is due to Caltrans gross mismanagement.

But it didn’t stop there with Caltrans’ reckless mismanagement:

* There were significant construction delays, new bridge cost overruns, the outrageous $10 million public relations contract, irresponsible vehicle purchases and vehicle rentals.

* There were Caltrans employees falsifying overtime and test data and stealing state property.

* There are more than 20,000 Caltrans employees making more than $100,000 annually.

* The Bay Bridge was so grossly neglected that the state auditor blamed $3.2 billion retrofit cost overruns in 2010 on the neglect.

“There is more. And it is all under the watch of acting Director Malcolm Dougherty.

A 2011 Senate Budget committee agenda addressing a contracting proposal shows committee analysis found contractors cost $243,000. However, if you read further, they acknowledge that better contracting could get the cost down to $209,000. That includes overhead calculations in full time employees totaling $96,000 a year.”

I wrote this in 2013. And yet today, in August 2015, the governor is proposing raising huge taxes to cover additional transportation costs for the transportation agency still operating under a cloud of mismanagement and corruption.

But even more telling are the outrageously poor rankings Caltrans has received over 20 years:

* Ranked 50th in overall highway performance and spending efficiency

* Ranked 49th for having urban interstates in poor condition

* Ranked 48th for having rural interstates in poor condition

* Ranked 48th for having rural arteries in poor condition

* Ranked 41st for having rural arteries with narrow lanes

* Ranked 35th for having deficient bridges

* Ranked 34th for having urban interstate congestion

According to Caltrans regulations on their own contracting policy, there are several stages of qualifying contracts and if Caltrans is following the process, then there are negotiations and the cost should be held to reasonable levels.

In June, Cathrina Barros, president of the Professional Engineers in California Government, the labor union for Caltrans engineers, claimed in an op ed that awarding contracts to private firms cost twice that than having the work performed by Caltrans employees. And again last weekend, she wrote a letter to the editor in Sunday’s OC Register Commentary Section attacking Moorlach’s bill. “I am honored to have the President of PECG go after me, falsely, but going after me all the same…”

“They argue that the cost per employee is less than that of private sector architects or engineers,” Moorlach said. “But, the union is relying on pre-1999 data, so the hefty pension plan contributions are understated in their numbers. Other studies suggest that the in-state employee costs may be higher when long-term pension costs and debt payments are fully considered.”

Moorlach explained that the benefit of outsourcing “is that you can quickly and adeptly expand or reduce the number of contractors. This is not as easily done with employees. Consequently, Caltrans has 3,500 more employees than it needs. A simple calculation of this opportunity cost, of roughly $500 million per year, brings the costs to $143,000 per employee.”

The committee analysis on Moorlach’s bill says that state staff costs $158,000 per employee per year. “The low-state numbers are usually averages of all ranges of state engineer costs and do not reflect the higher costs of specialized needs that a contractor can provide with more flexibility,” Moorlach said. “Further, when a contract is complete, there are no lingering costs. But when state employees are hired for long-term positions, Caltrans cannot justify their salaries when they are not working on actual projects.”

Moorlach said given the mismanagement within Caltrans, cutting costs is a much better option that should not be passed over.

Moorlach’s Senate Bill X1-9, the Responsible Contracting for Caltrans Act. It addresses the glaring flaws at Caltrans:

1. CA’s gas taxes are the 4th highest in the nation. According to the American Petroleum Institute, California’s 61-cent-per-gallon gas taxes are the 4th highest in the nation, behind only Pennsylvania, New York and Hawaii. This does not include the recent addition of extra cap-and-trade taxes resulting from bringing fossil fuels under California’s AB 32 law.

2. CA’s gas prices are the nation’s highest.

According to AAA, the current national average price for a gallon of ‘regular’ gasoline is $2.63. California’s current average price is $3.69 per gallon (as of 8/5/15).

3. CA’s gas tax & transportation fees yield $10.6 billion annually. According to the State of California, Department of Transportation, Division of Budgets, 2014/2015 Fiscal Year estimates, the State brings in at least $10.6 billion in taxes and fees “dedicated to transportation purposes.”

4. Caltrans spends just 20% of that revenue on state road repair & new construction. Last year, Caltrans spent $1.2 billion in state road maintenance & repair, and $850 million in new construction. Similar amounts are planned for the 2015/2016 CA State budget.

5. Caltrans wastes half a billion dollars annually on extra staffing.

6. CA’s roads rank near the bottom in every category, including:

7. Poor road conditions cost Californians $17 billion yearly in vehicle repairs, $702.88 per motorist.

8. 34% of CA’s major roads are rated to be in “poor” condition.

“I’ve run a department,” Moorlach said. “Nearly every metric that I’ve reviewed coming out of Caltrans has been screaming for a reorganization of this agency. With an opportunity to provide them with another $6 billion per year, it would be a great move on the part of management and the PECG union to educate the public on how it will efficiently manage this potential income stream with the lowest overhead expense ratio possible.”

Moorlach added: “Reducing Caltrans’ bloated size before proposing that California families pay even higher taxes to fix our roads is the right thing to do.”

