Voter's resoundingly agree with OCTax!
OCTax's analysis on several Ballow Initiatives from the 2010 election cycle and the voter outcome.
Proposition 19: Legalize Marijuana (OCTax Victory)
OCTax Position: OPPOSED
Proposition 19 would legalize marijuana under California (but not Federal) law. It would:
- Allow people 21 years or older to possess or cultivate marijuana for personal use;
- Permit local governments to regulate and tax marijuana;
- Prohibit its use on school grounds, in public, while driving, or when minors are present;
- Limit employers’ ability to address marijuana use to job situations where performance is actually impaired.
Fiscal impact: Potential savings of tens of millions of dollars annually in costs of incarcerating offenders. Increase in state and local tax and fee revenues in the hundreds of millions of dollars.
OCTax position: Supporters of legalization estimate savings in costs of incarceration of offenders and higher taxes and fees created by legalization. They point out that Prohibition of recreational marijuana isn’t working any better than prohibition of alcohol worked in the 1920s. In both eras, prohibition made (and makes) millionaires of scoundrels, while denying significant business opportunities to others.
Despite pro-legalization claims, OCTax recommends a “no” vote. Legalizing marijuana, with ensuing professional marketing, may entice more people into thinking the drug is harmless (even on the job, according to the Proposition). Marijuana isn’t harmless: the National Survey on Drug Use and Health says 9% of people who use marijuana may become dependent; the risk of habituation goes up to 17% among those who begin using as adolescents. The National Highway Traffic Safety Administration says many drivers who are injured or killed in accidents test positive for marijuana.
OCTax is a Board Member of the Sheriff’s “Drug Use Is Life Abuse” program. We see (and try to stop) the degradation of hundreds of young people in Orange County schools who use marijuana. Lucky users, with the support of parents and counselors, survive the experience and become productive, taxpaying citizens. Unlucky users are prone to become unproductive, poorly educated, government-dependent, low-wage citizens, and often become users of “harder” drugs.
Even if approved by voters, Proposition 19 would be powerless and pointless. The state cannot legalize recreational marijuana while the federal government outlaws it. The U. S. Department of Justice will not prosecute medical marijuana patients and providers whose actions are consistent with state medical marijuana laws, but the current Administration has announced clearly that it will not ease regulations further.
Proposition 20: Redistrict Congressional Districts (OCTax Victory)
Initiative Constitutional Amendment.
OCTax Position: SUPPORTED
Proposition 20 would remove elected representatives from the process of establishing congressional districts and transfer that authority to the recently-authorized 14-member redistricting commission. A competing measure, Proposition 27, also deals with redistricting. If voters approve both measures, only the one that receives the most “yes” votes would become law.
Fiscal impact: no significant net change in state redistricting costs.
OCTax position: Politicians like to design districts to ensure their own reelection. A Republican State Senator told OCTax, “I want to draw a line on a map that includes every possible Republican, and the least number of Democrats.” A Democratic Speaker of the Assembly was blunter: “The voters want ‘good government.’ I will ensure my own reelection first, then I’ll worry about good government.”
The two major political parties made a cynical pact in 2001. Democrats wanted to solidify control. Republicans, worried about losing even more seats in an increasingly Democratic state, acquiesced to gerrymandered lines to perpetuate the status quo. The result: polarized legislatures that spend taxpayers’ money on programs designed to please the most radical partisans. Today, Democrats are the bad guys because they hold majorities, but Republicans can be almost as profligate when they enjoy a majority: witness the overindulgent spending of the Bush administration.
OCTax supported 2008’s Proposition 11, which created the Citizens Redistricting Commission to establish new boundaries for the Assembly, State Senate, and Board of Equalization. It did not change the redistricting for California’s 53 Congressional seats, because (according to columnist Dan Walters) Speaker Nancy Pelosi threatened to spend many millions of dollars to oppose it. Redistricting for those seats is done by the State Legislature (more accurately, by Congressman Howard Berman and his brother Michael, the Democrats’ redistricting experts, who dictate changes to the State Legislature). Proposition 20 would correct Proposition 11’s failure to assign the redistricting of Congress to the Commission.
