“Smoothing” Today Makes For Bumpy Road Tomorrow
This week, the board of the California Public Employee Retirement System (CalPERS), the largest pension fund in the country, will be asked to approve a “smoothing” proposal designed to provide short- term cash flow relief to local and state governments by deferring pension contributions.
If that sounds to you like a free lunch, you’re right. Such an offer is tempting to governments facing harsh budget troubles, but CalPERS should reject the proposal as at best imprudent and at worst dangerous to future generations.
From Enron to AIG, we have seen the consequences when complex financial engineering and mystifying terminology is employed to obscure simple truths. In AIG’s case, “credit default swaps” masked transactions that in reality were unregulated insurance contracts. In CalPERS’s case, what is unthreateningly framed as “smoothing” is in reality a negative amortization borrowing of the type that recently led so many homeowners down the garden path to foreclosure.
Democrats Continue to Perpetuate the Spending Problem
Two weeks ago the Legislature completed the traditional “House of Origin” deadline where literally hundreds of bills are voted on over a 5 day period. It amazes me that in a time where our focus should be on solving California’s budget mess and with a deficit of $24 Billion the Assembly passed nearly 200 bills that increase state spending.
While some of the bills passed were needed and I was willing to support, several stood out as especially unnecessary. I have compiled my version of a “Top Ten” (or bottom ten to be more exact), highlighting the worst of the worst.
10) SB 95 doubles the amount of bond a used car dealer must hold in order to do business in California. I believe that this is especially wrong at a time when auto dealers have been decimated by the economic downturn and these increased costs will be passed along to consumers.
Why the Best Laid Plans for 2010 Will Be Lost in A Cloud of Smoke
What will be the big political issue of 2010 in California? Reformers think the constitutional convention will seize public attention. Labor unions are hoping it will be their effort to eliminate the two-thirds vote for the budget (and perhaps taxes too). Gay couples hope the fight for marriage equality will take center stage. And then are the contenders for governor, who will raise and spend hundreds of millions of dollars in hopes that the political year will be all about them.
It says here that they’re all wrong. The issue of 2010 won’t be reform or marriage or even the gubernatorial election.
You won’t be able to see any of those issues through a thick haze of marijuana smoke.
It’s a good bet that an initiative to legalize and tax marijuana is headed to the November 2010 ballot. TaxCannabis2010.org already has begun planning. The measure should be cheap to qualify; signature gatherers, standing outside of grocery stores, will have little problem convincing people to sign that petition (unless, of course, the munchies are so extreme that signers won’t stop on their way in).
Paying for the Lakers’ Parade
Once upon a time, when a major sports team from Los Angeles won its league’s championship there was no question that the city would cover the costs of a celebratory parade. However, in these difficult financial times, questions have been raised about springing for a parade to honor the 2009 NBA Champion Los Angeles Lakers.
The city has agreed to split the cost with the team for a two-mile parade and rally at the L.A. Coliseum. (The rent for the Coliseum will work toward reducing the state’s massive deficit by a few dollars because the governor hasn’t gotten around to selling it, yet.)
The Police Protective League issued a news release that declared it was “foolish” for the city to spend one million dollars on a three hour parade while every tax dollar is needed for essential services. It’s hard to debate that logic. The city council is considering major cuts and layoffs to deal with the hole in the city budget.
Hen Initiative Hatches Confusion
Last November, when voters approved Proposition 2, Californians embraced a broad principle to give egg-laying hens more space, a decision California egg farmers respect. The question now is, how much is “more space?” I explore this issue facing California’s egg industry in my opinion piece published in today’s Sacramento Bee, which you can read here.