California 2010 Ballot Propositions

Having received at least two dozen “voter guides” from “associations” representing public sector employees, and perhaps 2 or 3 from taxpayer groups – on much cheaper paper, much smaller formats, much lower weight – it seems like it would be useful to make a quick run-through of some of the critical voter initiatives on California’s ballot.

CIV FI’s California 2010 Ballot Proposition Voter Guide

Prop. 19 to legalize marijuana – who cares? The big money behind this proposition is based on the premise that people who smoke marijuana will support it, and that people who smoke marijuana will vote if this measure is on the ballot, and that people who smoke marijuana are young voters who (currently) tend to vote Democratic. Proponents of Prop. 19 who are backing it for this reason – and all the recent big money coming in to support this initiative are only concerned about this, not anyone’s rights to get stoned or any supposed tax revenue to be collected – need to be careful what they wish for. If this measure passes the Obama administration will be forced to crack down on California’s medical marijuana industry, which will alienate not only the marijuana smoking crowd, but pretty much every young person or libertarian leaning older person in America. 2012, anyone? CIV FI takes no position on this initiative.

Prop. 20 to form an independent commission to redraw California’s federal congressional districts – YES. A few years ago, a similar measure passed to redraw state legislative districts (ref. Prop. 27 that will reverse that – a terrible idea). A legislative district not only should all have the same number of people living in it, but should also be shaped logically, recognizing when possible city boundaries and geologic features, incorporating whoever happens to live within the resulting borders. Our current legislative districts, currently drawn by whatever political party controls the state legislature, carves each electoral district into whatever shape they can devise, however irregular and contrived it may be, in order to maximize the number of “safe seats” where most of the voters in that district are members of their party. Prop. 20 will accomplish in this election for California’s federal congressional districts what a similar proposition a few years ago accomplished for our state legislative districts (ref. Prop. 27 on this year’s ballot, which is trying to reverse that previous reform and must be voted down). VOTE YES.

Prop. 21 to raise taxes to fund state parks – NO. The reason this is on the ballot is because our unionized government employees, who take our tax money and use it to buy our elections and control our politicians, would rather raise taxes by any means necessary instead of taking cuts to their pay and benefits. Public employees in California are paid, on average, over $100K per year in total compensation, while taxpaying private sector workers, on average, earn less than $60K in total compensation (ref. “Public Employee Compensation,” “The Price of Public Safety,” “California Firefighter Compensation,” and “The Real Reason for Tuition Increases“).  VOTE NO.

Prop. 22 to “stop the state from borrowing or taking funds used for transportation, redevelopment, or local government projects and services.” You decide. The forces behind this measure are Peter fighting with Paul. Since the public employee unions are supporting this measure, one would be reasonably inclined to vote no. On the other hand, when you read the fine print there are some nuances to the measure that may inappropriately increase the power of local governments to enforce eminent domain, which suggests a no vote could make sense. CIV FI takes no position on this initiative.

Prop. 23 to suspend California’s global warming act, AB32, that will take full effect in 2012 – YES. This measure had a chance to pass, until the billionaires in Silicon Valley, who stand to make additional billions by manufacturing high-tech remote surveillance equipment to make sure all us little people don’t do our laundry during peak energy demand, etc., indicated to a few courageous out-of-state energy companies (who were supporting the measure) that they would spend them into the ground to defeat it. Now Prop. 23 will probably lose on Nov. 2nd, but it will be back, when Californians finally wake up and realize that global warming alarm is based on fraudulent science, that CO2 is not “pollution,” and the idea that “green jobs” will make up for the economic harm caused by crippling increases to the costs for energy, water, transportation and housing is a despicable lie. For much more on the global warming fraud in general, and AB32 in particular, ref. “California’s Proposition 23,” “Who Are The Carbon Criminals?,”  “The Climate Money Trail,” and, especially, “Implementing California’s Global Warming Act.” VOTE YES.

