Tag Archive for Howard Jarvis Taxpayers Association

California Attorney General Opinion Says Frequently-Used School and Community College Bond Deals Are Illegal

On January 26, 2016, the California Attorney General issued an opinion on a practice regarding bond measures that has long been questionable but continues to be rampant at California school and college districts: contracting with a firm to provide both pre-election bond measure “financial planning services” and post-election bond measure “financial advisory services.” That firm then typically makes a major contribution to the campaign to pass the bond measure.

The practice is described in Chapter 7 of the July 2015 California Policy Center report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction.

Not surprisingly, the practice was determined to be illegal under most circumstances. The Howard Jarvis Taxpayers Association called it “good news” for taxpayers and a “long-overdue slap-down” of “the incestuous behavior of school districts with political consultants and bond salesmen.” See Attorney General Reins In Shady Bond Practices – January 31, 2016.

California Attorney General Opinion

OPINION of  KAMALA D. HARRIS, Attorney General – MANUEL M. MEDEIROS, Deputy Attorney General – No. 13-304 – January 26, 2016 (see the five questions and answers, below)

School and community college districts throughout the state have adopted such contracts. Often these items are listed on board agendas with vague language, probably to disguise the purpose from the public.

Some Examples

Martinez Unified School District approved this contract on September 29, 2015: http://laborissuessolutions.com/wp-content/uploads/2015/09/2015-09-29-Isom-Advisors-AKA-Urban-Futures-Contract-with-Martinez-USD-for-Bond-Measure-Services.pdf

Pay to Play San Rafael City Schools Connect the DotsSan Rafael City Schools gave a financial service firms a no-bid contract in June 2015 for $15,000 in pre-election and $65,000 in post-election advisory services for two bond measures. The firm contributed $9500 to the campaign to pass the bond measures.

Solano Community College District: Critic Questions Actions of Measure Q Bond Underwriters – Fairfield Daily Republic – September 13, 2015

News Coverage

California School Bonds Can Be Source of Scandal – commentary by Dan Walters – Sacramento Bee – February 8, 2016

Many other districts have used the same loophole to avoid competitive bidding on contracts and also solicited bond issue campaign funds from financial houses.

State Treasurer Bill Lockyer, and later successor John Chiang, were concerned about the practice, and asked Attorney General Kamala Harris whether it’s legal for those in the bond financing business to get involved in the campaigns. Harris, in an opinion issued last month, declared that it is illegal for firms to provide “pre-election services” in return for a promise to get the underwriting business should the bond measure pass.

…if school districts are cut free from the state’s underwriting of school construction, they need some new ethics standards.

California AG’s Opinion Targets School Bond Practices by Kyle Glazier – The Bond Buyer – January 28, 2016

School and community college districts violate California law if they hire outside firms to campaign for bond ballot measures or purposely incentivize municipal finance professionals to advocate for passage of a bond measure, the state’s attorney general said in a formal legal opinion…

A previous Bond Buyer investigation found a nearly perfect correlation between broker-dealer contributions to California school bond efforts in 2010 and their underwriting of subsequent bond sales, and financial advisors have similarly been accused of using “pay-to-play” tactics. Former California Treasurer Bill Lockyer questioned the legality of the practices…

California Muni Dealers Can’t Fund Bond Campaigns to Get Hired by Darrell Preston – Bloomberg – January 28, 2016

Former Treasurer Bill Lockyer, who sought the opinion in 2013, praised the ruling, and said it could open up school districts and vendors to prosecution.

“It makes it clear that prior practices of this sort are illegal,” Lockyer said in a telephone interview Thursday.

Lockyer sought the opinion after finding school districts in the state entered agreements with underwriting firms in which the districts award the dealers the right to sell the bonds in return for providing services to pass an initiative.

He said at the time the agreements raise “substantive questions” about whether school officials broke the law by using public money to advocate passage.


THE HONORABLE JOHN CHIANG, CALIFORNIA STATE TREASURER, has requested an opinion on the following questions:

1. Does a school or community college district violate California constitutional and statutory prohibitions against using public funds to advocate passage of a bond measure by contracting with a person or entity for services related to a bond election campaign?

2. Does a school or community college district violate California prohibitions against using public funds to advocate passage of a bond measure if the district enters into an agreement with a municipal finance firm under which the district obtains pre- bond-election services in return for guaranteeing the firm an exclusive contract to provide bond-sale services if the election is successful?

3. In the case of an agreement as described in Question 2, does a school or community college district violate California law concerning the use of bond proceeds if the district reimburses the municipal finance firm for the cost of providing the pre- election services from the proceeds raised from the bond sale?

4. In the scenario described in Question 3, does a school or community college district violate California law concerning the use of bond proceeds, even where the reimbursement is not an itemized component of the fees the district pays to the firm in connection with the bond sale?

