The State of the State of Despair

casosGovernor Brown had something to say to Crazifornia this morning as he kicked off his State of the State speech:

Against those who take pleasure, singing of our demise, California did the impossible.

That would be me – about 300 pages worth of singing of our demise, or at least the increasing probability of our demise.

The impossible, as Brown defined it, is that “We have wrought in just two years a solid and enduring budget.” I agree it’s two years since he took office. I’m not at all ready to call the budget solid and enduring, as it is based on a lot of assumptions that still could go sideways.

Brown was quick to give credit to those who had a part in “doing the impossible.”

You, the California legislature, did it. You cast difficult votes to cut billions from the state budget. You curbed prison spending through an historic realignment and you reformed and reduced the state’s long term pension liabilities.

That’s a pretty impossible characterization of what the state did. Pushing prison expenses off to counties instead of addressing the root causes isn’t fixing anything, and it’s certainly not heroic. It just transfer to pain to counties that can’t fight back.

The touted reform and reduction of the state’s long term pension liabilities, while welcomed, was akin to the rate of speed of a great Roman galley when only one oarsman is rowing. Trimming around the edges is not a haircut. Reducing benefits for new hires still saddles us with 30 years of unaffordable liability from the previously hired. (More on this in a minute.)

Then, the citizens of California, using their inherent political power under the Constitution, finished the task. They embraced the new taxes of Proposition 30 by a healthy margin of 55% to 44%.

Yes they did, and now we get to watch the Legislature burn through that money instead of approaching it, to use a favorite word of the Sacramento majority, with sustainability as a goal. And watch tax revenues drop off in the latter years of Prop 30′s seven year life as business owners peel out to other states, taking their taxability with them.

Members of the legislature, I salute you for your courage, for wholeheartedly throwing yourself into the cause.

What else is he going to say to his Democrat super-majorities? Now came the most telling 22 words of the speech:

I salute the unions–their members and their leaders. You showed what ordinary people can do when they are united and organized.

And there you have Jerry Brown. A union guy through and through. A guy who knows who’s buttering his bread. A guy who knows that big, fat public employee unions equal big, fat Democrat election margins.

Things are looking better in California since I wrote the last word of Crazifornia. Unemployment is down. That’s good; we’re all for less human suffering. And tax revenues are up. That’s certainly one way to close a deficit – not my favorite way, but certainly a way.

Still, sorry Jerry! I’m still singing of our demise. I’ll change my tune when taxes go down and California starts treating businesses like assets instead of asses; when the union grip on Sacramento is loosened and we seriously address the $250-$500 billion shortfall in public employee benefit funding by rewriting contracts and reducing benefits for existing employees; and when we have a governor who kills High Speed Rail and stops trying to single-handedly save the world from climate change.

It’s not too much to ask. But in California it is, to use Brown’s words from earlier today, doing the impossible.

That Filthy Privately-Hauled Trash!

Fresno trashIf you track California regulation like we do, you’ve heard of CEQA reform – that’s the California Environmental Quality Act, and it’s regularly used by NIMBY and environmental groups to slow down projects that have fully complied with the law.

These groups can make even the most ridiculous arguments, allege a CEQA violation, and the whole matter gets tossed into the over-crowded California courts, pretty much guaranteeing a delay of a year or more in the start of the project. Even though most of the cases ultimately are thrown out, legal fees, delays and (sometimes) settlements that impact the project all drive up costs for the project proponent. That makes California more expensive and less business friendly.

Here’s a case in point: FRESCA, a days-old Fresno group, just sued the city, claiming a full-blown Environmental Impact Report should be prepared for the transfer of trash pick-up services from the city to a private company. The city wants to do this because the trash franchise fees will help to close an abyss-deep budget gap. I’m guessing FRESCA is a front group for city unions, so we know what they want.

Fine. Try to protect cushy union jobs. But how does privatizing trash collection impact the environment? Is privately hauled trash dirtier than publicly hauled trash?

Of course not! The lawsuit is ridiculous on its face, but that doesn’t stop FRESCA from delaying fiscal relief for a city much in need of fiscal relief – all so union employees can pad their retirement pensions a bit more before being tossed into the real world.

And that, my friends, is why CEQA reform is necessary.

