Tag Archive for Governor Arnold Schwarzenegger

After Seven Years, California High-Speed Rail Still Lacks Comprehensive and Credible Plan for Financing System

The California State Senate Transportation and Housing Committee held an informational hearing on March 27, 2014 entitled “Toward a World-Class Passenger Rail System in California:  Evaluating High-Speed Rail’s Potential for Success.” (See agendabackground information, a report from the California Legislative Analyst’s Office, and the video of the hearing.)

Of greatest concern to committee chairman Mark DeSaulnier (D-Concord) was the lack of a comprehensive and credible plan for financing the system in the California High-Speed Rail Authority Draft 2014 Business Plan.

Some things never change!

I have saved this old email from Governor Arnold Schwarzenegger’s office forwarding an opinion piece published in the May 4, 2007 Fresno Bee. In it, he claims to support High-Speed Rail but doesn’t want to provide significant money for it in the 2007-08 state budget because “there is still no comprehensive and credible plan for financing the system.” He compares the speculative nature of funding sources for High-Speed Rail with the well-outlined plan for complete funding of projects authorized in a proposed water bond – a ballot measure that has never come before California voters.

See the phrases highlighted in bold font below.

From: governorsofficeofexternalaffairs@gov.ca.gov

Date: Fri, 4 May 2007 08:57:45

Subject: Must Build High-Speed Rail


Fresno Bee: State Must Build High-Speed Rail

Governor Arnold Schwarzenegger

As the recent Bay Area freeway collapse illustrated — and as a recent Bee editorial correctly pointed out — Californians need and deserve a diverse array of transportation options. I absolutely believe high-speed rail should be one of those alternatives.

A network of high-speed rail lines connecting cities throughout California would be a tremendous benefit to our state.

Not only would its construction bring economic development and the creation of hundreds of thousands of new jobs, but once completed, we would also see improvements to our air quality, reductions in greenhouse gas emissions, congestion relief on our highways and greater mobility for people living in the Valley and other areas of our state currently underserved by other forms of transportation.

Yet it’s been more than 10 years, and the state has already spent more than $40 million in initial planning for the rail line. But there is still no comprehensive and credible plan for financing the system so we can get construction under way.

The High-Speed Rail Authority, the commission in charge of developing a plan for high speed rail in California, estimates the cost of building the system to be more than $40 billion.

Yet so far, the only financing party identified with specificity is the state, which the Authority proposes float a $9.95 billion bond. The remaining 75% of the project cost, or more than $30 billion, has yet to be identified with any specificity or confidence.

Before asking taxpayers to approve spending nearly $10 billion plus interest, it is reasonable to expect the authority and its advisers to identify with confidence where we will find the remaining $30 billion.

A perfect example of what I’m talking about is my $5.9 billion water infrastructure package. By using a public-private partnership approach, we’ve identified a plan that lays out exactly how we are going to pay for every piece of the proposal, from the reservoirs to the groundwater storage to fixing the Delta to our conservation efforts.

For the reservoir portion, the estimated building cost is $4 billion. We’ve proposed $2 billion in general obligation bonds for the public portion and $2 billion in lease revenue bonds to be paid for by the water users themselves, i.e. water agencies, irrigation districts, cities, etc. And to ensure that this funding materializes, we are requiring that contracts be in place to pay for the lease revenue bonds before public dollars are spent on the projects.

Identifying the exact funding sources for large transportation projects is more problematic, which is why we need the authority to come up with a well-thought out financing proposal before moving forward.

I want to commend the authority for its great progress so far in completing the necessary environmental studies and identifying future rights-of-way that we would need to acquire.

Yet even the authority’s executive director, Mehdi Morshed, says the longer the state waits to build a high-speed rail network, the more expensive it will get. I could not agree more.

That’s why I have directed my recent appointees to work with the authority and its financial advisers to develop a comprehensive plan for financing the project in its entirety, so we can make high-speed rail a reality in California once and for all.

Last year, my administration increased funds for the authority to continue its work, and this year, my budget proposes additional funding.

I am willing to explore multiple approaches in order to fund the balance and execute this project — whether through federal grants, local participation, vendor support, co-development opportunities, public-private partnerships or any other realistic financing plans in which the authority expresses confidence.

I look forward to working with the authority and reviewing its proposal as soon as possible.

But let me be clear: I strongly support high-speed rail for California, and especially for the San Joaquin Valley. Increasing the Valley’s transportation options, especially after voters passed Proposition 1B to repair Highway 99, would better serve the region’s growing population and enhance the Valley’s critical importance to our state’s economy.

The promise of high-speed rail is incredible. Looking forward to the kind of California we want to build 20 and 30 years from now, a network of ultra-fast rail lines whisking people from one end of the state to the other is a viable and important transportation alternative and would be a great benefit to us all.

With a responsible plan in place, we can feel secure in delivering high-speed rail and bringing greater opportunity — and a brighter future — to all Californians.



Governor Schwarzenegger had initially included only $1.2 million in his original proposed 2007-08 state budget to keep the California High-Speed Rail Authority operating. (The California High-Speed Rail Authority reportedly had requested $103 million.) The Los Angeles Times reported in the April 29, 2007 article State Puts Brakes on Bullet Train Plan that “Schwarzenegger’s budget would reduce the authority to an office with no more than six full-time employees — without the 75 consulting firms with 300 employees it has now. Outside contracts would need to be canceled, route planning put on hold and environmental and engineering work frozen.” He also proposed again postponing the 2008 ballot measure to authorize bond sales.

Environmental and transit groups criticized this. They claimed he was betraying a commitment to reduce greenhouse gas emissions through Assembly Bill 32, the Global Warming Solutions Act of 2006 that he signed into law.

In the end, the budget signed by the Governor included $1,159,000 for support of the High-Speed Rail Authority.

Latest Scheme for Career Technical Education: School Districts Borrowing Money with “Social Impact Bonds” – Unions on Board

On March 19, 2013, California State Senate Pro Tem Darrell Steinberg led a press conference to promote Senate Bill 594 (California Career Pathways Investment, also known as the High School Dropout Reduction & Workforce Development Bond Act of 2013) meant to encourage partnerships among school districts, corporations, and unions for career technical education in California K-12 schools and community college districts.

Senator Steinberg also promoted this bill on March 22 at Redevelopment Forum: Revitalizing our Neighborhoods in a Post-Redevelopment Era, hosted by the San Diego Foundation. SB 894 is apparently a serious initiative.

It establishes an unfunded mandate for K-12 school districts and community college districts to create a new pool of money called a “Career Pathways Investment Trust Fund.” These districts can borrow money for the program by selling “Social Impact Bonds” (a concept promoted by the “progressive” Center for American Progress) for which investors can earn “Career Pathways Investment Credits.” This will be overseen by a new state government board called the “California Career Pathways Investment Committee.” The appointments of the Assembly Speaker and Senate Rules Committee to this committee will likely be union officials.