5. Does an entity providing campaign services to a bond measure campaign in exchange for an exclusive agreement with the district to sell the bonds incur an obligation to report the cost of such services as a contribution to the bond measure campaign in accordance with state law?

CONCLUSIONS

1. A school or community college district violates California constitutional and statutory prohibitions against using public funds to advocate passage of a bond measure by contracting with a person or entity for services related to a bond election campaign if the pre-election services may be fairly characterized as campaign activity.

2. A school or community college district violates prohibitions against using public funds to advocate passage of a bond measure if the district enters into an agreement with a municipal finance firm under which the district obtains pre-election services (of any sort) in return for guaranteeing the firm an exclusive contract to provide bond-sale services if the election is successful, under circumstances where (a) the district enters into the agreement for the purpose (sole or partial) of inducing the firm to support the contemplated bond-election campaign or (b) the firm’s fee for the bond-sale services is inflated to account for the firm’s campaign contributions and the district fails to take reasonable steps to ensure the fee was not inflated.

3. In the case of an agreement as described in Question 2, a school or community college district violates California law concerning the use of bond proceeds if the district reimburses the municipal finance firm for the cost of providing pre-election services from the proceeds raised from the bond sale.

4. In the scenario described in Question 3, a school or community college district violates California law concerning the use of bond proceeds if the district reimburses the municipal finance firm for the cost of providing pre-election services from the fees the district pays to the firm in connection with the bond sale, whether or not the reimbursement is evident as a component of the fees the district pays to the firm in connection with the bond sale made on an itemized service-by-service basis.

5. Where an entity provides campaign services to a bond-measure committee in exchange for an exclusive agreement with the district to sell the bonds, the entity has an obligation to report the value of its services as a contribution to the bond-measure campaign in accordance with state law.

Riverside Press-Enterprise Publishes My Commentary: Don’t Blame Wal-Mart for Fighting CEQA Abuse

The Sunday, December 2, 2012 Riverside Press-Enterprise published my opinion piece Don’t Blame Wal-Mart for Fighting CEQA Abuse. It is a response to a Riverside Press Enterprise editorial from November 25, 2012, Big-Box Browbeating, which I felt lacked an important perspective: labor unions and other groups routinely exploit the California Environmental Quality Act (CEQA) to suppress potential competition or to coerce labor agreements or other payoffs from developers (a practice known as “greenmail”).

On October 30, 2012, a California appeals court ruled in Tuolumne Jobs & Small Business Alliance v. Superior Court of Tuolumne County (Wal-Mart and the City of Sonora, Real Parties in Interest) that a city cannot bypass CEQA and approve a project if voters qualify a ballot measure to approve the project.

The Sonora Planning Commission and the Sonora City Council didn’t seem to have objections to Wal-Mart in their town. “The legal battle slowing down Wal-Mart’s expansion frustrates Sonora Mayor Hank Russell,” according to an article in the November 19, 2012 Bay Citizen (Ruling Is Win for Environmental Law, Loss for Wal-Mart):

These people just want to delay a process that should be part of a free market economy. I don’t think it’s the city’s role to decide who can compete.

The League of California Cities and the Howard Jarvis Taxpayers Association’s foundation submitted amicus briefs on behalf of the City of Sonora, which had won approval to bypass CEQA in Tuoloumne County Superior Court.

Meanwhile, the true identity of Tuolumne Jobs & Small Business Alliance does not appear to be public. Another mysterious group called CREED-21 (Citizens for Responsible Equitable Environmental Development) submitted an amicus brief on behalf of the Tuolumne Jobs & Small Business Alliance.

A variety of anonymous organizations purporting to represent local citizens challenge proposed Wal-Mart superstores (Wal-Marts that sell groceries) using CEQA. Some of these groups are reportedly fronts for the United Food and Commercial Workers (UFCW) union, which represents grocery store workers in the older, “legacy” grocery stores in California such as Safeway, Raley’s, Vons, Albertsons, Ralphs, Save Mart, and Stater Bros.

A November 21, 2011 California Watch article (Wal-Mart Ramps Up Ballot Threats to Speed New Stores) reported on the Wal-Mart ballot measure strategy and claimed it “raises questions about whether California’s communities – dogged by economic woes – can afford an aggressive use of the state’s system of direct democracy.”

I guess it would not be “progressive” to ask whether California’s communities – dogged by economic woes – can afford an aggressive misuse of the state’s environmental laws by unions and other leftist organizations that philosophically object to so-called “big box stores.” Has Wal-Mart ever considered releasing a list of the phony front groups and the names of the law firms that object to the Environmental Impact Reports (EIRs) and file CEQA lawsuits?

The law firm representing Tuolumne Jobs & Small Business Alliance is Herum Crabtree, based in Stockton. A web search indicates this firm has also used CEQA to challenge proposed Wal-Marts in the Northern California and Central California cities of Elk Grove, Lodi, Ceres, Tracy, American Canyon, Bakersfield, and Anderson.