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FOR IMMEDIATE RELEASE: August 19, 2015
CONTACT: Amanda Smith, Amanda.Smith (949) 223-5037

BREAKING NEWS

Unprecedented Senate Hearing Exposes Caltrans for Mismanagement and Lack of Budget Transparency

“Data is poor or inflated that the Department is using in their zero-based budgeting.”
– Legislative Analyst’s Office

“The overarching numbers given by Caltrans are not supported by data.”
– Legislative Analyst’s Office

“There are problems getting data, and that has to be fixed.”
– Senator Jim Beall (D-San Jose)

(Sacramento, CA) – In a rigorous discussion today during the Senate Committee on Transportation and Infrastructure Development over Senator Moorlach’s SBX1-9 (Responsible Contacting for Caltrans), the discussion quickly shifted focus to Caltrans’ lack of transparency, poor budgeting and mismanagement of funds.

Trained as a Certified Public Accountant, Senator Moorlach pointed out, “We’re generating among the highest revenues for our roads, and yet have some of the nation’s worst road conditions. This and other available data indicates a very clear and pressing need for oversight and reform at the California Department of Transportation.”

Jessica Peters, Principal Fiscal and Policy Analyst with the Legislative Analyst’s Office (LAO) said, “Data is poor or inflated that the Department is using in their zero-based budgeting.” Peters later testified that, “the overarching numbers given by Caltrans are not supported by data,” and Peters indicated Caltrans does not actually have a an adequate data collection system.

Several Senators on the committee expressed their frustration at the lack of data and transparency, including committee chair, Senator Jim Beall (D-San Jose), who declared, “There are problems getting data, and that has to be fixed.”

In response to SBX1-9, which highlights an LAO audit finding that Caltrans is overstaffed in its planning and engineering staff by roughly 3,500 employees, costing taxpayers approximately half a billion dollars a year, Ted Toppin of the Professional Engineers in California Government (PECG) stated, “There is not overstaffing in the department” (VIDEO of statement HERE).

However, Toppin failed to provide hard data to substantiate this claim. The non-partisan LAO challenged Toppin with findings from their review of Caltrans, pointing out that, after accounting for vacant positions and other attrition, they believe Caltrans to currently be overstaffed by 3,300 employees, as they have reduced their workforce by only 178 positions in the past year.

Senator Moorlach then presented a long list of troubling economic data regarding Caltrans. Toppin responded by saying that the Senator’s data “made no sense to me whatsoever.”

Senator Moorlach concluded by stating, “The Caltrans union failed to address the most basic question, which is why Californians pay the most, but get the least for their road money. And they never directly answered the question about being overstaffed by 3,500 positions.”

“Another problem, and again a sign of needed reform, is that it has been very difficult to get accurate data from Caltrans,” continued Senator Moorlach. “If Caltrans will be more forthcoming with the data, then we can begin to understand where the needs are.”

Video clips of the hearing will be posted, as they become available, on Senator Moorlach’s YouTube Channel: https://www.youtube.com/channel/UCjMDeyoFbh-TcQiWCTvCEug

###

About Senator John Moorlach (R-Costa Mesa):
State Senator John Moorlach represents the 37th District of California, is a trained Certified Financial Planner and is the only 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.
Follow him on Twitter and Facebook.

Digital Communities

Lawmakers, Drone Advocates Disagree Over UAVs Impeding Firefighting Efforts

Though the FAA is expected to address emerging safety issues when it adopts regulations to incorporate drones into the national airspace, an action expected in early 2017, California lawmakers might consider taking action on its own.

By Timm Herdt, Ventura County Star

Just this summer in California, there have been a dozen incidents in which drones flying over wildfires have caused delays or interruptions in airborne firefighting activities, and CalFire Chief Ken Pimlott told lawmakers Tuesday he fears a collision is inevitable unless strong action is taken.

Brandon Schulman, an executive with DJI Technology, a leading drone manufacturer, offered a very different story.

Last year in Connecticut, he said, a drone hobbyist flew his aircraft over a quarry fire and was able to provide video showing the location of explosives inside the quarry, allowing firefighters to extinguish the blaze safely.

Those two stories represented the extremes of a situation explored by a joint legislative committee at a hearing designed to examine what state Sen. Hannah-Beth Jackson described as “the good, the bad and the ugly” of the use of drones in emergency situations.

Jackson, D-Santa Barbara, chaired a hearing that was inspired by a rash of incidents this summer, including a 20-minute delay in fighting a San Bernardino County fire that soon thereafter jumped Interstate 15 and set fire to 20 vehicles and a near-miss in Fresno last week in which a helicopter carrying a patient to a hospital narrowly avoiding colliding with a drone.

Tuesday’s hearing came as lawmakers are considering legislation to establish steep penalties against drone operators whose aircraft interfere with emergency operations and pondering other possible actions, such as requiring operators of unmanned aircraft to first obtain a license.

“We cannot afford to delay any further this discussion,” Jackson said.

The committee heard testimony from 16 witnesses, including fire and law enforcement officers, drone enthusiasts, a representative of NASA and a co-founder of Drone University, an institution that offers training in drone operations.

