Happy California Admission Day! It’s the Golden State’s 169th birthday as the 31st state to be admitted into the Union.
That’s not the only thing to celebrate today. On Friday, Gov. Newsom signed my bill, SB 496 — Protections Against Financial Abuse of Elder and Dependent Adults (see https://moorlach.cssrc.us/content/senate-bill-496-protections-against-financial-abuse-elder-and-dependent-adults).
I want to thank the Financial Planning Association of Orange County for recommending the legislation and my staff for seeing it through to completion.
The Banning-Beaumont Patch provides the contents of the Governor’s press release in the piece below.
25th Anniversary Look Back
On September 9th, 1994, the OC Register’s Chris Knap authored one of the most frustrating articles of the post-election cycle, claiming that all my warnings were for naught. His piece, “O.C.’s SKY DIDN’T FALL—Government: Critics of the tactics of Treasurer Robert L. Citron had predicted financial doom,” should explain my car’s personalized license plates, SKY FELL.
It was an amazing article, recounting all of the warnings published in various publications during the campaign and still concluding that everything was fine. It claimed interest rates had leveled off—very, very wrong. (And tell me again that reporters are supposed to be objective.)
I can recall receiving calls from clients that day. This article was top-of-the-fold for the Business Section. They called to ask questions like, “Are you as stupid as the Register claims you are?” It was not pleasant. In fact, it motivated me to write a letter to then-publisher David Threshie about how sadly off the mark his paper was.
I would bump into then-editorial page editor Ken Grubbs a few weeks later and, when I asked about my letter and the lack of a response, all he could say was they were “bemused.” What a profoundly appropriate response. Many years later, the Register’s holding company would find itself in Chapter 11 bankruptcy protection – twice. What a very strange twist of fate.
Here are some segments to give you a flavor of the fun summer I had 25 years ago. Talk about watching the band playing on the deck of the sinking Titanic.
Costa Mesa accountant John Moorlach, whose campaign against Citron fueled stories in the financial press, declared, “Regardless of who is elected on June 7, Orange County has a bleak future for its fiscal assets.”
Well, the campaign is over, interest rates are leveling out, and to tweak a line from Mark Twain, reports of Bob Citron’s death spiral appear to have been greatly exaggerated.
“All those dire predictions never came true,” Assistant Treasurer Matthew R. Raabe said. “It would appear that our investments were pretty well on target.”
In fact, county government’s budget managers say they relied on Citron’s arbitrage strategy to dig them out of a hole last year: The county issued $200 million in taxable notes – in effect borrowing at 3.95 percent interest – and Citron invested it in a series of higher-paying investments. Those secondary investments, known as reverse repurchases, returned 7 percent. After costs, the county earned $20 million.
“That’s what is helping us survive,” county budget manager Steve Franks said.
This year, Citron has been asked to invest $600 million the county has borrowed; arbitrage earnings are expected to be at least $40 million.
In total, according to figures provided by Franks and Auditor Steve Lewis, Citron’s investments will bring the county general fund $120 million this fiscal year, more than the county’s share of local property taxes.
“He has gone out and done a heck of a job as far as I’m concerned,” said Lewis, an independent elected official. “To (earn this interest) the county has taken some risks, but in my opinion the risks appear to be very well managed.”
Moorlach, who lost in the June election, was unrepentant in an interview this week, noting that leveraged private investment funds have continued to collapse, despite the leveling off of interest rates.
“I had predicted a pretty steep price to pay,” Moorlach said. “I think it’s too early to say that Citron has escaped that.”
During the campaign, Moorlach was accused by county officials of scaring jittery bond buyers, driving up the cost of Orange County’s borrowing.
Again, Moorlach defended his actions. He volunteered that he went to city officials in Costa Mesa after the June election and tried to convince them to pull out of the county pool. They refused.
“I was overly cautious (in the campaign). I was too conservative in my remarks. I had people tell me, ‘Make it (the investment pool) crash,’” Moorlach said. “I didn’t want to do that.”
“As far as rubbing Moorlach’s nose in what he said, I’m not interested in doing that,” said Citron, 69. “I’m not interested in creating another controversy.
“Sixty-one percent is not a landslide, but it’s certainly a strong election by the people of their faith in me. People just didn’t believe what (critics) were saying.”