Senate Bill 594 exemplifies the foolishness of governance in the California State Legislature:

  • bizarre and incomprehensible financing schemes
  • borrowing money (with interest) without consideration of cumulative debt service
  • unfunded state mandates
  • forcing the state’s local governments to create and manage another pool of money
  • inviting more corruption at local governments
  • creating another state government board
  • tax breaks to corporations for ambiguous purposes
  • intrusion of corporations and unions into the public school system
  • brilliant suggestions that freed-up funds from a few cuts in the state budget can be transferred to pay for it
  • lack of concrete evidence that there is a problem (in fact, testimony during the press conference suggested the big problem is a lack of jobs, not lack of training)
  • government solutions for something that could be handled by the free market if there was real demand

When Governor Schwarzenegger promoted his Career Technical Education initiative in 2007, he considered it worthy enough to propose paying for it out of the general fund through the annual state budget. His efforts were not deemed worthy of mention at the SB 594 press conference.

Here’s my March 20, 2013 article in www.UnionWatch.org about the press conference and Senate Bill 594: Businesses Can Make a “Social Impact Bond” with Unions – www.UnionWatch.org – March 20, 2013.

The Sacramento Bee posted an article on March 21, 2013 about Senate Bill 594, Steinberg Pushes Privately Funded Career Training Program, which quotes me as a skeptic:

But skeptics wonder how the career readiness programs would be funded.

“They need to stop coming up with new funds and new schemes paid for by borrowed money,” said Kevin Dayton, head of the consulting firm called Labor Issues Solutions. “New things like this are just a big distraction. If they want to do career education they should fund it in the general budget.”

I posted these comments under the article:

Do you want your K-12 school district or community college district to establish a “Career Pathways Investment Trust Fund” and oversee yet another pool of money? It’s a mandate.

Let’s create another state government board: the “California Career Pathways Investment Committee!” The appointments of the Assembly Speaker and Senate Pro Tem will certainly be union officials.

Do you want your K-12 school district or community college district to sell “Social Impact Bonds?” Who will pay the interest on these bonds? Who will make the money on the interest?

“Career Pathways Investment Credits” – how about just focusing on an efficient, responsible government with a simple tax structure?

As another comment indicated, “the State has funding for apprentices (it contributes about 5% of the cost to train an apprentice – the rest coming from employers)…”

I also mentioned this in my comment:

One is led to believe Senate Bill 594 is needed because California businesses can’t find skilled workers. But notice the nurses’ association representative says the problem is that trained nurses can’t find jobs in California and therefore need to move out-of-state. And is there really a shortage of skilled construction workers in California right now? Are there no longer 20%-30% unemployment rates in the building trades? Or is SB 594 for training disadvantaged union workers to build the California High-Speed Rail under the Project Labor Agreement?

Los Angeles Times columnist George Skelton wrote positively about the general concept of encouraging career technical education (he avoids the politically correct phrase and simply calls it “shop”), but his column (Reinvigorating ‘Career Tech’ a Worthy Goal – Los Angeles Times – March 20, 2013) also reveals that the supporters don’t understanding the funding scheme:

Steinberg’s legislation is a bit convoluted — at least the financing part — and needs much work…Steinberg is suggesting several financing methods, including tax credits and foundation grants. But the main money source involves bonds. The state would sell “workforce development bonds” — say, for $1 million a crack — to businesses in areas “with the greatest potential for high-wage job growth.” The bond revenue would pay for the career-tech programs. The bond-buyers would earn a rate of return based on a program’s results, as judged by some committee. “I’m not sure I completely understand it,” Zaremberg [Allan Zaremberg, President & CEO of the California Chamber of Commerce] told me. “Why don’t we just fund this out of existing resources? Is this not a priority? … like Zaremberg, he [Jack Stewart, President of the California Manufacturers & Technology Association] doesn’t quite grasp the bond idea.

Dan Walters is another California commentator who has written much over many years about the need for stronger career technical education programs in California public schools. (For example, see Technical Education Fight RagesSacramento Bee – November 19, 2007)  I look forward to reading his perspectives on Senate Bill 594.

California’s 2010 Law Changing the Crime Classification for Petty Marijuana Possession Reduced Workload for District Attorneys and Courts

Thanksgiving dinner at the Dayton household featured relatives and friends from San Francisco and Berkeley who are active in leftist causes and jubilant about the election results. Meanwhile, I was bemoaning the lack of present and future market demand in California for policy analysts and political consultants who advocate for minimalist government.

From their perspective, there was a solution: work with a campaign to convince a majority of California voters to legalize marijuana, as voters did in Colorado and Washington in the November 6 election.

Factions on both the Left and Right could agree that this step would give Californians more personal freedom from intrusive government and reduce the costs of law enforcement, courts, and prison, thus saving money for taxpayers and allowing the government to focus limited resources on more serious threats to an orderly, functioning society. The product could also be taxed as a source of revenue. In addition, such a campaign might introduce concepts of economic and personal freedom to California citizens who don’t often respond to the typical message and delivery from the Right. See the November 14, 2012 Cato Institute article A Time for Choosing: The GOP and the Marijuana Initiatives for this kind of thinking.

I was reminded of the Thanksgiving dinner advice when I saw tweets this morning from Scott Lewis, a reporter for the Voice of San Diego web news site. He wrote that the San Diego Association of Governments (SANDAG) reported 6,783 misdemeanor marijuana arrests in San Diego County in 2010, but only 703 in 2011. That’s a 90% drop in arrests. (The San Diego Union-Tribune has now reported this in the November 28, 2012 article Marijuana Arrests Plummet 90% Countywide.)

I immediately knew the reason for the drop, but people in San Diego replied with tweets asking if this was because of lack of enforcement, a drop in use, or the presence of medical marijuana dispensaries. All of these guesses were wrong but understandable, because Californians have dramatically inaccurate perceptions about the state’s marijuana laws.

As the reporter subsequently confirmed with another tweet, it’s because of an obscure change in state law in 2010, explained below. I tweeted a question on whether or not anyone had compiled the statewide statistics on misdemeanor marijuana arrests and/or estimated the savings for county district attorneys and the judicial branch. I’m looking forward to an answer.

Petty Marijuana Possession in California Ceased to Be a Felony in 1975, and It Ceased to Be a Misdemeanor in 2010

June 26, 2001 analysis of Senate Bill 791 for the Assembly Committee on Public Safety corrected a common misperception among Californians that hundreds of thousands of people are in prison because they were caught with a small amount of marijuana:

…possession of less than one ounce of marijuana was essentially decriminalized in 1975 with the passage of the Moscone Act. Up until that time, possession of any amount of marijuana was a felony, punishable by up to ten years in prison. In 1974, felony marijuana arrests peaked at nearly 100,000 (99,597), representing about one-fourth (24.75 percent) of the felony arrests in the state and over two-thirds (69.21 percent) of the state’s felony drug arrests.

Even though possession of one ounce (28.5 grams) or less of marijuana was no longer an offense for jail or prison (outside of some exceptions that continue today), the violation remained a misdemeanor to be addressed in trial courts. It was claimed that the misdemeanor classification was costly and absurd, because “there exists no disincentive for the accused to drain the resources of the state and the courts with a lengthy trial” that would simply result in a $100 fine if a judge or jury found the defendant to be guilty.

