MOORLACH UPDATE — Iceberg Dead Ahead — September 28, 2017

The sad night the cap and trade bill garnered the necessary two-thirds vote, the Governor signed three of my bills, SB 665, SB 671 and SB 742 (see MOORLACH UPDATE — Bad News/Good News — July 18, 2017 ).

Earlier this month, the Governor signed SB 764 (see MOORLACH UPDATE — Who Is? — September 13, 2017).

Yesterday, the Governor signed the fifth and final bill we were able to get to his desk, SB 653, and the good news is covered by the Highland Community News in the first piece below (also see MOORLACH UPDATE — Legislative Efforts — June 29, 2017 , MOORLACH UPDATE — PACE and HERO — April 30, 2017   and MOORLACH UPDATE — Budget and House of Origin Deadlines — June 1, 2017).

SB 653 is a bill I proposed requiring all 58 County Treasurer-Tax Collectors to post their required published notices on their websites. This would be another good way for taxpayers to find out if they are impacted through the beneficial use of search engines. This is particularly true for escheatment funds that should be refunded to individuals. Why the bill? Well many of my former Treasurer-Tax Collector colleagues needed to be dragged into the 21st century in assisting their constituents. Many complained about the cost and the required expertise. I suggested that they hire a 13-year-old to either cut, paste and add the notice, create a PDF, or assist in providing a link to it. It’s that easy. And Orange County has been doing it for more than a decade.

Last week I was the keynote luncheon speaker for the first California Local Elected Officials (CLEO) conference. This new organization is designed to assist elected officials (see https://calocalelectedofficials.org/). They are also providing material and the second piece below is an excellent sample.

The real financial impacts of having a rapidly rising required defined benefit pension plan contribution in the annual budgets of municipalities is the crowding out of core functions. The theme is simple: “iceberg dead ahead.” The captains of the ships of state in the city world are screaming it and they are working feverishly to avoid it. But, when you go along blissfully, you will hit it. For a refresher course, see https://www.youtube.com/watch?v=enlZAsth0sk (there is some course language).

A Texas cartoonist used the theme recently:

In yesterday’s UPDATE, I lamented that some of the testimony at the CalPERS Finance and Administration Committee meeting wasn’t garnering headlines in local communities. Well, Oroville did today (see http://www.orovillemr.com/article/NB/20170927/NEWS/170929752 or http://www.orovillemr.com/general-news/20170927/calpers-rising-costs-could-cause-oroville-and-cities-like-it-to-go-bankrupt).

BONUS: I was interviewed last week by Rick Reiff, literally hours after the conclusion of the 2017 Session. We covered a number of key subjects and it can be seen at https://www.youtube.com/watch?v=t-rpMqqQJJE&feature=youtu.be.

DOUBLE BONUS: To date, the Governor has not addressed any of the top 20 bills Assemblyman Harper and I have recommended he veto (see MOORLACH UPDATE — 2017 Top 20 Veto Worthy Bills — September 22, 2017).

Governor Brown Signs Legislation

http://www.highlandnews.net/news/political/governor-brown-signs-legislation/article_7a6264b0-a3d6-11e7-81e8-dba4d03eaba6.html

SACRAMENTO – Governor Edmund G. Brown Jr. today announced that he has signed the following bills:

AB 25 by Assemblymember Adrin Nazarian (D-Sherman Oaks) – Tour buses: modified tour buses.

AB 218 by Assemblymember Rob Bonta (D-Oakland) – Local agencies: airports: customer facility charges.

AB 326 by Assemblymember Rudy Salas Jr. (D-Bakersfield) – State Board of Barbering and Cosmetology: physical and sexual abuse awareness training.

AB 465 by Assemblymember Philip Y. Ting (D-San Francisco) – Urban agricultural incentive zones.

AB 515 by Assemblymember Jim L. Frazier Jr. (D-Discovery Bay) – State Highway System Management Plan.

AB 661 by Assemblymember Chad J. Mayes (R-Yucca Valley) – Magnesia Spring Ecological Reserve: Mirage Trail.

AB 712 by Assemblymember Richard H. Bloom (D-Santa Monica) – Civil actions: change of venue.

AB 804 by Assemblymember Cristina Garcia (D-Bell Gardens) – Controller: internal control guidelines.

AB 910 by Assemblymember Sebastian Ridley-Thomas (D-Los Angeles) – CalWORKs: welfare-to-work activities: hours.

AB 976 by Assemblymember Marc Berman (D-Menlo Park) – Electronic filing and service.

AB 993 by Assemblymember Catharine Baker (R-Dublin) – Examination of victims of sex crimes.