The Twelve Days of Crazifornia

“On the twelfth day of Crazifornia,
Gov. Moonbeam gave to me twelve months of craziness,
Eleven propositions
Ten UC tuition hikes,
Nine “high-speed rail links,”
Eight states’ worth of takers,
Seven-ty percent underfunded pensions,
Six billion in debt
Five fleeing comp’nies,
Four bankrupt cities,
Three falling bridges,
Two super-majorities
And a tax hike on millionaires.”

California was even crazier than this in 2012.

It looks like Guv Moonbeam re-gifted us this year. After all, we got twelve months of craziness last year, and the year before that, and the year before that, and the year ….

I am one day late posting the twelfth of the twelve days because my wife and I are in Arizona visiting our oldest daughter, who fled California because of one of its major crazy features: unaffordable housing. In California, the cost of over-regulation adds 30 percent or more to the cost of housing, which explains why all ten of the nation’s top ten cities for regulations’ burden on housing costs are in California.

Legislators are well aware of the impact their regulations are having on the housing industry, and they know how important new home sales are to the state’s economy.  As recently as 2007, new home sales – not resale homes, just new ones – generated more dollars in sales than any other industry in the state, even more sales than all the retail sales combined.

If they would dial back the regulations, it would help they state. The Democrats in Sacramento know this. So what did they do in this crazy year? They increased the energy efficiency standards for new homes, which will add at least $1,500 to the cost of even the most modest home  – and even more in the most hard-hit parts of the state.

Crazily, California already has the nation’s most demanding home energy efficiency standards. We’re doing a great job. We can rest on our laurels and still be the best in the nation. But no, recession or not, the Legislature ratcheted up what the state demands of homebuilders.

Why? To save the world from global warming of course. Will a small incremental gain in the energy efficiency of homes in a state where new homes already are extremely energy-efficient cause global temperatures to drop? No, of course not. It will do nothing but make the state less attractive.

Here’s some more California craziness from 2012:

One-third of the nanny-state laws passed in the nation were passed by California legislators, including most famously one that would make it illegal to try to turn around gender confusion issues in children.

California became the #! Judicial Hellhole in the nation, the #1 state for outrageous pay to state workers, topped by a state psychiatrists’ “earnings” of $822,000, and the #1 state for the number of people in poverty.

During the year, school districts all over the state started obligating themselves to expensive bonds to meet their outrageous pension obligations. Schools in Poway (San Diego County), for example, took on bond debt that will cost $1 billion in order to meet pension obligations of $100 million. A school district having pension obligations of $100 million? That’s almost as crazy!

Speaking of San Diego County, San Diego sued itself over a bridge that cost twice its estimated cost.

The year also saw the state’s first carbon credits auction under its first-in-the-nation state carbon cap-and-trade program. (Less crazy states aren’t considering such a program, or have delayed them because of the recession.)  Moonbeam wanted $1 billion  from the auction but only got $289 million. Do you sense the whole campaign against carbon is more about raising state revenue than saving planets?

On and on it goes. Obviously, the craziest thing that happened all year occurred in November, when voters sized up the Democrats who are so responsible for much of the state’s crazinesses and decided to award them with a legislative super-majority.

Expect things to be even crazier in 2013.

 

The Seventh Day of the Twelve Days of Crazifornia

“On the seventh day of Crazifornia,
Gov. Moonbeam gave to me seven-ty percent underfunded pensions,
Six billion in debt
Five fleeing comp’nies,
Four bankrupt cities,
Three falling bridges,
Two super-majorities
And a tax hike on millionaires.”

Let’s imagine a California utility that installs 30 percent of the required air scrubbers on its power plants. Or a California manufacturer that disposes of 30 percent of its hazardous waste materials correctly, but dumps the other 70 percent in a nearby river. Do you think the state would let them get away with it? Of course not!

Then why are the voters of the state letting the state get away with promising its employees the moon, but never getting around to funding 70 percent of those promises?

The managers of the state’s pension programs and the legislators who oversee them would quibble with my analysis. They would say they don’t need to fully fund the pensions because investment income will fill the gap before the employees all retire. I could easily draw another “imagine a California company that” analogy, but you all are quick and don’t need it.