Citizens for Responsible Equitable Environmental Development (CREED-21) is represented by the Briggs Law Corporation. A web search indicates this firm has used CEQA to challenge proposed Wal-Marts in the Southern California cities of Tehachapi, Apple Valley, Lake Forest, Victorville, Ontario, San Bernardino, Hesperia, Menifee, Gelndora, Barstow, Rialto, Murrieta, and Vista.

These are not the only law firms prominent in using CEQA to stop Wal-Mart.

A lawyer based in Davis named William D. Kopper has used CEQA to hinder the construction of Wal-Mart superstores. A web search indicates this firm has used CEQA to challenge proposed Wal-Marts in the Northern California cities of Redding, Red Bluff, Oroville, Linda, Yuba City, Galt, Stockton, Ukiah, Santa Rosa, and Gilroy. Kopper also exploits CEQA on behalf of construction trade unions seeking Project Labor Agreements from developers proposing private residential and commercial projects in Northern California.

The law firm of M.R. Wolfe & Associates, based in San Francisco, has used CEQA to challenge Wal-Mart projects. A web search indicates this firm has used CEQA to challenge proposed Wal-Marts in the Northern California and Central California cities of Antioch, Fremont, Hayward, Suisun City, Madera, Porterville, Visalia, Delano, Atascadero, and Rohnert Park.

Mark Wolfe used to work at the law firm of Adams Broadwell Joseph & Cardozo, the CEQA lawyers of choice for California Unions for Reliable Energy (CURE) and individual construction trade unions. I did not find any evidence through a web search that Adams Broadwell Joseph & Cardozo has ever worked for a client who objected to a Wal-Mart on CEQA grounds.

San Diego County Treasurer Drafts Outline of Legislative Proposal to Restrict and Expose How California School Districts Sell Capital Appreciation Bonds

UPDATE:

Now posted on the County of San Diego Treasurer’s web site:

Information about San Diego County Treasurer Dan McAllister’s August 21, 2012 press conference and presentation materials about Capital Appreciation Bonds.

A YouTube video of San Diego County Treasurer Dan McAllister‘s August 21, 2012 press conference: SD County Treasurer Dan McAllister Calls for School Bond Reform

UPDATE 2: The San Diego Union-Tribune reports on Senator Mark Wyland‘s Senate Bill 1205, which was amended on March 28, 2012 to impose restrictions on the sale of Capital Appreciation Bonds by K-12 school and community college districts. Howard Jarvis Taxpayers Association official David Wolfe, who also serves on the Board of Directors of the California League of Bond Oversight Committees, is quoted in support of the bill. Senate Bill 1205 never had a hearing and never had a legislative analysis.

Lawmaker Sought to Stop Controversial Bond Financing – San Diego Union-Tribune – August 23, 2012


A little more than three months after the California League of Bond Oversight Committees (CalBOC) annual conference brought my attention to school districts and community college districts selling Capital Improvement Bonds (CABs) to borrow money for school construction, a prominent public official has proposed legislation to increase public awareness of the practice and rein it in.

Yesterday (August 21, 2012), San Diego County Treasurer Dan McAllister held a press conference to announce the outline of a legislative proposal to deal with Capital Appreciation Bonds. At the time of this writing, his office inexplicably does not have any information about the press conference or the proposal on its County of San Diego Treasurer web site, but the San Diego Union-Tribune posted his letter and proposal on its own web site. See them here:

Outline of the Proposed Capital Appreciation Bond Reform from the San Diego County Treasurer

Letter from the San Diego County Treasurer Explaining the Need for Capital Appreciation Bond Reform

As I wrote in my August 11, 2012 blog post (News Media Beginning to Pick Up on Story about California School Districts Selling Insidious “Capital Appreciation Bonds” – Dayton Public Policy Institute an Early Informant to California Taxpayers), the attraction of Capital Appreciation Bonds for California school districts and community college districts has been referenced in various specialty publications, including the CalBOC Newsletter, my own Dayton Public Policy Institute blog posts on Capital Appreciation Bonds, and originally in Joel Thurtell’s blog www.JoelontheRoad.com.

It was a set of articles earlier this month in the Voice of San Diego about the Poway Unified School District sale of Capital Appreciation Bonds that really brought the story to mainstream public attention. People get motivated when they are the direct victims! For proof that the school district borrowed $105,000,150 by selling Capital Appreciation Bonds and will need to pay investors $981,562,329 by 2052, see page 12 of the Poway Unified School District’s Proposition C Bond Building Fund Annual Audit Report, January 31, 2012.

I hope the California Association of County Treasurers and Tax Collectors can align with the California League of Bond Oversight Committees (CalBOC) and various state and regional taxpayers organizations such as the Howard Jarvis Taxpayers Association to enact bipartisan legislation in 2012 to restrict or ban the sale of Capital Appreciation Bonds by school districts and community college districts. My statement about Capital Appreciation Bonds:

School board members don’t care how much these Capital Appreciation Bonds cost after 30 or 40 years. By the time property owners are assessed with the staggering tax burden, the elected board members will be out of office and probably dead. They won’t be accountable for the consequences, but they’ll still have their names on rusty plaques next to the front doors of deteriorating schools.

