MOORLACH UPDATE — Budget Conference Season — May 30, 2019

The May Budget Revision was released recently. The five Senate Budget and Fiscal Review Committee Subcommittees have concluded their work. And now it is time for the Assembly and Senate to compare notes and adjust their differences.

Between January and May, Subcommittee members reviewed the Governor’s proposed January budget and listened to department representatives, Department of Finance officials, Legislative Analyst Office staff specialists, advocates and the public. Then–for some of the issues–we voted in agreement or disagreement, with recommended alternatives, on the various components of the budget in the Subcommittee’s area of focus.

Then five Senators and five Assemblymembers were selected to serve on the Budget Conference Committee. Subcommittee 1 and 5 Chairs were selected to assist the Chair of the Budget and Fiscal Review Committee, making up the 3 Democrats. For the Republicans, the Vice Chair of the Budget and Fiscal Review Committee was selected and I am the second Republican Senator, as the de facto Vice Chair of Sub 5, Corrections, Public Safety and the Judiciary.

What does this mean? It means that I’ll be figuratively locked in a room for the next ten days hammering out the differences with four other Senators, five Assemblymembers, Department of Finance and Legislative Analyst Office representatives and members of the public and advocates. The ten of us will determine the final budget that will be voted on by both chambers for the Governor’s signature.

This is the only bill that the Legislature is required to pass and present to the Governor every year. And, it must be delivered by June 15.

It is an honor to be selected. But, I go into this exercise with the full knowledge that this will be a budget determined by the Democrats. The Republicans on the Budget Conference Committee will be out-voted at almost every turn. But, we will have a voice to state the reasons for our concerns and opposition to those budget items that we object to. The Orange County Breeze provides our press release in the first piece below.

For a perspective on last year’s exercise, see MOORLACH UPDATE — Gov. Brown’s Final Budget — June 15, 2018.

The California Globe provides a good close to tomorrow’s deadline in the second piece below. May 31st is the last day for bills to be passed out of the house of origin. The Senate concluded this exercise this morning. Then, all but the five Senators serving on the Budget Conference Committee will supposedly go back to their Districts today.

I did not come to Sacramento to increase the number of income tax credits, and my voting record shows that. Why? Because this state must address its unfunded pension liabilities, and now, before dishing out more tax expenditures.

When SB 468 came before me in Government and Finance Committee, I voted for it with hopes that a thorough review of all tax credits, both individual and corporate, would be analyzed. But, that’s not the case. And, SB 468 strays into areas that would bring California even further out of conformity with Federal income tax law.

The author of SB 468 was hoping that I would be a co-author, but I told her that after the amendments, it did not go in the direction I preferred. Consequently, I abstained from voting on the bill on the Senate Floor.

25th Anniversary Look Back

The LA Times provided four Letters to the Times, under the heading “Citron’s Policy Defended, Questioned,” in their Sunday, May 29, 1994 issue.

The first letter was from then-Assemblyman Tom Umberg (D – Garden Grove), who had received a number of generous political contributions from his fellow Democrat, Mr. Citron. The letter concludes:

I am confident that the voters of Orange County will overwhelmingly re-elect Bob Citron to his seventh successful term. The investment of our hard-earned taxpayer dollars is too important to trust to “partisan political hacks” like Jeffrey Thomas and John Moorlach.

Twenty-five years later I have the privilege of working with Senator Tom Umberg (D – Garden Grove) in the California Senate.

Bonnie O’Neil of Newport Beach, who is still active in her community, provided these comments as the conclusion of her submittal:

Apparently people in the financial world agree with candidate John Moorlach regarding potential problems associated with the present county treasurer making high-risk investments at a questionable time. Isn’t that the problem which caused the downfall of so many savings and loans? This could be very dangerous and I appreciate Mr. Moorlach calling it to our attention. No matter who wins the election, let’s hope this situation will be addressed in a responsible manner.

Susan Guilford of Orange provided the brilliance of the Citron campaign’s major deflective theme:

Your editorial supporting Robert L. Citron for reelection (May 24) missed an important point: that Orange County Republican Chairman Thomas Fuentes has confirmed that Citron is being targeted for defeat, even though the job is supposed to be nonpartisan, because he is a “liberal, partisan Democrat.” Even Republicans should be offended by that kind of reasoning.

