The GASB Shoe Falls on California Pension Plans

Pension Crisis StatesFor years, pension hawks like Orange County supervisor John Moorlach have been warning that California’s already toxic public employee pension plan deficits will get much worse once Government Accounting Standards Board (GASB) rules take effect. Among other things, the rules will require the big pension plans like CalPERS and the teachers’ plan CalSTERS to use more realistic projections for the returns they will earn on their investments. Now we know how much more toxic:

New government accounting rules will more than double the pension debt reported by CalSTRS, boosting an “unfunded liability” that is now about $71 billion to a newly calculated “Net Pension Liability” of $166.9 billion.

The CalSTRS board was told last week that it’s unclear whether the new liability figure will be reported by the state or spread among school districts, where more than doubling current debt might lower credit ratings and drive up borrowing costs.

If the “Net Pension Liability” is distributed among employers, the reported total debt of a typical small-enrollment school district might jump from $21 million to $49 million and the debt of a typical large district from $280 million to $728 million.

Neither the state nor the school districts have been including CalSTRS debt in their financial statements. The new accounting rules call for pension debt to be added to employer balance sheets. [CalPensions]

GASB exists to end of the sort of accounting shenanigans described here, including projecting investment returns well above those earned by Warren Buffett and this: “Neither the state  nor the school districts have been including CalSTRS debt in their financial statements.” This practice is, to use an accounting term, insane. The state and the school districts know they will be hit with hugely higher pension costs unless the current pension debt isn’t zeroed out by either (1) most retirees dying tomorrow or (2) the market routinely returning more than 8 percent on all investments, all the time.

The big public employee pension plans are required to switch to GASB rules in this year’s financial reporting, and employers whose employees are covered by the plans – your city, your county, your school district – must make the switch in their 2014 reports.

Look for two things: First, the unions will blame it all on “just a change in accounting rules,” even if those rules exist to create more accurate reports, and second, government at all levels will be coming at you with tax  hike proposals.

The $200,000 Mud Patch

San Clemente 1

When I speak to Orange County water leaders at tomorrow’s Water Advisory Committee of Orange County (7:30 a.m., 18700 Ward St., Fountain Valley, with book-signing to follow), I’m going to tell a lot of “crazi” stories, including the one behind this picture.

Here’s a preview:

In San Clemente, city maintenance workers noticed some sand and mud had washed down off the coastal bluffs and were covering part of a sidewalk alongside Pacific Coast  Highway. Being well versed in what it means to be a coastal city in California, the city applied to the California Coastal Commission for a Coastal Development permit so they could remove the mud.

Coastal staff came down from Long Beach to look at the mud and found there was some pickleweed and saltgrass growing there. Those are both what we call wetland indicator species, so the guys from Coastal suddenly became very concerned about what San Clemente was up to. They wrote a 22-page staff report on the matter – virtually tweet-length compared to most of their reports – in which they called the project area:

… a wetland area overlaying a partially buried pre-existing asphalt sidewalk that however degraded, still meets the commission’s definition of a wetland.

Wetland_wetlandJust to be clear, here are photos of a wetland and an asphalt sidewalk. For Coastal staffers: The wetland is the top photo; the asphalt sidewalk is the bottom photo.

No other resource agency in the country – including those in California – would call San Clemente’s sidewalk a wetland. That’s because they require all of the three wetland indicators – vegetation type, soil type and hydrology – to be present for something to be called a wetland. The Coastal Commission says if any one of Asphaltthe indicators is present, it’s a wetland. So San Clemente’s sidewalk could not be scraped clean because that would be tantamount to the destruction of a wetland, which is practically a capital offense in the Commission’s eyes.

So, San Clemente had to build the wood and steel bridge pictured above over the patch of mud. They were required to make the bottom transparent so sun could get through to the weeds below, and install interpretive signage.

Oh, how I would have loved it if they’d given me the assignment to write and design those signs!

When the costs of legal counsel, biological studies, design, permitting and construction were added up, the muddy sidewalk ended up costing San Clemente $200,000  – an amount that could have been used to make up one-quarter of the drop in general fund revenues the city experienced that year.

