Protecting taxpayers in a time of crisis

By Jon Coupal | The word “unprecedented” is fitting for the coronavirus crisis that is now savaging both the health of countless Americans as well as our nation’s economy. |

Not since September 11th has the United States faced such a challenge.

In reaction to the outbreak, healthcare professionals have emphasized the importance of speed. Dr. Michael Ryan, Executive Director of the World Health Organization, who has seen more than his share of epidemics, advised “Be fast, have no regrets. You must be the first mover. The virus will always get you if you don’t move quickly. If you need to be right before you move you will never win. Perfection is the enemy of the good when it comes to emergency management,” he said.

In a few weeks, or perhaps longer, we will be able to assess whether our health care response to the virus, including quarantines, social distances and “sheltering in place,” was overkill or not enough. But everyone, at this point, seems to fully grasp the concept of “better safe than sorry.”

The same philosophy seems to be applicable to the economic crisis as well. The immediate reaction from our political leaders has been to do something – anything – and do it fast. At the federal level, there has already been bipartisan support for a preliminary bailout of $1 trillion. For those of us who are fiscal conservatives, the headlong rush to add to the existing mountain of federal debt is deeply disturbing.

At the state level, Gov. Gavin Newsom has taken aggressive action on the health care front but also has signed into law (or issued executive orders) designed to lessen the economic damage. While some of these policies are understandable under the circumstances, the interests of taxpayers and property owners do not seem to be getting the same level of concern as other interests.

To read the entire column, please click here.

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Money can’t buy love, or elections

By Jon Coupal | Of the many conclusions that can be drawn from the March primary election in California, perhaps the most notable is that money doesn’t always translate into political success.

Let’s start with the “bad” Proposition 13 — the $15 billion statewide school bond measure which, at this writing, is way behind in the polls. The Associated Press has already called the election for the opponents.

The proponents of the bond had a lot of things going for them including the vocal support of the governor, education interests, public sector unions and developers. They also had a sympathetic purpose. Raising money for schools has traditionally been easy in California because education ranks very high in importance among the state’s voters. The slogan “it’s for the kids” may be overused, but it can still be effective.

The proponents also had something else which should have translated into a huge advantage: Lots of campaign cash. Although all the financial filings with California’s secretary of state are not yet publicly available, the proponents spent at least $10 million and perhaps much more than that to push their messaging.

Slick television ads claiming crumbling schools, lead in the pipes and asbestos in the ceiling tiles were intended to push the sympathy buttons of concerned voters.

To read the entire column, please click here.

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COVID 19 will eventually end — our pension problem will not

By David Crane | In addition to its regular pension spending, the State of California is providing an extra $12 billion over a four-year period to boost the assets of the state’s two pension funds (CalPERS and CalSTRS) in an effort to reduce future pension spending. But the impact will be negligible. That’s because pension liabilities will grow >10x as much over the same period. 

Pension liabilities grew >$300 billion from 2009 to 2018: 

That growth is automatic because California’s pension funds suppress the true value of pension liabilities when they are first created, as explained here. Even a tripling of the stock market and a tripling and doubling of pension spending by schools and governments couldn’t boost pension assets enough to keep up:

As a result, the difference between pension liabilities and pension assets (“Unfunded Liabilities”) nearly tripled:

Pension costs for schools and governments rose alongside, forcing schools to lay off teachers, shut programs and provide insufficient raises for young-in-career teachers. But you ain’t seen nothin’ yet.

In 2010, I published a Wall Street Journal op-ed entitled Dow 28,000,000: The Unbelievable Expectations of California’s Pension System that explained the levels stock markets must reach to meet the projections employed by California’s pension funds. Failure means both increased tax payments and reduced government services — as amply demonstrated by school strikes and layoffs despite major tax increases in 2012 and 2016.

It is only a coincidence that this note is being written during a sharp market decline, which is largely irrelevant to what will continue to be an upward curve of pension spending. That’s because the Dow Jones Industrial Average would already have to be at >50,000 for state pension funds’ expectations to have worked out. 

More money from taxpayers will not solve the pension problem. At this stage only a reduction in liabilities will work.

That means a suspension in automatic benefit increases and a reduction in benefits for years not yet worked. But elected officials in California have been too afraid of government employee unions to act.

The only way that will change is through persistent and permanent protection of lawmakers who legislate in the general interest.

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Sending a message on taxes

By Joel Fox

There’s somethin’ happening here;
What it is ain’t exactly clear.
There’s a man with a TAX over there,
Telling me I got to beware.
(With apologies to Buffalo Springfield) 

There is something happening here in California on the bread-and-butter issue of taxes, a possible shift in the state’s political orbit, for it seems that voter-approved tax increases may not be a near sure thing anymore. 

Remember last year when Measure EE, a tax to help fund Los Angeles schools, was defeated? Experts were surprised. The Los Angeles teachers’ union had just come off a successful strike which, on the surface, seemed to garner much sympathy from the residents of the community. Schools have a strong appeal to voters and the tax increase, backed by Mayor Eric Garcetti and the city’s political establishment appeared to be a safe bet until it lost 46% to 54%. 

