Thoughts on Local Ballot Measures

October 15, 2010

The last piece of the election puzzle (for me) is the local ballot measures.  Here in Oakland, there are six — one county, one school district, and four city measures.  I’ll go through them in alphabetical order.

Measure F — County transportation supplemental registration fee.  The legislature in its infinite wisdom has decided (and the governor approved) that while the state will continue to short-change counties on transportation funding, it will allow each county to enact, with voter approval, a supplemental vehicle registration fee to be used for local transportation projects.  The Alameda County Congestion Management Agency — the state-mandated local agency with responsibility for general transportation and its funding, has decided to propose a $10 per vehicle fee to fund local transportation improvements.  The funds would be allocated 60% for roadway improvement and repair, 25% for a congestion relief program, 10% for transportation technology (e.g., “smart roadways”, electric vehicle charging stations, improved traffic signal technology — e.g., signal timing, transit override, etc), and 5% for pedestrian and bicycle related improvements.  The County’s other transportation agency, formerly called ACTA and now ACTIA, had to be sued over its misuse of country transportation sales tax funds.  (BTW, ACTIA and the county CMA have now been merged into an Alameda County Transportation Commission with control of all the county transportation funding.)  The ACTC does have a number of advisory citizen committees, but I’m not sure if there’s explicitly a “watchdog” committee over how the ACTC uses its funds.  There was no ballot argument submitted against the measure.  With the decreased state transportation funding, local funding is getting to be the wave of the future.  I would recommend a YES vote, but I’d also recommend keeping your eye on how this money gets spent.

Measure L — This measure was put on by the Oakland school board to provide supplemental funding for salaries of teachers and other instructional (i.e., non-administrative) positions.  This would be an additional $195/year parcel tax on top of the already-approved school parcel tax for facilities.  Like transportation (and everything else), the state has been starving schools because we’ve run out of money.  Us local taxpayers end up having to make up the difference.  I don’t like parcel taxes as a way of doing that, because they’re regressive.  You pay the same $195 whether you’re in a two-room hovel or a $5 Million mansion.  (And most leases allow the landlord to pass along parcel taxes to the tenants, even though the tenant doesn’t get to deduct it off his/her taxes!)  I’m also somewhat concerned that the school board is doing this at the behest of the teachers’ union.  This is the same kind of shenanigans that led to Oakland’s budget problems when the city council gave the police and firefighters unions everything they wanted.  I will leave you to make up your own minds, but I’m giving strong consideration to voting no.

Measure V — The medical marijuana tax increase.  The city put this on the ballot to squeeze a little extra revenue out of the lucrative medical marijuana industry that has sprung up since the passage of Prop. 115.  I see little reason to oppose it.  While some of the tax may get passed on to the consumers of medical marijuana, the small additional fee isn’t going to make medical marijuana unaffordable to those who really need it.  YES

Measure W — telephone tax increase.  The city already has a utility tax on “land line” phones.  This would add a flat $1.99 per month charge on both land lines and mobile phones, as well as a somewhat higher tax on trunk lines that serve multiple subscribers.  This not going to make or break the city budget.  My suspicion is that it will probably fail, because many people are tired of getting nickeled and dimed with little taxes.  we really ought to be getting to the root of things and re-addressing the inequities of Prop. 13.  We also need to reassess our public employee pensions systems, and move to a single-payer health insurance system.  If all those things happened, we would not need all these extra little taxes.  In fact, I’d suggest a measure that revises Prop. 13 and simultaneously sunsets all of these small taxes.  YES.

Measure X — Police parcel tax.  This is undoubtedly the most controversial measure on the Oakland ballot.  It represents a deal between the City Council and the OPOA.  The OPOA agreed to accept an increase in police contributions to their pension funds in return for the city putting this on the ballot, restoring the laid-off police, and promising no lay-offs for the remainder of the current OPOA contract.  Since it was placed on the ballot, virtually all of the council members have had “buyers remorse”.  I’m not sure there’s a single city council member who’s still supporting and campaigning for this measure.  It seems destined to go down in flames.  That may be appropriate.  Unfortunately, Oakland citizens will pay, with reduced police coverage, for the OPOA’s pig-headedness during the budget crisis.  I’m torn.  I don’t like the reduced police, but I also don’t want to reward the OPOA’s obnoxious behavior.  On balance, I’m afraid I must recommend NO.