The falseness of the pension income claim – a deliberate falseness, also know as a lie – is that the pension funds lost money on bad investments during the recession, and have not yet made that money up. They’re continuing to estimate their return on investments will be over seven percent, when the actual return is now one or two percent.

The Little Hoover Commission – California’s Grand Jury – reported in 2011 that, “California’s pension plans are dangerously underfunded, the result of overly generous benefit promises, wishful thinking and unwillingness to plan prudently.”

Brown’s pension reform plans are deemed by taxpayer organization leaders to be about 25 percent of what’s needed. And those are only plans. As they move through the pack of wolves at the California Legislature, most hungry for the next wad of cash doled out by the public employee unions, they will be watered down. And if anyone sues over this mismanagement, the case will be heard by judges awaiting their pensions, who won’t do anything to jeopardize their promised pot of gold.

Besides, the proposals are mostly directed at new hires and ignore the vast and growing sums due those hired before even the current meager reforms go into effect. Here’s what I write about that in Crazifornia’s chapter on the budget and pensions:

The major problem is that most current public employees are guaranteed defined-benefit plans, under which their benefits are guaranteed no matter how well, or badly, the underlying pension investments perform. Reforms include, at a minimum, a shift to defined contribution plans for new hires, under which employees contribute a certain amount, usually with matching contributions from the taxpayers. The final pension payout then is not guaranteed, but depends on how well the investments perform. The taxpayers are not on the hook for poor investment performance.

Jack Dean, proprietor of Pension Tsunami, a website that has succeeded in raising journalists’ awareness of the public-employee pension crisis, explained to me over lunch why the public employee fat cats will continue to present a problem no matter what the younger employees do, or what sort of lesser pension plan they are forced to accept.

“I do talk radio shows,” he said between bites of his sandwich, “and people will call in and ask, ‘What can we do to stop this right away?’ and my answer is, ‘You can’t stop it.’

“We’re stuck with what’s in the pipeline right now – all the current employees with contracts that spell out their pensions, and judges who rule those contracts cannot be breeched. So, all we’re left with is switching to a defined-contribution plan for new hires, instead of the defined-benefit plan the earlier employees have.”

I said that would help in 30 or 40 years when the new-hires retire with fully vested benefits, and wondered if the state could survive the long and well-paid retirements of the current generation of workers.

“You’re right,” he said. “We’re going to have to live through something that’s like the Deepwater Horizon oil leak in the Gulf. You can cap it off so there’s no more oil coming out – but then you have to deal with everything that’s floating around in the Gulf, and you say, ‘What in the Hell do we do with all this stuff now?’ What do we do with all the liabilities from the current employees’ defined benefit plans, which we’ll have to pay on from when they retire until they die?”

The Sixth Day of the Twelve Days of Crazifornia

“On the fifth day of Crazifornia,
Gov. Moonbeam gave to me six billion in debt
Five fleeing comp’nies,
Four bankrupt cities,
Three falling bridges,
Two super-majorities
And a tax hike on millionaires.”

When I started writing Crazifornia, the state’s budget deficit was $24 billion. As I wrapped it up, the deficit was about $6 billion. The Legislature shouldn’t be taking any credit for the improvement. Rather, we can thank a slightly improved economy … and revenues from taxes on new Facebook millionaires.They didn’t get as rich as the state bean-counters hoped, but when you’re drowning in red ink, any black ink looks good.

With November’s passage of new taxes – Prop. 30 and Prop. 39 – Legislative Analyst Mac Taylor is projecting an FY 2103 deficit of “just” $1.9 billion. Let’s not kid ourselves. When there’s a $1.9 billion hole in your pocket, it doesn’t mean you’re solvent, even if it makes you less of a laughingstock.

Taylor couched the $1.9 billion prediction with enough disclaimers to make a Wall Street lawyer dizzy. It’s predicated on assumptions about economic growth, job growth, investment returns, bond rates, General Fund spending levels (gulp!) and several others, any one of which could crash the projection. As we’ve said before, this is today’s California, so it’s safe to assume the worst … especially with Democrats having unassailable majorities in both houses and the governorship.

Sacramento Bee columnist Dan Walters nailed it when he wrote recently,

When push comes to shove, will Democratic leaders tell their political allies that even more austerity is needed to reduce debt and balance the budget, or will they cave in to the pressure to restore spending?

