MOORLACH UPDATE — Attaboy — January 22, 2018

Just like anyone else, it’s nice to receive an attaboy once in a while. Last month the Apartment Association of Orange County awarded me with their 2017 Legislator of the Year Award. Allow me to extend my gratitude to its members for this kind recognition.

Last week the Rural County Representatives of California (RCRC) made me a recipient of one of their two 2017 Rural Leadership Awards (see MOORLACH UPDATE — Haven for Hope — January 19, 2018). Thank you, RCRC!

Yesterday, Jon Coupal, President of the Howard Jarvis Taxpayers Association provides an attaboy for my reaction to the Governor’s proposed 2018-19 Budget (see MOORLACH UPDATE — Budget and Legacy Priorities — January 11, 2018). It’s provided below in The Press Enterprise. It also made it to the OC Register and the Daily News. Thank you, Jon Coupal!

Not a bad week. But wait, there’s more. A week ago last Monday, I presented my bill, SB 656, to the Senate Public Employment and Retirement Committee. One of my two witnesses in support was Judge Lance Ito. It passed 5-0. Last Tuesday, the Senate Appropriations Committee put SB 656 in suspense status. But, on Thursday, it voted to move it onto the Senate Floor and it also picked upthe Appropriations Committee Chair, Sen. Ricardo Lara, as a co-author. That’s a major attaboy.

However, last Tuesday the Chair of the Senate Judiciary Committee refused to hear a reconsideration of my bill, SB 722. It addressed cheaters in mobilehome parks that are subject to rent control. Unfortunately, the Chair prefers rent control over mobilehome park owners that are forced to give lower rents to those who occupy their space as a second home. Instead of doing the task of finding housing, some Democrats prefer subsidizing those who can afford multiple homes. So, it wasn’t a perfect week.

BONUS: I have a District fund raising event this Friday, January 26th, at 5:30 p.m. I would love for you to attend and to invite as many of your friends that are concerned about the direction of this state to participate.

Former Costa Mesa Mayor Steve Mensinger and current Costa Mesa Councilman Jim Righeimer are the hosts. We’re enjoying a great response and you will be glad that you attended.

For a copy of the invitation and an easy way to RSVP, please go to https://www.efundraisingconnections.com/c/Moorlach2020/EveningReceptionJan2018.

OPINION

The two most insightful

responses to the governor’s

budget

State Sen. John Moorlach, R-Costa Mesa, listens as lawmakers

debate a bill Thursday, June 2, 2016, in Sacramento, Calif.

By JON COUPAL

https://www.pe.com/2018/01/20/the-two-most-insightful-responses-to-the-governors-budget/

Last week, Gov. Brown released his proposed 2018-19 state budget. But few citizens even pay attention to public finance issues except in the most general sense. For example, we hear from media either that the budget is balanced or that we’re running a huge deficit and the world will soon end.

If people tune out news about the budget, you can’t blame them. The whole process is a bit of a choreographed Kabuki dance where every Sacramento player has a role. First, the governor proposes a budget in January, then there is the infamous “May Revision,” and that leads up — hopefully — to the passage of the final budget by the constitutional deadline in June.

Part of the January dance when the initial plan is released is the reaction from constitutional officers, legislators and interest groups that customarily supply some sort of quote to media outlets. It’s a dog and pony show, but it does help in staking out turf between now and the June 30 deadline.

Not surprisingly, the comments from Democratic legislators and constitutional officers regarding the proposed budget were positive given that the general fund budget has grown to $132 billion — a staggering 44 percent since Gov. Brown was elected in 2010. Still, most of the voices from the left called for even more spending. For example, State Treasurer John Chiang stated “I would continue to urge him and lawmakers to continue to invest more heavily in three bedrock areas that are critical to the long term prosperity of this state: higher education, affordable housing and early childhood education.”

Republicans, on the other hand, want more accountability and would prefer that some of this year’s surplus be returned to taxpayers. Fiscal watchdogs, such as Howard Jarvis Taxpayers Association, expressed concern with the explosive growth in Medi-Cal spending as well as the billions in unfunded pension liabilities.

Two of the best responses to the governor’s proposed budget stand out for very different reasons. The first is from Sen. John Moorlach, R-Costa Mesa, the California Legislature’s only CPA, who has been laser-focused on the staggering amount of public debt in California even when we have balanced budgets. His reaction was a distillation of the true state of California’s fiscal condition: “Gov. Brown admits that ‘the last 5 budgets have significantly increased spending,’ and this budget proposal is no different. Coming in at just under $300 billion dollars of total spending, debt and poverty remain at all-time highs. Even worse, our balance sheet is massively short and unfunded liabilities are in the hundreds of billions of dollars. Our underfunded pension systems will get minimum payments of $6.2 billion for CalPERS and $3.1 billion for CalSTRS. These costs are directly related to policies Jerry Brown embraced 40 years ago during his first time as governor. While he’s sensitive to a possible economic slowdown and should be lauded for increasing our rainy day funds, he has been a spendthrift in Sacramento.”

The second best reaction to the governor’s proposed budget is from Sen. Andy Vidak, R-Hanford, who simply acknowledged that the proposed budget is just that — proposed. We won’t know the true state of fiscal affairs until the debate over the final budget in June concludes. However, the way he stated this fact garners extra points for style: “Semper in excretia sumus solim profundum variat.” This Latin phrase translates as, “We’re always in the manure; only the depth varies.”

