MOORLACH UPDATE — Goes to Sacramento — June 14, 2016

Heidi Cuda is back. She interviewed me at the conclusion of my two terms as an Orange County Supervisor (see MOORLACH UPDATE — First Dutch American — December 11, 2014 december 11, 2014 john moorlach). She had interviewed me previously while she was at FOX News. She returns in the first piece below, from Fox & Hounds, detailing the fun I’m having in this new chapter of my life.

The Bond Buyer is back. This time with another update on our upcoming budget vote for tomorrow (also see MOORLACH UPDATE — Budget and Tax Reform — June 13, 2016 june 13, 2016 john moorlach. Fidelity’s Fixed Income division also picked up the piece, which is the second below.

I had a Senate Budget and Fiscal Review Committee meeting yesterday afternoon. I received its agenda, mostly regarding trailer bills, late yesterday morning. That’s not much lead time for a Budget that is as large as the state’s Unrestricted Net Deficit.

I’m now scheduled for another Budget and Fiscal Review meeting Wednesday morning, and a full Senate Floor Session that afternoon, to vote on the State’s 2016-17 Budget. As of the time of my sending out this UPDATE, I have not received agendas for these meetings. And they are tomorrow! What a state!

One other small thing to share. Trailer bills are not always about the Budget. Many implement policies, like CEQA reform for low income housing. Stay tuned.

Please accept my best wishes for a pleasant Flag Day!

P.S. Since I referred to an UPDATE titled "First Dutch American," which stated that I was the first Orange County Supervisor to have been born in the Netherlands (whose national color happens to be orange – a story for another time), it turns out that I am the second California State Senator to have been born in Holland.

Mr. Moorlach Goes to Sacramento

Heidi Siegmund Cuda
By Heidi Siegmund CudaFormer Investigative Producer for Fox 11 News in Los Angeles and the Creator and Host of the Economic Series, "Saving the California Dream." She is currently producing and hosting the series, "Ripoff Report Investigates."

I’m a CPA groupie. Not being a mathemagician myself, I rely on my pocket-protector friends to protect our pocketbook. Simply put, I like getting down to brass tacks, and it’s evident, the tax guys and gals usually know the score.

So that’s why I’ve been interviewing John Moorlach for years. The State Senator and veteran CPA is California’s most congenial Republican. Despite being a wet blanket on the Golden State’s fiscal forecast, he’s just so dang likeable.

He says part of his congeniality is that his first lesson in public service 22 years ago was to grin and bear it.

“Someone called me up and said, ‘Let me give you some advice: smile, grit your teeth. These guys aren’t gonna like you, but smile, they’re gonna grind on you, but smile.’”

Two decades later, he’s still grinning.

“Mostly because I have a warped sense of humor,” he says.

I asked him to recall his first day in the Senate, March 25, 2015.

“It was marvelous,” he says. “There was a special session that afternoon, two bills on the drought, and I looked at the bills and the numbers didn’t add up, not even close. And I’m meeting everyone and talking about how bad these bills are, and everyone is saying, ‘Yeah, these bills are awful, just horrible.

“And I get on the floor when it’s time to vote, and everyone is saying ‘Aye,’ and it gets to me and I say, ‘No.’ At the end of the roll call, it’s 39 ‘Yes’ and one, ‘No.’ And that’s my first day, and it sorta set the tone.”

He says he went up to everyone after the vote and asked them why, if they knew this was bad stuff, they voted for it.

“What I learned is, ‘How do you, in the middle of a drought, vote no on a drought bill?’” he says. “So a lot of the votes are made not because they’re the rights votes, it’s because they can’t explain to their constituents why they’d vote no on a ‘drought’ bill. Most of the money was coming from unissued bonds… the money was gonna be used not for drought but for flood control, so it was a technique.”

He says a Wall Street Journal editorial came out blazing against the bills a couple days after the vote, exonerating his calculations and naysaying.

“I didn’t come here for monkey business or patronizing nonsense,” he says.

It’s that attitude that earned him the subtitle: the Fiscal Conscience of Sacramento. That might also explain why there’s scuttlebutt that he may run for Governor in 2018.

“I don’t know if there are rumors, but I do know that two friends of mine, on their own, set up Facebook accounts without my permission, like they’re having fun,” he says. “I kinda laugh. There was a publication on their blog saying I had formed a committee. I have not formed a committee.”

It’s perhaps wishful thinking for those who don’t want the sky to fall on their beloved state.

“Our balance sheet is terrible but the weather’s great,” he says, with his trademark humor.

Recognized as a leading player in cleaning up the Orange County bankruptcy, first as a Treasurer, then as a Supervisor, Moorlach says he feels his team is already making progress. He’s been tenaciously going after the low-hanging fruit of CalTrans, which he describes as trying to hit the backside of a barn.

“We have the highest taxes, but the worst roads,” he says. “There’s something wrong.”

He says he applauds Governor Brown for doing his part to keep state budgets on the straight and narrow.

“But to fix the state, it might require it to get a little redder.”

I ask him how that’s possible in an era when, to paraphrase Barry Goldwater, the social conservatives keep gumming up the works for the fiscal conservatives.

