MOORLACH UPDATE — Snubbing — May 10, 2017

Monday afternoon, Senator Jerry Hill (D – San Mateo) presented SB 751 on the Senate Floor. I followed with the request that the Senate consider my submitted amendments, that would have made SB 751 identical to my version (SB 590) on the topic of addressing school reserve caps (also see MOORLACH UPDATE — Repealing the Cap — May 7, 2017 may 7, 2017 john moorlach). As expected, a motion was made to table the amendments, which passed along party lines.

Debate on SB 751 ensued. My Republican colleagues were well spoken and provided the following comments: "SB 751 is OK, but SB 590 is what should be considered." After a healthy Floor discussion, SB 751 received votes from all the Senators present (38). The narrative of one television news station, KERO Channel 23 in Bakersfield, covers the story in the first piece below.

Monday evening, following Session, SB 371 and SB 671 were heard in the Senate Public Employment and Retirement Committee (also see MOORLACH UPDATE — Repealing the Cap — May 7, 2017 may 7, 2017 john moorlach). SB 371 lost with a 2 to 3 vote, along Party lines. But, SB 671 received unanimous support, making it my first bill to get out of this committee.

Tuesday morning found SB 59 being overwhelmingly approved in the Senate Governmental Organization Committee (also see MOORLACH UPDATE — Repealing the Cap — May 7, 2017 may 7, 2017 john moorlach). It now moves to Senate Appropriations Committee.

Tuesday afternoon found me Chairing the Senate Judiciary Committee while the Chair presented her bills. Courthouse News Service covers one of those bills that impacted the services performed and provided by the State Bar in the second piece below.

In the third piece, the OC Register provides a column discussing Secure Choice and affirms my opposition to the creation of this new government bureaucracy (also see MOORLACH UPDATE — Secure Choice in Jeopardy — April 2, 2017 april 2, 2017 john moorlach). I provided the online photo to point out that half of the Republicans that attended the bill signing ceremony did not return to Sacramento this Session. And the piece announces the good news, the U.S. Congress voted to reverse the ERISA changes that made SB 1234 possible.

The fourth and final piece is from R Street and covers my bill, SB 247, which tried to inform the Legislature that some perceived good practices are really barriers to the poor in entering certain industries (also see MOORLACH UPDATE — There Ought Not Be A Law — April 23, 2017 april 23, 2017 john moorlach and MOORLACH UPDATE — PACE and HERO — April 30, 2017 april 30, 2017 john moorlach). Two validations in one day is encouraging up here in Sacramento.

KERO 5/8/2017 6:11:54 PM: …districts ill- prepared if disaster strikes.

Currently — california school districts can only set aside 6-percent of their annual expenditures. Lawmakers say that only amounts to a few weeks of cash-flow in terms of a payroll crunch.

Senator John Moorlach of Orange County is proposing a new amendment that will permanently remove the rainy day fund cap. He says the cap is unfair and a selfish move by the teachers unions.

"It just tells you how dominant the public employees unions are in Sacramento and they would rather spend the money paying their members than being concerned about how well a school district is being run."

Senator Moorlach says Governor Jerry Brown should never have agreed to the cap. Similar attempts to remove the cap by Republican lawmakers have failed three other times.

Committee Approves Overhaul of California State Bar

Maria Denzio

A bill to allow the California State Bar to collect membership dues next year sailed out of the Senate Judiciary committee Tuesday, but it also contains a caveat: the agency must divide its disciplinary and trade association functions.

The bill, sponsored by state Sen. Hannah Beth Jackson D-Santa Barbara, will enact a host of changes to how the state bar operates, including winnowing its current 19-member board of trustees to 13 and cutting six attorney members from that number. Board members will now be expected to serve four-year terms instead of three. Members of the bar’s executive board must also include one member appointed by the governor, state Supreme Court and the Legislature.

