MOORLACH UPDATE — SB 1463 — March 25, 2016

Allow me to wish you a respectful Good Friday and a wonderful Easter weekend. He is risen!

The Indy of Laguna Beach, in the first piece below, provides the introduction for another one of my bills, SB 1463 (see

We got this one in just under the wire (pun intended), as we are more than happy to assist cities in the District with their legislative needs. The piece describes our bill, but for more detail, allow me to quote the Legislative Counsel:

This bill would require the [Public Utilities C]ommission, in consultation with the Department of Forestry and Fire Protection, to prioritize areas in which communities are at risk from the consequences of wildfires when determining areas in which it will require enhanced mitigation measures for wildfire hazards posed by overhead electrical lines and equipment.

The OC Register‘s editorial staff has mentioned me four times in the last ten days in their editorials. I am most honored. Today, they marvel at California’s CAFR and what it reveals (see MOORLACH UPDATE — California CAFR — March 19, 2016 march 19, 2016 john moorlach). The reaction to the GASB No. 68 adjustments continues (see MOORLACH UPDATE — GASB Gasp — March 9, 2016 march 9, 2016 john moorlach).

The editorial, the second below, also rightfully addresses funding from Cap and Trade revenues directed toward high speed rail (see MOORLACH UPDATE — Greenhouse Guesses — February 21, 2016 february 21, 2016 john moorlach).

The third piece in City Watch shows how SB 1141 is resonating around the state. You’ve seen it before, but it is receiving great circulation (see MOORLACH UPDATE — SB 1141 — March 22, 2016 march 22, 2016 john moorlach). Our offices have been receiving a number of telephone calls asking if this is the Senator’s office that is taking on Caltrans. These comments in support, and the comments from a number of constituents that I’ve interacted with recently, have been very encouraging about our efforts to encourage improvements at this critical state agency.

Laguna Pursues Burying Utility Wires

By : Rita Robinson

A retardant-dropping plane douses a wildfire in Laguna Canyon set off by sparks from a power line last summer. Photo by Greg Farnes

Public safety has usurped visual aesthetics as the motivation to underground utility cables citywide, says a report presented to the City Council Tuesday.

A huge undertaking if pursued, costs are expected to run in the hundreds of millions and would require voter-approved taxes and debt, according to a report laying out options and recommending initial actions. In the end, City Manager John Pietig said, some high-power transmission lines and street-lighting poles could still remain standing.

The plan includes the difficult option of buying the utility infrastructure from Southern California Edison and San Diego Gas and Electric to expedite the process. If the city did acquire the now-franchised service from the two utility companies, it would be a first in California history, the city’s report says. Other cities operate their own utilities but none as a result of a buy-out, according to the presentation.

Laguna’s move toward undergrounding utility wires citywide due to fire danger prompted new legislation, state Senate Bill 1463. The proposed legislation, introduced by Orange County Senator John Moorlach, would require the California Public Utilities Commission to prioritize communities most at risk of wildfires in order to determine who is responsible for removing the fire hazards.

The PUC already requires utility companies to set aside funding for undergrounding utilities in specific cases, but Laguna officials are dissatisfied with the pace and scope of the process. With the city hoping to qualify for state and federal funds to underground wires, the report points out that the commission’s first draft of a map to identify communities with wildfire risk from overhead wires omitted Laguna Beach altogether.

To emphasize Laguna’s fire risk, Fire Chief Jeff LaTendresse outlined recent local wildfires, starting with the arson fire in 1993 that destroyed 441 homes and charred 14,333 acres with $838 million in losses, the seventh most costly wildland fire-related disaster in U.S. history. Since 1993, five more fires ignited by falling trees, electrical surges molten causing metal to erupt from wires and downed cables have occurred, three of them along Laguna Canyon Road. The information has been presented to state officials, council member Bob Whalen said.

The council approved spending $300,000 for expert input to analyze the cost of burying utilities citywide. The council also approved hiring a manager to expedite undergrounding projects in neighborhoods and on Laguna Canyon Road at Big Bend, which is expected to start April 4 with lane closures and traffic delays. The new employee will also oversee already approved bicycle, pedestrian and safety projects along the canyon road.

For Laguna to become the provider of electricity to the community may be cost-prohibitive, the report says. After a transformer sparked a fire last July, council members Whalen and Rob Zur Schmiede met with Southern California Edison and San Diego Gas and Electric officials and found they were not remotely interested in footing the cost of citywide undergrounding, the council members said. Acquiring the utilities would most likely require eminent domain, taking private property for public use, said Pietig, an expensive process he expects the utility companies to “aggressively oppose.”

Asking utility companies to upgrade equipment and the city to more consistently manage surrounding vegetation was listed as the least costly option. It’s not as safe as undergrounding, Pietig acknowledged.

The council also approved surveying residents about the issue and how to pay for it. The public survey will be conducted prior to the November general election in case a ballot measure is required. Residents have limits on how much debt or tax increases they’re willing to take on, said Pietig, and other city priority projects need to be considered. The public opinion survey, conducted by FM3 of Los Angeles, will also ask residents to prioritize other city projects.

If residents opt to pay for undergrounding, those who have already paid for neighborhood undergrounding — averaging $30,000 per property — would not be double-charged, Pietig assured.

