MOORLACH UPDATE — Other’s Senate Bills – 1286, 443, and 899 — April 18, 2016

In Sunday’s edition, the OC Register had two pieces on legislation being debated in Sacramento. Sometimes it feels like little attention is paid to the state legislature by our local newspapers, so I’m excited to see both of them.

The first is from the Commentary section. Being new to the Senate, I do not co-author very often. And, it is very rare that I would co-author a bill that is being carried by someone on the other side of the aisle.  But, after working on establishing the Orange County Office of Independent Review and becoming familiar during that process with terms like “code of silence,” I decided to accept Sen. Leno’s invitation to participate.

For a sampling of my history in this area, go to MOORLACH UPDATE — Property Tax Due Date — April 10, 2013 John Moorlach and read the column by Michael Capaldi, titled “Moorlach’s Mad Motivation,” and the OC Register pieces, titled “D.A. says deputies’ actions were ‘shocking and unacceptable’ – But Rackauckas says 9-month grand jury probe of jail beating death did not find evidence of criminal wrongdoing by sheriff’s personnel” and “Five placed on leave in wake of report on jails – Acting sheriff calls in FBI to look at jails; supervisor says report shows ‘clear case of human failure.’”

SB 1286 addresses peace officer misconduct.  To improve our public safety agencies and to enhance trust by the public in these agencies, making the proposed legislative changes is the appropriate course to take.

The column also deals with SB 443.  I voted for this bill on the Senate Floor on June 3rd of last year.  I have been consistent on asset forfeiture with my votes as a County Supervisor.  I do not condone it until the party has been convicted of the crime.  SB 443 failed on the Assembly Floor last year (see MOORLACH UPDATE — Bill Killer — October 10, 2015 John Moorlach).

This week SB 899 came before the Judiciary Committee.  I have never had a conversation with anyone about the subject of women paying more for certain products than men.  I must confess that my first interaction on this topic was Tuesday afternoon.  I expressed my concern that no one is forced to purchase certain products.

Where prices and fees are discriminatory, like for certain medical appointments, then I concur with the intent of the bill.  I am sure the concern is genuine, but isn’t Sacramento already piling enough onto our business communities?  I fear for the many retailers that will shut their doors as a result of the recent minimum wage increase, let alone a new pricing police.  This is the subject of the front-page, top-of-the-fold, story which is the second piece below.

The third piece is from CalPensions, which is also provided by PUBLIC CEO, on the need for pension transparency.  My SB 1251 is trying to do this (see MOORLACH UPDATE — Tim Clark — April 13, 2016).

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Some in GOP yield to Sacramento’s secrecy lobby

By STEVEN GREENHUT / Contributing columnist

Sacramento – In one of my favorite “Far Side” comic strips, the first panel offers what people typically say to dogs: “OK Ginger I’ve had it. You stay out of the garbage! Understand Ginger?” The next panel translates what dogs actually hear: “Blah blah Ginger, blah blah blah Ginger.”

I think of that comic sometimes when I’m stuck on the floor of the state Assembly or Senate and hear a Republican legislator giving a speech about “freedom.” All I hear is, “Blah blah Constitution, blah, blah limited-government.” My comprehension skills are better than the average mutt’s, but I’m trained to know blather when I hear it.

On two of the clearest liberty issues to come before the Legislature in recent years, most Republicans have sided with big-government secrecy. Those issues are back this year in the form of Senate Bill 1286, which calls for transparency by California’s law enforcement agencies, and SB443, which reins in some of the government’s most corrupt property-taking tactics.

Because of a 2006 state Supreme Court decision, Californians have had virtually no access to information about police officers who may have engaged in pattern of misbehaviors or who have been involved in multiple shootings. In Copley Press v. Superior Court, the San Diego Union-Tribune sought access to the disciplinary hearing of a San Diego deputy sheriff who appealed his termination.

The far-reaching ruling blocked the public’s access to information that previously was available and that remains widely accessible in most other states. A 2010 report by the Investigative Fund found that 25 of 27 Fresno police officers who were involved in repeated shootings remained on the force. TheCopley decision meant the public had no right to learn who they were. That can allow bad officers to fester within a department.

In Tuesday’s hearing, Sen. Mark Leno, D-San Francisco, stood up for accountability, while Sen. Jeff Stone, R-Riverside County, did not. “This is not an anti-law-enforcement bill,” Leno said. “This bill is not opening all personnel files for public consumption. It’s an attempt to rebuild community and police trust through greater public access to sustained charges of egregious law-enforcement conduct.”

Perhaps the nation wouldn’t be facing so much turmoil over police use-of-force issues if there were fewer union prerogatives and more accountability. The bill recently was amended to deal solely with public records (and not personnel hearings), but even that won’t mollify the “secrecy lobby.”

