MOORLACH UPDATE — Governor’s 2016-17 Proposed Budget — January 8, 2016

Governor Jerry Brown released his 2016-2017 Budget yesterday morning and it provides for some interesting reactions. There is much to discuss, but I provide some thoughts in the first piece below, as The FlashReport allowed an opportunity to address two areas of concern that will shape this year’s debate on the budget.
Also see

The Sacramento Bee provides numerous reactions, see, and I’ve provided mine in the second piece below.

Two more editorial boards weighed in on the repurposing of Prop. 63 tax revenues, the Long Beach Press Telegram and the Los Angeles Daily News and the Daily Journal. For a video update on this topic, see

and watch starting at minute 24:30.

Prop. 63 is a surcharge tax for taxpayers with one million dollars or more in taxable income. This revenue source is to be used for programs to address mental illness. In Orange County, these programs are designed to be new and creative, but not to supplant. Consequently, I have participated in the initial announcement of the proposal and hope to shape it in a proper direction.

Governor’s Budget: Early

Battle Lines on Taxes

Yesterday, Governor Jerry Brown released his 2016-17 budget proposal to the legislature, and in that budget he anticipates approximately $7.6 billion in new spending over the previous year’s approved budget.

The fact that we have increased revenues to the state should be good news for California taxpayers, as the additional funds should take away any pressure to raise taxes.

But, that’s not how Sacramento logic works.

In addition to incorporating the increasing revenues, the Governor’s budget also renews the call for even more taxes – bringing back the car tax and further increasing the gas and diesel taxes – and using those tax increases to address the lack of maintenance of our highways and bridges.

That’s where we’ll see the early battle lines being drawn between Republicans and legislative Democrats.

Last year, we pointed out that California already has the nation’s 4th highest gas tax, and when the new cap-and-trade taxes are added in, the state’s gas tax, and gas prices, are the nation’s highest.

We also pointed out that, in the 6 years following the Great Recession, gas tax revenue grew by $1.75 billion, but road spending remained stagnant.

And, we presented data that showed California’s road spending efficiency needs work. California currently spends three times the national average on maintenance per mile of roadway, yet our roads continue to rank among the worst in pavement condition and congestion.

We are constantly reminded that one-third of the state’s residents now live at or below the poverty line. The last thing these Californians need is even higher taxes to pay for road repairs – repairs that should already be covered by current gas tax revenues.

Another ongoing battle line is the Governor’s call for a managed care organization (MCO) tax. When asked to explain this tax by a reporter, the Governor politely declined because he felt it was too complex to discuss.

Let me try to describe what is occurring. The United States government wants California to tax managed healthcare providers to pay a state tax that will be matched by Federal funds. The Governor claims that it will be a wash. That is not accurate, but we have yet to see the details that have been negotiated between the Governor’s office and major healthcare providers, like Kaiser Permanente. But, expect your already high medical premiums to increase should this tax be approved.

Throughout his budget presentation, the Governor made one thing clear. There apparently is not enough in revenues to meet the state’s needs, and Republicans’ unwillingness to support tax increases for roads and federal matching health care dollars is real the problem.


The Governor is increasing the annual budget by more than $7 billion, but he could not allocate funding to these two critical areas?

California is already the least economically-competitive state in the nation. Our regulatory and tax rates are among the highest. Businesses and higher-wage jobs continue relocating out-of-state. For the 11th year in a row, California was named the worst state for business in a survey of 500 CEO’s by Chief Executive Magazine.

The worst thing we can do for our economic competitiveness and for working families is to continue adding even more taxes. That difference on taxes should be the defining issue between the two parties in the 2016 legislative session.

Taxes are high enough. It’s time to protect the families in this state from paying a high tribute just because the weather is great.

This Republican, along with my colleagues, are standing in the breach for California’s families. If roads and health care are important to Governor Brown, then his budget would have reflected that priority. It does not.

Gov. Jerry Brown’s proposed budget: Rapid response


Here are some responses to Gov. Jerry Brown’s proposed budget:

Sen. John Moorlach, R-Costa Mesa:

Every California family know that our state is a very expensive one in which to live. That includes our state government, which has the nation’s highest income and sales taxes, and now the highest gas taxes when adding the new cap and trade taxes.

With $7 billion in revenues above last year’s budget, we can’t ask these families to pay even more in higher gas taxes. That will be a major difference between Senate Republicans and the Governor.

I appreciate the Governor’s concern for our fiscal future, particularly if the economy takes a downturn. That’s why we must take care of our priorities with current revenues, and that includes a well maintained infrastructure that will accommodate commerce and job growth.

A new plan to end California’s sad state of homelessness: Editorial

At least two aspects of a proposed plan to spend $2 billion to fight the scourge of homelessness in California fit the bill for the right approach to the problem.

First, the proposal takes the “housing first” tack that many experts on mental health and addiction have long said is the best initial way to tackle the issue.

There is simply no way to expect people to be able to get treatment for the problems many of them face with illness, drugs and alcohol until they have roofs over their heads.

This includes many of the tens of thousands now living on the streets, along the freeways and in unsafe riverbeds in Southern California.

The housing-first approach provides those who are experiencing homelessness “assistance to find permanent housing quickly and without conditions,” according to The National Alliance to End Homelessness.