It will also rename the positions of president and vice president as chair and vice chair, to be appointed by the state Supreme Court rather than elected by the board.

“This has been a very carefully thought-out effort. There’s a lot going on in this bill. We want to make sure we get this right,” Jackson said Tuesday. “This has not been easy and this has not been fun, but it’s my hope we will pass this and that the bar will once again do what it should be doing to protect the public and serve lawyers and the people of California.”

Jackson’s bill will authorize the bar to collect dues of $390 for 2018 and 2019, but disallows the bar from blocking the Legislature’s reduction of membership dues in the future.

Chief among the bill’s changes to the bar is its requirement that the agency allow its 16 specialty law groups to split off and form their own nonprofit corporation, to be called the California Bar Sections Association.

The “sections,” as the state bar calls them, are specialty organizations currently affiliated with the bar that focus on various areas of legal practice, from family and labor law to intellectual property and antitrust law. It also includes the California Association of Young Lawyers.

They provide low-cost continuing education for its attorney members, which the state bar requires. They also work with legislators to interpret, amend and propose legislation. While lawyers are required to be dues-paying members of the bar to practice law in California, section membership is voluntary and members pay separate dues of roughly $95 a year.

The sections began considering a split from the bar last year, spurred by a combination of factors including new restrictions imposed by bar executives to reconcile the bar’s regulatory and trade association functions.

Among these was a ban on spending on alcohol at events and contracting with resort-style meeting venues. The sections had argued that these regulations prevented them from attracting and keeping members.

Jackson’s bill is the culmination of talks within the state bar and with the state Supreme Court and lawmakers, who were concerned about how the agency spends its money and whether it has been sufficiently diligent in disciplining wayward attorneys.

After the Legislature ended its session last fall without passing a yearly dues bill, the state Supreme Court stepped in and allowed the bar to collect dues for 2017 – but only to support its disciplinary functions.

At Tuesday’s hearing, State Bar President James Fox called the bill a perfect solution.

“We are strongly in support of this bill. You all know how contentious it was last year. This, I think, is a perfect solution,” he said.

“So you’re agreeing to the terms of your surrender,” joked state Sen. John Moorlach, R-Orange County.

“My white flag,” Fox laughed.

The committee passed the bill unanimously, 6-0.


Get government out of

retirement planning

AP Photo/Rich Pedroncelli
Gov. Jerry Brown signs legislation that will automatically enroll millions of private-sector workers in retirement saving accounts, as lawmakers and supporters look on, at the Capitol Thursday, Sept. 29, 2016, in Sacramento, Calif.

By asummers

Increasingly, the government is taking control of the financial decisions that will determine the quality of life we lead during our golden years — and that should concern everyone.

First, there was the failure of Social Security, which has always been more of a Ponzi scheme than a retirement program. Social Security’s old-age trust fund will be exhausted in 2035, at which point it will only be able to pay out 77 percent of promised benefits, according to the 2016 report from Social Security and Medicare trustees.

Public pension systems face similar financial difficulties, racking up trillions of dollars in unfunded liabilities nationwide. Yet, California and a handful of other states, as well as some cities, are looking to compound this error by establishing government-administered retirement plans for private-sector workers. California’s version, known as the Secure Choice program, would require employers with as few as five employees to either offer retirement plans to their workers or deduct 3 percent of their paychecks — with “automatic escalation” of up to 8 percent of salary thereafter — for investment directed by the government.

Like other government-run “auto-IRA” programs, Secure Choice was made possible by a Labor Department regulation passed during the waning days of the Obama administration that exempts such state or local government programs from the federal reporting, fiduciary duty and other protections under the Employee Retirement Income Security Act of 1974.

But Congress recently threw a monkey wrench into the plans for Secure Choice by invoking the Congressional Review Act to nullify the DOL rule for state governments, with a 50-49 vote in the Senate last week that followed a 231-193 House vote in February. President Donald Trump has promised to sign it, just as he signed a similar measure covering the local government versions last month.