 

The numbers may change, but the political equation remains the same. There are always more demands than there is the money to meet them.

And remember, we need a very, very big budget surplus if we’re going to start paying down the $250 billion to $500 billion shortfall in the state employee pension plans.

The Third Day of the Twelve Days of Crazifornia

“On the third day of Crazifornia,
Gov. Moonbeam gave to me three falling bridges,
two super-majorities,
And a tax hike on millionaires.”

CalTrans safety inspector Duane Wiles was fired after fabricating test results on the safety of concrete pours on the Oakland Bay Bridge and two other California bridges.

Merry Christmas from Duane?

OK, the three bridges aren’t exactly falling … yet … nor are the dozens of other bridges he improperly tested. But still, we’d feel better driving over any bridge in California if ne’er do well state employees like Duane Wiles weren’t involved in their design and inspection.

Caltrans – or as I refer to it in Crazifornia, Caltransylvania – is a star in the book’s chapter on bureaucratic incompetence. Even among the other Caltrans dimwits, time-wasters and incompetents, Wiles stands out as one exceptionally bad state bureaucrat. Here’s what I wrote about him in Crazifornia:

Duane Wiles’ job in Caltrans’ Foundation Testing Branch is much more critical to California drivers than the mere designing of pavement; he’s tasked with conducting tests to determine the structural integrity of bridges. One of his assignments was the $6.3 billion reconstruction of the Oakland Bay Bridge, which was damaged in a 1989 earthquake. (Yes, it took more than 20 years for Caltrans to rebuild it.)

A Sacramento Bee investigative report found that Wiles failed to properly conduct tests on the Bay Bridge’s new span and dozens of other bridges, fabricated results on at least three Caltrans projects, often discarded his raw data files and inflated his overtime pay. Perhaps all this was merely the side effects of personal problems Wiles was experiencing at the time, as he faced felony charges for a sex crime against a child.

Other employees in the department had raised concerns about Wiles three years earlier, but Caltrans failed to take action until after a reporter from the Sacramento Bee called, armed with materials provided by a whistleblower.

It took another three weeks for Caltrans to shuffle Wiles off to a less visible place where there was less risk that he would harm the public. But just two days after the story became public, Wiles was fired, along with his supervisor, who not only had tolerated Wiles, but also had used Caltrans workers to do work on property he owns. Reasonable people must question how many other supervisors are ignoring how many more test fabricators and overtime falsifiers at Caltrans. Should it really require negative publicity for the agency take action?

So, who’s going to ease your mind the next time you’re on a bridge over troubled waters?

 

The Second Day of the Twelve Days of Crazifornia

“On the second day of Crazifornia,
Moonbeam gave to me two super-majorities
And a tax hike on millionaires.”

I finished writing Crazifornia immediately after the June 2012 primary election, so it ended a bit more up-beat than I thought it would. After all, voters in San Diego and San Jose had just voted overwhelmingly to aggressively address those cities’ public employee pension programs.  What could go wrong?

November could go wrong – and boy, did it!

California voters passed two tax hikes and rejected a much-needed end to public employee unions’ ability to mandate political contributions from their members, which was bad enough. Then they made things infinitely worse by granting the Democrats – who are most responsible for the state’s sad condition – super-majorities in both the Senate and Assembly.

Their new super-majorities mean the Democrats will no longer have to look for a Republican or two who will join them in voting for tax increases. With two-thirds of the votes in both houses in the Democrats’ hands, they will now be free to raise taxes whenever, on whomever and however much they want to.

Do you think the wealthy and successful will stand for this? Or will they pack their bags?

And it gets worse. Two super-majorities mean Democrats can impose new legislation retroactively, rush legislation through the process and increase the amount of high jinx they can pull off during marathon end-of-session legislation orgies.

And it gets even worse. Gov. Brown is now our only defense against Dems Gone Wild – how scary is that? – but with super-majorities, the Assembly and Senate can override the governor’s vetoes.

Happy New Year … not.

Goof-Off and Rip-Off State Employees Exposed

The state auditor has issued a new 90-page report, Investigations of Improper Activities by State Agencies and Employees, detailing the behavior crummy state employees. Talk about a target-rich environment!