Potential funding sources include increasing the sales or transient occupancy tax, largely paid by visitors, Whalen noted. Other possibilities include a utility users’ tax, a bond measure or a special tax levied on property owners, all needing voter approval. The citywide undergrounding project would require more than one source of funding and is expected to take at least 10 to 15 years, the report says.

Undergrounding on Laguna Canyon Road is a top city priority due to fire hazard. The road sees 41,000 cars daily and vehicles have collided with utility poles at least 46 times there since 2007, the report says.

The open space surrounding Laguna Beach has been designated a “very high fire hazard severity zone,” by state fire authorities and encompasses 90 percent of the city, according LaTendresse.

The council also approved an engineering survey of five miles along Laguna Canyon Road to determine exact costs of undergrounding. A new ordinance, ready for council approval, will compel utilities and property owners to underground any new, replaced or relocated utility equipment, City Attorney Phil Kohn said. By adopting the ordinance, city law would align with the proposed legislation, which will determine if utilities are responsible for removing equipment posing a fire hazard, he said.

Funding for the approved recommendations will come from the city’s street-lighting fund, which carries a $3.9 million balance.

Facing up to the state’s debt burden

New accounting standards reveal California has run a $250 billion tab.

The state of California has run up $6,400 on your credit card. And the same amount for your spouse and each of your children. A family of four owes more than $25,000.

The numbers are calculated from the state government’s latest comprehensive annual financial report, just issued by Controller Betty Yee. The CAFR follows new requirements in recent years by the Government Accounting Standards Board for accountability to the taxpayers of the sort long required of private businesses.

The new CAFR disclosed “a net pension liability of $63.7 billion as of June 30, 2015,” the end of fiscal year 2014-15. That’s up $20 billion from the previous year’s estimate.

Then there is $67.1 billion in debt for bonds. The total rises to $175.1 billion when such debts as “claims, judgments and long-term leases” are included.

There will be more. As was noted by state Sen. John Moorlach, R-Costa Mesa, who also is a CPA, “$74 billion in unfunded retiree medical” benefits will be included in the next CAFR, for fiscal 2015-16, which ends June 30.

Total unfunded liabilities: $250 billion. As Sen. Moorlach notes, that comes to about “roughly $6,400 for every man, woman and child in California.” Too bad we didn’t have these new CAFR accounting standards 16 years ago, when public-sector pensions were sharply increased. Now, the taxpayers are on the hook, and the next recession is sure to bring more municipal bankruptcies, like those declared in recent years by San Bernardino, Stockton and Vallejo.

The new CAFR also details how Gov. Jerry Brown’s plans for implementing Assembly Bill 32, the Global Warming Solutions Act of 2006, includes “a $3.1 billion cap-and-trade expenditure that will reduce greenhouse gas emissions through programs that support clean transportation” and other projects – meaning $500 million for the high-speed rail boondoggle. The vast expansion of coal production and burning in China and India far outstrips any greenhouse gas cuts by California – meaning AB32 is another pointless tax increase.

In sum, we welcome the fiscal realism reflected in the state’s CAFR, which Ms. Yee actually produced a month early. To deal with it, the state desperately needs pension reform. And how about repealing not just high-speed rail, but also AB32?

‘Caltrans is Worst Managed, Most Inefficient’ … It’s Time to Shift Road Funding to Counties


GUEST COMMENTARY–Last week, yet another high-profile scandal involving mismanagement rocked the California Department of Transportation (Caltrans) and this week I introduced Senate Bill 1141, which would launch a pilot program shifting road funds and maintenance duties from Caltrans to county governments.

Caltrans is one of the worst managed, most inefficient government agencies in the nation. Just look at the metrics. Californians pay among the highest gas taxes and the highest per-mile road maintenance, yet we also have the nation’s fifth worst roads. Those are clear signs that Caltrans is dysfunctional and wasting taxpayer money. If Caltrans was a private company, it would have been out of business long ago.

SB 1141 would launch a pilot program that allows two California counties to handle their own road maintenance needs, and to receive the road funding that typically would have been administered by Caltrans for those maintenance needs.

County governments are much more accountable to the taxpayers than the bureaucracy at Caltrans. County governments know their needs and have a history of getting the job done. Senate Bill 1141 allows counties to prove they can do much better than Caltrans.

Last week, the State Auditor found that Caltrans had intentionally lied to legislators about implementing the results of a 2009 efficiency study – one that recommended moving money and manpower to the highest need areas and managing efficiencies to help fix roads with the existing resources.

Caltrans management reassured legislators that they were implementing the study’s recommendations, when, in fact, they had ignored them altogether and continued with an inefficient, labor-union friendly resource allocation.

Auditors also found that Caltrans has little, and often no, cost control measures, and that Caltrans often fails to even track project costs. The State Auditor is telling it straight when she says there are ‘weak cost controls’ that ‘create opportunities for fraud, waste and abuse.’ Sixty-two percent of Caltrans projects are over budget, and now we are beginning to know why. We can no longer tolerate this nonsense. It’s time to provide constructive and necessary solutions.

SB 1141 would provide a real-world study on moving resources to counties and making our road dollars stretch much further. More information on SB 1141 can be found HERE.

(State Senator John Moorlach (R-Costa Mesa) represents CA District 37. He is a nationally recognized budget, finance, and fiscal policy expert. This piece was first posted at Fox & Hounds Daily. )

Prepped for CityWatch by Linda Abrams.


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