This is a victory for taxpayers and true choice, for, as state Sen. John Moorlach, R-Costa Mesa, has often said, the Secure Choice program “is neither ‘secure’ nor a ‘choice.’” It is certainly not a choice for employers, who are forced to deduct employees’ pay or set up retirement programs that they may not be able to afford. Additional costs will be passed on in the form of reduced hiring or hours for workers, diminished investment in the business and/or higher prices. Secure Choice could also crowd out existing private-sector retirement plans, prompting some employers to dump their plans since employees could always join the state-sponsored system. The mammoth government investments would also create unfair competition for private-sector investment management services.

Then there is the issue of whether the state would be pressured to provide a backstop (i.e., a taxpayer bailout) if the investments do not perform well. California’s experience with its own pension plans does not inspire a lot of confidence. And, as I noted in last week’s column, the pension funds have often discarded fiduciary duty in favor of ideologically motivated investing, costing taxpayers billions of dollars. Secure Choice could be subject to the same political motivations.

“Today, 55 million working Americans do not have a way to save for retirement out of their regular paycheck,” AARP board member David Walker argued in a March USA Today column in support of the DOL rule. But this argument is highly disingenuous. The 55 million figure refers to those whose employers do not offer their own retirement plans, but this is quite different from “not hav[ing] a way to save for retirement out of their regular paycheck.” Anyone with access to a telephone or an internet connection can sign up for an IRA or an annuity and contribute a portion of their paychecks to those investments on their own. They do not need the government to hold their hand — or force them to do so.

Besides, some people, particularly those living paycheck to paycheck, rationally determine that that extra 3 percent or 8 percent of income today is preferable to future invested funds because they need to pay bills or put food on the table. In any case, shouldn’t individuals have the right to make those “money today vs. money tomorrow” decisions?

As we have seen in so many other areas, ceding more responsibility — and more control over one’s life — to the government is a dangerous prospect. We should be able to determine our own futures, and plan for them accordingly — without government interference.

Adam B. Summers is a columnist with the Southern California News Group.

Democrats snub working poor, killing licensing reform



California Democrats prattle endlessly about helping the working poor, but their latest vote against a bill that would tangibly help financially struggling people shows that Democratic leaders are more interested in serving their real constituencies: state bureaucracies, unions and other interest groups that want to keep out the competition.

The latest example involves occupational-licensing reform. It’s one of those rare issues that should have widespread bipartisan support. Think tanks on the left and right agree that burdensome and costly rules for getting a license to perform certain jobs (barbers, makeup artists, locksmiths, speech pathologists, funeral directors, etc.) make it inordinately difficult to enter the job market, especially for people of modest means.

The stated purpose of the rules, which often require hundreds of hours of training and thousands of dollars in coursework, is to promote public health and safety. But the rules often have little relevance to the job at hand, and they typically are promoted by unions and trade associations (and the politicians they support), who want to use the political system to increase prices and profits artificially. There’s no evidence such barriers enhance safety.

One of the most notorious examples involves African-style hair-braiding, which is a natural process that doesn’t involve the use of dyes or chemicals and doesn’t even involve hair cutting. Yet in more than half of all states, these hair-braiders are required to get a cosmetology license to learn about things that are unrelated to braiding. As a result, many braiders are pushed into the underground economy.

In 1999, a federal court ruled that California’s licensing requirements for hair-braiders were unconstitutional, because of that disconnect between the required training and the actual braiding process. The Legislature responded by exempting hair-braiders from licensing laws. “It was forced into it by a federal lawsuit, but California has kept its regulatory mitts off of hair-braiders,” said Paul Avelar, a senior attorney with the Institute for Justice, which had filed that lawsuit.

As these braiders have flourished in the ensuing 18 years, there have been no rash of health or safety problems. It’s allowed people to offer their services publicly without worrying about sting operations, fines and arrests. It’s been an unquestionably good thing for this one field – but what about the dozens of other fields still encumbered by Byzantine rules?