AB 994 by Assemblymember Al Muratsuchi (D-Torrance) – Health care districts: design-build.

AB 1034 by Assemblymember Ed Chau (D-Monterey Park) – Government interruption of communications.

AB 1119 by Assemblymember Monique Limόn (D-Santa Barbara) – Developmental and mental health services: information and records: confidentiality.

AB 1149 by Assemblymember Joaquin Arambula (D-Fresno) – Workforce investment boards: funding.

AB 1286 by Assemblymember Laura Friedman (D-Glendale) – Airports: alternative customer facility charges.

AB 1396 by Assemblymember Autumn R. Burke (D-Inglewood) – Surrogacy.

AB 1438 by the Committee on Environmental Safety and Toxic Materials – State Water Resources Control Board: environmental laboratories: public water systems: certificates and permits: procedures.

AB 1518 by Assemblymember Shirley N. Weber (D-San Diego) – Criminal justice information.

AB 1636 by Assemblymember Cecilia Aguiar-Curry (D-Winters) – California Finance Lenders Law: California Deferred Deposit Transaction Law.

AB 1692 by the Committee on Judiciary – Judiciary omnibus.

SB 40 by Senator Richard D. Roth (D-Riverside) – Domestic violence.

SB 367 by Senator Patricia C. Bates (R-Laguna Niguel) – Tidelands and submerged lands: County of Orange.

SB 420 by Senator William W. Monning (D-Carmel) – State summary criminal history information: sentencing information.

SB 448 by Senator Bob Wieckowski (D-Fremont) – Local government: organization: districts.

SB 568 by Senator Ricardo Lara (D-Bell Gardens) – Primary elections: election date.

SB 653 by Senator John Moorlach (R-Costa Mesa) – County tax collectors: notices: publication.

SB 658 by Senator Scott Wiener (D-San Francisco) – Jury selection.

For full text of the bills, visit: http://leginfo.legislature.ca.gov

City finance director says Oroville faces specter of bankruptcy

by Stephen Greenhut

https://calocalelectedofficials.org/cities-facing-fiscal-mess-plead-calpers-pensions-consume-local-budgets/

SACRAMENTO – Most Californians are aware of the near-calamity at the tallest earthen dam in the nation, which sits east of the Butte County city of Oroville. More than 188,000 residents were evacuated in February after a large portion of the main spillway threatened to give way amid heavy rains. Talk of “Oroville” often centers on an infrastructure crisis and even global warming, as officials discuss ways to protect that city – and others – from catastrophe.

But a major dam’s eroded spillway isn’t the only thing threatening to collapse around the 19,000-population city. During a public hearing at a California Public Employees’ Retirement System (CalPERS) committee meeting this month, Oroville Finance Director Ruth Wright warned about the city’s rapidly collapsing financial situation.

Thanks in large part to growing pension costs, Wright said that “We’ve been saying the ‘bankruptcy’ word, which is not very popular.” Wright was at the Sacramento meeting with several other city officials from across the state to support a senator’s request that CalPERS provide additional actuarial data regarding pension costs. Sen. John Moorlach, R-Orange County, wanted to know what the savings would be if pensioners had cost-of-living adjustments temporarily capped and if some employees were moved to a less-generous pension tier.

The impetus: Cities of all sizes and financial conditions are facing rapidly growing pension costs. CalPERS continues to increase the rates that cities have to pay into the pension fund, which is leading to cuts in services and layoffs of city employees.

“In the last two years, we’ve reduced our workforce by one-third,” Wright said. “This is how we balanced our budget, it’s how we’re currently operating, and it’s not operating well, let me tell you.” She said the city just negotiated a 10-percent salary reduction in the city’s police officers’ bargaining unit, “which is very, very hard, very sad.”

“Our future projections show that our rates are going to double in seven years and we don’t know how we’re going to face that,” Wright added. “In three to four years, our cash flow is going to be gone. We don’t even know how we’re going to operate past four years.”

Other California cities have gone bankrupt in recent years, including San Bernardino, Stockton and Vallejo. Some others have threatened the “b” word, but have avoided actual bankruptcy. Cities aren’t totally the victims here. Many of them dramatically expanded pension benefits, without accounting for what it would mean. But at least they now are sounding the alarm, as pension costs consume larger portions of their budgets.

Until the state Legislature addresses the expanding pension debt, more cities are going to face the dismal situation that Oroville’s finance director described at the hearing. More cities are not just going to be saying – but declaring – the “b” word.

Here is the link to the full hearing: https://www.youtube.com/watch?time_continue=1843&v=0uhWTfVcsDg

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut.

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