It’s the “without conditions” aspect that is key. While it may make would-be do-gooders for the homeless feel better to offer what they see as the “carrot” attitude of: “We’re here to help you just as soon as you stop drinking,” that is in fact a “stick” approach, punitive in its very nature.

Housing initiatives in Seattle and elsewhere have found that simply by getting homeless alcoholics into subsidized apartments, many stop drinking as much as they did on the streets on their own. In fact, some stop drinking altogether once staying warm and dry is not a daily problem.

A famous inebriate in downtown Seattle did just that after his 25 years on the streets came to an end.

“He no longer had to worry about violence or finding a place to sleep. He met with a counselor who encouraged him to drink less. By his second year at 1811 Eastlake, John decided he was going to stop drinking, and he did,” an analysis in the online magazine Pacific Standard found. Others doing as did John “means huge taxpayer savings on arrests, hospitalizations and welfare.”

Second, the plan floated this week by state Senate President Pro Tem Kevin de León, D-Los Angeles, would take the $2 billion to build homes for homeless people with mental illnesses from existing fundsgenerated by Proposition 63.

This 2004 voter-approved proposition levied a 1 percent income tax on Californians earning $1 million or more per year to pay for mental health services. That means the money would come without seeking new taxes or other revenue sources.

Not that the plan, which could fund the construction of about 10,000 new housing units around the state, will necessarily come about easily.

There are complexities to it, including floating a bond measure that would require about $130 million in annual debt service from about $1.8 billion in annual Prop. 63 revenue.

It would also require negotiations with Gov. Jerry Brown, who unveiled his own annual budget plan Thursday.

But the good news is that the Democratic state Senate leader was joined by two Republicans, Sen. Bob Huff of San Dimas and Sen. John Moorlach of Costa Mesa, at the press conference announcing the plan.

All of us need to work together to solve the problem of homelessness.

Its human tragedies surround us daily, real people in flimsy tents with rickety shopping carts, as we go about our own relatively secure lives.

OP-ED: Housing the homeless

A bipartisan group of California state senators on Monday offered a powerful $2 billion housing plan to combat the appalling level of homelessness, particularly among severely mentally ill people in this rich state.

By making the announcement on the first business day of 2016, Senate President Pro Tem Kevin de Leon, D-Los Angeles, made clear his budget priority for the new year. No issue is more worthy of the Legislature’s attention.

Twenty-five years ago, then-San Francisco Mayor Art Agnos spoke about “compassion fatigue,” the idea that residents in that liberal city had grown sick and tired of panhandlers and homeless people. The problem has only gotten worse.

Now, a fifth of the nation’s homeless population calls California home, an estimated 114,000 people. Two weeks ago, we learned of the death of 5-month-old Sivam Lekh, the son of an often-homeless, drug-addled woman. In October, we read about 77-year-old Genevieve Lucchesi, who died in a sleeping bag in midtown. We cannot become inured to these deaths and call ourselves civilized.

Confronting the slow-motion crisis, de Leon, joined by several other politicians, announced the proposal on Los Angeles’ Skid Row, a festering example of California’s failure to solve homelessness.

De Leon’s predecessor, Darrell Steinberg, was at his side, as were two Republican state senators. Steinberg, a candidate for Sacramento mayor, endorsed the plan to raise the $2 billion by leveraging the billions raised by Proposition 63, a voter-approved initiative he promoted in 2004 to help severely mentally ill people.

Proposition 63 generates $1.8 billion a year by imposing a 1 percent income tax on people earning $1 million or more annually. The Legislature would take 7 percent of the Proposition 63 money, about $130 million, to finance $2 billion in revenue bonds to build housing for severely mentally ill homeless people.

The $2 billion would provide 10,000 to 14,000 housing units, as much as $200,000 per unit. That might seem high, but taxpayers already pay dearly for homelessness in added health care and policing costs, and in lost economic development.

Counties would be expected to compete for the funds. Presumably, areas with the largest number of homeless people — Los Angeles, San Francisco and other urban areas including Sacramento — would receive much of the money.

Sen. Bob Huff, R-Diamond Bar, and Sen. John Moorlach, an Orange County Republican, attended the news conference. As an Orange County supervisor, Moorlach used Proposition 63 money to implement that county’s version of Laura’s Law, a statute that allows judges to order treatment for mentally ill people who have a history of incarceration and hospitalization.

De Leon’s proposal is aimed at providing housing first. Once people have roofs over their heads, de Leon said, social workers would offer services including mental health care and drug treatment.

Democrats would do well to listen to Sen. Pat Bates, R-Laguna Niguel. Bates sees a need to spend some money on housing that caters to formerly homeless people who seek drug- and alcohol-free housing.

Getting chronically homeless people off the street ought to be the priority. But California should not reject funding for programs simply because they require that residents be drug- and alcohol-free. Keeping drugs and alcohol away from severely mentally ill people is especially important.

De Leon’s proposal comes amid protests by so-called homeless advocates at Sacramento City Hall and arrests over the weekend. Pointless protests do nothing to solve the problem of homelessness. Spending $2 billion to provide housing would. It’d also provide a powerful statement that the people of this state care about the least fortunate among us.


This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District.

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