Here’s one example that, unfortunately, isn’t that far off the norm:

A California Dept. of Education employee was investigated because he was posting comments on articles and columns in the Sacramento Bee. No big deal, you say? How about 4,900 comments in one year, during work hours?

He tried to explain it away by claiming commenting was in his job description. It wasn’t. Then he said he didn’t have all that much to do, anyway. He was right; his supervisor confirmed there was only enough work to keep him busy 80 percent of the time.  Hmm. Why wasn’t he laid off if there wasn’t enough work for him?

According to the Sacramento Bee – which seem to report he story rather jubilantly, as if reporters there were thrilled the jerk was finally busted – the education department took “some informal action against the employee as a result of this investigation,” but not enough to keep him from continuing to post comments on the Bee during work hours.

How can it be that an employee that so flagrantly violated job expectations was merely informally disciplined? There’s not enough work for him AND he’s a complete goof-off AND he’s a discredit to whatever profession he professes to have … and he’s not fired on the spot? He certainly would be if he wasn’t working for the government!

Update: A later report said the employee “voluntarily left employment.” One down. A whole lot more to go.

Here are some more findings by the auditor, quoted from the Bee’s article:

  • A Franchise Tax Board employee, an Office of the Secretary of State employee and a courier service owner who were convicted of bribery and ordered to pay the agencies more than $227,000 in restitution.
  •  A former Employment Development Department accounting technician and two accomplices committed mail fraud by fraudulently redirecting nearly $93,000 of unemployment benefits to the two accomplices.
  • The California State Athletic Commission’s overpaid a total of $118,650 to 18 athletic inspectors because it incorrectly paid them at overtime instead of hourly straight-time rate over a two-year span.
  •  A Department of Fish and Game supervisor inappropriately required a farmer leasing land from the state to pay more than $53,000 to third-party vendors for department expenses. The Fish and Game employee also required the leasee to provide him with $5,000 in Home Depot gift cards that the supervisor couldn’t prove were used for state purposes.
  •  A manager with California Correctional Health Care Services improperly paid $55,000 in travel benefits to 23 employees, including commuting costs and expenses incurred near their residences and workplace.

Just one question. What is an athletic inspector and where do I apply?

The Crazifornia Propositions Voter Guide

Uglies, Goodies and Don’t Bother Me’s make the Crazifornia Proposition Voter Guide a Must!

When I was interviewed by The Weekly Standard for an upcoming article about this November’s flock of Crazifornia ballot initiatives, that’s how I categorized them: “Five uglies, four goodies and two don’t bother me’s.” (I’m still not sure how to spell that last one!) Coming up with that summary took hours of research, which you can save yourself with The Crazifornia Propositions Voter Guide.

Here are my recommendations, in ballot order, with those in red being the most critical:

Prop 30 – Ugly

It’s hard to even get by the name of this one – Temporary  Taxes to Fund Education, Guaranteed Local Public Safety Funding – without uttering that most common of election season bromides, “How stupid do they think we are?”

This proposition’s position at the top of the ballot is the result of Gov. Jerry Brown’s strong-arming of the system to gain advantage, and that pretty much sums up this initiative. Its advertising campaign is basically strong-arming, too; picture an image of a sweet classroom teacher with a gun to her head and the slogan, “Pay up or the teacher dies!” Brown could have linked passage of his tax  hike to the jobs of bureaucrats, regulators and tax-collectors instead of teachers, but we know how that would turn out.

If Proposition 30 passes, California will have the highest income taxes of all 50 states, and its already secure ranking as the state with the highest sales tax will become more secure.  California spends three times more per capita on social welfare programs than it should, based on national per capita averages. It doesn’t need more revenue, it needs more disciplined spending. Vote NO.

Current Around the Capital Polling Average: Closing steadily at 50.8 yes, 39.9 no. We might still defeat this one!

Prop 31 -  Goodie

If the LA Times is against it, we must be for it. This latest effort from California Forward would create a two-year budget cycle for the state in order to reduce end-of-the-session craziness (I doubt the craziness would disappear, but still like the idea of taking more time with budgeting), require the legislature to find off-setting cuts for any new expenditure of $25 million or more, require performance reviews of all state programs, plus a few other good ideas.