Latest News Media Coverage of CAB Reform

School Bond Reform Gaining Support – San Diego Union-Tribune – August 22, 2012

Tax Collector Blasts Poway Unified Bonds, Calls for Reform – North County Times – August 22, 2012

County Treasurer Calls for Widespread School Bonds Reform – Voice of San Diego – August 22, 2012

Poway Unified Residents Fume Over Expensive Bond: School District Officials Explain, Defend Decision Behind $1 Billion Debt – San Diego Union-Tribune – August 21, 2012

Poway Bond is a Billion-Dollar Box-Office Bomb – San Diego Union-Tribune (columnist Logan Jenkins) – August 21, 2012

County Treasurer Calls for Widespread School Bonds Reform – Voice of San Diego – August 21, 2012

A Creative Borrowing Boom: VOSD Radio – Voice of San Diego – August 20, 2012

Tonight: Big School Board Meeting in Poway – Voice of San Diego – August 20, 2012

High Cost of School Bond Shocks Poway Unified: Repayment Under Financing Plan Will Be 9 Times the Principal – San Diego Union-Tribune – August 17, 2012

‘Wow, If True Then That Is Financial Suicide’: Comments on School Bonds – Voice of San Diego – August 10, 2012

Find High-Interest School Bonds in Your District: A Five-Step Guide – Voice of San Diego – August 8, 2012

A Creative Borrowing Boom: Poway Not Alone in High-Interest Financing – Voice of San Diego – August 7, 2012

Where Borrowing $105 Million Will Cost $1 Billion: Poway Schools – Voice of San Diego – August 6, 2012

Moody’s Suggests Greedy Taxpayers Clinging to Their Money and Too Much Local Government Authority Are Causes of Municipal Bankruptcies; Predict More to Come

UPDATE: Inglewood Unified School District was indeed the next school district to be taken over by the state, as predicted below. On September 14, Governor Jerry Brown signed Senate Bill 533, a bill amended on August 15, 2012 to authorize emergency loan assistance to the school district of up to $55 million. Senate Bill 533 also requires the State Superintendent of Schools Tom Torlakson to assume all the rights, duties, and powers of the school board and appoint a state administrator for the district.

Note that the Inglewood Unified School District Superintendent Gary McHenry was the Superintendent of the Mt. Diablo Unified School District in the mid-2000s when the school board spent years arguing over requiring construction contractors to sign a Project Labor Agreement with unions to work on certain projects at the district.


ADDITIONAL THOUGHT: as I was writing about the Costa Mesa City Council’s derailed cost-efficiency plan on the morning of August 18, 2012 (Costa Mesa’s Bold and Meaningful Government Cost-Efficiency Plan on Hold Until November 6, When Citizens Vote on a Proposed Charter (Measure V) and for Three City Council Members), I realized that Moody’s looks at strong local government authority without considering all of the potential POSITIVE aspects of strong local governments and “home rule” under charters. A 4-1 majority on the Costa Mesa City Council is asking voters to enact a charter on November 6 through Measure V that would allow it more freedom and flexibility to save money for taxpayers by contracting out services and exempting local construction from state-mandated construction wage rates (so-called “prevailing wages”).

The people sending out the message from Moody’s about city bankruptcies in California apparently didn’t think much about wasteful government spending and the flexibility that comes with local control. They simply blame democratic obstacles to tax increases (“raising revenues is difficult for all California cities because tax hikes require voter approval”) and insufficient centralized government control (“unlike other states that are empowered to intervene in the financial affairs of stressed local governments, California’s strong ‘home rule’ means local governments get relatively little financial, technical, or oversight help from the state”).

If institutional investors are foolish enough to buy bonds issued by the City of Compton and the Inglewood Unified School District, why do California taxpayers need to bail out those investors with tax increases and costly state government interventions?


Imagine the constant pressure on the Howard Jarvis Taxpayers Association as it responds in bad times (as well as in good times) to the relentless claims that California would be so much better without those silly laws (especially Proposition 13) enacted by greedy, uncaring, ignorant voters who want to limit tax increases. When will people be more willing to share their bounty for the public good?