For California’s beleaguered taxpayers, Sens. Moorlach and Vidak bring clarity and truth to California’s fiscal dysfunction.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

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MOORLACH UPDATE — 2018-2019 Budget Recommendations — January 4, 2018

The 2018 Session started yesterday afternoon with a bang. Sen. Andy Vidak (R – Hanford) introduced Senate Resolution 69, a resolution to permanently expel Sen. Tony Mendoza (D – Artesia) from the California State Senate. This caused the Democratic Caucus to immediately meet in a closed door caucus, for several hours, while the Republican Senators simply spent the afternoon and early evening waiting for them to conclude. A little after 6 p.m., the Senate reconvened and Sen. Mendoza gave an “I’m taking a one month leave of absence” speech. This is something he should have done when the President Pro Tem offered him this solution at the end of last year, during the recess. And then yesterday’s Floor Session closed with a quick thud. No comments allowed from anyone in the Chambers. The fun has begun.

I return next week for a boatload of work. I have four two-year bills to address before committees, SB 656, SB 681, SB 688 and SB 722 (see the 2017 legislative package on my Senate website). I will also have Public Employment and Retirement Committee, Judiciary Committee, and Governance and Finance Committee meetings. Plus there will be two joint hearings, where the Senate and Assembly combine, addressing sexual harassment and the Ghost Ship fire. And, if that was not enough, the Governor will be announcing the 2018-19 Budget on January 10th.

In anticipation of one of next week’s upcoming events, I decided to submit a snarky but extremely serious op-ed on the proposed budget to the San Francisco Chronicle. It is the piece below.

The year of our Lord 2018 is here and it’s game on, as we try to message to the Governor and the Legislature that California needs to turn its ship of state around. We issued an ICYMI yesterday that proves the necessity of minding the fiscal store here in Sacramento (also see my Senate website at http://district37.cssrc.us/).

Happy New Year!

More money than expected for new budget

Will Gov. Brown propose to spend more or reduce debt?

By John Moorlach

http://www.sfchronicle.com/opinion/openforum/article/Will-governor-propose-to-spend-or-save-12472049.php#photo-14786355

While you’re struggling to make ends meet, the California Legislative Analyst’s Office reported that this year the state’s coffers will overflow with an additional, unexpected $7.5 billion of your tax dollars. Will the governor propose to spend it or save it?

On Jan. 10, Gov. Jerry Brown is scheduled to release his budget proposal for fiscal 2018-19, which begins July 1. It will be his 16th and last budget proposal and likely will include a small surplus, more funding for the Rainy Day Fund and money for his pet boondoggle, the high-speed rail project.

Meanwhile, the stock market is up some 20 percent for the year since our new president was elected. And the value of your home has been rising at a rapid clip. You’re doing great, so you’re able to spend more for gas and pay a little more in taxes. You’re a giver.

But, what about those with no savings? No stock portfolio? No home? Those who cannot afford to live close to their job? You know, those in the middle class the Democrats always talk about protecting? Those who oppose the $5.5 billion-a-year gas tax whom the governor referred to as “freeloaders”?

Guess what? The Democrats have bamboozled this significant segment of our state’s people, because the new budget, like last year’s, likely will not include adequate reforms to reduce the $8 billion to fund pension liabilities.

In 2012, Proposition 30 was approved by voters as a “temporary” fix to get us past the Great Recession, and was to expire in 2018. But, at the behest of the public employee unions and other special interests, California’s voters approved Proposition 55 in November 2016. It extended this reliance on the highest income and sales tax rates in the nation another 12 years!

Then earlier this year, the Democratic supermajority in the Legislature increased your gas tax, effective Nov. 1, 2017, starting at 12 cents more a gallon. It goes on indefinitely, with adjustments for inflation. All this tax revenue, yet the Golden State’s fiscal condition is awful.

There is some good news, however: The state’s ranking on fiscal condition no longer is the worst — it has risen to 43rd, according to a 2017 Mercatus Center Study. (New Jersey is the worst.)

We know the Democrats aren’t going to decrease tax rates and these taxes will be collected. So, what to do? As a serious corrective, here are some proposals Brown should announce in his new budget to smartly use that $7.5 billion in unexpected revenues.

Pay off bonds. The Department of Finance can proffer a list of lenders who should be paid off in advance. A state cannot rack up a $169 billion deficit without borrowing money. Sacramento could use a strategy whereby it puts in escrow enough cash to service the debt, thus saving the interest payments. The controller could then call the debt paid, as the funds in escrow will pay off the bonds as they are regularly scheduled.

Make another prepayment on public employee pension debt to both the California Public Employees’ Retirement System (CalPERS) and California State Teachers Retirement System (Cal STRS), as he did last year. This will reduce required payments in future years. This debt comes at a 7 percent cost, so paying it down is a no-brainer.

Get more aggressive in paying down the state retiree medical liabilities — exceeding $76.7 billion as of June 30, 2016. (A revised estimate is expected later this month.)

Pay cash. Get really radical and start making infrastructure investments without borrowing. The bond measures on the June and November 2018 ballots would be unnecessary if California made improvements the way many of us do on homes or business buildings.

Jan. 10 will let you know if Brown is trying to balance his budget with some serious balance-sheet debt reductions. Otherwise, his legacy will be presiding over a financial bottom-dweller state.

State Sen. John Moorlach, R-Costa Mesa, represents the 37th District in the California Senate.

This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District. If you no longer wish to subscribe, just let me know by responding with a request to do so.

Also follow me on Facebook & Twitter @SenatorMoorlach.