Wednesday, December 29, 2010

November 2010 - How We Did

The results of this election were mixed, mostly bad. It seems too many of us are still being influenced by the television commercials and mailers. With Prop 22 and 26, we shot ourselves in the foot, budget-wise. The only bright spot was the failure of Prop 23.

Prop 19
- Failed
Here's what will happen if Prop 19 passes: People over 21 will be able to possess up to one ounce of marijuana, as well as grow it in an area of up to 25 square feet. The plant must be solely for their personal use and not for sale to others. Consumption of marijuana would only be allowed in "non-public" places, and never in the presence of a minor. Driving under the influence would still be illegal, and a person who knowingly gives marijuana to a minor would be fined and/or jailed.

Local governments would have the option to license and regulate the commercial production of marijuana, as well as of hemp. These establishments would be subject to all federal, state, and local taxes imposed on similar businesses. Additional fees could be charged to offset the cost of marijuana regulation.

It is uncertain how much money will be raised by this measure, as we cannot know how many local governments will decide to allow commercial marijuana production. However, we do know there would be a savings for our courts and prisons, as the number of marijuana offenders is reduced.

Of course, all of this could be made moot if the US government decides to enforce federal laws against marijuana possession. In 2009, the Obama administration announced that they would not prosecute users of medical marijuana, made legal in CA by Prop 215 in 1996. It is uncertain to what extent they would fight this expanded legalization.

It is this disparity between state and federal laws which opponents say could cost CA billions in federal grants and contracts, as companies would not be able to comply with the federal government's drug-free workplace requirements. The measure would also prohibit employers from discriminating against an employee unless the marijuana consumption directly impairs his or her job performance. In addition, opponents point out that Prop 19 provides no indication for what is the "legal limit" in regards to marijuana intoxication while driving. Of course, that is a matter to be determined by law enforcement and medical researchers, the same way we determined the legal limit for alcohol. We wouldn't want the lawyers who wrote this measure deciding for us what constitutes "too stoned to drive".

The opponents' dire claims against Prop 19 are not unfounded, in a legal sense, but it is unlikely that the federal government would revoke contracts with companies like Lockheed because of this measure. Plus, they paint a picture in which the legalization of pot means that every driver, every coworker, and every teacher will be stoned. Really? Is pot that hard to get now?

Personally, I don't like pot. I'm more excited by the panacea that is hemp. But the War on Drugs is a failure. Everyone knows it, and CA is the logical place to take the first step towards a new drug policy. The US government will never deal with this problem on its own.

Your Political Friend is voting YES.

Prop 20 -
Every ten years, after the national census, voting districts in California are redrawn (aka redistricted) according to changes in population. In November 2008, Prop 11 changed the authority for establishing these districts from elected representatives to a 14 member Citizens Redistricting Commission drawn from a pool of CA voters.
Currently, the Commission has the authority to determine the district boundaries for the State Assembly, State Senate, and the Board of Equalization. Prop 20 would extend that authority to cover redistricting for the US House of Representatives.

Your Political Friend was opposed to Prop 11 because there was no way to know who would end up on this "Commission". Their simply being "voters" does not mean that they will conduct their negotiations with any more impartiality than politicians. At least the legislators are elected. Furthermore, it would be far easier for some nefarious outside interest to influence a commission of 14 people than it is to influence the entire state assembly. I'm not saying that will happen, but it is a valid concern.

Should we really be giving these unelected people even more power? Why don't we see how well they do with redistricting the state offices before we let them go all federal on our asses?

Your Political Friend is voting NO.

Prop 21 - Failed

Prop 21 would establish an $18 surcharge on vehicle license fees. This money would be deposited into a trust fund that could only be used for state park and wildlife conservation purposes. In exchange all CA vehicles subject to the surcharge would receive year-round free admission to the state parks (the current fee is $5-15 per day).

The measure would raise about $500 million annually. However, as much as $200 million of this could be used to take the place of existing monies currently coming from the General Fund. Another $50 million would cover the estimated loss in day use fees, as CA vehicles would be admitted for free. This means the net increase in funding for state parks would be about $250 million.

The state parks system, like many public programs, is desperately underfunded. There is a long list of backlogged maintenance projects. And Prop 21 actually derives its funding from an appropriate source of environmental degradation - cars. Call it a "sin tax", if you will.

This measure would be a great idea if not for one thing: the money raised by the measure would be locked in permanently for the state parks. It is an unfortunate example of "ballot box budgeting", and would further limit the flexibility of our legislature.

I love our state parks and am extremely concerned about their condition. I really want to vote Yes on this one. If only the measure had some time limit, it would make more sense. Short of that, I cannot support it.