Measure BB — modify Measure Y — This measure is a stopgap to prevent further hemorrhaging of the Oakland police dept.  It would temporarily suspend the minimum staffing levels established by Measure Y for the police force.  If this doesn’t pass, Measure Y funding gets cut off and Oakland would be forced to lay off another 150 police.  This would serve the OPOA right, but it would be a situation of cutting off your nose to spite your face.  We really do need to go after the OPOA and let them know that they can no longer play the games they’ve played.  That’s one reason why I’m so strongly opposed to Perata, the OPOA’s darling.  However, we can’t afford to lose another 150 police.  YES.

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First comments on the November Election: Proposition 22

September 11, 2010

Prop. 22 is local government’s latest attempt to tell the state to keep its hands off the local treasury.  In many ways, the ballot measure makes sense, although we need to keep in mind that WE created this mess more than thirty years ago when the voters passed Proposition 13, tying the hands of state and local government to collect the revenue needed for government services.  If you don’t like police layoffs, fire station “brown-outs”, state park closures, furlough days, etc.,  ask yourself if you voted for Prop. 13.  If you did, you’ve got yourself to blame for our current fiscal mess.

Here’s the Sacramento Bee’s explanation of the measure with supporters and opponents, pros and cons:

http://www.sacbee.com/2010/09/11/3021098/ballot-watch-ban-on-state-using.html

There’s little question that having the state government digging into local government’s wallet makes it harder and harder for local government to make ends meet.  However, there’s big one piece of local government that would be  protected by Prop. 22 but which, in my opinion, doesn’t deserve protection:  that’s redevelopment agencies.

For one thing, redevelopment agencies, while they’re housed in local government, aren’t really local.  Legally, they’re part of the State of California, and, while they’re often officially run by the city council wearing another hat, they  are often REALLY run by an executive director who has close to total autonomy in how redevelopment funds get used, especially when (as is often the case) the city council doesn’t pay a lot of attention to how the agency gets run, as long as it brings in money.

Another issues with redevelopment agencies objecting to the state taking their money is that it’s a case of the pot calling the kettle black.  Under state law, redevelopment agencies are largely funded by what are called “tax increment funds”.  These are increases in property taxes due to increased property value in the redevelopment area.  In theory, the redevelopment agency “primes the pump” by using bond funds to invest in the redevelopment area.  The resulting increased property value, and increased property tax revenue, is then used to pay off the bond, leaving everybody happy.

Sounds good  in theory, but when the redevelopment agency siphons off the property tax increase over the thirty years term of a redevelopment project, the losers are often other local agencies, including cities, schools, and special districts, that would otherwise get that revenue.  Over time, the legislature has tried to ameliorate the situation by requiring redevelopment agencies to include a “pass-through” of funds to local agencies to replace the funds the redevelopment agency took away.  However, the passthroughs are complicated and one often gets the feeling that other local agencies are getting the short end of the stick.

Aside from that, redevelopment agencies have had a mixed record in California and elsewhere.  Their eminent domain powers have led to some shocking abuses, including taking people’s homes and handing them over to private developers who replace them with projects such as glitzy shopping malls that make lots of money for the developer (and the redevelopment agency) but can literally leave former residents (especially tenants) out in the cold.

While I acknowledge the problem created by the state stealing local revenue, I can’t support including redvelopment agencies in those being protected.  Besides, the real culprit here is Proposition 13, and passing Prop. 22 will just continue to “prop” up a failed tax system badly  in need of major overhaul. 

My recommendation?  Vote NO on Prop. 22, but also let your legislators know that you expect to see reform of Prop.13 if they want to remain in office.


Prison Guard Union Muscles into Oakland Mayoral Election

June 28, 2010

If you’re like me, you get bunches of political ads in the mail.  I just got two today: CSC mailer & filing, both from “Coalition for a Safer California,” which is identified as a political committee sponsored “by public safety organizations.  OK, so what kind of public safety organizations?  Well, it couldn’t be police or fire departments, or the CHP, because they’re all governmental organizations and can’t contribute to political campaigns.  Well, maybe it’s a bunch of police and fire chiefs?  Nope.  It’s a couple of police unions and the state prison guards’ union.  In fact, the group’s latest filing shows the biggest single source of their money is the state prison guards’ union ($100,000 in their most recent filing).  Huh??  I didn’t know there were any state prisons in Oakland, or even near Oakland.  There aren’t even any state prisons anywhere in Alameda County.  So what gives??