The latest subtle attack on the selfish taxpayer comes from Moody’s Investors Service. Today (August 17, 2012) Moody’s announced the release of a report entitled “Why Some California Cities Are Choosing Bankruptcy.” The announcement on the Moody’s web site hints of fundamental problems in California that include the following: (1) governments aren’t taking enough money in taxes and fees from their citizens to pay for services and other obligations; and (2) the state government isn’t strong enough to effectively meddle in municipal affairs. Here are some relevant excerpts:

[The report] details the economic, legal and policy environment that is helping to drive the increase in bankruptcy filings and defaults by California cities and concludes that the risk profile of California cities has increased across the board. Factors include the state’s boom-bust real estate economy, its hands-off policy with regard to the fiscal problems of local governments, and newly enacted legislation that … effectively lays out a path to bankruptcy court for stressed municipalities…

“Raising revenues is difficult for all California cities because tax hikes require voter approval,” said Moody’s Managing Director Gail Sussman. “And, unlike other states that are empowered to intervene in the financial affairs of stressed local governments, California’s strong “home rule” means local governments get relatively little financial, technical, or oversight help from the state.

“The inability and unwillingness to honor obligations to bondholders is relatively new in US public finance and still remains rare,” said Sussman. “The emergence in California of bankruptcy as a tool to extract bondholder concessions as part of a budgetary solution is a significant new risk for bondholders.”

“Stressed local governments” need a financial massage from the taxpayers through “raising revenues” and an “empowered” state government. A Reuters article about the report picks up on the theme:

The remedies California’s municipalities can employ are more limited than those of some other states, citing restrictions on property tax hikes and cities’ considerable independence from the state government, Moody’s said.

Get it? Local communities are too independent, and they selfishly want to keep their own money. They need to give away more money and more power to the wise in Sacramento, and then some of it will come back.

Here is a counter-perspective, which can be done by citing Moody’s own words:

Looking at the last couple of months of ratings issued by Moody’s for California local governments, it looks like the City of Compton might be the next city to file for Chapter 9 bankruptcy. On July 23, 2012, Moody’s announced that it had downgraded the rating for the City of Compton‘s $4.9 million in Sewer Enterprise revenue bonds from A2 to to Ba1 with the possibility of further downgrades. Apparently the city is collecting more than enough money from its sewer bills to make its payments on these bonds. Some other pesky issues have come up, such as “weak internal controls and management practices” and “severe General Fund overspending relative to budgeted amounts” and “waste, fraud and abuse.”

The downgrade is based primarily on the city’s severe liquidity crisis, the risk this raises that the city could seek bankruptcy protection, and the potential implications of such a development on timely debt service payments. The sewer enterprise currently generates more than sufficient net revenues to make debt service payments, and the Ba1 rating reflects our expectation of full, if not timely, debt service payment, assuming revenues have been allocated as legally required. The downgrade also reflects the city’s weak internal controls and management practices, highlighted by the depth of the liquidity crisis; recent, severe General Fund overspending relative to budgeted amounts; and allegations of waste, fraud and abuse of public monies by the city’s Mayor. These allegations undermine our expectation that the city will properly account for and transfer pledged enterprise revenues to bond trustees consistent with trust agreements to ensure timely debt service payments. Uncertainty also derives from the city’s inability to produce audited financial information on a timely basis.

The July 18, 2012 Los Angeles Times suggested that the City of Compton would be the next city to go bankrupt: see “Compton on Brink of Bankruptcy: The city is the latest to fall victim to questionable financial practices. It could run out of money by the end of the summer.” (The article hedged its bets by also mentioning Victorville and Montebello.)

At California school districts, it looks like the Inglewood Unified School District might be the next school district to be taken over by the state. On June 28, 2012, Moody’s announced that it had downgraded the rating for the Inglewood Unified School District‘s $113 million worth of outstanding general bond obligations from A3 to Baa1. It also assigned a “negative outlook” because of “the district’s continued fiscal crisis and the possibility it could be forced into state receivership to remain solvent.”

According to an April 20, 2012 announcement about the Inglewood Unified School District from Moody’s, this school district has been spending more while taking in less and educating fewer students:

The district’s financial position has eroded to a level of near insolvency that requires an immediate correction to maintain operations. The current financial position occurred due to growing expenditures during a period of acute revenue decline. Revenue decline has been driven by two main factors: declining enrollment averaging 4.8% annual decrease over a five year period, and reductions of state aid experienced by all California school districts beginning in fiscal year 2008. The district’s operational imbalance was funded during fiscal years 2009 and 2010 by Federal ARRA funds and the use of the district’s reserve funds. Fiscal year 2010 ended with a General Fund balance of $3.8 million, 3.4% of revenues, a significant drawdown since fiscal 2007’s balance of $17 million, or 12.8% of revenues.

Speaking of school bonds, notice all the wonderful things that happened after Californians voted in 2000 to reduce the voter approval threshold for school districts to sell general obligation bonds for school construction from two-thirds to 55%. School districts went wild borrowing money from bond investors, often by selling Capital Appreciation Bonds. Today the kids enjoy their new and renovated school facilities, and tomorrow their families will enjoy a lifetime of renting when property taxes shoot through the roof in 20-30 years to pay off the compound interest from those bonds. (Don’t worry, I’m sure the state government and local governments will institute laws to control the rent.)