Few Californians know that in the waning days of his administration, Governor Arnold Schwarzenegger signed Senate Bill 1449, introduced by State Senator Mark Leno (D-San Francisco), which changed the classification of crime for possessing one ounce (28.5 grams) or less of marijuana from a criminal misdemeanor to a civil infraction that simply triggers a $100 fine. (To put this amount in perspective, California drivers are fined between $400 and $500 when photographed running a red light.)

At that time, California voters were about to decide on a statewide marijuana legalization ballot measure, Proposition 19, called the “Regulate, Control and Tax Cannabis Act of 2010.” Opponents of Proposition 19 thought Senate Bill 1449 could blunt voter support for Proposition 19. It did lose in the end, 53.5% to 46.5%.

Theories abound as to why a majority of voters rejected Proposition 19, with one being that some voters thought Senate Bill 1449 was acceptable but full-fledged legalization was too extreme. Another reasonable guess is that some voters agreed with the arguments of business groups and news organizations that Proposition 19 was poorly written and would undermine company drug policies, and it would even give people flexibility to drive under the influence of marijuana. (My former employer, Associated Builders and Contractors (ABC) of California, opposed Proposition 19 because it did not want construction workers on dangerous job sites to use Proposition 19 as a basis to evade company drug policies.)

Converting Petty Marijuana Possession from a Misdemeanor to an Infraction

Senate Bill 1449 was promoted as a way for the State of California to reduce the expenditures of the judicial branch by eliminating the involvement of trial courts in petty marijuana possession cases. The bill analysis for SB 1449 noted that “the number of misdemeanor marijuana possession arrests have surged in recent years, reaching 61,388 in 2008.”

According to an April 21, 2010 analysis of Senate Bill 1449 for the Senate Rules Committee and a June 22, 2010 analysis of Senate Bill 1449 for the Assembly Committee on Public Safety, supporters of the bill included the American Civil Liberties Union, the California Attorneys for Criminal Justice, the California District Attorneys Association, the National Organization for the Reform of Marijuana Laws – California, the District Attorney of San Diego, the Drug Policy Alliance, the Friends Committee on Legislation of California, and most significantly, the Judicial Council of California. Opponents listed in the April 21 analysis were the California Narcotics Officers Association, the California Peace Officers Association, and the California Police Chiefs Association. No opponents of SB 1449 were listed in the June 22 analysis.

A handful of Democrats voted against Senate Bill 1449. Two Republicans voted for it: Assemblyman Anthony Adams, who was not running again after supporting a budget deal in 2009 that raised taxes, and Assemblyman Chris Norby, a former Orange County supervisor whose voting record reflected a libertarian philosophy.

After being the lone champion in the state legislature of proposals unpopular with the Establishment – such as eliminating redevelopment agencies – Norby was defeated for re-election in November 2012 by a Democrat supported by every organization in Sacramento that feeds off the government. In Norby’s farewell statement issued today (November 28, 2012) and published on the OC Politics Blog as Verbatim: Chris Norby’s Goodbye, he wrote the following about his work on marijuana laws:

As for marijuana, I was happy to provide bipartisan support to legalize the growing of industrial hemp, and for more rational laws in dealing with its recreational use. The War on Drugs has become a war on people – especially poor people. It costs billions in incarceration and in broken lives of those whose only crime was ingesting a substance into their own bodies. Is this a criminal issue or health issue? Consensual, non-violent adult activity should not be subject to our costly criminal justice system or militarize our relations with other countries.

Republican leaders love to blast the over-intrusive “nanny state,” yet for cultural reasons most shy away from advocating common sense drug laws. Some have not shied away: influential columnists William F. Buckley and George Will, Reps. Ron Paul (R-Texas) and Dana Rohrabacher (R-Huntington Beach), Rep. and Sen.-elect Jeff Flake (R-Arizona), and former Secretary of State George Shultz. Where are the Democrats? The current presidential administration has raided more medical marijuana dispensaries than its Republican predecessor.

Another Republican who supported the change in petty marijuana possession from misdemeanor to infraction was former Santa Cruz State Senator Bruce McPherson, who introduced essentially the same bill as Senate Bill 791 in 2001. According to a June 26, 2001 analysis of Senate Bill 791 for the Assembly Committee on Public Safety, that bill was supported by the California Council of Police and Sheriffs, the Judicial Council of California, the Los Angeles District Attorney’s Office, and National Organization for the Reform of Marijuana Laws. Opponents listed in the analysis were the California Narcotics Officers’ Association, the California Peace Officers’ Association, and the California Police Chiefs’ Association – the same three groups that opposed SB 1449 nine years later.

Also opposing SB 791 was the “Committee on Moral Concerns,” a group active in the 1990s against medical marijuana but now appears to be defunct. This group argued that “It sends the message that marijuana use carries little or no legal risk and, therefore, is nearly acceptable. Strengthening the law, instead of weakening it, would save the lives of thousands.”

The bill passed the Senate 23-13 but was defeated in the Assembly 44-14. Only one Republican voted for it: Senator Tom McClintock, who now represents California’s 4th Congressional District.

Senator McPherson was subsequently appointed by Governor Schwarzenegger as California Secretary of State in 2005 after the Democrat incumbent resigned in disgrace. He lost to Democrat Debra Bowen when he ran for a full term in 2006. He quit the Republican Party in June 2012 when he was running for Santa Cruz County Board of Supervisors. It appears he barely won (with 50.33%) against a Democrat in the November 6, 2012 election.

Will the California Republican Party Ever Lean Toward Marijuana Legalization? If So, Would Californians Be More Willing to Give Republicans a Chance to Govern?

Of the four Republican legislators who voted to reduce the penalty for petty marijuana possession from a misdemeanor to an infraction, one was repudiated for supporting a tax increase, another was appointed to a statewide office, lost the election, and then quit the Republican Party to run for county supervisor, and a third was rejected by voters in favor of a Democrat. Not an impressive track record. Only Tom McClintock is still holding an office, but note McClintock was unsuccessful as a replacement candidate for Governor in the 2003 recall election.

And Governor Schwarzenegger – the Republican who signed the bill – certainly didn’t leave office popular with Republican Party leaders and activists, not to mention Californians at large. (Wait until the Global Warming Solutions Act of 2006 – Assembly Bill 32 – really begins kicking in!)

Among the groups taking a position on reducing the penalty for petty marijuana possession from a misdemeanor to an infraction, the district attorneys would seem to be the group most palatable to Republican voters. The district attorneys’ support for Senate Bill 1149 (2010) and Senate Bill 791 (2001) was based on pragmatic, fiscal concerns. Even then, few Republicans were in favor of the change. This is a case in which moral connotations and implications seem to have primacy over saving money for taxpayers.

Some people on both the Left and the Right feel that government should serve as an authoritative or guiding force for public morality. Others on both the Left and the Right fear government when it serves as an authoritative or guiding force for public morality. That debate will continue in the realms of intellectual ideas, such as constitutional law, philosophy, and theology.

Meanwhile, we can now measure the short-term fiscal impact of weaker drug laws on government expenditures and see how the government is redistributing limited resources to reduce violent crime and protect property. It looks like Senate Bill 1449 greatly reduced law enforcement and judicial activity for one kind of crime. The states of Colorado and Washington are now serving as pilot programs to see the effect of outright legalization. For California leaders who believe that minimalist government is the best approach, the next year will bring some interesting new insights.

