MOORLACH UPDATE — Stormy Weather — January 12, 2017

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

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

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

California Watch

Stormy Weather: Brown’s Budget Holds Infrastructure Hostage

  • Read online here:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

California Legislature doesn’t understand the art of the deal

By JOHN MOORLACH

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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