MOORLACH UPDATE — The Week That Was — April 26, 2019

It was not a quiet week in Sacramento. Along with the regular two Floor Sessions, I had one hearing and six committee meetings to review and vote on proposed legislation. I also had the opportunity to present eleven bills. It was a massive juggling act.

In between all of the hustle and bustle, some two thousand brave and highly motivated constituents, mostly young parents, many with their children in tow, came to earnestly testify against SB 276. It is unfortunate how their concerns about their medically sensitive and fragile children or other unique situations were dismissed by the majority party on the committee.

I’ve heard some of the same people who voted for the bill state that Sacramento shouldn’t legislate the doctor-patient relationship, but that’s exactly what SB 276 does. Sending people’s medical situations for review by some super-bureaucracy seems to be over-the-top. Imagine your delicate medical issues going to a bureaucrat for review every time you needed some special consideration in consultation with your doctor. It can only make our healthcare system worse. If there are bad actors, the state has a capable medical board to deal with them and their licenses.

In the end, those thousands of constituents that came at some personal cost to plead their case may have been disappointed, but they also gained an education on the process and how aggravating it can be up in Sacramento.

Here’s a wrap up of my successes and set backs for this past week:

Monday, April 22 –

Senate Budget & Fiscal Review (I am a member)
* Informational Hearing on DMV Field Office Wait Times and Operational Improvements (making the Transportation Committee vote later in the week, on SB 511 all the more perplexing).

Senate Housing Committee (I am a member; it concluded around 7:45 p.m.):
* Successfully presented SB 754, receiving no votes in opposition, and now goes to Senate Judiciary Committee.

Tuesday, April 23 –

Senate Public Safety Committee (I am Vice Chair):
* SB 230 (Caballero) was the major bill heard. It passed 7-0.

Senate Natural Resources and Water Committee
* Successfully presented SB 584, passing 9-0, and now goes to Senate Appropriations Committee. Also see MOORLACH UPDATE — Senate Bills 511, 584, 598, 496 and 640 — April 15, 2019.

Senate Elections and Constitutional Amendments Committee
* Successfully presented SB 359, passing 5-0, and now goes to Senate Appropriations Committee.

Senate Governmental Organization Committee
* Successfully presented SB 598, passing 16-0, and now goes to Senate Appropriations Committee.

Senate Judiciary Committee
* SB 496 was put on the Consent Calendar and passed 9-0, and now goes to Senate Appropriations Committee.
* SB 435 was opposed by the Chair and was killed with a 2-6-1 vote. I did ask for reconsideration, which was granted.

Senate Transportation Committee
* I requested that SB 447 be a two-year bill and will work with the Committee Chair to see if the transfer of park land to the city of Orange can be accomplished without the use of legislation.
* SB 511, which passed earlier without opposition in Senate Elections and Constitutional Amendments Committee, was opposed by the Chair and failed to pass on a 4-5-3 vote.

Wednesday, April 24 –
Senate Energy, Utilities and Communications Committee (I am Vice Chair)

Senate Governance & Finance Committee (I am Vice Chair)
* Successfully presented SB 241 (which was formerly SB 473, but had to be amended to make house of origin deadlines), passing 7-0, and now goes to Senate Appropriations Committee.

Senate Environmental Quality Committee
* Successfully presented SB 535, passing 7-0, and now goes to Senate Appropriations Committee.

Senate Insurance Committee (I am a member)
* Major bill heard was SB 254, which passed 7-3-3, but gave me more heartburn the more I reviewed it and listened to the testimony.

Senate Health Committee (I presented at 10 p.m.)
* Unsuccessfully presented SB 689, with a vote of 2-5-2. I did ask for reconsideration, which was granted. Also see MOORLACH UPDATE — Presenting SB 689 Plus a Dozen More — April 17, 2019.

KRCR News Channel 7 covered SB 689 in the first piece below. The Capitol’s appetite for removing more local control continues. (The cities of Santa Ana and Orange were also formally in support.)

I must be doing something right in the Capitol, as I’ve been appointed to a new Senate Select Committee to address the Governor’s recent report on wildfires and climate change. The Vallejo Times-Herald and Solano County’s Daily Republic provide the announcement in the second piece below.

25th Anniversary Look Back

April 22nd was a big day in the media. The LA Times had a prophetic headline: “County Treasurer Says This Race Will Be His Last: Government: Robert L. Citron cites the emotional toll stemming from the controversy over his investment strategies.” It was written by Jeff Brazil and Mark Platte (see

I was very disturbed by the following inaccurate characterization in the piece:

Moorlach said he was not surprised by Citron’s decision not to seek office again because of the veteran treasurer’s age.

It caused me to write what was probably my first protest letter to reporters. “I was very specific with Mark that I did not want to make age an issue. Mark brought it up. I clearly stated that Mondale learned that lesson with Reagan” (see

The big story of the day was provided by an industry publication, The Bond Buyer, by Brad Altman, titled “California Official Defends His Strategy Of Managing Pooled Investment Fund” (see MOORLACH UPDATE — Start to Finish — June 30, 2017

If all of this fun was not enough for one day, James Grant of Grant’s Interest Rate Observer, one of the most highly regarded investment letters dealing with the fixed income market, weighed in with “Orange County tale.”   For more on James Grant and Joe Mysak, see MOORLACH UPDATE — Encyclopedia of Municipal Bonds.  The East Coast could figure out what was happening in Orange County!  James Grant even hinted at the possibility of “a sudden inversion of the yield curve!”  Here is why James Grant is so highly regarded:


It stands to reason that the only elected Democrat in Orange County, Calif., is the manager of the county’s highly leveraged, multibillion-dollar, fixed-income investment funds, and he is running for office against a Republican in the middle of a bear market.  The lucky man is Robert L. Citron, age 68.