Well, although the fliers are nominally about proposed layoffs of Oakland police (and factually inaccurate at that), what they’re really about is the November mayoral election, and they target two mayoral candidates, Jean Quan and Rebecca Kaplan. 

So, why are the prison guards trying to put  the finger on these two Oakland politicians?  The answer isn’t hard to figure out.  The third major candidate in the mayoral election is none other than Don Perata, former President Pro Tem of the state senate, deal-maker extraordinaire, and close ally of the prison guards during past state budget processes.  (It’s one reason the prison guards have gotten such sweet deals on their contracts — to the detriment of the state’s huge deficit.)

Perhaps not coincidentally, the Oakland Police Officers Association has endorsed Perata’s candidacy (using a public appearance by Oakland’s new police chief [who hasn’t endorsed Perata] as the venue to announce the endorsement).  In the best political “you scratch my back, I’ll scratch yours” tradition, Perata has returned the favor by coming out four-square against any police layoffs.

What Perata’s bold stance doesn’t answer is:  How is he going to balance the city’s budget and address its $30 million deficit, which is projected to balloon to $50 million next year?  Maybe he’ll finance it by selling bonds or push it over for the next mayor to deal with — what he did when he was leading the legislature.

As you may be able to tell, I have not endorsed Perata.


Thoughts on the Oakland Special Election

June 27, 2009

Yesterday, I got my absentee ballot in the mail.  That might not seem so special, except that here in Oakland, everyone is getting an absentee ballot in the mail.  This is the first time I can recall a mail-ballot-only municipal election.  (There have been, of course, numerous mail-only elections for assessment districts and the like.)  With the high and increasing cost of running elections, it’s probably the wave of the future.  In fact, while there will be no polling places open, the City has called a special election for July 21st.

As to the subject of the election itself, the City Council called this special election as a last-gasp effort to avoid truly draconian cuts in the Oakland city budget.  Even as it is, the City is looking eliminating maintenance for many city parks, cutting back or eliminating a number of city programs, and generally cutting back city services.

Part of this is the City’s own doing (e.g., the failure of the city council to maintain adequate oversight over Mayor Jerry Brown and his city administrator as they spent money the city didn’t really have), but much of it is the result of a “perfect storm” of outside factors.  Those factors include the dismal state of the local, state, and national economy (and associated drop in business tax and sales tax revenue), the precipitous drop in the Oakland real estate market, with consequent drop in property tax  and transfer tax revenue, the cutbacks in state contributions to local programs (hopefully to be partially offset by federal “stimulus” dollars), and, of course, the long-term impacts of Prop. 13.  Added to that is the self-inflicted wound that Oakland voters perpetrated last November by enacting the “Kids First II” measure, Measure OO, which funded non-city kids’ programs at the expense of the city budget.

The four measures on the ballot are the city council’s attempt to reduce the damage from Kids First II and cobble together some additional short-term revenue sources.  If these measures fail, even more drastic budget cuts are lurking in the shadows waiting to pounce.

What are the measures?  Measure C increases the City’s hotel tax from 11% to 14 % to fund cultural and educations institutions (including the Oakland Museum, Oakland Zoo, and Chabot Science Center), as well as the convention & visitors’ bureau, that are currently funded from the general fund.  It requires a 2/3 majority vote to pass.   If it fails, those institutions will probably lose their City funding, and some or all of them may be forced to close down.

Measure D would replace the Kids First II measure (Measure OO).  That measure dedicated a percentage of total city revenue to kids’ programs.  Measure D would change this to a percentage of unrestricted general fund revenues.  This makes far more sense, since restricted funds are locked into their uses and essentially are “untouchable”.  It requires only a majority vote (as did Measure OO).  If Measure D fails, Measure OO would remain in effect and the City would be forced to cut many other services in order to provide the mandated level of funding for (non-city) childrens’ programs.  Measure OO was, to put it bluntly, a stupid and poorly-written measure.  We shot ourselves in the foot by passing it.  We’ll be adding a second bullet hole if we don’t pass Measure D.

Measure F would increase the business tax on medical marijuana sold in the City from $1.20 per $1000 (0.12%) to $18 per $1000 (1.8%).  It’s a whopping increase, but the current tax is miniscule.  (Compare it to the roughly 10% sales tax on general merchandise!)  As a general tax, this would only require majority vote approval.  Taxing medical marijuana may not be the best way in the world to gain revenue (a city tax on cigarettes or alcohol would be far better), but it’s one of the few politically acceptable revenue sources that isn’t pre-empted by state or federal law.  Again, if this goes down to defeat, there will be even more programs cut from the city budget.