The LA Times doesn’t like it because “it could only be revised by another vote of the people.” Exactly! Leave it to the legislature and they’ll be back to their old tricks in no time.  Vote YES, but note that OC Supervisor John Moorlach, a leader in the fight for fiscal responsibility let me know he’s voting no because it “forecloses on the Laffer curve” by limiting the legislature’s ability to enact tax decreases. Like all things from California Forward, 31 is a mixed bag.

Current Around the Capital Polling Average: About one-third are still undecided so this one could still flip. Yes: 30.7, no 37.8

Prop 32: Goodie

Here’s another run at “paycheck protection” or curtailing the power of unions (and corporations) to mandate paycheck deductions used for campaigning and lobbying. Of course, corporations don’t do mandatory payroll deductions for lobbying, so clarity demands saying that this is an effort to curtail union power.

And it needs to be curtailed if California is every going to gain the fiscal sensibility it must gain to become healthy once again. Public employee unions own Sacramento now, as just the two biggest public union funders of lobbying in Sacramento spend more than the pharmaceutical industry, PG&E, Chevron and ATT&T combined.

The unions are spending really big to stop Prop 32, contributing nearly $60 million thus far. Until Charles Munger responded with a $23 million contribution in support, opponents had outraised supporters five to one. They’re still up by about $13 million.Vote YES

Current Around the Capital Polling Average: A long-running dead heat, with 44.4% yes and 43.8% no.  The 11.5% undecided are going to be barraged with ads from both sides.

Prop 33: Don’t bother me

This is Mercury Insurance CEO George Joseph’s second run at insurance regulation tweaking via the ballot box. Last time around (Prop. 17, 2010), Mercury spent about what they’ve spent this time – $17 million – trying to accomplish the same thing, which is to blah, blah, blah, zzzzz.  I figure they figure they’ll make more than $17 million off higher premiums if it passes.

One reason to vote for it is that Harvey Rosenfield is against it. This is a guy who has milked propositions for millions in personal gain, so I lean toward supporting what he opposes. But this kind of junk shouldn’t be clogging our ballots, so Don’t Vote.

Current Around the Capital Polling Average: Holding at 54.8% yes, 33.6% no.

Prop 34: Ugly

Propositions, as you’ll learn in Chapter 1 of Crazifornia, were the Progressive’s wet dream of the early 1900s. Prop 34 shows why, as it would take capital punishment off the table in California, thereby moving the state closer to Europe.

Arguments fly on both sides of this longstanding and controversial issue, but here’s one that works for me: If the death penalty is no longer in a prosecutor’s bag of tricks, the number of plea bargains and confessions will drop dramatically. Even with delays that are far too long before sentencing and execution, the chance of taking up residence on death row remains the penultimate bargaining chip. I don’t want it taken away, and neither should anyone else who puts victims and justice ahead of criminals and legal technicalities. Vote No.

Current Around the Capital Polling Average: Steady and unbelievably tight at 43.9 yes, 44.9 no.

Prop. 35: Don’t bother me

Don’t bother me, but don’t get me wrong. I’m no fan of human trafficking, a subject I wrote passionately about quite frequently in my Cheat-Seeking Missiles days. It’s the sinful side of the human nature played large and its perpetrators will need Christ’s forgiveness; they’re certainly not getting mine.

But why is it on the ballot? Even the inept California legislature has done enough law-passing to discourage the practice and incarcerate the perpetrators. Since it won’t make any difference in the results, Don’t Vote.

Current Around the Capital Polling Average: Yes 79.7%, no 12.3%.

Prop. 36: Goodie

I was all for the first three-strikes proposition, but it turns out that it had unintended consequences, as so many propositions do. Prop 36 corrects this while keeping the intent of the original proposition intact.

Basically, it separates truly heinous offenders from run of the mill bad guys, with the former still subject to life in prison without parole on their third strike and the others not. California spends way too much on prisons for a lot of reasons, one of which is that we simply have too many prisoners. Let’s save some money by letting some bad but not too bad guys do their crime and serve their time. Vote Yes.

Current Around the Capital Polling Average: Yes 71.5%, no 17.3%. It looks like even Californians can agree on this one.