That, my friends, is a pretty good example of how much it costs Californians to cuddle up too close to Mother Nature.

Three Crappy Regulatory Battles

A funny thing happened yesterday – from three different directions, three different stories reached me, all having something to do with the regulation of poop in California. CalWatchdog ran the resulting column this morning, “Crazifornia: Three Crappy Regulatory Battles.”

Here’s the column’s conclusion:

San Diego’s Regional Water Quality Control Board — which I fought unsuccessfully when it decreed that rainwater becomes toxic the moment it hits the ground — is the cause of the third poop battle … .

Because it succeeded in defining fallen rain as toxic, the board now exerts its authority beyond the prior limits of its purview, the gutter, and reaches into people’s yards. This change is reflected in proposed new regulations that would subject homeowners to six years in prison and fines of $100,000 a day if they repeatedly let dog poop sit unpicked up in their own backyards.

Similar punishments would be meted out to those who repeatedly allow their sprinklers to hit the pavement and those who wash their car in their driveway.

The board’s goal is to cut the amount of bacteria in runoff that reaches the ocean. That reminded me of a study conducted some years ago — in Morro Bay, interestingly enough. Scientists collected samples of ocean water and isolated the DNA from fecal coliform found in it to trace its source. They found it to be overwhelmingly not pet or human in origin, but the DNA of coyotes, rabbits, deer, seals, sea birds and fish.

What will California’s regulators come up with next? Diapers for dolphins?

If you want to find out about the first two poop battles, go to CalWatchdog.

Regulating the Rocket’s Red Glare

The Daily Caller picked up my latest opinion piece, Regulating the Rocket’s Red Glare, about California’s war against fireworks shows. I’ve written a lot about this phenomenon, and it’s recently taken a turn for the worse with a decision in San Diego that could have statewide ramifications.  Here’s the lead:

It should come as no surprise that the leftist legislators and authoritarian bureaucrats who run California are vehemently opposed to fireworks shows. After all, the shows are always fun and usually patriotic.

And against them they are. The California Coastal Commission has led the charge with a multi-year assault on the Sea World theme park in San Diego, which blasts fireworks over Mission Bay every night. That effort shipwrecked on the rocks of Sea World’s considerable political clout and even more considerable legal budget, so the Commission looked for a more vulnerable, less wealthy target.

It found that in the Fourth of July fireworks show put on by local business owners in the tiny, picturesque hamlet of Gualala on the northern California coast.

Please click through to read the entire piece here.

 

Stop the Desecration of the 4th of July!

There are sane people in the California Legislature. They’re just outnumbered.  One of my favorite of the outnumbered and sane set is Diane Harkey (R, of course, 73rd), who has a keen nose for regulatory insanity. She’s just introduced AB 206, a bill that would exempt municipal fireworks shows from the heavy hand of the California Coastal Commission (and the California Environmental Quality Act, to boot).

This is a subject near and dear to Crazifornia’s heart – and the subject of much of my upcoming book’s chapter on the Coastal Commission – due to the plight of the good people of the North Coast town of Gualala (pictured), whose Fourth of July fireworks show was blasted out of existence by the Coastal Commission. Here are some posts you can check out for more on the story:

From Cheat-Seeking Missiles:  Coastal Commission Attempting to Ban Fourth of July Fireworks

From The Daily Caller:  The Queen of the Coastal Star Chamber

The bill is not yet posted on California’s LegInfo site, but it should be soon, and I’ll update this with a link when it does.  A fact sheet on the bill summarizes the issue as:

Broad interpretation of environmental regulation law has defined fireworks as “development” which has expanded regulators authority to require permits or licenses in order to display fireworks. This interpretation has applied particularly to coastal communities. These regulations threaten the ability of local municipalities along the coast to provide this public service to both their communities and the state.

In order for Californian’s to celebrate the great independence of this country and continue with traditions that previous generations have enjoyed, it is necessary that the ability of public entities to put on such firework displays is protected.

These shows are a cultural event that are enjoyed by many Californians and also provide an economic benefit for the municipalities that display them.

