Governor Brown announced his May Revision last Friday morning.
Low and behold, between Proposition 55 (see MOORLACH UPDATE — SB 32 and Propositions — September 18, 2016) and the gas tax increase last year (see MOORLACH UPDATE — Not Amused — April 17, 2017andMOORLACH UPDATE — Do You Recall? — July 10, 2017), he has more than $8 billion in excess of the previously forecasted revenues. Now, there is a peculiar problem to have.
In one recent e-mail exchange with a friend, I lamented the perspectives on the state’s finances.
“California is like one of those 3-D photos which shows a different scene depending on the angle at which you are viewing the photo.
“Gov. Jerry Brown sees a surplus.
“Sen. Moorlach sees massive deficits.
“Gov. Brown looks at receipts.
“I look at balance sheets.
“And I see future generations grappling with major priority decisions thrust on them by this generation.
“Watching train wrecks in slow motion is getting a little old for me.”
So, I’m piping in with some ideas. They are in the FlashReport, which is the first piece below.
With this one-time money, let’s address one-time opportunities. Let’s not build the base, thus requiring ongoing funding in the years ahead.
In recent UPDATE editions you’ve heard me address homelessness, mental health services, electric power lines causing wildfires (that have wiped out greenhouse gas reduction goals by multiples), massive unfunded pension liabilities, upside-down unrestricted net positions at all levels of government, educational system fiscal hemorrhaging at all levels, and water storage mismanagement. So, Governor Brown, thanks for making a token stab at a few of these, but more can be done.
As I sit on the Senate Budget and Fiscal Review Committee, including its Subcommittee 1 on Education, and last year on the Budget Conference Committee, which may occur again this year, the next four weeks will keep me very, very busy on what is now a $300 billion annual budget!
As additional funding for the homeless and mentally ill is provided in the May Revision, the second piece provides an opportunity to catch up on this topic in Orange County. I have mentioned that these concerns are on the radar screen with the Governor’s office, in the interview referred to by the Voice of OC below. The piece provides a wonderful biography of Federal Judge David O. Carter, whom I have known for more than two decades and have the utmost of respect for. And, my comments were made with that admiration in mind.
Gov. Brown’s May Revise Shows
No Need for Gas Tax Increase
By John Moorlach
The first takeaway from Gov. Jerry Brown’s May Revision of his budget for 2018-19 is that California didn’t need that $5.5 billion yearly gas-tax increase the Legislature passed last year. The proposal shows we have $8 billion in revenues in excess of projections.
In one area I persistently agree with Governor Brown, “Despite strong fiscal health in the short term, the risks to the long-term health of the state budget continue to mount.” Unfortunately, according to the governor’s budget revision, we have $291 billion in long-term costs and the legislature has done little to fix the state’s fundamental problems.
In his budget announcement and press conference, Brown emphasized the volatility of tax revenues, especially capital gains-tax revenues, shown in this chart:
And he emphasized we’re overdue for a recession. Of course, he didn’t mention it has been President Trump’s economic policies – tax cuts and regulation reform – that have lifted the national economy above the sub-par performance of the Obama administration.
“How you ride the tiger is what we now face,” he said. “It’s going up, but when it goes down, a lot of these programs will be cut. Life is very giddy at the peaks.” No doubt, he is right. But he also ignored most of the reasons for this volatility even as he pointed out the Rainy Day fund will be filled at $13 billion, though he estimated that an impending economic storm would require resources closer to $60 billion. That’s a budget hole expected in the next recession, which could be $30 billion a year for two years. In such a scenario, the Rainy Day Fund would provide just 22 percent of that potential revenue shortage.
I see a much bigger danger. Taxes are so high in this state. To survive the next recession, companies will flee to states with much lower taxes. Because of the state’s punishing taxes, including then-Gov. Arnold Schwarzenegger’s $13 billion tax increase in 2009, our state’s economy crashed hard. Unemployment soared to double-digits and was exceeded only by the rates in Michigan and Nevada. It may happen again.