They Said Paycheck Protection Would Be Back Again in California…An Archived Post-Election Letter from the 1998 Proposition 226 Grassroots Campaign Team

Proposition 32 (on the November 6, 2012 ballot) is the third opportunity in 15 years for California voters to enact a state law that requires unions to get written permission from their members (and the employees they represent who aren’t formally union members) to deduct money from their paychecks to use for political purposes.

Proposition 226 in 1998 was the first, and Proposition 75 in 2005 was the second (although Prop 75 only gave paycheck protection rights to workers in public employee unions). Both of these ballot measures were defeated by almost the exact same percentage.

On June 2, 1998, 53.3% of California voters rejected Proposition 226. Looking through my old files, I found this June 1998 post-election letter from the nine leaders of the Yes on 226 campaign team which handled the grassroots operation out of Orange County. (This was a separate organization from Governor Pete Wilson’s Californians for Paycheck Protection operation in Sacramento, which handled most of the TV advertising for Proposition 226 under the direction of Mitch Zak, who is now a partner in the public relations firm of Randle Communications.)

The team blamed its loss on an open and deliberate (and highly effective) campaign strategy by Proposition 226 opponents to distract voters from the themes of workers’ freedom of choice and the appropriate use of mandatory paycheck deductions by unions.

The team also pointed out that unions (ironically) took additional money from their members’ paychecks (without permission) to fund a campaign that exceeded $30 million. ($40 million was a number frequently bandied about by political insiders after the election.) This huge sum completely swamped the amount raised by Proposition 226 supporters, who generally failed to convince timid business groups and corporate executives to help their campaign with voluntary contributions.

To prove that the opposition campaign deceived California voters, the letter indicated that exit polling showed 69% of voters “support giving workers the right to choose whether money comes out of their check for politics.” (This percentage was close to the 71% percent who claimed to support Proposition 226 in a February 1998 Field Poll, before opponents began their TV advertising.) Voters supported the concept; they did not support the specific ballot measure of Proposition 226. Attached to the letter was a June 4, 1998 editorial from the Wall Street Journal contending that paycheck protection was not a dead concept.

The letter concluded with a promise that the team would again seek voter approval for a statewide ballot measure for paycheck protection and would maintain their campaign infrastructure for the 2000 primary election.

We’re going to do it again…Please join us in continuing the fight.

This, of course, did not happen in the end. As the state began to accelerate its slide to the political Left, the nine campaign team members went their various ways, some of them to continue the fight for economic and personal freedom in other arenas.

Three have been particularly prominent. Ron Nehring ultimately becoming chairman of the California Republican Party for two terms. Jim Righeimer became involved in local government and was elected to the Costa Mesa City Council, received national news media attention for tackling excessive union-backed public employee expenditures, and is now campaigning for a city charter (Measure V in Orange County) to circumvent costly union-backed state mandates. Eric Christen has been executive director of the Coalition for Fair Employment in Construction for 13 years, fighting government-mandated Project Labor Agreements at California local governments, and he also attempted to reform a declining Colorado Springs school district as an elected board member in the mid-2000s.

The next effort in California for paycheck protection was initiated in 2005 by Lew Uhler of the National Tax Limitation Committee. It became one of four propositions in a 2005 special election called by Governor Arnold Schwarzenegger after the Democrat majority in the California State Legislature refused to adopt his various reform proposals. An interesting article published at the time about the lessons supposedly learned from the Proposition 226 failure is in the September 2005 California Political Review magazine: Quiet, Unassuming Lew Uhler.

The lessons did not lead to a different outcome. On November 8, 2005, 53.5% of California voters rejected Proposition 75 – not as badly as the other three propositions, but enough to sink the idea for another seven years. The percentage against Proposition 75 was only .2% higher than the percentage against Proposition 226 more than seven years earlier.

One difference between the 2012 campaign to pass Proposition 32 and the two earlier paycheck protection campaigns: this time the Governor of California is not backing it. This may actually be an improvement in the quest for paycheck protection!

My Outline of the June 21, 2012 U.S. Supreme Court Decision on a California Union’s Mandatory Fee Assessment on Non-Members to Fight Governor Schwarzenegger’s 2005 Ballot Measures

Today the United States Supreme Court issued a 7-2 decision in Knox et al. v. Service Employees International Union, Local 1000 related to the legality of public employee unions taking money from workers’ paychecks without permission and spending it on politics.

I’m sure labor lawyers and First Amendment lawyers are now writing lengthy and erudite analyses of this decision. I’m not a lawyer, but I will try to summarize the decision in layman’s terms based on the actual text of the decision. Then I will assert that the U.S. Supreme Court may be looking for a case to strike down the common union practice (in states that do not have “Right to Work” laws) of assessing mandatory charges from nonmembers’ paychecks for union bargaining and representation purposes.

What Is the Crux of the Decision?

First, here are two excerpts from the decision that generally summarize the Court’s opinion:

By authorizing a union to collect fees from nonmembers and permitting the use of an opt-out system for the collection of fees levied to cover nonchargeable expenses, our prior decisions approach, if they do not cross, the limit of what the First Amendment can tolerate. The SEIU [Local 1000 in California], however, asks us to go farther. It asks us to approve a procedure under which (a) a special assessment billed for use in electoral campaigns was assessed without providing a new opportunity for nonmembers to decide whether they wished to contribute to this effort and (b) nonmembers who previously opted out were nevertheless required to pay more than half of the special assessment even though the union had said that the purpose of the fund was to mount a political campaign and that it would not be used for ordinary union expenses. This aggressive use of power by the SEIU [Local 1000 in California] to collect fees from nonmembers is indefensible.

To respect the limits of the First Amendment, the union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out. Our cases have tolerated a substantial impingement on First Amendment rights by allowing unions to impose an opt-out requirement at all. Even if this burden can be justified during the collection of regular dues on an annual basis, there is no way to justify the additional burden of imposing yet another opt-out requirement to collect special fees whenever the union desires.

This case has its origins in California, of course. California is NOT a Right to Work state, so employees in bargaining units (workers covered by a collective bargaining agreement) are required to pay “agency fees” to financially support certain union activities, even if they chose not to become actual union members. These union activities include contract negotiations and representation of employees in grievance and arbitration procedures.

In this Supreme Court decision, these fees are called “chargeable expenses.” They do NOT include expenses for political purposes. Under federal law, a public-sector union can bill nonmembers for “chargeable expenses” but it may NOT require them to fund its political or ideological projects.

Some state government employees represented by (but not members of) California’s Service Employees International Union (SEIU) Local 1000 objected to the union’s decision in the summer of 2005 to take additional money from their paychecks to support union political operations in opposition to what became four propositions backed by Governor Arnold Schwarzenegger on a November 8, 2005 special statewide election ballot.