Here is what Citron does:  He receives municipal operating funds, bond-sale proceeds and construction funds.  He invests them in short-dated federal agency notes.  He leverages them via reverse repurchase agreements.  At the end of the day, when the yield curve is right (as it mostly has been), he reports stupendous investment results.  In 1992, for instance, his Orange County Investment Pool had an average monthly balance of $4.7 billion and an average yield of 8.52%.  Los Angeles County, by comparison, had an $8 billion average monthly balance and an average yield of 3.88%.


All told, Citron has $7.5 billion under his control, which he has levered into an investment portfolio of $19.5 billion.  His principal broker is Merrill Lynch.  Recently, Citron has received, and met, margin calls. 


Almost exactly 10 years ago, observes our new colleague at Grant’s, Joe Mysak, Lion Capital Group and ESM Government Securities blew up.  Both dealt in repurchase agreements, both seduced municipal treasurers with fat yields and both committed fraud.


Fraud is not the issue with Citron.  Nor are catastrophic losses (barring, of course, the unforeseen, such as a run on the funds by his investors or a sudden inversion of the yield curve).  The real problem, according to a knowledgeable source of Mysak’s, “is there are tons and tons of long-term losses in municipal portfolios out there that won’t come to light until the books are audited next year.”


SB 689: Syringe exchange bill to be reconsidered at California State Capitol

by Dylan Brown

California Senate Bill 689 went before the Senate Health Committee at the California State Capitol Wednesday. According to California State Sen. John Moorlach (R), the bill would change the control of syringe exchange programs from state government to local government.

“Why should parks be raked each morning? Why should library janitors find themselves pricked by a carelessly tossed syringe, or a patron find a needle in a borrowed book,” said Sen. Moorlach.

The senator authored the bill and said that the bill will allow local governments a greater say in the location of clean needle and syringe exchange programs. Moorlach says the bill restricts the California Department of Public Health from authorizing or re-authorizing needle and syringe exchange programs unless a city or county has approved the request. “By working with the locals we could address the issues regarding the disposal of the needles,” said Moorlach.

The Humboldt Area Center for Harm Reduction’s Executive Dir. Brandie Wilson went on record Wednesday, speaking against the bill. “I’m clearly from Humboldt, and we are absolutely oppose this,” Wilson stated during public comment.

According to Moorlach, Orange County is one place that currently has no syringe exchange program. Local government officials spoke at the meeting stating that, if the control was on a local level, they could address the issues regarding the disposal of the needles. Another Orange County government employee said that the local level should have a say in where a needle exchange should or shouldn’t be.

While some at the Capitol spoke in support of the bill, many were against it.

According to the minutes, those who supported it were:

  • Anaheim Lighthouse
  • Association of California Cities – Orange County
  • California State Sherriff’s Association
  • City of Anaheim
  • Office of the District Attorney, Orange County
  • Orange County Board of Supervisors
  • Orange County Recovery Collaboration
  • Windstone Addiction Centers, Inc.
  • Fourteen Individuals

And those who were opposed to the bill were:

  • Access Support Network of San Luis Obispo and Monterey County
  • APLA Health
  • California Society of Addiction Medicine
  • Drug Policy Alliance
  • Harm Reduction Coalition
  • Health Officers Association of California
  • Humboldt Area Center for Harm Reduction
  • Mendocino County AIDS/Viral Hepatitis Network
  • North Coast Substance Abuse Council, Inc.
  • Orange County Needle Exchange Program
  • Three Individuals

For now, according to the last meeting, SB 689 will go up for reconsideration.

Bill Dodd to lead new committee on governor’s wildfire report

By Vallejo Times-Herald

California Senate President pro Tempore Toni G. Atkins, D-San Diego, has appointed Sen. Bill Dodd, D-Napa, to lead a newly created Senate Select Committee to assess policy options outlined in Gov. Gavin Newsom’s 2019 Report: “Wildfires and Climate Change — California’s Energy Future,” Dodd’s office announced.

“California needs a holistic, well-rounded approach to wildfires that will help us adapt to climate change, mitigate risks and protect ratepayers,” Dodd said. “I look forward to evaluating the options presented by Gov. Newsom as we work toward solutions to this complicated problem.”

Issued in early April, the report offers “a substantive and thorough discussion of the key risks to California’s economy, energy infrastructure, and public safety, posed by wildfires in the age of climate change,” according to the announcement. While the report does not endorse specific policy proposals, it puts the challenges facing California in clear perspective, and it will help inform the Legislature as it continues to address these critical issues, it says.

“The growing threat of wildfires across our state demands a bold and comprehensive response,” Senate Leader Atkins said. “This Select Committee will bring together the Chairs of each relevant policy committee in the Senate to help us identify the best path forward.”

The Select Committee will meet during May and early June to review, vet and accept public comment on the Governor’s Wildfire Report Recommendations and related issues.

Besides Dodd, the Select Committee members are: Andreas Borgeas (R-Fresno), Bob Hertzberg (D-Van Nuys), Jerry Hill (D-San Mateo), Ben Hueso (D-San Diego), Hannah-Beth Jackson (D-Santa Barbara), Brian Jones (R-Santee), Mike McGuire (D-Healdsburg), John Moorlach (R-Costa Mesa), Jim Nielsen (R-Red Bluff), Susan Rubio (D-Baldwin Park), Henry Stern (D-Canoga Park) and Bob Wieckowski (D-Fremont).


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