Rationalizing the surprising defeat, political insiders pointed to the fact that the tax appeared at an off-time election with a small voter turnout that tends to favor conservatives. In addition, there was a city council race on the ballot to fill an empty seat in, for Los Angeles, the most conservative councilmanic district in the city bringing out a larger percentage of voters in that district. 

Things would be different during a more well-attended, regular election, they argued.

The well-attended regular election just happened with the state primary and tax results reflected what occurred in Los Angeles a few months ago. 

Despite a heavy Democratic voter turnout drawn by the contested Democratic presidential primary, the California Taxpayers Association charted election results and reported that about half of the 237 taxes and bonds on the ballot were defeated.

The biggest tax and spend issue on the ballot, the statewide school bond, Proposition 13, also took a thumping.

Some results might flip before all votes are certified in a month, but the percentage of measures that were turned down is eye-opening. 

While more than 50% of the taxes and bonds were defeated in March 2020, that compares to 22% that lost in the June 2016 primary and 17% that failed in the November 2016 presidential election. The higher number of rejected measures is astounding in light of the fact that few opposition campaigns are run against the taxes while there is usually financial campaign support for the Yes side and/or “informational” campaigns by government agencies that clearly have a sheen of advocacy.

Given the results in Los Angeles in June 2019 and on the state ballot in March 2020, there really could be an attitude shift on tax issues. The Public Policy Institute of California poll revealed that 58% of Californians across the state think taxes are too high. 

California Taxpayers Association president Robert Gutierrez hopes we are seeing the beginning of a trend and that advocates for tax increases are reading the tea leaves: “We hope elected officials and special interests will listen to the public and drop their remaining plans to further increase the tax burden on hard-working Californians.”

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Is failure of the 2020 Prop. 13 sign of a new tax revolt?

By Jon Coupal | The good Proposition 13 — the one from 1978, not the $15 billion school bond currently on electoral life support — was the beginning of the modern tax revolt movement.

That movement spread across the United States and even into Europe in addition to spawning several additional initiatives here in California. But it’s the bad Prop. 13 on last week’s ballot that is currently generating a statewide buzz because it appears to be headed for failure. Could this be the beginning of Tax Revolt 2.0?

The 2020 version of Prop. 13 was a massive $15 billion school facility bond measure, the largest such bond in state history. The Howard Jarvis Taxpayers Association led the opposition with a guerrilla-style campaign relying on a relatively modest $250,000 statewide radio buy, social media and nearly a hundred interviews with television, radio and print media. This was in comparison to the more than $20 million spent by Gov. Gavin Newsom and his allies.

Because there are millions of absentee and provisional ballots yet to be counted, it is possible that Prop. 13’s losing margin will shrink. But no matter the outcome, politicians have been put on notice that voters are growing increasingly weary of hundreds of bond and tax measures confronting them at the state and local level in every election cycle.

Here’s what taxpayers can take away from the March primary election:

To read the entire column, please click here.

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Vote NO on Proposition 13, and NO on bond Measures J & K

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Fake taxpayer group misleads voters on Prop. 13 bond measure

By Jon Coupal | We’ve seen this before. Fearful that taxpayers might reject a proposed tax increase or bond, the proponents of the measure will trot out some endorsement of a fake organization with a pro-taxpayer sounding name. It is a highly deceptive tactic meant to confuse voters.

Before this campaign season began, had anyone heard of the California Republican Taxpayers Association? We doubt it. But that is the name of the group appearing on millions of “slate mailers” and which is now running radio ads throughout the state supporting the costly $15 billion school bond measure ironically labeled as Proposition 13. Employing both the “taxpayer”and “Republican” label the group clearly hopes to appeal to more conservative voters. 

The best we can tell is that CRTA was started by a political consultant working for the infamous anti-taxpayer Republican, Abel Maldonado. Not only was Maldonado notorious for voting against taxpayers when he was in the legislature, he successfully traded his state Senate vote, which was needed to pass a massive tax increase, in exchange for putting Proposition 14, the open primary law, on the ballot. 

The consultant’s firm, Capitol Consulting & Public Relations, advertises on its website to potential clients that it can “manage your entire campaign from paid media: direct mail, radio and broadcast advertising.”

There’s certainly nothing illegal about that, but misrepresenting the source of the information can cross the line into legal problems. The CRTA reportedly heard from the Republican party after it used an elephant logo on these mailers to make it appear that the group was an official Republican organization. It’s not. Today its logo is a bear.

To be clear, a professional political consultant is a paid adviser to well-funded campaigns, not by any stretch of the imagination an advocate for the interests of taxpayers. Moreover, CRTA has no lobbyists, no attorneys representing taxpayers in legal fights, does no education efforts and its “location” is a UPS mailbox. It only materializes during election season. This purported group appears to be merely a “for sale” shill existing for the sole purpose of persuading, or deceiving, voters. (As for who “bought” CRTA, one need only consider that among the largest contributors to the Prop 13 bond campaign are the California Teachers Association, trade unions looking for construction business and the California Democratic Party. There’s nothing much “taxpayer” or “Republican” reflected in the money behind this bond measure).