Your Political Friend is reluctantly voting NO, with regrets.

Prop 22 - Passed

In 2004 and 2006 two budget propositions were approved by voters. These props restricted the state's ability to borrow fuel sales tax revenues and redistribute local property taxes to schools. If Prop 22 passes, these practices would be eliminated, as would the state's ability to redirect local redevelopment revenues.

Every year, the state collects about $5.9 billion in fuel tax revenue. According to the Attorney General, Prop 22 would prohibit the state from delaying the distribution of these revenues "even during a period of severe fiscal hardship." It would also prohibit the state from using those revenues to pay down voter approved transportation bonds (really, is there a more appropriate source of funding for those bonds?).

Prop 22 would, by Constitutional Amendment, set aside billions of dollars for a few sacred cows (in this case, highways and local developers). If it passes, about $1 billion additional more would have to be paid from the General Fund, reducing what can be spent on non-transportation purposes. This is yet another example of "ballot box budgeting", further calcifying our already inflexible budget.

Your Political Friend is voting a big, fat NO.

Prop 23 - Failed
California is the second largest emitter of Greenhouse Gas in the nation, and one of the largest emitters in the world. In 2006, the legislature enacted AB 32 to reduce the state's Greenhouse Gas emissions to its 1990 level by 2020. This would be accomplished through a combination of regulation and market incentives.

Prop 23 would immediately suspend AB32 by prohibiting the enforcement or adoption of any regulation until the state's unemployment rate is 5.5 percent or less for a full year. This has happened only three times since 1970, and shows no signs of happening again for many years.

Over 91% of Prop 23's funding comes from oil companies, most of whom are out of state. By linking greenhouse gas legislation to unemployment, these businesses can appear to care about jobs while protecting their current practices for possibly decades. Of course, their claims about jobs lost as a result of AB32 ignore the increase in jobs due to clean energy investment.

California has over 500,000 people employed in clean energy occupations. With over $9 billion in venture capital funds, California's clean energy firms have received 60% of the venture capital in North America. The rate of growth in clean energy is 10 times more than the state's average job growth rate (source). The Legislative Analyst has stated that suspending AB 32 would "dampen additional investments in clean energy technologies or so-called 'green jobs' by private firms, thereby resulting in less economic activity than would otherwise be the case."

This does not even address the economic losses that come from poor air quality such as increased health care costs and lower worker productivity. Such losses would likely dampen any potential benefits from the lower energy costs touted by the measure's supporters.

With Prop 23, oil refiners are trying to avoid costly reductions to how much they pollute, while also shutting down the clean energy competition. And they're spending millions to trick us into helping them do it.

Your Political Friend is voting NO, NO, NO.

Prop 24 - Failed

Under state tax laws, a business that has more deductible expenses than income has what's known as a Net Operating Loss. Generally, a business can "carryforward" these losses to deduct from its taxes in later years. In 2008 the state legislature enacted a law to allow a business to "carry back" it's losses as much as two years. This means that a business can file for a tax refund from the last two years, based on its losses from the current year. In addition, the amount of time that a business can "carryforward" its losses was extended from 10 to 20 years.

Prop 24 would rescind these changes, bringing tax laws back to their pre-2008 levels. In addition, the measure would repeal 2009 legislation allowing multi-state businesses to choose the formula by which their income is taxed. Currently, the state considers a company's property value, payroll, and sales compared to its value in other states. The 2009 law, set to take effect in 2011, would allow multi-state business to be taxed only on the portion of their national sales that are in California. Finally, Prop 24 would rescind 2008 legislation that allows businesses with available tax credit to transfer those credits to a parent or affiliated company.

The measure is mainly supported by the CA Teachers Association, as well as a mysterious "Super-PAC" called America's Families First. It is opposed, of course, by a broad coalition of large corporations (including Walt Disney!).

Prop 24 is aimed at large, out-of-state corporations. It rolls back as much as $1.3 billion in tax breaks that were negotiated in 2008 without hearings or public debate. Back then, when the deals were made, California's budget was months late and deep in the hole (like every year!). In exchange for some quick cash, legislators offered big businesses these tax breaks. The trouble is that, while the cash infusion was one time only, the tax breaks are permanent.

Only the top 2% of businesses in CA would see any impact from Pro 24. These are the companies that do not need more tax breaks, and are far less likely to keep their money within the state. If Prop 24 fails, we'll see yet more of the tax burden carried by us individual tax payers.

Your Political Friend is voting YES.