Really, do you want to give more money to the City of Compton and the Inglewood Unified School District, the way they’re run today? The problem is not that Californians aren’t giving enough money to their government. The problem is the government itself.

Don’t Be Fooled! Meet Some Sneaky Fake Taxpayer Groups In California

In November 2000, California voters approved Proposition 39, which allows school districts to seek voter approval for school construction bonds at a 55% threshold instead of a two-thirds threshold. One of the conditions in Proposition 39 required of school districts seeking the 55% threshold for passage is to establish a Citizens Bond Oversight Committee, with the requirement that “One member shall be active in a bona fide taxpayers’ organization.” (See California Education Code Section 15282.)

I scoffed at that provision and figured it wouldn’t be long before the California Labor Federation, AFL-CIO and its regional affiliates created their own “bona fide taxpayers’ organizations” to undermine bond oversight committees and make sure taxpayers remain a generous source of revenue for the government and the people who live off of it.

That has surely happened with the case of the Middle Class Taxpayers Association in San Diego, one of two obviously phony taxpayer organizations that float about nowadays to provide cover for the union tax-and-spend agenda.

The Middle Class Taxpayers Association in San Diego – FAKE!

The Middle Class Taxpayers Association, formed in 2011 in San Diego, betrays its true agenda with the code words in its mission, as reported in the leftist Ocean Beach Rag: “MCTA will focus on pocket-books issues such as healthcare coverage, housing affordability, quality of life, small business development, asset building, moral public budgeting, employment self-sufficiency, lifetime education, retirement security, and consumer safety.” (They forgot to include “investment” in this list.) In other words, more taxes, more programs, more spending.

A post on the web site of the San Diego County Republican Party claims that “the ‘Middle Class Taxpayers Association’ isn’t a new voice for responsible stewardship of our tax dollars. It’s a front group shilling for the San Diego (Central) Labor Council. The Labor Council doesn’t even try to hide its involvement.” No surprise, the Middle Class Taxpayers Association opposes Proposition A (Fair and Open Competition) and Proposition B (City Employee Pension Reform) on the June 5 ballot in the City of San Diego.

In the summer of 2011, the Governing Board of the Southwestern Community College District in Chula Vista declined to reappoint Rebecca Kelley, the representative of the San Diego County Taxpayers Association, to its Citizens’ Bond Oversight Committee for the $389 million Proposition R bond measure, instead placing a representative of the Middle Class Taxpayers Association on the oversight committee.

That so-called taxpayers’ representative is Matt Kriz, political director of International Union of Painters and Allied Trades, District Council 36 and Local 831. As reported earlier by the Dayton Public Policy Institute, the board of directors of the Southwestern Community College District is about to vote on a policy to require contractors to sign a Project Labor Agreement with construction unions to work on projects funded by Proposition R. Even the college newspaper was able to make the connection:

Builder Decries Loss of Oversight Members: SWC Board Replaced Two on Prop. R Committee over the Summer – Southwestern College Sun newspaper – October 7, 2011

Also, see Breaking: Labor Corruption…SD Labor Council Seeks to Oust Taxpayer Advocate from Oversight Committee – posted on San Diego Rostra by Ryan Purdy – July 12, 2011

The real taxpayers’ organization in San Diego County is the San Diego County Taxpayers Association. In addition, Richard Rider’s San Diego Tax Fighters is a reliable source of information on local fiscal responsibility.

The Contra Costa County Senior Taxpayers Group – FAKE!

I only checked the existence of this phony organization when construction union officials handed me a letter from the Richmond-based “Contra Costa County Senior Taxpayers Group” on May 18 outside an event hosted by the Contra Costa Taxpayers Association. The letter reiterated union-backed attacks on a study showing that school construction in California is 13%-15% more expensive when a school district requires contractors to sign a Project Labor Agreement with unions.

Using web searches, I only find one example of the Contra Costa County Senior Taxpayers Group involved in policy issues: on June 18, 2009, Susan Swift – the executive director of the Contra Costa County Senior Taxpayers Group – spoke to the Brentwood City Council in support of a requirement for contractors to sign a Project Labor Agreement to work on the Brentwood Civic Center. (The union requirement was approved on a 3-2 vote.) Swift is a former staffer to two San Francisco Bay Area Democrat state legislators and received the endorsements of numerous Democrat politicians and unions when she ran unsuccessfully for Director of the West Contra Costa Healthcare District in 2004.

The real taxpayers’ organization in Contra Costa County is the Contra Costa Taxpayers Association. There is also a small group called the Alliance of Contra Costa Taxpayers, which still seems to pop up occasionally to oppose new taxes but whose web site has been neglected for several years.

The Mother Lode Taxpayers Association – BONA FIDE or a POLITICAL FRONT?