OCTax is non-partisan, but we abhor the mischief that can be done by either party when they have a near-veto-proof majority. If the Democratic-controlled Legislature redraws the state’s Congressional districts, half a dozen seats could be shifted from Republican to Democratic control. If the Citizens Redistricting Commission draws the districts, the impact could be much less.
Proposition 21: State Parks Surcharge (OCTax Victory)
OCTax Position: OPPOSED
Proposition 21 would establish an $18 surcharge on the annual vehicle license fee to help fund state parks and wildlife programs. It would grant free admission to all state parks to surcharged vehicles.
Fiscal impact: increased state revenue of about $500 million annually. Potential state savings to the extent that surcharge revenues were used to reduce support from the General Fund and other special funds for parks and wildlife. Reduction of about $50 million annually in state and local revenue from state park camping and day-use fees.
OCTax position: Don’t be fooled by Proposition 21. It’s a general tax increase, wrapped in the appealing mantle of state parks, to help bail the state out of its $20 billion structural deficits. Proposition 21 may provide no additional money for parks, because the new vehicle tax it would create is designed to free existing parks dollars in the General Fund for our Legislature to spend on other programs. According to columnist Dan Walters, one greedy legislator actually proposed cutting existing funding for parks prior to the election in order to coerce voters into approving Proposition 21.
Proposition 21 dishonestly calls the surcharge a “fee.” It’s not a fee. It’s a tax. (We pay a fee to use a service or facility. We pay a tax whether we use it or not.) As much as possible, parks should be funded by entry fees paid by park users, not by general taxpayers. Proposition 21 shifts the funding in exactly the wrong direction: it forces the general public to pay for an optional benefit, and absolves the actual users of that benefit from paying fees. Proposition 21 probably would harm our parks by driving up attendance while providing no more money to operate them.
Politicians and proposition-writers love to blur the distinctions between taxes and fees for devious reasons. They blurred them masterfully in Proposition 21. It would:
- Disguise a tax as a fee, thereby evading the 2/3 vote requirement for new taxes;
- Offer a false ballot measure that will only replace one source of funds with another;
- Provide no net benefit to parks; and
- Worst of all, give our profligate state Legislature more of our tax dollars to spend.
Don’t be fooled by Proposition 21.
Proposition 22: Prohibit State from Borrowing Local Funds (OCTax Victory)
Initiative Constitutional Amendment.
OCTax Position: SUPPORTED
Proposition 22 would prohibit the state, even in periods of fiscal hardship, from borrowing local funds used for transportation, redevelopment, or local government projects and services.
Fiscal impact: losing the authority to withhold fuel and property taxes from local governments would cause the state to seek funds from other sources, in the range of $1 billion to several billion dollars annually. This would reduce General Fund spending, with comparable increases in funding for state and local transportation programs and local redevelopment.
OCTax position: Proposition 22 is an unseemly family squabble between the state and local governments for bigger shares of taxpayers’ money (much of which is wasted on lavish pensions for public employees).
OCTax would prefer that neither side win this spat, but Proposition 22 doesn’t offer that option.
Proposition 22 would undo 2004’s Proposition 1A, which allows the state to borrow local funds in “times of fiscal crisis.” Voters naively hoped that the Governor and Legislature would exercise some judgment in spending, so that “times of fiscal crisis” would be rare. We should have known better. What Ronald Reagan said of Congress applies to our state: “to say they spend money like drunken sailors is an insult to drunken sailors.” State spending rose sharply after 1A. Our spendthrift Legislature and Governor make every year a fiscal crisis. Even our Republican Board of Supervisors approved the lavish “2.7 percent at 55” retirement benefit for employees.
Local agencies provide useful services: transportation, police, fire protection, parks, libraries, juvenile hall, streetlights, water, sewers, trash collection, planning, zoning, jails. The closer a government is to the people, the better it is administered: taxpayers usually can get answers from city councilmembers and the Board of Supervisors. In contrast, communicating with our ultra-liberal Legislature (“the most leftist state this side of Sweden,” according to the Wall Street Journal) is like e-mailing questions and complaints to an astronomical black hole: not even light can escape.