It is now apparent that, because legitimate taxpayer groups such as the Howard Jarvis Taxpayers Association have opposed the massive Proposition 13 school bond, the special interests backing the costly proposal are attempting to counter our narrative. Unfortunately, their deceptive tactics may be working. 

We received an email from a longtime member of HJTA who, after hearing our radio ad opposing this year’s Prop. 13, told us he had already mistakenly voted in favor of the costly bond measure. “I feel like a fool,” he wrote. No, he wasn’t a fool. He got scammed. Apparently, this is the only way the progressive tax and spend lobby can win.

Perhaps we at Howard Jarvis Taxpayers Association take this too personally. We have worked for 41 years to establish an impeccable record of defending the interests of taxpayers and advocating for fiscal responsibility. We have two permanent offices in Sacramento and Los Angeles, three full-time lawyers who represent the interests of taxpayers in literally hundreds of tax cases against government, and a full-time lobbyist advancing the interests of taxpayers and defending the real Prop. 13 (1978) in the California Legislature.

It’s no secret that there is a lot of deception in politics. On Tuesday, voters who truly care about limiting increases in property taxes should listen to legitimate voices on behalf of taxpayers and vote NO on the Proposition 13 $15 billion bond measure. 

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Irony

By David Crane | One week from today, Californians will finish voting on a $15 billion General Obligation Bond to be issued by the state if approved by voters. Currently, the state has $73 billion of voter-approved General Obligation Bond obligations outstanding that cost the General Fund $5 billion a year.

Meanwhile, also outstanding are $250 billion of non-voter-approved obligations that cost the General Fund $11 billion a year plus another >$10 billion year from school districts funded by the state.*

Voter-approved debt obligations are issued to Wall Street underwriters. Non-voter-approved retirement obligations are issued to government employees. Under California law, government employees may donate to elected officials. Wall Street underwriters may not.

Annual spending on retirement obligations nearly tripled over the last decade and now is crowding out spending on classrooms and other government services at 4x the rate of spending on debt obligations. Absent reform, spending on retirement obligations will grow even faster, plus new retirement obligations are being issued every day without voter approval.

The only scrutiny over non-voter-approved retirement obligations issued to government employees is through the eyes of state lawmakers.

*Plus $12 billion over four years in supplemental payments authorized by the legislature and governor since 2017. Note also that the $250 billion figure cited in the state budget is net of assets set aside to meet retirement liabilities even though the state’s obligation is not legally defeased by those assets. Gross retirement liabilities are ~$900 billion. Note also that the state values the pension portion of retirement liabilities at a fraction of the value accorded those same liabilities by the Federal Reserve Bank.

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Prop. 13 school bond isn’t really for the kids

By Jon Coupal | In the arguments and advertising in support of Proposition 13 on the March 3 ballot, the proponents are trying to convince the voters it is all “for the kids.” As with previous education ballot measures in California, a parade of disasters is predicted unless the proposal in question is approved.

True to form, the opening argument set forth in the official voter information guide intones ominously, “Despite research showing students learn better in classrooms which are modern and safe, too many school buildings are dilapidated, unsafe, and unhealthy. Thousands remain at risk of wildfires or earthquakes. Others are contaminated with lead, mold, asbestos, and other hazardous materials.”

Really?

The first question taxpayers should ask is if things are this bad, where has all the previously voter-approved bond money gone? Let’s review some recent school bond measures already authorized by voters: Prop. 1A in 1998 ($9.2 billion); Prop. 47 in 2002 ($13.05 billion); Prop. 55 in 2004 ($12.3 billion); Prop. 1D in 2006 ($10.4 billion); and Prop. 51 in 2016 ($9 billion). In addition to tens of billions of dollars in new debt, there’s a nearly equal amount owed in interest costs.

And the lottery? It was sold to voters as a big step toward fully funding education. And what about Proposition 98 (1988), which mandates that at least 40% of the state’s general fund be spent on education? There is no excuse for even one classroom anywhere in the state of California still having unsafe conditions. Taxpayers and parents should demand to know which school buildings are unsafe.

To read the entire column, please click here.

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Protecting California children from life

By Jon Coupal | Under current California law, public school children in fifth, seventh and ninth grades are given a physical fitness test that measures everything from aerobic capacity to flexibility and upper body strength.

According to the California Department of Education, “the main goal of the test is to help students in starting life-long habits of regular physical activity. The test has six parts that show a level of fitness that offer a degree of defense against diseases that come from inactivity. The test results can be used by students, teachers, and parents.”

Because of dramatic increases in childhood obesity, not just in California but throughout the nation, it makes sense to have some way of measuring the fitness of our kids. Such tests can also motivate young people to improve their overall health.

But starting next year, schools will suspend the fitness exam because, according to Governor Newsom, physical fitness tests are “discriminatory.”

To read the entire column, please click here.

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