The period of rising revenues we’re now enjoying should be used to reduce our already committed liabilities and the overall tax burden.
Of course, having increased taxes last year – not just the gas tax, but the cap-and-trade tax Brown pushed through, estimated at $2.2 billion a year – Brown wasn’t about to suggest cutting taxes. It will be up to the voters to repeal the gas tax this November.
Given that the rising tax revenues won’t be returned to the taxpayers who worked so hard to earn them, the governor at least is proposing spending the money on some true needs. I have worked up a list of options, below, of 15 one-time spending recommendations that should be prioritized. But first let me recognize three of Brown’s proposals that have some overlap to my suggestions:
· $2 billion for infrastructure: “The proposal will target these funds to the universities, courts, state facilities and flood control. Investments are also proposed for high-priority capital expenditures.”
· $359 million for homelessness. His proposal notes more funding will begin to flow “from a bond and a fee on real estate transactions” passed last year – another tax that I opposed and don’t believe we need. This money would be a “bridge” until these funds are spent.
· $312 million for mental health “for enhanced early detection of mental health problems and the education of mental health professionals.” The budget proposal also would put the $2 billion “No Place Like Home” initiative funding on the ballot “to accelerate the delivery of housing projects to serve the mentally ill.”
My proposals include prefunding the $2 billion for No Place Like Home, which will be paid back with the bond proceeds.
I’d also like to help out cities and counties with their pensions by injecting several billion dollars directed to their unfunded liabilities in lieu of taxpayer rebates. In his press conference, Brown unfortunately answered, when that question was raised, “A lot of cities signed up for pensions they can’t afford. The state can’t step into the shoes of the cities and counties. They’re going to have to handle that.”
Again, he’s largely right. And he’s actually putting his legal resources and political chits behind the overturning of the so-called “California Rule,” which ratchets up pension costs with no ability for governments to correct costs at the front end, leading them to fiscal ruin at the back end.
Because of that, we’ve got cities and counties laying off police and fire simply because their pension costs are so high. And the cities and counties can’t raise their tax base more than 2 cents on the sales tax. Current leaders in our cities and counties weren’t the ones who spiked pensions decades ago, but the California Legislature made it really easy.
Sacramento is renowned for taking funds from cities and counties during recessions. Giving something back to them would be a noble thing to do.
The state also has a backlog of rape kits. Not only is that unfair to the victims, but after catching the Golden State Killer, how many more predators could we catch and prosecute?
We also need to harden power lines across the state. If this state wants to emphasize electric cars, we’re going to be sending a whole lot more electricity around, which means more wildfires unless the power lines are put underground.
Compared to his January proposal, the governor’s May Revise only tinkered with education funding. But we could use more funding for career technical education. A lot of kids don’t want to go to college, but could have successful careers in the trades or other vocations. They should be afforded the training opportunities just as much as those we send to our elite institutions.
Finally, this budget largely is a stopgap getting the governor beyond his tenure in office. He said he wanted to leave it in good shape for his successor. But so much more needs to be done, especially in improving the state’s harsh anti-business fiscal policies, shoring up pensions, fixing long-neglected infrastructure and reducing the housing and homelessness crises.
Below is a list of my 15 policy proposals for spending the $8 billion in excess revenues. It is largely in priority order. And if the state wins the litigation for the No Place Like Home bond dollars, or it is approved by the voters on the ballot in November, then that money could be cycled into any of the remaining priorities.