Assemblywoman Harkey also sent me a sample support letter.  Please help her in this important effort (which faces a bleak future in the Dem-dominated legislature) by getting folks in your neck of the woods to support it.  Here’s the sample letter:

Dear Assemblywoman Harkey,

On behalf of the (INSERT NAME OF YOUR ORGANIZATION) I am writing to express support for Assembly Bill 206, which will provide an exemption for municipal firework shows from the California Environment Quality Act and California Coastal Act.

In 2008, the Gualala Festivals Committee received a cease-and-desist order from the California Coastal Commission for discharging fireworks without first receiving a coastal development permit. The Coastal Commission determined fireworks caused an increase in nest abandonment.

This action was confirmed by a court, setting a dangerous precedent in which “development” was deemed to encompass the discharging of fireworks as described in the California Coastal Act because the displays deposited spent materials into coastal waters.

Fireworks shows are an inexpensive way for families and the community to celebrate the independence of this country. Previous generations in California have enjoyed these shows without burden of a government agency standing in the way of a long celebrated tradition.

In addition, these shows provide an economic benefit for the municipalities that display them. As a coastal community this issue is especially significant to the citizens of (INSERT NAME OF YOUR CITY OR ORGANIZATION).

Environmental protection is important, but a line should be drawn to ensure the preservation of long held traditions that provide enjoyment, foster patriotism and stimulate our coastal economies.

(INSERT NAME OR ORGANIZATION) stands in support with AB 206 for the above mentioned reasons.

Sincerely,

Pacific Legal Foundation Likes Crazifornia

The Pacific Legal Foundation has been an invaluable source to me as I’ve researched Crazifornia, and I greatly admire their efforts to stand up for the little guy who’s the target of zealous over-regulators in government.  Paul Beard III has been particularly helpful in my work on the Coastal Commission, having represented plaintiffs in two high-profile cases, the Gualala Festivals Committee’s effort to put on a Fourth of July fireworks show, and George and Sharlee McNamee’s fight to keep their beachside furniture on their own private property.

Consequently, it was gratifying to see this on the PLF Liberty Blog:

Coastal Commissioner Sara Wan in hot water

Author: Paul J. Beard II

The California Coastal Commission routinely steals from and bullies coastal landowners who simply want to develop, use, and enjoy their properties. Among property-rights violators, the Commission may be the very worst. And among the agency’s 12 voting members, Commissioner Sara Wan, whose disdain for property owners and their rights is legendary, may be the worst of the lot.

Wan recently became chairperson of the Commission. The position gives her much influence over the agency’s agenda and operations. But her rise to power is not without controversy.

In an insightful article published in The Daily Caller, Laer Pearce offers a profile of, as he puts it, “the Queen of the Coastal Star Chamber,” and casts doubt on Wan’s future on the Commission. The article discusses several of PLF’s high-profile cases against the Coastal Commission. It is a must-read.

To learn more about PLF and their efforts on behalf of liberty, click here.

The Queen of the Coastal Star Chamber

The Daily Caller ran my op/ed on the latest intrigue at the California Coastal Commission, the state’s all-time champ at trampling on private property rights and the test case for obsessive over-regulation.  The column focuses on the new chairwoman of the Commission, Sara Wan, and is appropriately titled, “The Queen of the Coastal Star Chamber.”

When the Star Chamber ruled atop Great Britain’s legal system for 150 years until its demise in 1641, it was characterized by secrecy, intrigue, and the often arbitrary and oppressive dispensing of what could hardly be called justice. California has its own Star Chamber, the California Coastal Commission, lorded over, for the time being at least, by a portly grandmother from Malibu, Sara Wan.

There is a pitched competition between California agencies for which is the most nonsensical in its implementation of over-reaching regulations. Certainly, the California Air Resources Board, which recently tried to ban black cars in the state in its fevered effort to save the world from global warming, is a strong contender. The California Energy Commission, which last year deprived Californians of the right to purchase large, high-performance LCD and plasma televisions — also to save the planet — is another contender. But none can top the Coastal Commission when it comes to imposing its will forcefully on the hapless Californians who are deemed to fall short of the Commission’s deep green political will.

For the rest of the post – including a blow-by-blow recount of Wan’s recent power grab and the possible ramifications, read the entire op/ed at The Daily Caller.