Here are excerpts from the Supreme Court decision that provide important background:

  1. A 1986 U.S. Supreme Court decision (Chicago Teachers Local 1 v. Hudson) outlines requirements that a union must follow in order to collect regular fees for “chargeable expenses” from nonmembers without violating their rights. Unions must provide an annual notice to members and non-members represented by the union explaining how much money it planned to spend on on chargeable expenses and use that information to set and cap monthly dues.
  2. In the typical fashion of unions, the SEIU Local 1000 decided to violate the law when it did not serve its purposes. The union sent a notice in June 2005 to its members and represented nonmembers estimating that 56.35% of its total expenditures in the coming year would be chargeable expenses. Nonmembers had 30 days to object to full payment of dues, while being required to pay the percentage assigned to chargeable expenses. The notice stated that the fee was subject to increase without further notice.
  3. That same month, the Governor called for a November 8, 2005 special election for voters to consider ballot measures. Proposition 75 (paycheck protection for public employees) and Proposition 76 (state spending and school funding limits) were opposed by the SEIU Local 1000 as well as many other unions.
  4. After the 30-day objection period ended, the SEIU informed its represented employees via a letter dated August 31, 2005 that it was imposing an “Emergency Temporary Assessment to Build a Political Fight-Back Fund.” The letter explained that the union would use the fund to “defeat Proposition 76 and Proposition 75 on November 8,” and to “defeat another attack on [its] pension plan” in June 2006. The union noted that the fund would be used “for a broad range of political expenses, including television and radio advertising, direct mail, voter registration, voter education, and get out the vote activities in our work sites and in our communities across California.”
  5. The SEIU joined a coalition of public-sector unions in vigorously opposing these measures. Calling itself the “Alliance for a Better California,” the group would eventually raise “more than $10 million, with almost all of it coming from public employee unions, including $2.75 million from state worker unions, $4.7 million from the California Teachers Association, and $700,000 from school workers unions.The emergency political assessment was a temporary 25% increase in dues and a temporary elimination of the monthly dues cap.
  6. The SEIU Local 1000 did not provide a choice about paying into the fund to the 28,000 employees represented by the union but not members of the union.
  7. A group of nonmember state employees who were compelled to pay into the fund brought a class action against the SEIU alleging violation of their First Amendment rights.
  8. A federal district court ruled that the special assessment was for entirely political purposes and ordered the SEIU to send a new notice giving class members 45 days to object and to provide those who object a full refund of contributions to the fund.
  9. The federal Ninth Circuit Court of Appeals reversed the lower court decision by concluding that the SEIU’s procedures provided a reasonable balance and accommodation for the interests of the union, the employer, and the nonmember employees.
  10.  While this case was working through the court system, the SEIU Local 1000 offered a full refund of the assessment to nonmembers. It continued to claim that its procedure for handling the special assessment was legal.

The court states the following about the First Amendment in its decision:

  1. The First Amendment of the United States Constitution is about creating “an open marketplace” in which differing ideas about political, economic, and social issues can compete freely for public acceptance without improper government interference.
  2. Like-minded individuals have the right to associate for the purpose of expressing commonly held views.
  3. At the core of the First Amendment are certain basic conceptions about the manner in which political discussion in a representative democracy should proceed.
  4. The central purpose of the Speech and Press Clauses is to assure a society in which “uninhibited, robust, and wide-open” public debate concerning matters of public interest would thrive, for only in such a society can a healthy representative democracy flourish.
  5. Maintenance of the opportunity for free political discussion is a basic tenet of our constitutional democracy.
  6. The government may not prohibit the dissemination of ideas it disfavors, nor compel the endorsement of ideas that it approves.
  7. Closely related to compelled speech and compelled association is compelled funding of the speech of private speakers or groups.

From these principles, the Supreme Court concluded the following:

  1. When the State of California establishes an “agency shop” that exacts compulsory union fees as a condition of public employment, some employees may be forced to give financial support to an organization with whose principles and demands he may disagree. The principle to consider in this case is whether or not the union violated the right to free speech.
  2. The SEIU Local 1000 had no legal justification to make the assessment without providing a new notice. Because of the First Amendment, nonmembers should not be required to fund a union’s political and ideological projects unless they choose to do so after having “a fair opportunity” to assess the impact of paying for nonchargeable union activities.
  3. Because the U.S. Supreme Court has already recognized that a nonmember cannot be forced to fund a union’s political or ideological activities, what is the justification for putting the burden on the nonmember to opt out of making such a payment? Shouldn’t the default rule comport with the probable preferences of most nonmembers? And isn’t it likely that most employees who choose not to join the union that represents their bargaining unit prefer not to pay the full amount of union dues? An opt-out system creates a risk that the fees paid by nonmembers will be used to further political and ideological ends with which they do not agree.

The Supreme Court even observes that it’s an anomaly for the Supreme Court to infringe free speech rights when it allows unions to collect ANY money from nonmembers represented by the union. It has only accepted this “free-rider argument” (that represented workers who are not union members should have to pay their fair share for the union services that allegedly benefit them) because it sees an interest in furthering “labor peace.”

The decision juxtaposes its statement about rationalizing mandatory payments through the argument of “labor peace” with its observation that requiring objecting nonmembers to opt out of paying the nonchargeable portion of union dues – as opposed to exempting them from making such payments unless they opt in – represents a remarkable boon for unions. Then it proceeds to analyze the union practice of requiring its represented employees to “opt-out” of payments for political or ideological purposes:

Although the difference between opt-out and opt-in schemes is important, our prior cases have given surprisingly little attention to this distinction. Indeed, acceptance of the opt-out approach appears to have come about more as a historical accident than through the careful application of First Amendment principles.

My favorite section of the decision addresses what I’ve always noted as irony: that unions use mandatory paycheck withdrawals to fund campaigns against ballot measures that would protect workers from mandatory paycheck withdrawals to fund campaigns!

The effect on nonmembers was particularly striking with respect to the union’s campaign against Proposition 75 because that initiative would have bolstered nonmember rights. If Proposition 75 had passed, nonmembers would have been exempt from paying for the SEIU’s extensive political projects unless they affirmatively consented. Thus, the effect of the SEIU’s procedure was to force many nonmembers to subsidize a political effort designed to restrict their own rights.

My Predictions: I’m reading between the lines in this decision and surmising that some members of the U.S. Supreme Court are encouraging someone to pursue a case that would allow them to reconsider and perhaps strike down the right of unions to make mandatory withdrawals (without permission) for “chargeable expenses” from the paychecks of workers in bargaining units who are not members of the union. (Does the government’s quest for “labor peace” justify allowing unions to take money from the paychecks of nonmembers without permission?) The court also seems to want to explicitly address a broader question about whether or not it is a violation of First Amendment rights for a union to require nonmembers to use an “opt-out” system concerning routine paycheck withdrawals for political purposes. For example, the phrase “even if this burden can be justified” seems to be a hint:

To respect the limits of the First Amendment, the union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out. Our cases have tolerated a substantial impingement on First Amendment rights by allowing unions to impose an opt-out requirement at all. Even if this burden can be justified during the collection of regular dues on an annual basis, there is no way to justify the additional burden of imposing yet another opt-out requirement to collect special fees whenever the union desires.

I suspect the National Right to Work Legal Defense Foundation will look for an appropriate and relevant case to pursue through the federal courts.