Local governments are far from faultless: witness the misuse of redevelopment districts. But generally, they make better use of our money than the state, and provide more tangible services.
Hold your nose and vote for Proposition 22.
Proposition 23: Suspend AB 32
OCTax Position: SUPPORTED
Proposition 23 would suspend implementation of the air pollution control law (AB 32), which requires major sources of emissions to report and reduce greenhouse gas emissions that cause global warming, until unemployment drops to 5.5% or less for a full year.
Fiscal impact: Modest increase in overall economic activity in the state from suspension of regulatory activity, resulting in potentially significant net increase in state and local revenues.
OCTax position: Here’s what California’s Legislative Analyst said about AB 32, the 2007 law that Proposition 23 would modify: “AB 32 will raise energy prices, causing the prices of goods and services to rise; lowering business profits and reducing production, income and jobs . . . energy-intensive industries (aluminum, chemicals, forest products, oil, gas and steel) may significantly reduce their business activity in California . . . the net economy-wide impact will in all likelihood be negative.” Memo to Governor Schwarzenegger and other defenders of AB 32: California already has 12.3% unemployment, a giant agricultural region turned to wasteland by regulatory water restrictions,
a structural (i.e., ongoing) budget deficit of $20 billion, and is rated “worst state in the Union for business” by Chief Executive Magazine. AB 32 would add hugely to those burdens.
From various sources, the Howard Jarvis Taxpayers Association found hidden taxes in AB 32:
- A 60 percent increase in your electricity bill (Southern California Public Power Authority);
- An 8 percent increase in your natural gas bill (California Air Resources Board);
- $50,000 more for the price of a new home (National Renewable Energy Laboratory);
- $3.7 billion a year more for gasoline and diesel fuel (Sierra Research);
- A $1,000-$3,000 additional cost for a new car (CARB and automaker studies).
The Orange County Business Journal quotes Esmael Adibi, director of the Anderson Center for Economic research at Chapman University: “None of these alternative sources [of energy] are economically viable . . . they need some government subsidy or tax credit.” A typical solar panel installation costs $40,000, but the cost to the buyer is less than half that because of tax credits and utility rebates. Extorting over $20,000 per installation from taxpayers and utility ratepayers to subsidize inefficiency probably destroys more taxpaying jobs than the “green” industries create.
Proposition 23 does not repeal AB 32, as OCTax would prefer. It simply suspends AB 32 until the state’s unemployment rate drops to 5.5% for a full year. Is that attainable? We reached that level in 2006. We can do it again - but not if voters fail to approve Proposition 23.
Proposition 24: Businesses Taxes (OCTax Victory)
OCTax Position: OPPOSED
Proposition 24 would repeal recent legislation that would allow businesses to lower their tax liabilities. It was put on the ballot by petition signatures.
Fiscal impact: increased state revenues of about $1.3 billion each year by 2012-13 from higher taxes paid by some businesses. Smaller increases in 2010-11 and 2011-12.
OCTax position: Proposition 24 would return three business tax provisions to what they were before 2008 and 2009.
- Under federal and state tax laws, when a business has a net operating loss (NOL) in one year, it can use the NOL to reduce its taxes in a succeeding year (“carryforward”). Under federal law only, the business also can “carryback” NOLs to a previous year. A new law allows carrybacks for the first time in California.
- Businesses that operate in many states can determine their taxes by a formula that includes all property, payroll and sales, or by a new formula based only on sales in California.
- The state grants “tax credits” for products or services that the state wants to encourage. Under new law, tax credits may be transferred to another business in the same group.
Proposition 24 would revoke these recently legislated benefits to business.
Public employees, led by the teachers’ unions, face budget cutbacks (minor ones, compared to the private sector), so they concocted Proposition 24 to close “big corporate tax loopholes” for “giant out-of-state corporations” that are enjoying “unfair tax breaks.” I.e., the unions want more money.