“People need to be proven guilty before we disclose their identity and potentially enrage the public,” Sen. Stone said.

However, members of myriad professions have their disciplinary proceedings open to the public. We mere citizens could have allegations publicly raised against us (in a court proceeding, for instance) before any finding of guilt.

On the encouraging side, Sen. John Moorlach is a co-sponsor of SB1286. The Costa Mesa Republican also supports reform of the asset-forfeiture process by which police agencies grab the property of citizens who have never been convicted, or even accused, of a crime. The process was designed to battle drug kingpins but has morphed into something despicable.

“The tactic has turned into an evil itself, with the corruption it engendered among government and law enforcement coming to clearly outweigh any benefits,” two U.S. Justice Department officials, who developed the program in the 1980s, wrote in a 2014 Washington Post column. New Mexico’s governor last year limited the practice after a city attorney was taped bragging: “We could be czars. We could own the city. We could be in the real estate business.”

California’s current law has some fairly tough restrictions on these takings, so local agencies partner with the feds and operate under more lenient federal laws. Then they split the loot. SB443 would shut down that loophole. Last year, the bill had widespread support, but then police agencies – fearing a loss of revenue – began arm-twisting at the Capitol.

Only a handful of Republicans held firm in the final vote, with Orange County putting in the best showing. Assemblymen Bill Brough, R-Dana Point, and Matt Harper, R-Huntington Beach, were two of only four Republicans in the Assembly who voted “yes” on a bill that did little more than uphold the Fifth Amendment’s requirement for due process.

Politicians from the party of Reagan and Lincoln should instinctively know the dangers of giving government officials unaccountable power. That so few of them do is a reminder that, when many of them talk about liberty, all the rest of us should hear is “blah, blah, blah.”

Steven Greenhut is Western region director of the R Street Institute. He was a Register editorial writer from 1998-2009. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

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‘Pink tax’ coming under fire

Women’s products costlier than men’s, research shows.

By TERI SFORZA

That adorable bike helmet for little boys, with the stuffed shark protruding from the top? It cost $14.99 at Target.

That adorable bike helmet for little girls, with the stuffed unicorn protruding from the top? It cost $27.99 at Target.

And so it goes for toys, clothing, shampoo and even adult diapers, according to a recent government investigation that is adding momentum to a push to outlaw so-called gender pricing on a wide array of consumer products in California.

Across several industries, items targeted for female consumers cost 7 percent more on average than nearly identical products marketed for male consumers, according to the examination of online and in-store prices by New York City’s Department of Consumer Affairs.

“(P)rice conscious female shoppers may not know that, for discounts, they need look no further than the men’s department,” the report said.

Consumer advocates call it the “pink tax,” a pricing disparity that follows women from cradle to grave and costs them thousands of dollars over the course of their lifetimes. The mounting data on the pink tax have become Exhibit 1 in a Sacramento drive to prohibit such differential pricing.

Senate Bill 899, sponsored by Consumer Federation of California, would extend the state’s ban on gender-based pricing for services (haircuts, laundry, dry cleaning) to products (toys, clothing, personal care items).

The bill, supported by a coalition of women’s, consumer and civil rights groups, sailed out of the Senate Judiciary Committee on a 5-1 vote last week. The only dissenter was Orange County Sen. John Moorlach, R-Costa Mesa.

“I believe we have a free market, and I believe that we’re not forced to purchase certain products,” Moorlach said. “You charge what the market will bear. If you don’t want to buy it, you don’t buy it. In retail, you price it for profit – supply and demand holds.”

OPPOSITION

The business-friendly California Chamber of Commerce has branded the bill a “job killer” and is pushing for its defeat. The California Retailers Association said it’s unworkable and will result in confusion, inaccurate pricing and increased costs.

Opponents also include the California Grocers Association, the New Car Dealers Association, the Toy Industry Association and the Civil Justice Association of California, which fears that the bill would open the floodgates to lawsuits, which would be consumers’ main avenue of redress under the bill.

The retailers’ group argues that product pricing depends on many, sometimes invisible, factors. They can include the costs of design, development, labor, packaging, shipping, tariffs, marketing and merchandising. And those costs often differ between products targeted for men and women, the association says.

The group’s members, including department, drug and grocery stores, don’t discriminate based on a person’s gender, said spokeswoman Margaret Gladstein.

“Do we price different items differently based on a variety of other factors? Absolutely.

“From store to store and day to day, prices change,” Gladstein said. “You could go to a Target and find that pink scooter at one price, then go to another Target down the road and find that same scooter on sale, based on the inventory and products that that store has available.

“What we’re trying to do is provide our customers with as many choices and as many products as possible. They can choose the least expensive option, or go to another store.”