$500 Million California School Construction Funding Program for Career Technical Education – 5 1/2 Years Later, Is the Program a Success?

I think California taxpayers deserve to hear and know a lot more about the status and results of the significant investment of taxpayer funding on the construction and improvement of California school district facilities designated for career technical education (vocational education).

For example, has statewide demand for building these school facilities faded since the big mid-2000s push for career technical education led by Governor Arnold Schwarzenegger? How many students have been using these facilities, and is the rate of use increasing?

Why have some school districts not claimed the funds approved by the State Allocation Board for their career technical education facility funding?

Have there been cases in which school districts used career technical education funds to build facilities that were not used for that purpose in the end? Which school districts are guilty?

Has anyone investigated or audited some of these new or renovated facilities to determine they are actually being used for their intended purposes?

Which of the 15 sectors of career technical education have been most popular in terms of requests for state funding? Here’s the list:

  1. Agriculture and Natural Resources
  2. Arts, Media, and Entertainment
  3. Building Trades and Construction
  4. Education, Child Development, and Family Services
  5. Energy and Utilities
  6. Engineering and Design
  7. Fashion and Interior Design
  8. Finance and Business
  9. Health Science and Medical Technology
  10.  Hospitality, Tourism, and Recreation
  11.  Information Technology
  12.  Manufacturing and Product Development
  13.  Marketing, Sales, and Service
  14.  Public Services
  15.  Transportation

I’ll open this issue by presenting some of the background on funding and grants.

Voters Approved $500 Million in State Matching Grants in 2006

Go back in your memory to the halycon days of the fall of 2006: the economy was booming, house prices were sky-high, construction was happening everywhere, people were paying for luxury goods and services, and taxpayers were feeling generous. And the Schwarzenegger Administration was focused on encouraging “career technical education” to train the future workforce of California for all of the anticipated new construction jobs and other jobs requiring craft skills (see list of 15 sectors, above).

So, it was a ripe time to ask California voters to approve a $10.4 billion bond called the Kindergarten–University Public Education Facilities Bond Act of 2006. It was placed on the ballot through Assembly Bill 127, supported by most Democrat legislators, opposed by many Republican legislators, and signed by Governor Schwarzenegger. The ballot measure included $500 million for the construction of facilities related to career technical education programs – see California Education Code Section 101012 (a)(4).

The 2006 ballot argument in support of Proposition 1D claimed that “Many students need vocational training instead of college, but our schools do not have up-to-date facilities to provide it. 1D will enable schools to provide the career and technical training many students need to get jobs.” The 2006 ballot argument against Proposition 1D claimed the program was “untested.” (See ballot arguments here.)

Well, more the five years later, the Career Technical Education Facilities Program (CTEFP) has been “tested.” How is it doing? Have the difficult economic circumstances of the past five years cooled the enthusaism for career technical education in California schools?

Some School Districts Aren’t Asking for Their Approved Funding. Why?

The State Allocation Board allocates or apportions school construction matching grants administered by the Office of Public School Construction in the California Department of General Services.

I was inspired by an article posted on the web today (Dormant School Construction Projects Face Closer Scrutiny – June 5, 2012 – SI&A’s Cabinet Report) to examine the list provided by the Office of Public School Construction of construction projects approved for state matching grants but not funded to date. There is a large cluster of career technical education projects on the list. See the list – arranged by school district – at the end of this article. No reasons are given on the chart as to why the school districts have not requested the funds.

Funding Approval Has Declined, and Money Is Unexpectedly Still Not Allocated

The State Allocation Board reports that it made $33,031,490 in unfunded approvals available to fund applications submitted for a third funding cycle – a cycle not required in law but made possible when the $500 million was not used up in the first two rounds. It reported awarding $199 million in the first round. Despite a claim from the California Department of Education that “it is anticipated that all of the funds will be exhausted,” the second round resulted in apportionment of another $220 million for a total of about $420 million. (It is hard to pin down the exact numbers, for example, this legislative committee analysis for Senate Bill 1380, dated June 30, 2010, claimed that a total of $409 million had been apportioned in the first two cycles, while this analysis for SB 1380 dated April 15, 2010 reported that a total of $417.2 million had been apportioned in the first two cycles.)

According to a “Report of the Executive Officer” for the April 25, 2012 State Allocation Board meeting, “74 Career Technical Education Facilities Program applications totaling approximately $103.6 million in State funds have been received by the Office of Public School Construction as part of the third funding cycle, but have not been approved by the Board due to insufficient bond authority…An additional 73 Career Technical Education Facilities Program Board-approved projects totaling $94.4 million in State funds are currently on the Unfunded List (Lack of AB 55 Loans).”

The California Department of Education has a web site summarizing the program. For some reason, the Department of Education has not posted statutorily required status reports about the program since 2010. The State Allocation Board also has a web site about the program.

As a layperson looking at this program, I find it frustrating and difficult to figure out what’s going on. There should be a single site that informs taxpayers of what has been allocated to specific Career Technical Education Facilities Program projects, which applications for funding are up for approval, which projects are approved, and which projects have been approved but not funded and the reason why they are not funded. Perhaps I am naive to expect that kind of information?

In addition, there is a lot of terminology thrown about, such as “approved,” “allocated,” “apportioned,” “disbursed,” “awarded,” and “available.” It’s hard to untangle.

Proposed Legislation Suggests Either Fraud or Changing Needs in School Districts

Senate Bill 1380 (introduced in 2010) would have changed the Career Technical Education Facilities Program (authorized by the Leroy F. Greene School Facilities Act of 1998) to require school boards to pass a resolution indicating that school facilities constructed or modernized with specified bond funds set aside for career technical education purposes would be used for career technical education purposes for a minimum of five years. SB 1380 also allowed a school board to seek a waiver of the career technical education use requirement from the State Allocation Board if school district enrollment changed, if enrollment in career technical programs changed, if the district was unable to hire qualified instructors, or if “labor market demands” changed.

In support of this bill, Senator Loni Hancock (D-Oakland), a member of the State Allocation Board, cited “several implementation problems with the CTEFP program, including LEAs constructing or modernizing CTE facilities and then using them for non-CTE programs.”

Despite passing through the legislature without any votes against it, Senate Bill 1380 was vetoed by Governor Schwarzenegger with this message:

For years many career technical education (CTE) programs and facilities have been ignored or eliminated altogether. However, during my time in office the state has made substantial investment in CTE. This bill stands to threaten the recent investments in this area, as well as the significant momentum we have achieved. By allowing CTE bond funds to be used for CTE investments with just a five year minimum lifespan, and for non-CTE related purposes, this bill seriously risks jeopardizing the quality and scope of investments we make in these facilities.

Note that this bill originally proposed transfering $200 million from the Overcrowded Relief Grants Program to the Career Technical and Education Facilities Program (CTEFP), because it was anticipated that the $500 million would be exhausted in the third round of funding. According to this legislative committee report for SB 1380, applications totaling $231 million were submitted for the third round. (Once again, figures are inconsistent from source to source.)

More Suggestions of Fraud or Changing Priorities for School Districts?

