San Diego’s Triple Pension Scandal

Richard Rider
Chairman of the San Diego Tax Fighters

The problem of the San Diego city pension deficit is well known. But what is not understood is that many city workers are often entitled to three pensions, not just one.

Even with the new 2nd tier pension structure (a rather tepid improvement that marginally reduces taxpayer pension costs), all current San Diego employees are largely grandfathered under the lucrative plans discussed below.

The problem is deeper than the pension underfunding, or even the burgeoning unfunded liability that now exceeds two billion dollars. The problem is that city workers get a compensation package that’s far more generous than what the taxpayers receive, or what is necessary to hire city workers. It is fundamentally unfair to the employers of the city workers – the beleaguered taxpayers of San Diego.

Below is an example of what pensions a career “general” city employee (not police and firefighters) can receive. Police and firefighters get two pensions (assuming they participate in the DROP pension program), but general employees sometimes can receive three pensions.

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Recalls and Witch Hunts

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

So now the call for punishing legislators who raised taxes has spread to those legislators who did not vote to raise taxes. Calls for recalls have gone beyond the targets of the governor and Republicans who voted for the taxes to include Republicans who voted to put Proposition 1A, the spending limit/two-year tax extension measure on the ballot. Supposedly, there was a deep conspiracy to make the taxes happen and all, or nearly all, Republican legislators are guilty.

Am I the only one that sees echoes of the Salem witch trials and Arthur Miller’s award winning play about the witch trials, The Crucible, in all this?

In the play, presiding Judge Danforth says: “You must understand, sir, that a person is either with this court or he must be counted against it, there be no road between.”
In Salem, all is black and white, you are either with God or with the Devil, and anyone who opposes the court cannot be an honest opponent.

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L.A. Teachers Must Learn A Lesson From the City Election

President and Vice-President of Community Advocates

Tuesday was a wake-up call for public employee unions—the defeat of Measure B in Los Angeles demonstrated that the voting public is fed up with the abuses that come from the raw and unchecked use of their political power. United Teachers of Los Angeles ought to heed the warning just delivered on Measure B as it battles the school district’s student assessment tests scheduled to be administered in two weeks.

Unlike what was at stake in Measure B (guaranteed unionized jobs for electrical workers and harnessing solar power) the high stakes game that UTLA is playing is about our public school kids and their future—ultimately more critical than electrical workers’ expanded employment or when and how we decide to capture the sun’s rays.

For many years, UTLA couched its policy objectives in language that claimed they were really “putting kids first”—more money in the classroom was to benefit kids, not them, etc. But in the latest battle UTLA has abandoned any pretense about kids being their priority, it is really about, as UTLA has asserted in documents directed to their members, “building unity” and “to organize” the work site. It is also guaranteed to harm kids and their education.

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CPSIA – Have You Heard of It?

Tom Scott
CA Executive Director, National Federation of Independent Business

If not, you might want to read on for a bit.  On February 10th, the Consumer Product Safety Improvement Act (CPSIA) went into effect.  Now – you should realize that anytime government uses the term “improvement,” trouble is probably the next thing coming.  The act provides for fines starting at $100,000 per violation and possible jail time for anyone selling items containing lead for use by children age 12 or under.  No one denies that lead ingestion can have severe health implications, but this is a train wreck.  A lot of people believe that Congress overreacted with this legislation and made matters even worse when they let state attorneys general sue, or even hire personal injury lawyers to sue, to enforce their own interpretations of the law.

The end result of this law is that many businesses, from used bookstores to thrift shops and even libraries, are being forced to throw out inventory, lay off workers or even close their doors.  The Motorcycle Industry Council has estimated $1 billion in economic loss from frozen inventory, payroll losses and lost opportunities for sales and service.

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The Three Blind Men and The Elephant

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977; www.dswlawyers.com

The parable goes something like this. Three blind men were trying to figure out what they had encountered when they met an elephant drinking from a stream. The first touched the elephant’s leg and thought it was a tree. The second touched the elephant’s tail and thought it was a rope. The third touched the elephant’s trunk spouting water and thought it was a water hose. A venerable American political party, which shares the elephant as its long-time symbol, is also having this problem right now.