Opponents warn that the bill, which would permit consumers to recover $4,000 in civil penalties for each pink vs. blue violation, would lead to a rash of legal demand letters from opportunists.

They draw ominous comparisons to what critics have called “legal extortion” encouraged by the federal American Disabilities Act. Using the act, they argue, attorneys have collected thousands of dollars in settlements from businesses to forgo lawsuits over lack of handicapped parking spaces or wheelchair access. Businesses in Brea and elsewhere grappled with such threats in recent years.

The California Chamber of Commerce argues that SB899 leaves retailers and grocers with stark choices: try to identify products specifically targeted at males and females and re-price substantially similar goods to an equal, higher amount; or simply increase the price of all substantially similar goods to the same, higher amount.

“Neither of these options are beneficial to the consumer,” the chamber wrote recently to lawmakers.

SUPPORT

The bill’s sponsor, Sen. Ben Hueso, D-San Diego, said the pink tax is unfair and discriminatory and lawmakers must fix it.

“If this law is passed, it will change practices in California that will affect people’s lives, and will affect people’s pocketbooks, and will affect the products that they buy,” he said.

Hueso held two disposable razors aloft at the Senate Judiciary Hearing. Each was purchased in the same store at the same time, he said. Each was made by the same manufacturer, was of the same brand, and was identical in every respect – except that the one made for men was blue, and the one made for women was pink, he added.

“The men’s was $7.99 for a 12-pack,” Hueso said. “The women’s was $12.99. That’s a $5 markup, for the exact same product.”

At the same time, he said, he is working with the business groups to refine SB899’s language.

His bill already has been amended to clarify that similar razors of different brands would not have to be price-matched, but that the same razors from the same manufacturer of the same brand would.

Richard Holober, executive director of the Consumer Federation, said with exasperation that a Levi’s One Pocket Boyfriend Shirt has been marketed to women for $78. Their boyfriends, he said, could buy a nearly identical shirt for $48.

“Add the word ‘boyfriend’ and put the shirt on a woman, and the price goes up by $30,” Holober said. “Businesses have figured out, through a lot of research, how to extract extra dollars by giving products a veneer of being designed especially for girls or women. But that’s not right.”

Supporters of the Hueso bill include the American Civil Liberties Union of California, California Public Interest Research Group, the Older Women’s League Sacramento Capitol Chapter and Women’s Foundation of California.

“The combination of gender-based differences in consumer prices and the gender wage gap is a double-edged sword: Women face higher expenses than men and at the same time are paid less,” the Equal Rights Advocates group wrote in a letter of support to lawmakers.

“Women working full-time in California make an overall average of 84 cents on the dollar when compared to full-time working men, and the wage gaps are far worse for women of color. … This means that on top of losing $39 billion a year to the gender wage gap, Californian women and girls are collectively spending in excess of $41 billion more than boys and men to purchase things that everyone needs.”

NEXT STEPS

The bill will advance to the full Senate and, if approved by the full body, will move to the Assembly. If it prevails there, it will proceed to the governor’s desk for his signature.

Hueso said the bill is the logical extension of California’s Gender Tax Repeal Act, a 1995 law making it illegal to discriminate against women in the pricing of services. It prohibits a dry cleaner from charging more to press a plain white shirt for a woman than to press a plain white shirt for a man. But the dry cleaner can charge more to press a shirt with ruffles or bows or beads, as it requires extra work.

That law hasn’t unleashed a flood of lawsuits, Hueso said. Supporters and opponents could point to fewer than five over the course of more than 20 years.

It’s time to include goods in the pink tax ban, Hueso said. “This bill will provide an additional tool to individuals fighting for their civil rights, to combat gender pricing of consumer goods,” he said.

Contact the writer: tsforza@ocregister.com

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Pushing the case for cost-cutting pension reform

POSTED BY : 

A leading advocate of the view that public pensions are alarmingly underfunded thinks rising costs could, in the next five to ten years, push some cities into bankruptcy and some states into insolvency.

Joshua Rauh, a Stanford University finance professor, said in a new study issued by the Hoover Institution that 564 state and local pensions systems reported a “net pension liability” of $1.2 trillion under new government accounting rules.

But Rauh believes the debt is nearly three times larger, $3.4 trillion, because the pension systems, even under the new rules, use an overly optimistic annual earnings forecast, 7.4 percent, for investments often expected to pay two-thirds of future pensions.

Rauh used a 3 percent risk-free Treasury bond rate. That not only follows the basic principles of finance, he said, but is more realistic given low interest rates, the failure of pension funding levels to recover after a major bull market, and other factors.