Priority Description Amount
1 No Place Like Home Prefunding of approved bonding $2,000,000,000
2 Provide funding to 482 cities to be appropriated to
their pension liabilities $482,000,000
3 Provide funding to 58 counties to be appropriated to
their pension liabilities $580,000,000
4 Provide matching funds for city pension liabilities $964,000,000
5 Provide matching funds for county pension liabilities $1,160,000,000
6 Fully fund bringing current the Rape Kit testing backlog $12,500,000
7 Fund Armed Prohibited Persons System (APPS) gun
holder backlog $12,500,000
8 Hardening of electric power lines around state $1,168,000,000
9 Oroville Dam state water project conveyance levee
10 Temperance Flat construction $250,000,000
11 Refund the Fire Tax $471,000,000
12 Continue Career Technical Education Funding at prior
13 Renters’ Tax Credit increase $300,000,000
14 Opioid treatment and prevention task force $100,000,000
15 Water Tax off-set $200,000,000
Federal Judge in Homeless Case Keeps Everyone Running
By Thy Vo
Just before dawn on a dewy February morning, U.S. District Court Judge David O. Carter led a march of county workers, elected officials, lawyers and reporters through the county’s largest homeless encampment, a village of tents and makeshift shelters for more than 500 people along the Santa Ana Riverbed.
Unsatisfied with secondhand information about living conditions at the riverbed, the 74-year-old Carter, dressed in jeans and a blue sweater bearing the federal court’s seal, went to see for himself, talking to dozens of homeless people, picking up trash and recruiting volunteers.
If judges are normally weary of media attention, Carter embraced the pack of reporters trailing him along the river trail, saying the exposure would raise public consciousness about homelessness and spur people to “do the good thing.”
“We get it up there, and get it to boil,” the federal court judge said.
It was not Carter’s first visit to a homeless encampment, and it wasn’t his last.
Over the last few months, Carter, a Marine combat veteran who was seriously wounded during the Vietnam War, has demanded public officials run to catch up with “decades of neglect” on homelessness.
Under his pressure, county officials worked around the clock for a week to dismantle the riverbed encampment and relocate more than 700 people to emergency shelters and motels. Before officials could take another breath, he demanded they act on a second major encampment at the Santa Ana Civic Center.
Throughout the process, Carter visited shelters and encampments unannounced in the early morning, to get an unsupervised glimpse of how people were faring. He once visited the riverbed at 4:30 a.m. to check on a homeless couple he had met the previous evening, saying he could not sleep and had come to see of the couple was okay.
Now he wants city officials in south Orange County to find locations for new emergency shelters, or possibly face suspension of the anti-camping and anti-loitering laws that cities have used to police the presence of homeless people in public spaces.
“I was literally begged by one of your (county) supervisors to take a breath and slow down,” Carter said at a court hearing in early April. “No. Absolutely not.”
Some public officials were unwilling to go on the record criticizing Carter, while others who have been at odds with the judge didn’t return calls for comment. But his actions in the homelessness case have garnered plenty of controversy, including private accusations of judicial activism and that he is legislating from the bench.
Earlier this month, State Senator John Moorlach (R-Costa Mesa) told television journalist Rick Reiff the judge is taking public officials to task on what they are doing to directly help the homeless.
“I just hope that he has an end game that works out well for everybody,” Moorlach said. “but it’s certainly rattling the cages of every single council member in Orange County.”
If the judge has surprised county politicians, for those who know Carter, he’s exactly in character.
“He gets down in the trenches. That’s the way he was in Vietnam, and in our platoon,” said former Marine Sgt. Al Anderson, who served as Carter’s platoon sergeant in Vietnam and remains a close friend.
The judge has been a fixture in the Orange County legal community from his time as a senior deputy district attorney in the late 1970s to his later appointments to the state Superior Court and federal bench.
Often described in articles and by those who know him as the hardest-working judge in Orange County, Carter is known to open his courtroom as early as 7 a.m. and work late into the evening, on weekends and holidays. Combined with his athleticism, younger attorneys often struggle to keep up with Carter.
A former college track athlete, as a deputy district attorney Carter would run 23 miles from the courthouse in Santa Ana to his home in Laguna Beach once a week, unless he was engaged in a major trial. He later ran the Boston Marathon in 2 hours and 36 minutes, and still exercises rigorously.
Carter declined to speak with Voice of OC for this story, citing a desire to stay out of the media until the end of litigation over homelessness.
Former state Assemblyman Tom Umberg, a Democrat living in Santa Ana who is currently a private attorney, said he has worked with Carter for years as part of the Public-Private Partnership for Justice Reform in Afghanistan, a project of the State Department to provide support to the Afghan legal community.