Louisiana Gov. Bobby Jindal ran into the Media brick wall when he spoke on Prime Time TV (which he was not ready for) recently and came across as a wooden and strange fellow who was delivering a message that simply did not resonate.

Newly crowned Chairman of the Republican National Party (for now), former Lieut. Gov. Michael Steele, seems to have Foot in Mouth Disease and may experience an early crib death unless he can learn to corral his tongue and focus his message.

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Prop 8 and the Supremes

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977; www.dswlawyers.com

Thursday, the California Supreme Court heard the Prop 8 oral arguments.   The Court itself put on a tour de force showing of great public relations by making publically available not only all the legal briefs, court orders and case histories of the various cases brought together for this landmark contest of Constitutional law, but also televising the three hours of oral arguments, accessible in real time in streaming video (go to http://www.calchannel.com/images/tcc_live.html  and it should be archived now). 

The Supreme Court’s website has a web page entirely devoted to the Prop 8 cases.  It includes a staggering amount of information at your fingertips, including all the legal briefs filed, not only by the parties, but also by the Amici Curiae  – Friends of the Court, literally; the many additional briefs filed by permission, actually invited by the Court, to aid in its analysis.  There are briefs filed by every imaginable segment of society including the Attorney General’s office, groups on either side of the issue, religious groups, law professors and many, many more.  If you are not accustomed to reading legally briefed arguments, the first thing you should know is that they are anything but brief.

The argument Thursday to the California Supreme Court was about whether or not the good People of the State of California, through use of the Initiative Process last November, passing Prop 8 by some 52%, could "amend" or "revise" our state’s Constitution.  Depending on which side you are on, the implications of each word are tremendously important to the outcome because "amending" will validate Prop 8; but, "revising" may invalidate it.   

This is all the result of a California Supreme Court decision reached May 15, 2008  ("In Re Marriage Cases" – a link to the opinion is at http://www.courtinfo.ca.gov/courts/supreme/highprofile/index.htm ).  It held that California Constitutional concerns of Equal Protection mandated that gays should be able to marry and, further, that a ‘civil union’ instead of ‘marriage’ was effectively the kind of "Separate, but Equal" distinction so long perpetuated in the area of race relations in the U.S., until blown away in 1954 by the U.S. Supreme Court in the legendary Brown vs. Board of Education.   

The California Supreme Court also heard one other fascinating issue argued Thursday: whether the thousands of gay marriages entered into during the months between the California Supreme Court’s ruling in the Marriage Cases on May 15, 2008 and the passing of Prop 8 on November 4, 2008, should stand as valid marriages, or whether Prop 8 should be given retroactive effect to invalidate all those marriages.

Reading the Justices’ questions to counsel during oral argument, often Socratically posed and not necessarily the reflection of an individual Justice’s views, is like reading tea leaves or a chicken’s entrails to predict the future.  Proponents of either side will cite what they find reassuring while the other side will cite those tidbits that warm the cockles of their own hearts.  But, nobody will really know how the Justices feel and, most importantly, how they will vote, until the Court issues its opinion within the next 90 days.  

Meanwhile, the unprecedented public access to read all the many, excellent legal briefs online and to view, on streaming Internet video, the several hours of oral arguments from truly the Cream of California’s Constitutional Law Bar, marked a wonderful opportunity for the public to see the inner workings of the highest level of California’s legal system for a day and to watch, up close and personal, the evolution of California Constitutional Law.   The Supreme Court’s public relations staff is to be highly commended for doing it.

Stay tuned: the decision, whichever way it goes, is bound to be highly controversial – it will sorely disappoint some, fill others with joy, and line many more pages of casebooks with law which will be cited by lawyers for many years to come.