Prop. 24 to “close corporate loopholes.” NO. This measure is being promoted via one of the most deceptive propaganda campaigns by public sector unions in the history of California, and that’s saying a lot. Prop. 24 will repeal some new corporate tax reforms that were adopted by the state legislature in 2009 as part of the budget deal that year. These were reforms, not loopholes. They eliminated double taxation and other rules in California that differed from other states, and had effectively penalized California’s corporations for locating here, especially if they exported most of the products they manufacture here out of the state or the country. But the fact this was a reform, not a loophole, and the fact that these reforms were negotiated in 2009 as part of the budget deal didn’t faze the California Teacher’s Association (by the way, “Association” means “Union.”) They want more tax revenue, heedless of the fact this measure will drive more corporations out of California, and they stabbed California’s business community in the back, putting this measure on the ballot and trying to sell it by hiring child actors to cry about “libraries being closed.” Why don’t they just fire half the administrators who haven’t seen a classroom in years? Why don’t they take pay cuts like the rest of us who pay the taxes to support them? For more on the origin of this deplorable, illegitimate abuse of power by public sector unions, ref. “California’s Union Ballot Initiatives.” VOTE NO.

Prop. 25 to get us “on-time” budgets – NO. This is also being promoted via another very misleading campaign, suggesting that all it will do is confiscate the pay of politicians for as long as they are overdue on passing a budget. But if you read the fine print, you will see this bill does make it easier to raise taxes. VOTE NO.

Prop. 26 to make a 2/3rd vote necessary for governments to enact fees as well as taxes – YES. It’s about time. Ever wonder why your property tax bill is more than 1.0% (and even just 1.0% is a LOT in California’s real estate market where property values are still grossly inflated)? It’s because of the additional “fee” for schools, the fee for roads, the fee for the disadvantaged, the fee for the endangered species, pretty much the fee for anything a tax might otherwise fund. These fees appear everywhere, not just on your property tax bill, but also on your bills for electricity, gas, water, sewer, garbage, telephone, internet, cable – all utilities – they appear on building permits or business licenses – they are everywhere. It is time to plug this genuine loophole, the ability to assess a fee whenever a new tax would be voted down. VOTE YES.

Prop. 27 to give power to redraw state legislative districts back to the politicians – NO. Are you kidding? Here is another one where the public sector unions are all lining up to say vote no. Why would they want competitive elections? When the Democrats (who in California are a wholly owned subsidiary of public sector unions) have manipulated the boundaries of the state legislative districts so they control nearly 2/3rds of the state assembly seats in a state that has less than 40% registered democrats, don’t you think this bill might scare them? Who is supposed to run California – public sector unions who control politicians who manipulate legislative district boundaries to stay in power, or the people? VOTE NO.

It is nearly impossible to get any political message out to conscientious voters for any election in California, because the public sector unions spend far more money, year after year, than any other special interest group (ref. “Public Sector Unions & Political Spending“). For those voters who are, in increasing numbers, realizing that public sector unions buy our elections through overwhelming campaign spending, there is a solution. For any political contest, local or statewide, no matter how obfuscated the language of the measures, no matter how elusive the candidate’s positions, simply vote against whatever the public sector unions support. Their agenda is unwavering – more government and more taxes, for the sole purpose of hiring more government employees and paying them over-market compensation. This is financially unsustainable. It is a recipe for the destruction of our nation. Public sector unions should be illegal, because they compel public employees to join them and pay dues, funded by taxpayers, in order to pursue an agenda that is anathema to efficient government. They must be opposed at every turn. It is that simple.

4 replies
  1. Chriss Street, Orange County Treasurer says:

    11 Civic Center Plaza · Santa Ana, CA 92702 · 714-834-7625
    PUBLIC SECTOR PENSION FUNDING JUST BECAME THREE TIMES MORE FUN
    Californians have become increasingly concerned that public employee pension costs may be a future burden on taxpayers. However, due to the complex world of actuarial mathematics and lack of accounting standards, most financial geniuses could not give you a straight answer about the costs. The Government Accounting Standards Board (“GASB”), a group of “uber” accountants, is about to make pension costs a frightening surprise.