Umberg recalled an appointment he made with Carter, about 15 years ago, to go running in Newport Beach.
“He just pulled up, got out of the car, and started running. I had to catch up with him,” Umberg said. “That’s emblematic of how he does things. He said ‘hi’ once I caught up to him.”
Carter was born in Providence, Rhode Island and raised by his grandfather after his father abandoned him at age four. His grandfather, a court bailiff, had a fourth grade education and worked in coal mines before joining the Army at sixteen, Carter told Orange County Lawyer magazine last year. He fought in the Philippines and achieved the rank of captain.
Carter also would go on to the join the military, joining the Marines after graduating from the University of California, Los Angeles (UCLA) with a 4.0 grade point average.
He arrived in Central Vietnam as a 24-year-old lieutenant on Christmas Eve 1967, just before the start of the Tet Offensive, and immediately sought out Anderson, who was acting platoon commander. The two went back to Anderson’s bunker and talked for three and a half hours.
Anderson had already been in Vietnam for six months and their battalion, 1st Battalion, 9th Regiment, known as the “One Nine” had seen heavy combat. “You have to read people quick,” said Anderson.
“We were both sizing one another up. Can I trust this person?” Anderson said. “And the end result of that conversation was, ‘yeah, I can trust you with my life and I can trust you with the life of our platoon’.”
Most of Carter’s four months in Vietnam were spent in combat. The One Nine has the grim nickname “The Walking Dead” because of its reputation for high casualties and seeing heavy combat.
Carter’s experience lived up to that expectation. On April 16, 1968, outnumbered by North Vietnamese soldiers at Khe Sanh, 38 men from Carter’s platoon went up a hill, and only 8 came down. Carter was seriously wounded: a grenade blew off his lip, sniper fire shattered his arm in multiple places, and his face and teeth were injured.
He continued to fight for hours despite his injuries, but at the end of the battle, Carter was so seriously hurt he was mistaken for dead and put in a body bag.
Carter later received a Bronze Star and Purple Heart for his actions at Khe Sanh, and spent nine months recovering at a hospital in Guam. It was while recovering that he decided to become a lawyer, telling Orange County Lawyer magazine last year that he struggled with “survivor’s guilt.”
War changes many people, Anderson said, but many of the qualities he saw in Carter that first night in his bunker, he still sees today.
“He’s down to earth, very intelligent, but not presumptuous,” said Anderson. “I never want to hurt another person in my life. And he’s the same way.”
A Respected Jurist
After Vietnam, Carter went back to UCLA and received his law degree. He joined the Orange County District Attorney’s office in 1972, where he rose to Senior Deputy District Attorney in charge of homicide. Carter prosecuted the serial killer William Bonin, known as the “freeway killer,” who later became the first person executed in California by lethal injection.
In 1982, Carter was appointed a Superior Court judge by Gov. Jerry Brown, where he earned the nickname “King David.” He was known for pushing rehabilitative and educational alternatives to jail time for juvenile offenders, before it became a norm. He also created a tattoo removal program for gang members to encourage people to find jobs and transition back to society.
In 1986, while still a judge, Carter was recruited by the Democratic Party to run for the 38th Congressional District seat against first term Republican incumbent Robert Dornan.
If ambitious, highly motivated and driven, Carter was “raw,” said George Urch, Carter’s campaign manager at the time.
In addition to traditional campaign staples like direct mail, Carter’s strategy included “walking like crazy” across the district and standing on street corners and street medians during rush hour with a “Carter for Congress” sign, talking to voters.
“I kept trying to say, ‘that’s great, but most of those people aren’t registered voters and Democrats’,” Urch said.
If Carter had his way, his campaign would be run “with a Xerox copier and 18 pairs of sneakers,” Mike Houlihan, another campaign staffer, told the Los Angeles Times in 1986.
Carter ended up losing the primary to another Democrat and fellow former Marine, six-term state Assemblyman Richard Robinson, and returned to the state bench.