I was reminded last week of my old 2000 prediction about fake taxpayer groups when I read about the controversy concerning the legitimacy of the Mother Lode Taxpayers Association, a group founded in 2010 that established a Political Action Committee on April 12, 2012 for independent campaign expenditures in support of Frank Bigelow, a Republican candidate for the 5th Assembly District facing off in the June 5 primary against former Assemblyman Rico Oller.

Now, I’m guessing that Frank Bigelow (just like Rico Oller) would be a solid vote for fiscal responsibility in the California State Assembly. But I wouldn’t regard the three donors to the Mother Lode Taxpayers Association’s Political Action Committee to be special interest groups known for their philosophical resistance to relentless tax increases and government expansion. It received $150,000 from the California Real Estate Independent Expenditure Committee, $75,000 from the California Dental Association Independent Expenditure PAC, and $10,000 from the California Cattlemen’s Association PAC (CATTLE PAC).

The Howard Jarvis Taxpayers Association (which endorsed Rico Oller) issued a press release noting “fake taxpayer groups like this undermine legitimate taxpayer organizations…” Yet, I notice that the web site for the Mother Lode Taxpayers Association has been active in other local campaigns in the past three years: see here. The executive director, Heidi Morton, is active in Republican and conservative causes in Tuolumne County.

So is the Mother Lode Taxpayers Association bona fide or not? I hope so, and I hope it will join the other legitimate taxpayer associations in California in the lonely fight for fiscal responsibility.

A Fairly Trustworthy List of Taxpayer Organizations in California

I don’t know every listed group, but I believe the National Taxpayers Union (based in Washington, D.C.) has posted a fairly accurate list of bona fide taxpayer groups in California: California is the Best Example of How to Run a State’s Economy into the Ground.

Shameful! Democrats Reject Assemblywoman Shannon Grove’s Bill to Codify Court Decision Allowing Public Access to Certain Legislative Records

I’m 3 for 3 on guessing the outcome of the triad of bills introduced by Assemblywoman Shannon Grove (R-Bakersfield) to reform the operations of the California State Legislature. On April 26, the Assembly Rules Committee rejected Assembly Bill 1946 on a 5-4 vote, with five Democrats opposed, four Republicans in support, and two Democrats not voting.

The bill was supported by the Howard Jarvis Taxpayers Association and the Dayton Public Policy Institute, a project of Labor Issues Solutions, LLC. (See my support letter here.) I was not able to attend the committee hearing to speak as a witness for AB 1946 because I was in Orange County on other business at that time.

This bill would have codified the December 2, 2011 Sacramento County Superior Court decision in Los Angeles Times Communications LLC v California Legislature (Case Number: 34-2011-80000929). It would have added to state law a statement of the court that “The language of the Open Records Act at issue here reflects a strong presumption in favor of public access to legislative records.” AB 1946 also would have added to state law the court’s statement that records that “reflect how Assembly money is budgeted and spent” are public records. According to the court, these records “indisputably contain information relating to the conduct of the public’s business” which is “critical to an understanding of the Legislature’s operations.”

The committee’s bill analysis for AB 1946 was essentially useless, although it suggested a clarification to the bill language that alluded to the practice of moving staff around from committees to personal offices to avoid budget restrictions.

News Media Coverage:

Assembly Kills Bill to Require Disclosure of Member Budgets – Sacramento Bee – April 26, 2012

Assembly Scuttles Bill to Make Budget Disclosure Permanent – Sacramento Bee – April 27, 2012

Assembly Errs in Keeping Its Process Closed – Bakersfield Californian (editorial) – April 30, 2012

Sacramento, A Place of No Surprises – Santa Maria Times (editorial) – May 1, 2012

Here’s a powerful excerpt from the Bakersfield Californian editorial:

One of the bills that died was an attempt by Bakersfield Assemblywoman Shannon Grove to stipulate in the Legislative Open Records Act that member-by-member budgets for individual lawmakers and their offices are public record. Grove’s bill came in response to a court decision in which a judge ruled legislative budgets are public records despite the Legislature’s long insistence otherwise. The Democratic-led committee said the judge’s decision was enough; the bill wasn’t necessary.

But why not codify the judge’s decision into law? The Legislative Open Records Act has long been regarded as a joke among open government experts and Grove’s bill could have helped bolster its legitimacy. It’s hard to see any political motivation on Grove’s part here, other than her well-documented disdain for big government and willingness to shine the light on those who take their duties as stewards of the public trust lightly. Her bill deserved more consideration and it’s a shame it was given short-shrift.

And an excerpt from the Santa Maria Times editorial:

The author of the disclosure bill, Assemblywoman Shannon Grove, a Bakersfield Republican, admitted she filed the legislation knowing it had little chance of survival — which tells you a lot about how little confidence she had in her colleagues’ ability or willingness to be honest about how they spend your tax dollars.

It’s interesting to note that Assemblywoman Grove, who tried to launch the legislation mentioned above to require full financial disclosure, is also helping the group trying to promote the part-time Legislature notion. Well, at least we know one person in Sacramento is focused on making a better government.