Public employee unions refuse to see that the private sector is in worse shape than government, with businesses leaving California and 12.3% unemployment (or higher, depending on the number of people who have given up looking for work). The unions, and their obedient pawns in the Legislature, have stopped all significant reform of the runaway defined-benefit public employee pensions that threaten the state’s solvency, yet they seek to take away three reasonable improvements in the business environment that were approved recently by the Democrat-controlled Legislature. The unions refuse to see that government earns no money; government is dependent on taxes paid by businesses and their employees. They refuse to see that if businesses are taxed to death, the money stream to government will dry up.
Proposition 25: Simple Majority Vote for Budget
Initiative Constitutional Amendment.
OCTax Position: OPPOSED
Proposition 25 would change the legislative vote requirement to pass the state budget, and budget-related spending bills, from two-thirds to a simple majority. If the Legislature fails to pass a budget by June 15, members would permanently forfeit reimbursement for salary and expenses every day until the budget is passed.
Fiscal impact: the contents of a state budget and related legislation could be changed because of the lower vote requirements. The changes would depend on factors such as the state’s financial circumstances, the composition of the Legislature, and its future actions.
OCTax analysis: does Proposition 25 look familiar? It should. It’s an evil clone of 2004’s Proposition 56 (the “Blank Check Initiative”) that OCTax opposed and which voters soundly rejected. In 2004, the Legislative Analyst said of Proposition 56: “the reduced number of required votes would make it easier in some years to approve tax increases related to the budget. In such cases, the measure would result in higher tax revenues (and state spending) than otherwise would have occurred. This potential revenue could be significant.” The same is true of Proposition 25.
California voters have voted repeatedly for the 2/3 vote requirement to pass anything that would make it easier to raise taxes. For example, in the Constitutional Convention of 1879 voters sensibly declared that “asking future generations to pay for a particular public good should have a high threshold for approval.” In 1978, 66% of California voters approved Proposition 13, which requires a 2/3 vote for any change in state taxes enacted for the purpose of increasing revenue.
Good governance requires that there be give-and-take by both parties to approve a budget. Today, the majority party in the Legislature is just two seats shy of having a veto-proof 2/3 majority in the Senate, and only three seats shy in the Assembly. By lowering the approval hurdle to a simple majority, Proposition 25 would change “give-and-take” to “take” by public employee unions and the majority party.
Proposition 25 also probably would allow budget-related tax increases to be included in the budget. A judge found it necessary to delete the words “Retains two-thirds vote requirement for taxes” from the measure because it is “misleading.”
Finally, Proposition 25 may allow extraneous matters to be included in the budget in order to protect them from being challenged by referendum. Not that any of our legislators are so devious.
Proposition 26: Voter Approval of Certain Fees (OCTax Victory)
Initiative Constitutional Amendment.
OCTax Position: SUPPORTED
Proposition 26 would require that certain state and local fees be approved by a 2/3 vote. Fees include those that address adverse health or environmental impacts caused by businesses. It would:
- Require that certain state fees be approved by a 2/3 vote of the Legislature, and that certain local fees be approved by a 2/3 vote of the people; and
- Increase the legislative vote requirement to 2/3 for certain tax measures, including those that do not result in a net increase in revenue, currently subject to majority vote.
Fiscal impact: decreased state and local government revenues and spending, potentially totaling billions of dollars annually over time, depending on future decisions by governments and voters. Effect of repealing recent fee and tax laws: increased transportation and general fund spending.
OCTax analysis: politicians want more money. They are frustrated by existing law, which requires a 2/3 vote to raise taxes. By falsely mislabeling a new tax a “fee,” they enable the tax to be approved by a simple majority. Example: Proposition 21 on this same ballot, a general tax increase disguised as a “user fee” for state parks. Another example: OCTax helped defeat (by 71%) an Orange County city’s attempt to disguise a general tax as a “maintenance district assessment” (on which only property owners vote) to evade the 2/3 vote required by Propositions 13, 62 and 218.
Politicians hope that voters don’t know the differences between a tax and a fee. Here’s a summary.