When Senator Mark Wyland (R-Carlsbad/San Juan Capistrano) was appointed to the State Allocation Board in January 2012, he issued a press release entitled “Shaking Things Up at the State Allocation Board” with these remarks:

In addition to exploring in-depth how funds are allocated, this position also creates an opportunity to further promote career technical education (CTE). CTE courses engage and stimulate students with hands-on training in a wide array of fields, leading to greater student success following graduation.

Under a law I authored in 2007, applicants for bond money are required to detail how schools would use funds to house CTE programs. Unfortunately, it appears that many applicants fail to meet this requirement. With this new position I intend to bring attention to CTE and ensure that California’s schools are offering students the opportunities and resources that they deserve.

School Districts with Unfunded Approvals for Career Technical Education Construction Facility Matching Grants from the State Allocation Board under Proposition 1D

ALAMEDA COUNTY – DUBLIN UNIFIED 59/75093-00-001 Career Tech Rehabilitation 3/11/2010  $533,605

ALAMEDA COUNTY – NEW HAVEN UNIFIED 59/61242-00-001 Career Tech Rehabilitation 3/23/2010  $394,342

BUTTE COUNTY – CHICO UNIFIED 55/61424-00-002 Career Tech New Construction 6/6/2008  $3,000,000

CONTRA COSTA COUNTY – PITTSBURG UNIFIED 59/61788-00-001 Career Tech Rehabilitation 2/26/2010  $1,409,655

CONTRA COSTA COUNTY – SAN RAMON VALLEY UNIFIED 55/61804-00-005 Career Tech New Construction 3/25/2010   $817,130

CONTRA COSTA COUNTY – SAN RAMON VALLEY UNIFIED 55/61804-00-006 Career Tech New Construction 3/25/2010   $412,085

EL DORADO COUNTY – EL DORADO UNION HIGH 59/61853-00-001 Career Tech Rehabilitation 3/26/2010  $821,617

FRESNO COUNTY – KINGS CANYON JOINT UNIFIED 55/62265-00-002 Career Tech New Construction 4/1/2010  $3,000,000

KERN COUNTY – KERN COUNTY OFFICE OF EDUCATION 55/10157-98-001 Career Tech New Construction 3/29/2010  $723,600

KERN COUNTY – KERN HIGH 59/63529-00-017 Career Tech Rehabilitation 3/24/2010  $434,224

KERN COUNTY – KERN HIGH 59/63529-00-019 Career Tech Rehabilitation 3/24/2010  $79,997

KERN COUNTY – KERN HIGH 59/63529-00-020 Career Tech Rehabilitation 3/24/2010  $826,720

KERN COUNTY – KERN HIGH 59/63529-00-021 Career Tech Rehabilitation 3/24/2010  $838,925

KERN COUNTY – KERN HIGH 59/63529-00-022 Career Tech Rehabilitation 3/24/2010  $192,803

KERN COUNTY – KERN HIGH 59/63529-00-027 Career Tech Rehabilitation 3/24/2010  $596,824

KERN COUNTY – KERN HIGH 59/63529-00-029 Career Tech Rehabilitation 3/24/2010  $723,188

KERN COUNTY – KERN HIGH 59/63529-00-030 Career Tech Rehabilitation 3/24/2010  $152,203

LOS ANGELES COUNTY – ARCADIA UNIFIED 55/64261-00-002 Career Tech New Construction 4/1/2010  $2,316,200

LOS ANGELES COUNTY – ARCADIA UNIFIED 59/64261-00-001 Career Tech Rehabilitation 4/1/2010  $470,962

LOS ANGELES COUNTY – LONG BEACH UNIFIED 59/64725-00-003 Career Tech Rehabilitation 3/11/2010  $1,500,000

LOS ANGELES COUNTY – LONG BEACH UNIFIED 59/64725-00-004 Career Tech Rehabilitation 3/11/2010  $1,500,000

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 55/64733-00-007 Career Tech New Construction 4/1/2010  $1,963,579

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 55/64733-00-008 Career Tech New Construction 4/1/2010  $3,000,000

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 55/64733-00-009 Career Tech New Construction 4/1/2010  $1,225,266

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 55/64733-00-009 Career Tech New Construction 4/1/2010  $1,774,734

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 55/64733-00-011 Career Tech New Construction 4/1/2010  $2,413,880

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 55/64733-00-013 Career Tech New Construction 4/1/2010  $1,533,959

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 59/64733-00-027 Career Tech Rehabilitation 4/1/2010  $50,000

LOS ANGELES COUNTY – LOS ANGELES UNIFIED 59/64733-00-028 Career Tech Rehabilitation 4/1/2010  $1,401,783

MADERA COUNTY – CHAWANAKEE UNIFIED 55/75606-00-001 Career Tech New Construction 3/16/2010   $2,086,640

MONTEREY COUNTY – MONTEREY COUNTY OFFICE OF EDUCATION 59/10272-00-001 Career Tech Rehabilitation 3/30/2010  $660,837

NAPA COUNTY – NAPA VALLEY UNIFIED 55/66266-00-002 Career Tech New Construction 4/1/2010   $465,127

ORANGE COUNTY – TUSTIN UNIFIED 59/73643-00-003 Career Tech Rehabilitation 3/24/2010   $73,732

RIVERSIDE COUNTY – BEAUMONT UNIFIED 59/66993-00-001 Career Tech Rehabilitation 3/30/2010   $1,335,796

RIVERSIDE COUNTY – DESERT SANDS UNIFIED 55/67058-00-003 Career Tech New Construction 3/10/2010   $2,130,036

RIVERSIDE COUNTY – DESERT SANDS UNIFIED 55/67058-00-005 Career Tech New Construction 3/10/2010   $1,040,611

RIVERSIDE COUNTY – DESERT SANDS UNIFIED 55/67058-00-006 Career Tech New Construction 3/10/2010   $2,666,732

RIVERSIDE COUNTY – RIVERSIDE UNIFIED 59/67215-00-001 Career Tech Rehabilitation 3/24/2010   $579,687

SAN BERNARDINO COUNTY – COLTON-REDLANDS-YUCAIPA ROP 59/74138-00-015 Career Tech Rehabilitation 3/30/2010   $2,050

SAN BERNARDINO COUNTY – RIALTO UNIFIED 55/67850-00-001 Career Tech New Construction 3/3/2010   $1,926,384

SAN BERNARDINO COUNTY – RIALTO UNIFIED 59/67850-00-001 Career Tech Rehabilitation 3/3/2010   $1,114,449

SAN BERNARDINO COUNTY – SWLINE JOINT UNIFIED 55/73957-00-001 Career Tech New Construction 3/3/2010   $1,093,051

SAN BERNARDINO COUNTY – SWLINE JOINT UNIFIED 55/73957-00-002 Career Tech New Construction 3/3/2010   $1,031,968

SAN DIEGO COUNTY – CORONADO UNIFIED 59/68031-00-001 Career Tech Rehabilitation 3/22/2010   $1,360,199

SAN DIEGO COUNTY – GROSSMONT UNION HIGH 55/68130-13-001 Career Tech New Construction 3/30/2010   $3,000,000

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 55/68338-00-001 Career Tech New Construction 3/22/2010   $2,918,735