    California’s irresponsible politicians just approved an $86 billion State Budget of smoke and mirrors that pushes approximately $10 billion of their $20 billion deficit to next the next administration in January. The budget fancifully estimates the current $3.8 billion cost of funding state pensions will decline. GASB’s adoption of new accounting rules next year will actually more than triple the annual cost of funding California state pensions to $12.5 billion!

    Private Sector pension plans eliminated creative accounting rules still practiced by Public Sector pension plans 15 years ago. Accounting rules mandate Corporations providing employee pensions fund the expected lifetime cost of the pension over the number of years the employee will continue to work. The Private Sector concept is that the money will be “in the bank” when the employee retires, so that the pension benefits are paid in full. Public Sector pension plans have “assumed” the government is perpetual and there is no need to put enough money “in the bank” each year the Public Sector employee actually continues working before he or she retires and collects a lifetime pension benefit. Instead, actuaries have allowed the Public Sector pension plans to operate as if every person working in government will continue working for the next 30 years.

    GASB calculated that the average public employee has already worked in government for 16 years. Consequently, GASB is mandating new accounting standards that will require government to put money, “in the bank” to fund lifetime pension benefit over the 14 years the average public employee will continue to work in government.

    The table below reveals the startling impact this new GASB accounting rule change will have on the Public Sector pension costs. The first example demonstrates that most government pension plans assume that every dollar they contribute to a Public Sector pension plan will earn a compounded annual return of 7 ¾% for each of the next 30 years; to generate $9.39 “in the bank” to pay pension benefits.

    The second example adjusts for the new GASB accounting rule that allows Public Sector pension plans to compound the same dollar contributed for 14 years. The GASB accounting rule change reduces the expected return from $9.39 to $2.84, a 70% reduction!

    The third example on the table demonstrates that Public Sector pension plans will need to increase funding from $1 to $3.30 to achieve the same investment return of $9.39!

    $1 = Amount Invested
    30 = Number of Years
    7 ¾ = Compound Rate of Return
    $9.39 = Total Return

    $1 = Amount Invested
    14 = Number of Years
    7 ¾ = Compound Rate of Return
    $2.84 = Total Return

    $3.30 = Amount Invested
    14 = Number of Years
    7 ¾ = Compound Rate of Return
    $9.39 = Total Return

    Most pension analysts have been suspicious of the Public Sector’s estimate that they will always achieve a compounded 7 ¾ % investment for 30 years. Warren Buffet, the Chairman of Berkshire Hathaway and a legendary successful stock market investor, has estimated his company’s long-term pension return will be 6%. The table below demonstrates Public Sector pension plan contributions would need to rise by 64% to achieve the same $9.39 return over 30 years at a 6% compounded earnings rate.

    $1 = Amount Invested
    30 = Number of Years
    7 ¾% = Compound Rate of Return
    $9.39 = Total Return

    $1 = Amount Invested
    14 = Number of Years
    6% = Compound Rate of Return
    $5.74 = Total Return

    $1.64 = Amount Invested
    14 = Number of Years
    6% = Compound Rate of Return
    $9.39 = Total Return

    As you can see from the tables above, a reduction in the number of years a Public Sector pension plan compounds earnings compared to a reduction in the amount of interest earned annually; is 360% more expensive.

    To put this new annual pension funding cost in human terms, the State of California will need to layoff some combination of approximately 87,000 of the state’s 310,000 teachers or 50% of the state’s 211,000 non-school employees. California taxpayers will not be alone in facing this looming nightmare, every state and local government across the United States is about to suffer the same hair raising fate.

  2. boprn says:

    Chriss Street,

    Good post. Accurate stats without tweaking or trying to slant the input. The one saving grace that PERSs has across the country is if inflation takes hold, it will balance the books. If not, then new employees will have to be offered reduced plans.

    Recently a lady I rent a house to took a job with the country sheriff’s office – as an officer. Was surprised to learn that the retirement was 2%@55. Apparently some counties are already reducing benefits for new hires. Its a good idea. Its also fair, as people know what they have signed up for.

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