Tax Fee
1. Pays for any service. No nexus between payer and service 1. Pays for specific service. Nexus required
2. General public gets primary benefit 2. Payer gets primary benefit
3. Payment is mandatory 3. Payment contingent on use of service
4. May be levied in any amount 4. Covers only cost of service
5. Levied equally on all similar payers 5. Levied in proportion to extent of activity
Proposition 26 would prevent “hidden taxes” (such as that proposed by Proposition 21 and the Orange County city’s phony “maintenance assessment district,” above) from being disguised as fees.
Proposition 26 has another major benefit. The State Constitution specifies that laws “enacted for the purpose of increasing revenues” must be approved by a 2/3 vote. Presently, a law that increases taxes for one taxpayer but offers an equal tax reduction for another can be approved by a simple majority. Proposition 26 would require that a law that increases taxes for any taxpayer be approved by a 2/3 vote.
Proposition 27: Eliminate State Commission on Redistricting (OCTax Victory)
Initiative Constitutional Amendment and Statute.
OCTax Position: OPPOSED
Proposition 27 would eliminate the state commission on redistricting, consolidating authority for redistricting with elected state representatives. It would:
- Eliminate the 14-member redistricting commission selected from the applicant pool;
- Give authority for setting district boundaries of the Assembly, Senate, and Board of Equalization to the elected state representatives who draw Congressional districts;
- Reduce the budget for redistricting;
- Enable voters to reject district maps approved by the Legislature; and
- Require that the population of all districts for the same office be exactly the same.
A competing measure on this ballot, Proposition 20, also deals with redistricting. If voters approve both measures, only the one that receives the most “yes” votes would become law.
Fiscal impact: Possible reduction of redistricting costs of about $1 million this year, with reduction of costs of a few million dollars once every 10 years beginning in 2020.
OCTax position: Politicians like to design districts to ensure their own reelection. A former Republican member of the state Senate told OCTax, “I want to draw a line on a map that includes every possible Republican, and the least number of Democrats.” A former Democratic Speaker of the Assembly was even blunter: “The voters want ‘good government.’ I will ensure my own reelection first, then I’ll worry about good government.”
The two major political parties made a cynical pact in 2001. Democrats wanted to solidify control. Republicans, worried about losing even more seats in an increasingly Democratic state, acquiesced to gerrymandered lines to perpetuate the status quo. The result: polarized legislatures that spend taxpayers’ money on programs designed to please the most radical partisans. Today, Democrats are the bad guys because they hold majorities, but Republicans can be almost as profligate when they enjoy a majority: witness the overindulgent spending of the Bush administration.
In 2008, OCTax supported Proposition 11, which created the Citizens Redistricting Commission. When the Commission meets in 2011, it will take redistricting power from the politicians, presumably creating more competitive districts. Proposition 27 is the politicians’ effort to undo Proposition 11, even before it has been implemented. Proposition 27 is the manifestation of some politicians’ arrogance and greed: they think they’re smarter than voters, and they want total control.
LOCAL PROPOSITIONS / INITIATIVES
Anaheim Measure J: Design-Build (OCTax Victory)
OCTax Position: YES
Measure J would authorize the City of Anaheim to use design-build procurement by competitive negotiation.
The City Council would, by ordinance, establish regulations for the award, use and evaluation of such design-build contracts, in which the design and construction of public works projects are procured from a single entity.
Discussion:
OCTax has observed that design-build contracts often are completed faster, cheaper, and better, especially in the fields of transportation and public utilities.
Measure J does not mandate the design-build process, it simply makes it an option in the City of Anaheim.