Mike Shepard, Mr. Citron’s Chrysler dealer and a Republican, concluded his commentary with:

I won’t engage here in a debate of the arbitrage techniques that Mr. Moorlach has attacked, except to say the rating services have not felt that the portfolio represents unusual risk. However, it is established fact that Mr. Citron has made well above average returns in good markets and bad markets, with high interest rates, and low interest rates. It is inexcusable to create the kind of misinformation Mr. Moorlach and Mr. Chriss Street are creating and then casually dismiss it as a normal campaign tactics.

For the last Look Back, go to MOORLACH UPDATE — Undergrounding In Paradise — May 28, 2019.

Moorlach thanks pro Tem for Conference Committee appointment

http://www.oc-breeze.com/2019/05/29/139360_moorlach-thanks-pro-tem-for-conference-committee-appointment/

The Senate President pro Tempore Toni G. Atkins (D-San Diego) appointed Senator John Moorlach (R-Costa Mesa) to the 2019-20 Budget Conference Committee.

The full makeup of the bipartisan committee is:

Senator Holly J. Mitchell (D-Los Angeles), Chair
Senator John M. W. Moorlach (R-Costa Mesa)
Senator Jim Nielsen (R-Tehama)
Senator Richard D. Roth (D-Riverside)
Senator Nancy Skinner (D-Berkeley)

“Thank you to the pro Tem for trusting this committee to reconcile the Senate and Assembly budgets in a manner that will advance the goals of fiscal responsibility and protect taxpayers,” said Senator Moorlach in response to his appointment.

There are generally differences in proposed spending levels in the budget legislation passed by the Senate and the Assembly. A bipartisan Conference Committee of members from both the Senate and the Assembly will resolve the differences and present the budget to the legislature to be voted on before sending to the governor. This is the third year in a row Moorlach has been appointed to Budget Conference Committee.

This article was released by the Office of Senator John Moorlach.

Bill to Repeal California Tax Credits = Backdoor Tax Increase

$65.2 billion per year in California income tax credits, deductions, exemptions, and exclusions targeted

By Katy Grimes,

https://californiaglobe.com/fr/bill-to-repeal-california-tax-credits-is-a-backdoor-tax-increase/

The $65.2 billion per year in various California income tax credits, deductions, exemptions, and exclusions, is now being targeted under the guise of “transparency and accountability.”

Senate Bill 468 by Sen. Hannah Beth Jackson (D-Santa Barbara), would not only seek to repeal these tax credits, it would create a new bureaucracy performing functions currently performed by a number of existing agencies.

Jackson says, “California has nearly 80 tax expenditures. These are provisions in the tax code – including tax credits, tax deductions, sales tax exemptions and income exclusions – that reduce the amount of tax collected in exchange for an intended public policy objective.”

The goal is more tax “revenue” into state coffers, even if that means repealing existing tax credits.

The California Teachers Association, in support of SB 468, said, “California has spent over $66.6 billion on the top ten most costly tax credits and exemptions in the past decade. Every dollar of a tax credit to the General Fund that does not generate its cost in new revenue takes approximately 40 cents out of California’s classrooms, representing the share of revenues that would have gone to Proposition 98 from the General Fund.”

The stated intent of the bill is to promote government accountability, however the bill would create another, costly bureaucracy, through the creation of the California Tax Expenditure Review Board, in an effort to repeal tax credits. As the California Taxpayers Association noted in their opposition, “Both the LAO and the State Auditor can initiate studies under their own authority or at the specific direction of the Legislature.” These agencies often independently analyze and make recommendations to the Legislature – without legislation directing them to do so.

Sen. John Moorlach (R-Costa Mesa) said he was having “buyer’s remorse” on the bill. Moorlach said going after 1031 exchanges to defer paying capital gains taxes on an investment property when it is sold, and ESOP employee benefit plans, should be reconsidered. “I hope another effort comes back instead of this,” Moorlach said.

“More recently, the State Auditor conducted an assessment of several of the state’s primary tax expenditures and recommended improvements to some, while noting that others appear to be achieving their objects,” Cal Tax said. “To provide a more accurate and comprehensive assessment of state revenue impacts, we suggest that any tax expenditure study incorporate ‘multipliers’ and their effects on the economy. Additionally, we believe it is critical to examine California’s policies in the context of competitiveness with other areas of the country.”

SB 468 passed the Senate on party lines.

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