Bottom line — If you don’t mind dealing with humongous potholes in the streets, broken streetlamps that don’t get fixed, closed fire stations, and being put on permanent hold when you call 911, by all means vote these measures down.  It’ll be one more step towards reducing government services to the point where government can be “drowned in the bathtub.”

If, on the other hand, you’d like Oakland to be something other than the world’s biggest cesspool, I’d recommend a YES vote on these four measures.

Incidentally, here’s the Oakland League of Women Voters’ recommendations on the ballot measures.  Like me, they recommend a YES vote on all four:

http://www.lwvoakland.org/VOTER-June-2009.html#election

Don’t forget, you do need to mail your ballot in so that it’s received on or before July 21st.  (Unlike a tax return, just a postmark won’t do the trick.)


So Now What??

May 19, 2009

Predictably, California voters have emphatically turned town the compromise crafted between the governor, the Democratic legislative leadership, and a few pragmatic Republican legislators.  So now what?

Well, to begin with, what lessons have been learned?  The big one is — don’t compromise.  The voters don’t want compromise.  They prefer ideological purity.  Republicans voters went along with the Republican leadership that rejected the governor’s compromises because they involved new taxes as well as budget cuts.  Democratic voters voted down the measures because they weren’t willing to accept a budget cap or temporarily shift revenue from specially approved taxes to the general fund.

When the legislature goes back to trying to solve the budget deficit, there’s little doubt it’ll keep these lessons in mind.  That means there will be no compromises — and no budget.  That will put the ball squarely in the governor’s court, and his only option will be to make the kind of draconian cuts he’s been threatening — lay-offs, furloughs, and slashed programs.  Essentially anything that isn’t required by a federal mandate will be slashed.  In addition, the governor will as he has warned, attempt to “borrow” money from local governments.  (It’s not clear to me whether this part of his strategy would require legislative cooperation.  If so, I’d be willing to bet he won’t get it.)

Given that the governor will get little if any help from the legislature on these matters, there are limits to what he can do.  The question is it’ll be enough to forestall defaults on state bonds and lawsuits from state vendors over non-payment of their bills.   I wouldn’t bet on it.  [Maybe the state can’t go bankrupt, but lawsuits from angry vendors and bondholders could result in courts taking almost as much power over state finances as a bankruptcy court would have.]  I think we can look forward to a year in which few businesses will want to do business with the state, and nobody will want to buy state bonds.

Without bond funding, even more programs will have to be cut.  Between that and lay-offs, look for unemployment to rise even more — maybe to levels not seen since the great depression.  This summer doesn’t look to be a good time for the Golden State.


The Market Implications of the California Special Election

May 7, 2009

I’ve been somewhat of a broken record stuck on discussing the May 19th special election here in California; but, after all, it is fast approaching.  One topic I haven’t touched upon yet, though, is the implications of the election for the financial markets.

Obviously, California doesn’t really have its own financial markets.  There isn’t even a Pacific Stack Exchange any more.  So, if the special election is going to have an impact, it’ll be on Wall Street and the national markets.  That doesn’t however, mean it will be ignored.

Right now, I’ve seen little if any discussion in the national financial press about the implications of the California election.  That doesn’t, however, mean it won’t have any.  If anything, it means the effects of the election will be felt even more strongly because they won’t have been anticipated and taken into account beforehand.

What will those effects be?  If, by some miraculous turn of events, most of the ballot measures pass (I’m ignoring Prop. 1F, which will have zero effect on financial markets [or almost anything else]), the effect would be positive.  It would send a message that California’s financial mess, while not totally solved, is at least being addressed and taken seriously.  What, however, about the more likely outcome?  What if most or all of the measures go down in flames?

I think the effects will be dramatic and negative.  The Governor is already raising the threat of major budget cuts, as well as poaching from cities’ and counties’ property tax proceeds (see, http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/07/BAPC17FU69.DTL&type=politics).  While the legislative leadership has been noncommital on specifics, it doesn’t seem the Democrats will have the stomach for another long and draining budget stand-off; especially when their last compromise solution was rejected by the voters.  The Republicans, on the other hand, will feel vindicated and strengthened by the elections results.  They’ve already indicated that they intend to push for even more and deeper cuts when/if the budget comes back to them post-election.