“I can only speak for myself,” he says. “I know my brand sucks. I know there are problems. But if we lose one Republican in November in the State Senate, we become irrelevant. We at least need a fair floor fight.

“If I could ask for anything it would be elected officials who want to do things, and can think, and can see the issues and come up with solutions,” he says. “I need more financial leadership up here. The social issues, that’s all fringe stuff. I need people who can do math.”

He says there’s a slow motion fiscal train wreck happening in the form of unfunded liabilities, and that’s why he’s keeping a close eye on Illinois.

“I drove through the middle of Illinois in October, through farmland, wondering just how high can we tax them? And then how do we explain to them the money goes to pension plans. Not to pay for new stuff, it’s to pay for old stuff. So what happens when everything grinds to a halt? Illinois already told their lottery winners not to expect their cash on time.”

He says, despite all the politicking and numbers crunching, he’s having a really good time in Sacramento. He says he’s even getting compliments from colleagues.

“Senator Hertzberg told me, ‘We thought you’d be this conservative jerk out of Orange County. But you ask great questions in committee, and you give brief arguments.’”

And with a smile on his face, Moorlach explains: “I can vote against your bill but that doesn’t mean I have to be your enemy.”

California Legislators To Vote Wednesday on Budget

By Keeley Webster

LOS ANGELES —California’s legislature will vote Wednesday on a $169.3 billion state budget compromise reached by legislative leaders June 9.

The Budget Conference Committee hammered out an agreement in principle on June 9, but the full Assembly and Senate will vote on the final budget on Wednesday.

The hearing followed several days of closed-door meetings between Gov. Jerry Brown, Senate President pro Tem Kevin de Leon, D-Los Angeles, and Assembly Speaker Anthony Rendon, D-Lakewood, according to the California League of Cities, which put out a release on the budget talks.

The conference report "reflects many of the Legislature’s top priorities, including reducing poverty, restoring funding for schools and early childhood education, making college more accessible and affordable for California students, increasing the availability of affordable housing, and protecting California’s fiscal future by building up our budget reserves," de Leon said in a statement.

"The budget agreement also includes many elements of the Governor’s May Budget Revision, and we look forward to working with him to finalize another balanced, on time budget by June 15," de Leon said.

Sen. John Moorlach cautioned legislators against adding on trailer bills in the final hours before the budget agreement is reached.

"I’m thankful that Governor Brown has worked to model out a softening economy and a budget agreement that grants a $2 billion increase for the rainy day fund; however, we still have much work to do to constrain spending and address our ever increasing debts and liabilities," the Orange County Republican Moorlach said in a release. "This constraint needs to include strong oversight over the dozens of trailer bills likely to be passed between now and the end of the fiscal year."

Final budget language is expected to be released today and tomorrow in preparation for the final vote.

"In order to continue to give this process legitimacy," Moorlach said, "trailer bills need to stay consistent with established budget priorities as to not exacerbate fiscal problems in the future."

De León was successful with his plan to build housing for the homeless by allowing some Proposition 63 mental health funds, paid for with a decade-old tax on incomes above $1 million, to be used to secure a $2 billion revenue bond.

While the agreement includes priorities of the governor and Legislature, it also delays action on some big items.

The Budget Committee approved the governor’s objective of adding $2 billion to the state’s rainy day reserve to protect the state in the event of an economic downturn. The California recovery is considered by many to be long in the tooth. Legislature also agreed to limit new and ongoing spending.

"Overall, the budget agreement holds good news for cities," according to the League of Cities. "However, several of the items on which the Legislature delayed action will require continued vigilance."

The budget agreement does not include the Governor’s plans to allow by-right development of affordable housing. Talks continue on what opponents describe as Brown’s proposal to limit community involvement, design and environmental review on affordable housing projects, though supporters say it is an effort to reduce spurious "not in my backyard" challenges that unnecessarily delay sorely needed housing development.

The Governor has offered $400 million in one-time funds for affordable housing in exchange for the Legislature approving the "by right" proposal. The Budget Conference Committee approved placeholder language that sets aside the $400 million while discussions continue.

State legislators and several cities have launched proposals aimed at solving the state’s affordable housing crisis and homeless problems over the past several months – many of which involve issuing general obligation bonds and tax increases.

The League does not support the governor’s by-right proposal, which it characterized as sacrificing public input, environmental analysis and local control on important development projects statewide, and said "trading it for a one-time $400 million appropriation would be ridiculous."

The state lost $1 billion in annual funding for affordable housing when it eliminated redevelopment several years ago. The proceeds of the last housing bond, which passed 10 years ago, have been depleted.

According to the League, the federal government also has been lowering the amount it contributes to housing since the 1980s.

"This massive withdrawal of resources has contributed to our current challenges, yet no significant source of ongoing affordable housing funding is on the horizon," according to the League.

The League recommended instead offering incentives to help local communities struggling to accommodate higher densities and new development.

While $400 million may sound to some like significant funding, it would only result in the equivalent of approximately 2,000 housing units statewide, the League said. Moreover, many jurisdictions would not even benefit from the allocation, even though they would be required to implement the "by right" proposal.


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