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 55/68338-00-002 Career Tech New Construction 3/22/2010   $986,812

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 55/68338-00-004 Career Tech New Construction 3/22/2010   $1,470,162

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 59/68338-00-001 Career Tech Rehabilitation 3/22/2010   $1,427,767

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 59/68338-00-002 Career Tech Rehabilitation 3/22/2010   $473,045

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 59/68338-00-004 Career Tech Rehabilitation 3/22/2010   $1,380,824

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 59/68338-00-006 Career Tech Rehabilitation 3/22/2010   $473,110

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 59/68338-00-007 Career Tech Rehabilitation 3/22/2010   $1,022,484

SAN DIEGO COUNTY – SAN DIEGO UNIFIED 59/68338-00-008 Career Tech Rehabilitation 3/22/2010   $1,500,000

SAN JOAQUIN COUNTY – MANTECA UNIFIED 55/68593-00-004 Career Tech New Construction 3/22/2010   $2,253,216

SAN JOAQUIN COUNTY – STOCKTON UNIFIED 55/68676-00-002 Career Tech New Construction 3/29/2010   $3,000,000

SAN JOAQUIN COUNTY – STOCKTON UNIFIED 59/68676-00-001 Career Tech Rehabilitation 3/29/2010   $1,499,715

SAN JOAQUIN COUNTY – TRACY JOINT UNIFIED 59/75499-00-007 Career Tech Rehabilitation 4/1/2010   $514,087

SAN MATEO COUNTY – SEQUOIA UNION HIGH 55/69062-00-004 Career Tech New Construction 3/30/2010   $2,073,405

SAN MATEO COUNTY – SEQUOIA UNION HIGH 55/69062-00-006 Career Tech New Construction 3/30/2010   $3,000,000

SAN MATEO COUNTY – SEQUOIA UNION HIGH 55/69062-00-007 Career Tech New Construction 3/30/2010   $3,000,000

SANTA CLARA COUNTY – CAMPBELL UNION HIGH 55/69401-00-007 Career Tech New Construction 3/8/2010   $625,964

SANTA CLARA COUNTY – CAMPBELL UNION HIGH 59/69401-00-001 Career Tech Rehabilitation 3/8/2010   $1,003,238

SANTA CLARA COUNTY – CAMPBELL UNION HIGH 59/69401-00-002 Career Tech Rehabilitation 3/8/2010   $610,353

SANTA CLARA COUNTY – GILROY UNIFIED 59/69484-00-001 Career Tech Rehabilitation 4/1/2010   $1,191,901

SANTA CLARA COUNTY – PALO ALTO UNIFIED 55/69641-00-001 Career Tech New Construction 3/30/2010   $3,000,000

SIERRA COUNTY – SIERRA-PLUMAS JOINT UNIFIED 55/70177-00-001 Career Tech New Construction 4/1/2010   $174,412

SISKIYOU COUNTY – SISKIYOU UNION HIGH 55/70466-00-002 Career Tech New Construction 4/1/2010   $296,772

SISKIYOU COUNTY – SISKIYOU UNION HIGH 59/70466-00-001 Career Tech Rehabilitation 4/1/2010   $143,380

SONOMA COUNTY – SANTA ROSA HIGH 55/70920-00-002 Career Tech New Construction 3/26/2010  $1,332,711

STANISLAUS COUNTY – CERES UNIFIED 59/71043-00-003 Career Tech Rehabilitation 3/25/2010   $1,201,300

STANISLAUS COUNTY – MODESTO CITY HIGH 59/71175-00-001 Career Tech Rehabilitation 4/1/2010   $337,760

SUTTER COUNTY – YUBA CITY UNIFIED 59/71464-00-001 Career Tech Rehabilitation 3/30/2010   $839,622

Today I Helped the State of California Reduce Its $16 Billion Budget Deficit!

It’s hard to grow that self-righteous feeling inside about “making a difference” when you believe in limited government. When I vote, I never have that rush of joy inspired by knowing I’m advancing justice by forcing someone to stop being selfish and surrender more money to the government. I never get to use my vote to shout “Yes!” to complicated, intrusive, costly new government programs that would surely make the world a better place if there was just more money available. And I never get to cast a righteous vote to outlaw and punish behavior that offends people, such as selling horse meat for human consumption at a restaurant or café.

But today I helped the State of California to reduce its newly-announced $15.7 billion budget deficit. Yes, I mailed a Form FTB 3522 LLC Tax Voucher to the Franchise Tax Board along with an $800 check from my fledging consulting firm, Labor Issues Solutions, LLC.

Every Limited Liability Company (LLC) that is doing business in California or that has articles of organization accepted or a certificate of registration issued by the California Secretary of State must pay an $800 annual tax.

I did a web search to see if anyone had ranked the states in terms of establishing and maintaining an LLC, because I suspected California was near or at the bottom. The Tax Foundation’s 2012 State Business Tax Climate Index ranks California 48th, with New Jersey and New York squeaking by for the worst. I also learned that California has the highest annual tax and is the only state to charge a tax even if the LLC doesn’t make any money.

I keep hearing important politicians claim that California is quite supportive of small businesses and anyone who says otherwise is either ignorant, lying, or an exploitive capitalist. In response, this is my story:

On February 9, I submitted my Articles of Organization (Form LLC-1) literally on paper, via the United States Postal Service, to the California Secretary of State to establish my new business, Labor Issues Solutions, LLC. I also had to pay a filing fee of $70. It was strange to actually write a check, using a pen, since I handle all of my financial transactions electronically nowadays. No new-fangled electronic stuff with bits and bytes at our highly efficient Secretary of State’s office!

So the state finally processed my application on April 6 and cashed my check. I guess I should be happy because I didn’t have to pay a bribe to dislodge it from the queue. California is still better than Russia as a place to do business!

I’m sure the Secretary of State’s office would claim that I had to mail the application on paper and wait two months for it to be processed because Californians aren’t giving enough of their money to the state to fund its essential services. This is what happens when one political party has a lock on all statewide offices: elected officials feel no sense of accountability to the people.

And I’m not kidding! In March 2005, Governor Arnold Schwarzenegger nominated former state legislator Bruce McPherson, a Republican from Santa Cruz, to be Secretary of State after Democrat Kevin Shelley resigned the position in disgrace. McPherson was a true moderate and so well respected that he was confirmed unanimously in the Democrat-controlled Assembly and Senate. Nonetheless, Democrat Debra Bowen defeated him 45% to 42% in the November 2006 election.

In 2010, Bowen easily defeated Republican Damon Dunn, a young African-American Stanford graduate who played professional football in the NFL. So contrary to the usual claims about why Republicans don’t win statewide office, it doesn’t matter even if the Republican Party has a candidate for Secretary of State who is not identified as a conservative or a candidate who is not an “old white male” – the Democrat still wins in California.

And Bowen’s job performance doesn’t matter, either: an editorial in the Long Beach Press-Telegram on March 25 (“High-Tech California Lags Badly in Online Public Records Access”) asserts correctly that “the state’s 1990s-era website is as clunky and convoluted as it was when Democrat Debra Bowen took office in 2005 with a pledge to modernize it.”