Prop. 37: Ugly

If California’s recent voting trend holds, Prop. 37 will pass because it has a lot of corporate money against it. Yes, a big majority of Californians are anti-business and it shows on proposition votes (and when rich Republicans run for state office, right Meg?). And this one has a lot of corporate money flooding the opposition.

But the current Around the Capital Polling Average indicates that might not happen this time. The yes vote is strong at 56.2%, but the no vote is climbing at 32.7%, and a lot of money will be spent on NO ads in the next two weeks.

It made my ugly list because Prop. 37 is the new Prop. 65.  In other words, it was written by trial lawyers for trial lawyers. Like 1986′s Prop. 65, it has a seed of a good idea. Then it was that people shouldn’t be exposed to carcinogenic chemicals without knowing it; now it’s that they shouldn’t be exposed to genetically engineered foods without knowing it. But like 65 was an elaborate ploy to funnel millions of dollars to trial lawyers (almost $500 million to date, in fact), so is Prop 37.

Don’t be fooled. Prop 37 is not about informative labels for you. It’s about label regulations that are so complex that farmers, processors, manufacturers and retailers are bound to make mistakes. And when they do, they’ll be sued by a pack of legal mutants. Vote NO.

Prop. 38: Ugly

Prop. 38 is another tax increase, but with this one the money is earmarked for schools. Why, if 1988′s Prop. 98 guarantees they’ll get over 40% of the general fund anyway? And why, since all that money has done nothing to lift our schools out of the cellar?

Well, it turns out the state legislature routinely steals Prop. 98 money from schools and rarely pays it back. In Crazifornia, I put the current IOU at $3.6 billion. Surprised?

But what good would even $3.6 billion do? At a luncheon yesterday, political mastermind Dan  Schnur quoted a Harvard study that found it would take $1 trillion a year to raise California schools to mere mediocrity if nothing is done beyond money to improve the system.

So let’s force the schools and the legislature to fix education by not giving the schools more money. Let’s force Sacramento to drop regulations that cost school districts $400 million a year to keep up with. Let’s let classrooms get bigger again because we’ve learned that all we’ve gotten from small classrooms is more mediocre teachers. Vote NO.

Current Around the Capital Polling Average: Yes 42.1%, No 47.0%

Prop. 39: Ugly

This one will pass for sure because it taxes the other guy, and Californians don’t mind taxing the other guy, as they do regularly with smokers, drinkers and millionaires. (Hm, strange company there!)

Be that as it may, there are two things wrong with Prop. 39 that definitely make it ugly. First, it taxes business. Yes, they’re out of state businesses, but Californians are more addicted to taxing business than smokers are to cigarettes, drinkers are to booze and millionaires are to … success. They’ve hit bottom. It’s time for an intervention, not another hit.

Second, about half the money raised – a stunning $500 million a year – will go to “create energy efficiency and green energy jobs” in California. Haven’t we had enough Solyndras and A123′s? Vote NO.

Current Around the Capital Polling Average: No surprise at 54.2% yes and 30.7% no.

Prop. 40: Goodie

Here’s something more rare than a California gnatcatcher eating an elderberry beetle: A GOP-sponsored proposition that’s polling very favorably. But that may be because it’s just the precursor to the really big vote that will follow.

Prop. 40 would subject the California senate district lines drawn by the California Citizens Redistricting Commission to a vote of the people, with interim boundaries for the next state-wide election set by court-appointed officials. California Democrats smartly and unethically took over the Citizens Redistricting Commission so the boundaries need to be redrawn. This proposition will make that vote possible. Vote YES.

Current Around the Capital Polling Average: 44.2% yes and 25.8% no. It should win, but with 30% undecided, it could still go south.

It’s Time for Moneyball in Sacramento

Jerry Brown is no Billy Beane.

Coaching a bottom-dwelling state – at the bottom of the education, business-friendliness and government efficiency rankings, at the top of taxation, regulation and fleeing residents rankings – Brown is continuing to dole out big money for policies that are past their prime and failing to perform.