It was evident that the training and qualifications of drone operators varies wildly.

Ventura County Sheriff’s Office Cmdr. Chris Dunn testified that his agency, one of the first nationwide to receive Federal Aviation Administration approval to operate a drone throughout its jurisdiction, has established rigorous safety standards. They include always keeping the craft within line of sight of the operator, contacting local airport control towers before a drone is launched, initiating radio contact with pilots if an airplane is sighted and grounding the aircraft if another unmanned vehicle is spotted in the air.

In contrast, said Bruce Parks of the Silicon Valley chapter of the Association for Unmanned Vehicle Systems International, many amateur operators are clueless about what safety precautions they should be taking.

“Some of these hobbyists,” Parks said, “they really don’t get that they’re flying an aircraft.”

Lawmakers on the panel made clear they have little patience with irresponsible operators.

Sen. John Moorlach, R-Costa Mesa, wanted to know whether any of the operators who interfered with firefighters have been apprehended and asked, “Where was your common sense?”

Sen. Richard Roth, D-Riverside, a retired Air Force general, said pilots such as himself are frightened by the prospect of colliding with a drone.

“They’re not toys anymore,” Roth said. “I’m not sure we shouldn’t have training for these operators.”

Many of the emerging safety issues are expected to be addressed by FAA when it adopts regulations to incorporate drones into the national airspace, an action expected in early 2017.

But lawmakers heard several suggestions Tuesday that California might consider taking on its own, such as requiring drones to be equipped with transponders that would allow emergency personnel to immediately identify their owner, requiring owners to undergo training and receive a license before being allowed to operate a drone and enacting stiff penalties for irresponsible operation.

“Up until now, it’s been the Wild, Wild West out there,” said Assemblyman Jim Cooper, a former Sacramento County sheriff. “It can’t be that way. Public safety trumps the private right to fly a drone.”

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

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#CALTRANS WATCH

The Caltrans Record:
The Facts vs. PECG Statements

Experienced Sacramento watchers told me that I was going against a very powerful public employee union with SBX1-9. I am persistently being told that the Professional Engineers in California Government (PECG) union runs Caltrans.

Ray Flores, President of PECG, wrote a response to my latest Orange County Register op-ed, "Caltrans needs to go on a staffing diet." In his response, there are several misleading statements.

PECG STATEMENT: “It is more than a little surprising that an Orange County Republican legislator would author a bill that would eliminate competitive bidding and mandate the waste of taxpayer funds.”

FACT: SBX1-9 does not address the topic of competitive bidding. Instead, it addresses the breadth of contracting opportunities, stops one-time funds from being used to hire long-term employees, and increases the percentage of work to be contracted out.

PECG STATEMENT: “This year’s state budget shows that, when Caltrans outsources an engineering job for a year, it costs $237,000. Having the same work performed by an engineer employed by and loyal to the public costs $116,000.”

FACT: In the Senate Transportation and Infrastructure Development Committee analysis, it states, “COS (Capital Outlay Staff) staff cost $158,000 per year while contract staff cost $243,000.” This is consistent with a 2011 Senate Budget analysis which further acknowledges that better contracting could get the cost down to $209,000. That number does not include additional overtime calculations in full-time employees totaling $96,000 a year.

We also found a comprehensive study, which puts the numbers much closer together, with an in-house engineer’s compensation ranging from $173,434 to $209,212, and an outside engineer averaging at $193,000. Both the LAO Report and the State Auditor call out Caltrans for their poor data and PECG, not knowing the salary of their own members, shows how much Caltrans is in need of accountability.

PECG STATEMENT: “Why does it cost so much more to outsource the work? One reason is that the contracts are not competitively bid. Construction contracts are awarded to the qualified firm with the lowest cost to the taxpayer. However, engineering services contracts, such as design and inspection, are outsourced without competitive bidding. The agency can pick whatever contractor it wants, regardless of cost. No wonder it costs twice as much!”

FACT: For Architectural and Engineering contracts, Caltrans is required to:

  • Make a public announcement requesting Statements of Qualification and Performance Data;
  • Establish criteria to comprise the basis for the selection of a firm for each project;
  • Estimate the value of services;
  • Issue a public announcement for Requests of Qualification;
  • Conduct a selection process during which firms are evaluated, discussions must be held with at least three firms, and from the firms with which discussions are held, the Director shall select no less than three, in order of preference, based upon the established criteria, that are deemed to be the most highly qualified to provide the services;
  • The Director shall attempt to negotiate a contract with the most highly qualified firm.

It appears that there is at least a decent qualifying process for bids, but if there are problems with the Caltrans bidding process, I am happy to author a bill to address it.

While I’m glad to receive PECG’s attention, unsubstantiated data and a complete lack of familiarity with the contracting process is a pretty weak response.

The problem is obvious. Before the legislature imposes an increase of fees and taxes on Californians, we must improve Caltrans.

Flexibility over contracting is a REASONABLE APPROACH to fixing our roads and saving money.

About Senator John Moorlach (R-Costa Mesa):
State Senator John Moorlach represents the 37th District of California, is a trained Certified Financial Planner and is the only 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.