“More and more money is going to have to go into these funds, and you are going to see more and more bankruptcies along the likes of Detroit, San Bernardino, Stockton, California,” Rauh told CNBC last week. “And over a five- to ten-year horizon, I would expect there to be a number — many, many more cities going bankrupt and many states that are insolvent.”

Most state and local governments in the nationwide study contribute 7.5 percent of their revenue to pensions, Rauh’s study concluded, but need to contribute 17.5 percent to keep pension liabilities from rising.

“Even contributions of this magnitude would not begin to pay down the trillions of dollars of unfunded legacy liabilities,” he said. None of the “50 worst cities” listed in the study, ranked by additional contributions needed to prevent more debt, are in California.

An oncoming wave of bankruptcies may be an extreme view, not to mention a 3 percent long-term earnings forecast. But a Citigroup study last month shares Rauh’s view that exposing “hidden” pension debt is a first step toward public pension reform.

Citigroup estimates that the total unfunded government pension liabilities for 20 industrialized countries is a “staggering $78 trillion,” nearly double the $44 trillion they have reported.

“Making these contingent liabilities more clear or complete is the first step towards further pension reform to address the increased risks from a rising dependency ratio (retirees vs. active workers) and a rising cost burden of public pension systems,” said Citigroup.

Last week, a state Senate committee rejected a bill requiring the nonpartisan Legislative Analyst’s Office to create an internet website listing major state debt, including pensions and retiree health care, that also would be shown on a page in the ballot pamphlet.

State Sen. John Moorlach, R-Costa Mesa, said his “California Financial Transparency Act” (SB 1251) would give voters “basic reliable nonpartisan financial information” as they consider bonds, spending measures, and candidates.

Moorlach, an accountant and financial planner known for predicting that risky investments would lead to the Orange County bankruptcy in 1994, created a website to show what the basic financial information might look like.

The bill, rejected on a party-line vote, was opposed by public employee unions who argued that ballot measures have a nonpartisan financial analysis and that the broad debt numbers have no direct relation to ballot measures, lack context and might confuse voters.

Pension debt can seem distant, with most bills not due for decades, and unpredictable or even unknowable as the reported unfunded liability swings up and down with the stock market and the yield from huge investment funds.

The bite taken from employer budgets by annual contributions to the pension funds is less abstract. Some call it “crowd-out” as growing pension costs reduce the money available for basic government programs, services and personnel.

Stephen Eide of the Manhattan Institute issued a California Crowd-Out” study last year that found, among other things, government staffing in December 2014 remained 8 percent below the December 2007 level, while private-sector jobs were 2.4 percent higher.

The “crowd-out” from pension and retiree health care costs was an issue as voters in San Diego and San Jose overwhelmingly approved cost-cutting pension reforms four years ago.

The ballot pamphlet argument in San Diego said Proposition B means more money for “fixing potholes and street repairs, maintaining infrastructure, restoring library hours, and re-opening park and recreation facilities.”

In San Jose, the ballot argument for Measure B said: “Retirement costs consume more than 20% of the general fund and are projected by independent actuaries to increase for years. This is unsustainable.”

With “spiking,” pension excess becomes even less abstract and gets a face. For example, an Orinda-Moraga fire chief, who retired in 2009 at age 50 with a pension much larger than his salary, told the Wall Street Journal he was a “poster child” for spiking but didn’t make the rules.

Last September, the Contra Costa pension board voted to reduce Peter Nowicki’s initial pension, $240,923 a year, to an amount, $172,818, that is below his final base pay, $193,281.

A review by a law firm found that Nowicki, with two contract amendments, inflated the final pay used to calculate his pension, mainly by cashing out unused vacation time with smaller amounts from holiday, terminal and retroactive base pay.

Manipulating final pay to improperly boost pensions is a common spiking method, surfacing sporadically in well-publicized incidents over the past half century. The two big state pension systems, CalPERS and CalSTRS, both have anti-spiking units.

Implied pension excess surfaces in several ways. The Los Angeles Times reported this month that at least 17 legislators including Moorlach are “double-dipping,” collecting their state salaries and a public pension from another government job or office.

The “$100,000 pension club” of retirees with big pensions was posted on the internet a decade ago by a reform group led by Marcia Fritz. Another group, Transparent California, now has a searchable database of state and local government pay and pensions.

“The main thing is to engage people when you talk about pensions, because it’s boring to people,” Fritz, president of the California Foundation for Fiscal Responsibility said in 2011. “When we put the list up, it was the same reaction as ours — unbelievable.”

Whether through debt, crowd-out or excess, the public seems to have received a message about pensions from somewhere.

A statewide Public Policy Institute of California poll issued in January 2014 found that 85 percent of likely voters think the amount of money spent on public pensions is somewhat of a problem and 73 percent support switching new hires to a 401(k) plan.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com.

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

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