Prop 25 - Passed
The state constitution requires the legislature to pass a budget each year by June 15th. In the last thirty years, the legislature has met that deadline only five times. This is because California's constitution requires a two-thirds majority in both houses in order to pass a budget. California is one of only three states in the nation to have this requirement.

When the budget is not passed on time, the state is forced to send out IOUs, which costs us millions a day in interest and lowers the state's credit rating. In addition schools and local agencies must operate without knowing how much money they have, setting them up for possibly painful corrections when the budget is finally approved.

Prop 25 would lower the requirement for passing a budget to a simple majority. However, a two-thirds majority would still be required to override any veto by the Governor. In addition, for any days that legislators are late in sending the budget to the Governor, they will not be allowed a salary or reimbursements for expenses.

Despite what the opposition warns, this is not about Democrats wanting a free hand to raise taxes. The measure clearly states that the legislature would still need a two-thirds majority in order to increase state tax revenues. Prop 25 is about removing Republicans' ability to block the budget and hold the state hostage for political mischief.

And if you're a loyal Republican, don't be so quick to vote no. The upcoming redistricting could soon change the balance of power in one or both houses.

Your Political Friend is voting YES.

Prop 26 - Passed

In addition to regular taxes, state and local governments may assess fees and charges that pay for particular programs that benefit individuals or businesses. These fees can include:
  • User Fees - such as a state park entrance fee, or a fee for garbage service
  • Regulatory Fees - such as fees on restaurants to pay for health inspections
  • Property Charges - imposed on developers to pay for public infrastructure that benefits the property owner
The state constitution requires a two-thirds majority in the legislature to increase or create any new state taxes. However, it only requires a simple majority to increase or create any new fees.

You can already see where this is going.

Prop 26 would expand the definition of a tax so that many fees would require a two-thirds majority to be passed. Specifically, the fees that would be effected are those that the government imposes to address health, environmental, and other societal concerns. These include the oil recycling fee, the hazardous materials fee, and the fees on alcohol retailers that are used for law enforcement. Certain other fees could be considered taxes under the measure, such as business assessments used to improve shopping districts (to providing parking, street lighting, increased security and marketing) because they do not provide a direct and distinct service to the business owner.

Prop 26 is supported by the cigarette, alcohol, and oil companies- the very businesses that have been the targets of fees used to offset the damage they cause. If passed it will cost the state billions in lost revenue every year.

Your Political Friend is Just Saying NO.

Prop 27 - Failed
Every ten years, after the national census, voting districts in California are redrawn (aka redistricted) according to changes in population. Until recently, redistricting plans were passed by the Legislature and signed by the Governor. Any disputes between the Governor and Legislature were decided by the state Supreme Court. To see a map of our current voting districts click HERE.

In November 2008 voters approved Prop 11, which changed the authority for establishing these districts from elected representatives to a 14 member Commission drawn from a pool of CA voters (five Democrats, five Republicans, and four others). Once appointed, the Commission would be required to hold public hearings, and would be bound by all federal laws regarding redistricting, including some additional guidelines meant to prevent political tinkering.

For those not familiar with the politics behind redistricting, be aware that political parties can gain or lose power depending upon how the voting districts are drawn. For example, a large urban population of Democrats can lose representation if their voting district is cut up and incorporated into the surrounding, mostly Republican, suburbs. This process of manipulation is known as gerrymandering.

Prop 27 would eliminate the Commission, created by Prop 11, and give the power of redistricting back to the State Legislature. In addition it would delete any requirements that districts be geographically compact, or that they not favor or discriminate against incumbents. The measure would also require that districts for each office have a difference in population of no greater than one person, and grants the public greater access to redistricting data.

I was ambivalent about Prop 11. Leaving legislators in charge of redistricting is a clear conflict of interest. Our system had a kind of "honor among thieves" feeling to it, as voting blocks were carved up to suit incumbents. But the system under Prop 11 will not be free from manipulation either. Who knows what kind of people will be put in charge of drawing our districts? Applicants to the Commission will be screened and appointed by three state auditors, but who screens the auditors for conflicts of interest? At least the legislators are elected representatives.

Still, as I said in Prop 20, I'm willing to give the Commission a chance. If we don't see any improvement after the 2010 redistricting, we can hand the power back to the legislators before the next census. And, if Prop 27 fails, we can be pretty sure that the legislators will reintroduce this measure again come 2020.

The supporters make a big deal of the fact that this measure will save money. In fact it will save less than $3 million. A drop in the bucket. This measure is not about saving money, but about controlling the redistricting process.

Your Political Friend's pen is hovering over this one for a while, but finally voting NO.

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