My previous three LOOK BACKS can be seen at MOORLACH UPDATE — Homeowners Insurance Crisis — September 6, 2019, MOORLACH UPDATE — Hart, Handy and OPEBs — August 29, 2019, and MOORLACH UPDATE — Additional Pension Contributions — August 26, 2019.
17 New CA Laws Just Signed By Governor Newsom
Gov. Gavin Newsom signed more than a dozen bills into law this week. Read about each one here.
Governor Gavin Newsom this week signed more than a dozen bills into law, including one aimed at helping California homeowners who’ve faced unimaginable destruction, one aimed at helping youth find the resources they need when in a bad situation and another that’s supposed to help officials crack down on illegal gambling.
Senator Brian Dahle, R-Bieber, said he introduced Assembly Bill 178 with the goal of helping California fire victims trying to rebuild their homes. Starting in 2020, California law will require those who build in the state to install solar panels; Dahle said he wanted to help these fire victims by making them exempt from this requirement.
“Thousands of Californians who have tragically lost their home due to wildfires are now facing the sad reality that costs have risen due to mandates by the state. These mandates can add upwards of $15,000 to the cost of rebuilding a home,” said Dahle. “Losing a home in a catastrophic fire is traumatic enough and worrying about complying with this new mandate is added, unnecessary stress. This is a small exemption that will allow people to rebuild their home without this additional costly mandate which has nothing to do with structural safety.”
Gov. Newsom said he hopes the solar exemption “hastens” the rebuild process. The exemption is temporary, and ends in 2023.
“Many of our communities in California that have been devastated by catastrophic wildfires and floods, particularly the people of Paradise, are desperate to get their lives back on track and to rebuild their homes,” he said in his signing message.
Another new law, AB 1294, was introduced by Assemblymember Rudy Salas, D-Bakersfield, and is focused on gambling.
“This bill strengthens the ability of the California Department of Justice and other local law enforcement agencies to go after the bank accounts and assets of international gangs and organized criminals who are convicted of operating illegal gambling sites,” his office said in a news release.
Meanwhile, SB 316 is a less complex law. Introduced by Senator Susan Rubio, D-Baldwin Park, will require California schools that issued student identification cards to have printed on them the telephone number for the National Domestic Violence Hotline. Schools are already required to include the National Suicide Prevention Lifeline.
In addition to the above bills, Newsom took action on the following legislation (click on the link to read the full bill text):
· AB 309 by Assemblymember Brian Maienschein (D-San Diego) – Vehicles that appear to be used by law enforcement: ownership or operation by public historical society or museum.
· AB 419 by the Committee on Agriculture – Food and agriculture.
· AB 504 by Assemblymember Marc Berman (D-Palo Alto) – Voter registration: residency confirmation.
· AB 653 by Assemblymember Richard Bloom (D-Santa Monica) – State armories.
· AB 707 by Assemblymember Ash Kalra (D-San Jose) – Santa Clara Valley Water District: contracts.
· AB 809 by Assemblymember Miguel Santiago (D-Los Angeles) – Public postsecondary education: child development programs: priority enrollment: Title IX protection: pregnancy and parental status.
· AB 949 by Assemblymember Jose Medina (D-Riverside) – Unsafe used tires: installation.
· AB 1018 by Assemblymember Jim Frazier (D-Discovery Bay) – Real estate appraisers.
· AB 1294 by Assemblymember Rudy Salas (D-Bakersfield) – Criminal profiteering.
· AB 1515 by Assemblymember Laura Friedman (D-Glendale) – Planning and zoning: community plans: review under the California Environmental Quality Act.
· SB 316 by Senator Susan Rubio (D-Baldwin Park) – Pupil and student safety: identification cards: domestic violence hotline telephone number.
· SB 400 by Senator Thomas Umberg (D-Santa Ana) – Reduction of greenhouse gases emissions: mobility options.
· SB 496 by Senator John Moorlach (R-Costa Mesa) – Financial abuse of elder or dependent adults.
· SB 527 by Senator Anna Caballero (D-Salinas) – Local government: Williamson Act: cultivation of cannabis and hemp.
· SB 570 by Senator Susan Rubio (D-Baldwin Park) – Insurance: low-cost automobile insurance program.
· SB 743 by Senator Robert Hertzberg (D-Van Nuys) – School facilities: design-build projects.
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