California Legislative Committee to Again Consider Putting Legislature Under Same Fair Contracting Laws as Other State Agencies

UPDATE: The committee analysis for Assembly Bill 1947 has been issued, and the Dayton Public Policy Institute (a project of Labor Issues Solutions, LLC) is the sole party in the universe that bothered (or dared?) to submit a comment. I’ll be at the committee meeting tomorrow to testify as a witness. Perhaps there will even be some committee members there besides the chairperson to hear it.

Assemblywoman Shannon Grove (R-Bakersfield) has introduced a package of three bills (Assembly Bill 1946, Assembly Bill 1947, and Assembly Bill 1948) that would eliminate some of the special privileges of the California State Legislature. I call these bills the “Glass Houses” package because they reveal how the state legislature hypocritically enacts laws to control the activities of businesses and government entities, but makes sure to exempt itself from those same laws.

On Tuesday, April 17, the Assembly Business, Professions & Consumer Protection Committee will meet at 9:00 a.m. in Room 447 of the Capitol and at that hearing will consider Assembly Bill 1947. This bill changes state law to require the California State Legislature to bid its contracts under fair and open competitive bidding, for the purpose of stimulating competition in a manner conducive to sound fiscal practices and for eliminating favoritism, fraud, and corruption. AB 1947 also creates transparency in the development and execution of bid specifications, so that the legislature is accountable to the people for its policy decisions concerning contracts funded by the people. A preliminary fact sheet explaining this bill, the need for this bill, and the inspiration for this bill is here:

Assembly Bill 1947 – Preliminary Fact Sheet

My letter in support of Assembly Bill 1947 is here:

Dayton Letter in Support of Assembly Bill 1947

Posted NEW on April 16: Assembly Business, Professions, and Consumer Protection Committee Analysis of Assembly Bill 1947

To express your support for Assembly Bill 1947, go to Shannon Grove’s My Legislation, select “AB 1947 – Competitive Bidding for Legislative Contracts” – and then select Support/Oppose AB 1947.

What Are the Chances of Assembly Bill 1947 Becoming Law?

Based on past history, the Democrat leadership will NOT let this bill pass out of committee.

In a shameful vote on April 23, 2007, the Assembly Business and Professions Committee rejected Assembly Bill 1070, a bill introduced by Assemblyman Paul Cook (R-Yucaipa) that would have subjected the state legislature to the same competitive bidding requirements as state agencies and local governments in California. One Democrat, Assemblywoman Wilmer Amina Carter (D-Rialto), joined committee Republicans to vote in support of the bill, reportedly because she recognized the historic legacy of racial discrimination in awarding government contracts.

A freshman legislator at the time, Assemblyman Cook learned through frustrating experience about how Democrat legislative leaders control their fiefdom. The Legislative Counsel’s office, which drafts bills, included an unnecessary provision in the bill that Cook could not manage to get removed despite his efforts. The Democrat committee analyst used the provision as the basis for an argument against the bill. Even though Assemblyman Cook received no letters of opposition, and not a single speaker at the committee hearing testified against the bill, the bill was rejected without comments.

Following the vote, the May 11, 2007 Orange County Register published a column by the newspaper’s “Capitol Watchdog” Brian Joseph entitled “Committee Quashes Contract Rules: Bill Would Have Required Legislature to Follow Fair Play Rules in Awarding its Projects.” The column reported on the committee rejection of Assembly Bill 1070. It also reported that in 2005 an unknown person or persons in the legislature unilaterally decided to insert a provision in bid specifications for the Capitol Safety and Security Improvements Project to require all contractors to use an “all-union workforce.” Such a requirement would not be allowed under the state’s competitive bidding laws, but the state legislature has exempted itself from those laws.

The column also referred to a court case – The Zumbrun Law Firm v. California Legislature – in which the legislature was accused of illegally using that union-only bidding requirement and also accused of illegally withholding documents from the public that would reveal which legislator initiated this behind-the-scenes bidding scheme. That lawsuit lost in Sacramento County Superior Court in 2006 and lost on appeal in the California Third District Court of Appeals in 2008. The California Supreme Court declined to hear an appeal. The courts ruled that the legislature could indeed and was indeed exempt from the State Contracts Act when bidding construction contracts.

In 2009, Assemblyman Curt Hagman (R-Chino Hills) introduced Assembly Bill 641, which would have required the legislature to abide by competitive bidding laws. The Howard Jarvis Taxpayers Association sponsored the bill in response to the two court decisions in The Zumbrun Law Firm v. California Legislature. The Assembly Business and Professions Committee defeated Assembly Bill 641 on a party-line vote (Republicans in support; Democrats opposed).

Will the third time be the charm for competitive bidding? The California State Legislature may want to heed the advice of Benjamin Franklin in Poor Richard’s Almanack:

Don’t throw Stones at your Neighbours’, if your own Windows are Glass.