Newport Beach Measure V (OCTax Victory)
OCTax Position: YES
If adopted by a majority of the voters, this City-sponsored measure would amend or repeal various sections within the City of Newport Beach’s Charter and repeal two voter approved ordinances related to non-profit contributions and Civil Service as explained below. Specifically, a “yes” vote would:
(1) repeal Section 1107 eliminating the City’s authority to enact for limited purposes up to a $1 annual tax on each $100 of assessed value of taxable real property located within the City;
(2) amend Section 1113 to eliminate the City’s ability to levy and collect taxes for capital improvements;
(3) amend Section 1401 to prohibit off-shore drilling originating from the ocean’s surface and restrict existing and future land-based oil operations to approximately 20 acres of territory;
(4) amend Section 414 to require the City’s ordinance publication requirements to mirror state law;
(5) repeal Section 419 to allow the City Clerk to follow general contracting procedures to administer and award publishing contracts;
(6) amend Section 1301 to allow franchises to be administered and awarded according to procedures established within the municipal code;
(7) amend Section 1110 to increase the threshold dollar amount from $30,000 to $120,000 for requiring formal bidding of public works projects and to allow for an annual increase of the threshold according to an index selected by the City Council;
(8) amend Section 1404 to expand the list of remedies available to prosecute a violation of the Charter to include a misdemeanor, infraction, civil action and/or administrative citation;
(9) amend Section 1005 to require appointment of a redistricting committee only every 10 years on a cycle corresponding to the national census;
(10) amend Sections 711, 800, 801, 802, and 803 to place critical language regarding the Civil Service System in the Charter, authorize the City Council to adopt, amend or repeal rules relating to the System and exempt the newly created positions of Assistant Chiefs in the Police and Fire Departments from the System and repeal Ordinance 866 codified in municipal code Chapter 2.24;
(11) repeal Ordinance 743 codified in municipal code section 3.24.010 to delete the annual $2,400 contribution limitation to the local Chamber of Commerce, instead treating the Chamber the same as other non-profit entities;
(12) repeal Section 420 to delete the 25 year term limitation on City contracts and leases; (13) amend Section 1402 to simply require voter approval prior to the sale of City-owned water-front property instead of requiring a Charter amendment;
(14) repeal Section 501 to delete the City Manager in-City residence requirement; and (15) amend various Charter sections to insert gender neutral language.
Discussion:
Items 1 and 2: corrects loopholes that circumvent Proposition 13.
This will prevent the city from raising taxes without a vote of the people.
Proposition 13 and Proposition 218 already prevent such tax increases.
Items 1 and 2 bring Newport Beach into compliance.
Item 3: The 20 acres are the place where Newport Beach itself currently drills, and which Banning Ranch is consolidating into its development project.
It is the appropriate area for drilling.
As a practical matter, authority to drill is superseded by the state and federal governments, but this provision will make clear to voters that there will be no expansion of drilling beyond the 20 acres.
It will allow the city to refresh its wells without being subject to uninformed environmental opposition regarding the drilling.
Item 11: OCTax is unsure the city should fund non-profits at all, but this puts the Chamber of Commerce on equal footing with other non-profit agencies.
It corrects an anti-business measure by the voters years ago.
Yorba Linda Measure Y (OCTax Victory)
OCTax Position: YES
Measure Y would:
- Prohibit city officials from soliciting or accepting campaign contributions from city contractors;
- Prohibit city officials from soliciting or accepting campaign contributions or loans of over $250 within 12 months after a decision involving the campaign contributor;
- Disqualify a councilmember from participating in a decision that benefits a campaign contributor who donated $250 or more to the councilmember within the past 12 months;
- Prohibits candidates from soliciting endorsements from city employees, commissioners, contactors or labor associations;
- Requires adoption of a code of conduct for elected and appointed officials;
- Requires adoption of “whistleblower” procedures;
- Requires AB 1234 training for all city staff and elected and appointed officials;
- Prohibits closed-door ad hoc committee meetings;
- Requires tape recording of all City Council closed session meetings;
- Prohibits city officials and staff from engaging in campaign-related activities using city resources; and
- Contains enforcement procedures.
Discussion:
Especially after the scandals in Bell, San Diego and other cities, an ethics code makes sense for city officials. Yorba Linda adopted such a code in January as Ordinance No. 2010-940.
Measure Y on the Nov. 2 ballot in Yorba Linda is identical to the ordinance. The difference is that, while the ordinance can be changed by the council, Measure Y could be changed only by a new vote of the people.
Passing the Ethics Ordinance was a three-year struggle with opposition by some Council members. Eventually the ordinance passed but can be overturned by a bare majority vote, unless the voters tell the politicians enough is enough by adopting Measure Y.
