San Diego & the Trump-California War

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

If you wish to inspect the frontlines of the conflict between Donald Trump and California, head for San Diego.

Yes, it’s true that the Golden State’s fight against the president has so far taken place in the courts and in cyberspace. And, sure, challenging The Donald’s legitimacy is not a mere local pastime but an all-consuming statewide prizefight. But as a matter of geography, culture and economy, the California-Trump War feels more intimate, higher-stakes and potentially destabilizing in greater San Diego.

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California’s Descent to Socialism

Joel Kotkin
Editor of NewGeography.com and Presidential fellow in urban futures at Chapman University

California is widely celebrated as the fount of technical, cultural and political innovation. Now we seem primed to outdo even ourselves, creating a new kind of socialism that, in the end, more resembles feudalism than social democracy.

The new consensus is being pushed by, among others, hedge-fund-billionaire-turned-green-patriarch Tom Steyer. The financier now insists that, to reverse our worsening inequality, we must double down on environmental and land-use regulation, and make up for it by boosting subsidies for the struggling poor and middle class. This new progressive synthesis promises not upward mobility and independence, but rather the prospect of turning most Californians into either tax slaves or dependent serfs.

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The Budget’s Done. What Now?

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

The budget passed—no surprise—so what will the legislature focus on during the remaining session this year?

First, a few factors to consider about 2018 that may frame what happens in the remainder of the 2017 legislative session.

Next year is an election year, which rarely produces major policy changes as legislators are leery of defending change to voters. Being a nearly one-party state, however, Democratic legislators may not fear election year retribution as their predecessors did. Still, anything major is more likely to happen before the legislature recesses for this year.

If a recent UC Berkeley poll is accurate in foretelling attitudes about the gas tax, reaction to that tax should be in full flower next year, causing legislators to duck and cover. 

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CA Budget & Fiscal Policy is Unsustainable

Rob Lapsley
President, California Business Roundtable

While the governor’s leadership has been the key to keeping California in the black and paying down debt, the Legislature continues to grow permanent spending based on an increasingly volatile revenue stream. The Legislature’s highest priority for environmental policy is sustainability. Yet today their highest priority for budget and fiscal policy is unsustainability.

Since the economic recovery began in 2010, taxpayers and the business community have grown the General Fund by $41 billion and special funds by $28 billion, representing an overall revenue increase of $69 billion or 63 percent. In addition, we have also grown local property tax revenues for Prop. 98 more than $10 billion, which is equal to a 72 percent increase.

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The Gas Tax. Who Cares?

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

Apparently, it’s time to choose up sides about the gas tax.

What’s the point?

There’s not much good to say about the legislative package that raised the gas tax to pay for a relatively small amount of road construction. After generations of neglect, California’s needs so far outpace the relatively small amount of money raised won’t do much.

And there’s not much good to say about the opponents of the gas tax. It’s a relatively small tax that is being blown up into a big issue. Why? Politics. The gas tax can be exaggerated into some sort of attack on the people, and used to recall a state legislator in Orange County and maybe even advance a ballot initiative campaign that will bring income to some consultants and activists.

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Health Care for All? More Like How to Destroy California

John Cox
John Cox is a San Diego area businessman and a Republican candidate for Governor. He can be reached at John@JohnCoxforGovernor.com.

The staggering price tag for the Democrats’ plan to provide “health care for all” would cost California $400 billion a year to create a state-funded universal health care system — more than double the $180 billion annual state budget.

California residents will be required to pay significantly increased taxes — as much as 50 percent or more — to the state to cover health care costs, rather than individuals being able to make their own decisions to buy from private insurers who have to compete for their business.

The real motive behind Los Angeles-area Democrat Sen. Ricardo Lara’s Senate Bill 562 is to provide health coverage to everyone in the state, whether they are here legally or not. It’s just another very expensive welfare program for people who do not pay into the system.

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Don’t violate the Constitution when reforming the Board of Equalization

Loren Kaye
President of the California Foundation for Commerce and Education

California legislators may vote as soon as today on a proposal to shake up the State Board of Equalization.

Reforming the Board is long overdue. The structure to accomplish this as outlined in budget trailer bills may be sound or faulty, but for now, only three things are clear:

  1. Rushing a major reorganization through the budget gauntlet is fraught: it limits debate over both the big issues and the details. The resulting organization and process inevitably will be flawed or worse.
  2. Expecting a well-functioning transition in only two weeks is foolish. Prepare for the “Chaos at New Office of Tax Appeals” articles in mid-summer.
  3. The bill is unconstitutional.

The first two points have been touched on by others, herehere and here.

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On the Budget

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Medi-Cal providers justly get a pay boost (for now), Earned Income Tax Credit expansion hopefully will incentivize work, but taxpayer protections at the Board of Equalization and electoral fairness take a hit under the budget proposal the legislature will vote on today.

Medi-Cal

Medi-Cal health providers deserved a boost in pay so sending some tobacco tax money to Medi-Cal providers is appropriate. But while underfunded Medi-Cal providers complain they don’t get enough of the tobacco tax money, there is a long-term problem involved with using tobacco tax to boost Medi-Cal. The compromise between the governor, legislators and backers of the initiative will deliver incentives for providers to take on more Medi-Cal patients while tax money will also allow for covering more health care costs that the state is taking over from the federal government. However, as opponents of the tax increase (including me) pointed out during the campaign, programs relying on tobacco tax money will see diminished returns over the years.  

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One Last Plea to Stop the Pension Loan

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Dear Legislators:

In my essay the other day I provided an alternative to Governor Brown’s pension loan — actually pay down pension debt.

You could do that by offering to redeem future pension payments for cash today. Provided the amount you pay is no greater than the present value of those future pension payments using the discount rate CalPERS uses to present value those payments, then you would actually pay off debt. If you wanted to save the citizens you serve even more money, you could start by offering less than present value.

Ideally such a pay-down would not be paid for with borrowed funds but if you insist on borrowing, then at least swap the floating rate loan from the special fund into a fixed rate loan so you actually know your cost and don’t subject citizens to floating rate loan risk. Together with the redemption outlined above, a fixed rate would lock in savings equal to the difference between the loan rate and the discount rate.

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Foam Fight: As California Balks at State Ban, Activists Target Local Level

Laurel Rosenhall
Reporter, CALmatters

Foam burger boxes and ice cream cups could eventually go the way of the flimsy plastic shopping bag—banned throughout California.

It’s not likely to happen this year. Environmentalists who push for the bans lost a big fight last month when the Legislature voted down a bill that would have banned foam takeout containers statewide.

But growing pressure from communities that are passing the bans could be a game changer in the future, as environmentalists continue to make the case that the foam plastic known as polystyrene is associated with myriad ecological hazards. It doesn’t biodegrade. It easily becomes litter because it’s so light. It breaks down into small plastic bits that flow into waterways and harm wildlife.

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