Beane, whose Oakland A’s are once again in the Major League playoffs, realized in 2002 he didn’t have enough money to put a team together the old fashioned way, so, as recounted in Michael Lewis’ best-seller, Moneyball, he signed undervalued players other teams overlooked. Each was smartly chosen for on-base percentage, scoring runs, or less measurable qualities like stepping up when the chips are down. Other managers thought Beane was either desperate or insane, or both, but the rag-tag team of forgotten players he assembled became winners.

Beane’s had the ability to see in baseball’s raft of statistics what other managers didn’t. Brown is surrounded by statistics on how California’s various players – agriculture, business, local government, state bureaucracies, pension funds – are performing compared to other states, but he can’t seem to read them. Instead of pursuing government policies that are the parallel of Beane’s brilliant recruiting, he’s doing the governmental counterpart of the Yankees shelling out $18.7 million (prorated down from a contracted $28 million) to get pitcher Roger Clemens back from the Houston Astros in 2007. Clemens made $1 million a start that year, and came to define “worst trade ever” to many baseball buffs by turning in a lackluster 6-6 season.

Proposition 30 is Brown’s Clemens, a high-cost, past-its-prime approach to government that he hopes will lift California out of the cellar. Like Clemens, it costs a lot, with sales and income tax increases of as much as $50 billion over the next seven years. Like Clemens, it too has a strong arm, in this case strong-arming Californians with its threat that if they don’t pay up, the teacher dies. And just like Clemens showed the Yankees, there’s no guarantee it will work as promised.

Moneyball for California

Should Prop 30 fail in November, Brown will have a chance to start playing Moneyball. Here are some ideas for the manager of the major league Sacramento Spenders.

Schools – Schools are the state’s single biggest expense, receiving 43 percent of the General Fund. Half of this largess goes to administrative overhead, because it takes a lot of administrators and $400 million a year to fulfill all the mandates, reports and busy work imposed on school districts by Sacramento. In contrast, just 20 percent of Connecticut’s education budget goes to administrative overhead. California ranks #46 in the most recent “best-educated state” rankings, while Connecticut comes in second.

Then there’s the problem that our teachers are the highest paid in the nation, despite California’s tragically poor education outcomes. The California Teachers Association, which gave almost $50,000 to Brown’s 2010 gubernatorial campaign and has paid out $6.3 million to support Prop 30, does all it can to keep salaries high and performance-based pay a nonstarter.

Moneyball in education would see the elimination of most of state-imposed mandates on public schools, so we could stop paying for thousands of high-priced school administrators. Then, Brown could support a ballot initiative requiring performance-based pay for teachers, and rail against the devious CTA advertising that would attack it. Brown would never do this, of course, but a Governor Billy Beane would.

Pensions – The real reason Brown needs Proposition 30 is to shovel money into the $250 billion to $500 billion hole of unfunded state employee pension liabilities. Brown needs to start managing this problem Moneyball-style. He will get nowhere as long as he dodges dealing with the contracts of existing employees, like he has to date. That’s where the real liability is, so he has to force the rewriting of those contracts, especially when retroactive increases were given, or unions won increases that were completely out of the norm of private sector increases. Costly add-ons, like life-time health insurance for agency directors, need to be prohibited retroactively.

This won’t be easy, but in Crazifornia, I make the case that many public employee contracts can be voided because management negotiators were city administrative employees who would benefit from rank-and-file salary and benefit increases when their own contracts were renewed. Brown should seek to have thousands of these sorts of contracts across the state declared null and void by claiming they are the fruit of criminal racketeering under the federal Racketeer Influenced and Corruption Act (RICO). Brown would never do this, of course, but a Governor Billy Beane would.

Taxes – William Voegeli of Claremont University found that California’s per-capita outlays increased 21.7 percent from the early 1990s to the mid-2000s, compared to an 18.2 percent average increase for the other 49 states. Just cutting back to average, which can hardly be categorized as heartless conservatism, would save California $10.6 billion a year, or enough to close most of the current budget gap – without new taxes. If California’s spending over those years had increased only with inflation and population growth, Voegeli writes in Failed State, “the resulting levels of per-capita government outlays … would have equaled neither Somalia’s nor Mississippi’s, but … Oregon’s, which is rarely considered a hellish paradigm of Social Darwinism.”

Brown would never attack spending in this way, nor would he do many other smart Moneyball approaches to fixing our lumbering disaster of a state, which is why his governorship will ultimately fail.