An IJ study from 2010 found that California had the seventh-most burdensome licensing regulations in the nation. Our state requires licenses for 62 low- to moderate-income professions. Only a handful of those were the target of Senate Bill 247.

Introduced by Sen. John Moorlach, R-Costa Mesa, and sponsored by the Pacific Legal Foundation, the bill would have repealed “the requirements for an individual to obtain a license to perform the following activities: fitting or selling hearing aids, locksmithing, barbering or the application of makeup, disposing of cremated human remains, and performing custom upholstery services,” according to the Senate bill analysis. It would also have modified “the regulation of certain landscapers, tree service contractors and private investigators.”

Pacific Legal Foundation made the obvious case:

Occupational licensing laws exist, in theory, to protect the public by requiring certain professions obtain a government license before legally working in California. However, many current licensing laws do little to protect the public and are an artificial barrier for middle class jobs. By lowering and repealing the barriers to entry for these professions, more Californians can earn a living doing what they want to do without government interference that does little to serve the public.

Opponents came from – you guessed it – a prominent union and trade groups that represent people who work in some of the fields affected by the reforms. The Hearing Healthcare Providers of California, for instance, defended current licensing requirements because “the proper fitting of a hearing aid requires close examinations of the ear into the canal, and that these devices can be extremely costly, consumers need the assurance that it is a licensed and qualified professional who is treating their hearing loss.”

Seriously, we need a state licensing bureaucracy because fitting hearing aids involves examining the ear canal? There are plenty of ways to get trained for these jobs, and it’s clear that much of the licensing process has little to do with proper training. The bill also was opposed by the California Nurses Association, which represents some public-sector nurses.

Nevertheless, the Senate committee rejected the bill on a 6-2 party-line vote, with only the two Republicans favoring it. The bill will still be considered by another committee, but is dead on arrival. The staff felt the bill was unnecessary because of the annual “sunset review” of the Department of Consumer Affairs, which functions to see if any regulations should be changed. Never mind that the review process is pro forma and rarely results in any regulatory rollbacks.

Apparently missing the whole point of the measure, the committee report opined: “It is unclear at this point why this bill seeks to eliminate occupational licensing laws that promote and protect the public.” Well, the staff who wrote that sentence could have read the legislation or some of the reports its author cited for a clear rationale.

California has the nation’s highest poverty rates, according to a new U.S. Census Bureau standard that includes cost-of-living factors. A good starting place to address that problem is to chip away at unnecessary barriers to work. Trade groups, however, recognize that the best way to inflate their members’ pay is to raise the cost of entry for others – and the more fields regulated this way, the more it keeps poor people in the welfare lines.

“One out of every five Californians must receive permission from the government to work,” explained a 2016 report from the state’s official watchdog agency, the Little Hoover Commission. “What once was a tool for consumer protection, particularly in the healing arts professions, is now a vehicle to promote a multitude of other goals. These include professionalism of occupations, standardization of services, a guarantee of quality and a means of limiting competition among practitioners, among others.”

Consider the freedom issue there too. We need to ask the government for permission to work?

The Little Hoover study found that the laws succeeded mainly in keeping “Californians from working, particularly harder-to-employ groups such as former offenders and those trained or educated outside of California, including veterans, military spouses and foreign-trained workers.” The problem is particularly acute for ex-offenders who often are barred from entering a variety of fairly low-skill professions by licensing rules that forbid them from entering the market.

Such concerns prompted even the Democratic Obama administration to call for far-reaching licensing reforms, yet California’s Democrats don’t even seem to understand the point of such efforts. Or maybe they just won’t let themselves understand the argument, given their political alliances. At any rate, they should at least stop pretending to care about the poor if they can’t embrace simple, cost-free policies that get poor Californians working.


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