In 1998, President Bill Clinton nominated Carter to the federal bench, an appointment that was unanimously approved by the U.S. Senate in 1999.
As a federal court judge, Carter has tackled some of the biggest cases to come to the Central District Court.
He presided over the longest trial in the history of the Central District, which involved the prosecution of more than 40 alleged Mexican Mafia members. The next year, Carter became involved in the indictment of more than 40 members of the Aryan Brotherhood prison gang.
Carter presided over a massive $500 million intellectual property battle between MGA Entertainment and Mattel over the rights to Bratz dolls. And in 2009, he dismissed a lawsuit brought by Laguna Niguel attorney Orly Taitz, which challenged then-President Barack Obama’s election based on claims that Obama is not a natural born citizen.
“He had to control a court room and multiple attorneys in cases fraught with legal challenges and high emotions,” U.S. District Judge Jeffrey T. Miller said of the Aryan Brotherhood and Mexican Mafia cases. “He can do that. And his work ethic is legendary.”
At 74, many remark Carter appears to run as hard as he always has.
“He’s a Marine who has been temporarily reassigned as a judge,” said Umberg.
In addition to dealing with heavy caseloads in his own courtroom, Carter has spent significant time doing humanitarian work overseas. His wife, Mary Ellen Carter, who he met during his congressional campaign, runs a nonprofit supporting schools in Malawi out of their Laguna Beach home.
Kate Corrigan, a criminal defense attorney who frequently appears before Carter, alters her diet to prepare for trials in his courtroom, limiting her caffeine intake and consuming “slow burn” foods.
“If you’re going to practice in his courtroom, you’ve got to have stamina, know what you’re talking about, and you’ve got to be ready, because he will not tolerate laziness, not knowing your case, and not doing the best you can,” Corrigan said. “He causes everyone in the courtroom to really elevate their level of practice.”
Carter’s style has generated some controversy.
In the 1980s, Carter began duct-taping the mouths of unruly defendants in his courtroom for spitting at court staff and shouting profanities, preferring to silence defendants rather than disrupt the proceedings. The American Civil Liberties Union reported Carter to the Commission on Judicial Performance, although he said he would continue the practice.
During the recent litigation on homelessness, Carter met privately with elected officials and power brokers, without attorneys on the case present; threatened cities with a Department of Justice investigation into the practice of dumping homeless people city-to-city; and held long court hearings where mayors and city officials from across the county were invited (his court staff took attendance to take note of who did not show up).
Moorlach said on a local television program earlier this month that he has been assisting Carter with “strategies in Sacramento.”
“(Carter) approached me and said, ‘I cannot call you, but you can call me.’ So I did,” Moorlach told Reiff.
Although at times effusive of the county’s efforts to clean up the riverbed, Carter could also be short-tempered, at one point angrily reprimanding the county’s lead attorney.
Corrigan believes Carter’s critics just aren’t used to a judge who does things differently.
“I’ve been on the podium examining a witness at 1:35 a.m. Was that a long day? Yeah, but it enabled the court to get all the information,” Corrigan said. “So I think people are quick to criticize when people don’t do things the way they see other judges do it.”
She points to early morning probation conferences where Carter descends from the bench and talks face-to-face with her clients.
“He makes them feel part of the community and takes an interest in getting them back into the community. If they’re messing up, he’ll sanction them,” Corrigan said. “When you have someone who comes out of a gang, to have a judge take the time to ask them how they’re doing, how are things – it’s a different type of relationship that develops.”
Carter was the same way with the young men in his platoon, said Anderson.
“That’s a real precarious place you’re putting yourself into as a combat leader, because you’re getting down on a very personal level with men that, tomorrow, you’re going to send into harm’s way, and through not of your own, some of them are not going to come back,” said Anderson. “It’s an emotional risk that you willingly engage in. Not all combat leaders do that, and that is part of who Judge Carter is.”
Corrigan believes Carter’s personal approach has made a difference in the lives of many of her clients.
“He becomes their champion,” she said.
Contact Thy Vo at tvo or follow her on Twitter @thyanhvo.
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