I can see one of two results; and neither would be good news for financial markets.  The first would be that a new, even more austere state budget gets approved — one not dependent on voter approvals.  That would mean the balancing would happen through cuts alone.  Look for major lay-offs of state employees — especially union employees, wage cuts for all employees not protected by a union contract, further drastic cuts in allocations for social services and education, and a grab for local property and sales tax revenue.  The misery would then trickle down to the local level, with major lay-offs of teachers and municipal employees and more than a few bankruptcies for vulnerable cities and counties.  (Vallejo, already in bankruptcy, might actually have to “disincorporate”, whihc, in turn, might drive Solano County into bankruptcy.)  The California municipal bond market would, needless to say, take an enormous hit.

In the alternative, the Democrats might stick to their guns, resulting in another budget impasse.  However, this time I don’t see a compromise forthcoming.  Those few Republicans leaders who might have been open to compromise have been removed form the party leadership, and those Republicans who supported the last compromised are already being threatened with retribution at the next election. 

If no compromise is reached, state bankruptcy could well be the end result.  That would, of course, have major repercussions in the financial markets.  Just for starters, the state’s huge bonded indebtedness would be put at risk.  At the very least state bonds would start to go into default on their interest payments.  The price of California bonds would plummet, and it would be a practical impossibility for California to issue any new bonds. 

My assumption would be that a federal judge would be assigned to preside over California’s financial restructuring.  As with Vallejo, all labor contracts (and other contracts as well) would be subject to being restructured or even voided.  Since a court couldn’t order any new taxes, the judge would have to order the same kind of drastic budget cuts the legislature would have faced; but a judge could ignore the protection of labor contracts.  Expect major cuts in the wages of state employees, as well a a huge wave of lay-offs in all state agencies.  Any expenditures not mandated by federal law would be subject to being reduced or eliminated.

One effect of all this would be that California’s unemployment rate would explode, hitting levels not seen since the Great Depression.  In fact, sad to say, I think there’s a (in)decent likelihood that the special election results and their repercussions might be enough to convert the “Great Recession” into a true depression, unless Obama can scrounge together enough federal funding to step in and save the day.  Even Obama, Superman cape and all, isn’t likely to be able to do that.

So go ahead, vote against all the ballot measures.  What the heck.  When have Californians ever thought much about the implications of their votes?  After all, we elected Ronnie Reagan governor — twice!


Tell Working Assets to support Republic Windows & Doors workers

December 9, 2008
 So, here’s a recent news item (from UPI) about one situation involving laid-off workers:
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CHICAGO, Dec. 6 (UPI) — Laid-off workers at the Republic Windows & Doors factory in Chicago remained camped out there Saturday, refusing to leave without their severance pay.

WMAQ-TV reported about 50 of the 200 idled workers could be seen through a window sitting on chairs and pallets on the factory floor. The Chicago TV station said reporters were asked to stay out of the plant’s work area.

“We’re going to stay here until we win justice,” said Blanca Funes, 55, of Chicago, who had been inside for several hours.

The Chicago Sun-Times reported the workers occupied the factory and warehouse Friday after company officials didn’t show at negotiations brokered by U.S. Rep. Luis Gutierrez, D-Ill., between the company and its bank. The workers say they are owed vacation and severance pay.

Republic said it was closing its doors as a result of Bank of America cutting its credit line.

Union officials said the company failed to give the 60 days’ notice required by federal law and that the bank barred the company from paying for the 60-day period or for vacation time earned by employees, the newspaper reported.

“It’s completely shameless that Bank of America took billions in taxpayer dollars and cuts off credit to a company we believe could have stayed in business,” United Electrical Workers union official Leah Fried said.

Bank of America said it was not responsible for Republic’s obligations.

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What’s this got to do with Working Assets?? Well, As you’ll notice, the real villain in the above story is B of A. (Why am I not surprised?) Working Assets (the “progressive alternative”) runs its credit cards through — none other than B of A. (They’re now calling it FIA Card Sevices N.A.; but that’s a wholly owned subsidiary of B of A.) I think it’s outrageous for a “progressive” business to be involved in this kind of robber baron era type of tactics. I have called Working Assets and left a message with them that, they need to tell B of A that either it reverses its position on Republic Window & Door (and other similar lay-off situations) or Working Assets will take its business elsewhere. I also told Working Assets that if they wouldn’t, I’d take my business elsewhere. I’d encourage any of you who have accounts with Working assets (either credit card, phone, or other) to call them with the same message. Their phone number is:

800.668.9253


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