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Proposition 1A: Too High a Price—and Voters Shouldn’t Buy

George Runner
Member of the California State Board of Equalization, District 1

California has become like that ne’er do well cousin who is always hitting up generous relatives for more money, while never changing their irresponsible ways.  Proposition 1A, scheduled for the May election, is merely the latest example of Sacramento politicians returning to taxpayers for $16 billion in higher taxes, during a time of record high 10% unemployment, plummeting retirement account funds, record high foreclosures, and overall economic jitters, for more money to feed wasteful programs.

What’s most outrageous about the situation is that the authors of the ballot argument in favor of Prop 1A are attempting to hoodwink voters into extending the largest tax increases in state history under the guise of budget "reform."  Rather than being honest with Californians, the official ballot summary will omit $16 billion in higher taxes and only mention the spending cap portion of this measure.

Don’t get me wrong-I am supportive of a spending cap, and believe it is good policy to reign in spending.  But under the current deal, which includes a two year extension of the tax increases, the price for this cap is too high.

I understand why Sacramento spendthrifts are afraid to reveal the truth to voters-these taxes would affect every Californian in very real ways.  Sometimes the truth is painful.

Prop 1A would increase statewide sales taxes from 7.25% to 8.25%, almost a 14% increase.  In Los Angeles County, this would raise the sales taxes to a staggering ten cents for every dollar they spend.  This is certainly not the proper incentive to jump start consumer spending during an ailing economy.

Income taxes will increase by a quarter of a percent while child tax credits will decrease from $400 dollars to $100 dollars, essentially a $300 per child tax increase.  These taxes will hit families the hardest, making it even more difficult to raise a family in California.

Finally, Prop 1A would nearly double the much despised Car Tax, or vehicle license fee. The average family would pay an additional $130, or about a week and a half of groceries.  Ironically, the Governor signed a budget raising the Car Tax that he first campaigned to repeal.

The best spending cap would have been Republican legislators refusing to vote for tax increases and using their 2/3 vote to restrain spending.  Any meaningful spending limit on the ballot will always get defeated by the special interests or will come at too high a price-like Prop 1A.

The taxes to sustain this spending will take $16 billion out of the economy-which means fewer consumer purchases, less investment, and no job creation.  While California government takes more of your money, the hardships of the average citizen will be prolonged as the economic growth and expansion will be stunted by taxes.  This is the most consequential tax policy change in decades, and Democrats and their Republican accomplices want to make sure you do not know about it.

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Spending Limit and the Orient Express

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)

The early, private polling I’ve seen is all over the map on Prop 1A, the new spending limit. Much depends on how the complicated limit is described – and on the nature of the opposition to the measure.

But common sense indicates the limit faces a steeply uphill fight. Why? The measure has bitter enemies everywhere – among liberals who hate any limit on spending, among conservatives who hate that the limit is linked to taxes, among anyone who hates the legislature (a solid majority in California) and even among pointy-headed centrists who won’t like the details of the limit as they learn them. One imagines that even the legislative leaders who negotiated it won’t shed a tear if Prop 1A goes down. The Democrats didn’t want it, and it was less than the hard spending cap that Republicans pined for. If the limit goes down, everyone could be a suspect, even politicians who endorsed it.

The strongest advocate is the governor, whose popularity has been on the decline. But in embracing this spending limit and rainy day fund, with its ties to taxes, the governor may have undone one of his accomplishments. The rainy day fund he convinced lawmakers to place on the ballot last year had a far better chance of passing, since it wasn’t tied to taxes. This spending limit and rainy day fund may be better policy, but the fact that temporary tax increases last longer if it passes may fatally undermine it. The governor had little choice but to do this deal-the state was running out of cash. But he’ll need real wizardry to avoid defeat on Prop 1A.

He’ll also need to resist the temptation to lead the campaign in public. His low public ratings could be a drag on the measure. And, fairly or not, he may have a particular credibility problem on the budget. He’s done so much campaign for spending measures that he has said would end the state’s budget problems, and none of the measures has delivered. Schwarzenegger needs to run a union-style campaign-visually at least–with teachers, police, and nurses speaking out about how the spending limit is needed.

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Mayor and Business a Poor Union

Charles Crumpley
Editor and Publisher of the San Fernando Valley Business Journal

Antonio Villaraigosa’s re-election Tuesday is OK. After all, he is a pretty good mayor.

My only complaint: He’s no friend to business.

That’s always seemed evident but it became even more clear last week when, in a late campaign swing, he stopped by the Los Angeles Business Journal offices to meet with reporters and editors. Our first question: Since businesses here are stuck with unusually high costs and high tax rates – and soon will face among the country’s highest sales tax rates – is his administration doing anything to help L.A.’s businesses combat those disadvantages?

Instead of talking about what he plans to do, he talked about the past. He said that when the city was facing a big budget deficit, he refused to suspend the third year of a scheduled tax cut for businesses.

Instead of talking about lifelines to businesses, he talked about how he’s trying hard not to lay off city employees and how he’s worked with the unions to save the city money.

Those responses were telling. When asked about issues or problems of interest to businesses in the city, his thoughts and answers veer to city budgets, city processes and city workers. Businesses apparently seem like abstractions to him; he can’t seem to see the world through a businessperson’s eyes.

But that’s not surprising. His background is mostly as a union organizer, as president of the local chapter of the American Civil Liberties Union and as a politician.

What’s more, Villaraigosa did little at our meeting to dispel the notion that he’s in bed with labor unions.

He basically confirmed suspicions that Measure B, the issue on the ballot Tuesday to boost solar power in Los Angeles, was written to intentionally benefit the International Brotherhood of Electrical Workers union.

"You say, ‘We cut a deal with them.’ Yeah, we did. We built a partnership with them," the mayor said.

His rationale: The politically powerful IBEW was against past solar power initiatives because "they didn’t see any jobs." So Measure B was written to gain the union’s help rather than its enmity.

Of course, that ignores the important question: Shouldn’t voters decide the solar power issue on its merits rather than being presented a gimme for the IBEW masquerading as a clean-energy initiative?

Villaraigosa also was unrepentant about the clean truck program at the Port of Los Angeles, which was written in such a way that opened the door to the Teamsters union at the port. But it also will seriously hurt or even kill hundreds, maybe a thousand, small trucking firms that serve the port. What would he say to them?

"That’s progress," he said.

To be fair, Villaraigosa said he opposes tax increases (although fees may go up), he has not stopped and even helped some nonunion businesses come to town, he’s pushing the 12-to-2 plan that reduces the number of stops a new business must make at City Hall and he wants to privatize or at least create public-private partnerships for the city’s parking assets and zoo and the like.

Again, Villaraigosa’s re-election is not all bad. He’s a conspicuous ambassador for Los Angeles, and his restless energy and coalition-building instincts serve him well in responding to the multidimensional and multiethnic issues and problems of the city. He has an "in" with the current administration in Washington.

But most business owners and operators in Los Angeles have no friend in the mayor’s office for the next four years.

Charles Crumpley is editor of the Business Journal. He can be reached at [email protected]

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Report on Prop. 8 Hearing

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)

The Folks Who Got Married Last Year Will Stay Married.

That, at least, seems a safe bet after watching this morning’s oral arguments in the California Supreme Court.

It was hard to tell from the court’s questions whether Prop 8 itself will be overturned. But the exchange between the justices and the Ken Starr, the attorney defending Prop 8, over the question of whether the approximately 18,000 same-sex couples who married last year should have those marriages invalidated was much, much clearer.

A majority of justices — including Carol Corrigan, who voted against last year’s ruling legalizing same-sex marriage — expressed deep skepticism at Starr’s argument that such marriages must be thrown out. It felt like a smackdown, actually.

"Here’s the flinty reality," Corrigan instructed Starr, explaining that the law made such unions legal at the time said, explaining that the law changed. "Aren’t those couples… entitled… to rely on the law as it existed?"

Starr didn’t get very far in answering that question before he was interrupted by other justices. Chief Justice Ron George, author of the original decision, even mocked Starr’s argument about the meaning of Prop 8 by comparing it to President Clinton’s infamous claim, "it depends on what the meaning of the word ‘is’ is." Starr was the special prosecutor who investigated Clinton in the Monica Lewinsky case.

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