MOORLACH UPDATE — Happy Independence Day Week — July 1, 2018

In a state where public employee unions have dominated at the expense of taxpayers, it is a breath of fresh air to see the U.S. Supreme Court rule appropriately in the Janus decision.

Better yet, for those members who have been forced to pay union dues used to underwrite the campaigns of candidates that they would not have voted for, the Janus decision provides freedom. (Over the past few years, on average, less than 6 percent of California public employee union political contributions have gone to Republicans.)

Mandatory and compulsory withholdings from a paycheck is a form of bondage. Government employees, you now have the keys to freedom. Happy Independence Day week!

The San Jose Mercury News provides a side-by-side, pro and con, debate on the ruling and my perspective is the first piece below (also see MOORLACH UPDATE – Janus Decision – june 28, 2018).

The Sacramento FOX News 40 provides a perspective on the numerous bills that the public employee union leaders have already submitted to willing legislators to counteract Janus, as if these supposed antidotes will be constitutional. I was not amused, and clearly stated the realities of life in California’s Capital. It’s the second piece below.

The Orange County Breeze provides my press release on the good news in the third piece below.

But, wait, that’s not all! Gov. Brown signed the largest budget in state history on Wednesday. That provides for another opportunity to share my concerns, which the San Gabriel Valley Tribune, Los Angeles Daily News, and OC Register have published in the fourth piece below. Since you are subject to mandatory income tax withholdings, it will be a long time of bondage for you, and it could get worse.

Welcome to the 2018-2019 Budget year, which begins today.

Let’s hope next year’s budget deals with the fiscal cancer of overly generous defined benefit pension plans foisted on the taxpayers by the public employee union leaders that municipalities are now trying to address.

Wishing you a wonderful Independence Day week, and remember what President Ronald Reagan once said:

“Republicans believe every day is the Fourth of July, but the democrats believe every day is April 15.”

Opinion: Janus court decision is a big win for Californians

We can now tackle California’s severe problems, getting the state balance sheet back into the black

By State Sen. John Moorlach

The U.S. Supreme Court’s Janus v. American Federation of State, County, and Municipal Employees decision struck a strong blow for freedom, not just for public employees, but all Americans. This is especially true for Californians.

The 5-4 majority decision, written by Justice Samuel Alito, reversed the high court’s 1977 decision in Abood v. Detroit Board of Education. Abood had upheld the power of unions to mandate union dues, provided those dues were used only for collective bargaining, not direct political advocacy.

“Abood was wrongly decided and is now overruled,” thundered the Janus decision. “It was also decided when public-sector unionism was a relatively new phenomenon. Today, however, public-sector union membership has surpassed that in the private sector, and that ascendency corresponds with a parallel increase in public spending.”

That’s as concise a summary as you’ll get of how public-employee unions manipulated the system to significantly expand state spending on their pay and pensions. So much so that the state’s balance sheet – when including pensions and retiree health care for state workers – is now $250 billion in the red.

Even worse, more than half our 482 cities also are out of fiscal balance with three of our cities recently seeking bankruptcy protection. Read your local papers and you’ll find that almost every local government and school district in the state is cutting services to pay for the pension costs of decades past. No wonder the Golden State’s taxes are higher than anywhere in the country.

Union defenders of the mandatory dues for collective bargaining maintained that doing so was non-political, being only concerned with pay and working conditions of all employees. Justice Alito ably rebutted that, writing, “To the contrary, union speech covers critically important and public matters such as the State’s budget crisis, taxes, and collective bargaining issues related to education, child welfare, healthcare, and minority rights.”

He must have had California in mind on that one. Giving public employees pay and benefits packages so high they sharply reduce services for constituents, while risking bankruptcy and virtually guaranteeing higher taxes, obviously impacts everyone in the state.

To cite one example, the recently enacted California budget allocates $9 billion just for pension payments. Janus should make it easier to find solutions to the pension and retiree medical crises. Just as important, the decision should increase the chances we can enact sensible reforms to the state’s education system, such as performance pay for the best teachers to improve test scores for students – often minorities – in the lowest-performing schools.

Janus does not mean the end of public-employee unions. Indeed, it will encourage them to actually work for the benefit of their members, and all Californians, instead of going off on political tangents. As Janus noted, “Experience shows that unions can be effective even without agency fees.”

How are these unions reacting? Not well. A slew of legislation and budget trailer bills have already surfaced in an attempt to anticipate this historic sea change. Union leaders will not go quietly, as their slush fund that has garnered them political dominance is in jeopardy.

Janus also upholds the grand American principle of free speech – which means you don’t rob others to pay for your own free speech. The high court found, “The First Amendment is violated when money is taken from nonconsenting employees for a public-sector union; employees must choose to support the union before anything is taken from them.”

I look forward to a post-Janus future where we can finally tackle the severe problems that face California, beginning with getting the state balance sheet back into the black.

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


State Leaders Already Making Moves to Protect Union Members After Supreme Court Ruling


The Supreme Court dealt a major blow to all public employee unions Wednesday but it was a blow California union leaders had been preparing for.

“There’s nothing the state can do to change this decision itself. But we think there are things to do for the state to protect its workforce,” said Steve Smith with the California Labor Federation.

In its Janus case decision, the Supreme Court said public unions can no longer collect dues from employees who aren’t union members. Smith acknowledges that for more than a year labor leaders in California have been working to soften the blow if the courts came down with that decision.

At least six bills became law, or are close to it, all of which offer benefits for union members or make joining a union easier for employees.

Republican State Senator John Moorlach, R-Irvine, has an issue with labor leaders efforts. He says it’s an attempt to get around the Supreme Court’s decision.

“The unions are in such dominance here in Sacramento that there are two parties — the Republican Party and the union party. The union party is trying to get in front of Janus,” Moorlach said.

Moorlach says each of the labor-backed bills should be reviewed in light of the court’s decision.

“I just simply disagree. I think, again, this is good public policy,” Smith said.

But Smith says big money interests will soon be in California campaigning against union membership. He claims what all these new laws offer is protection for workers.

“Out of state groups funded by billionaires are going to try to seek to exploit this decision to further erode California’s middle class and the legislature absolutely needs to protect workers against that,” Smith said.

Senator Moorlach comments on the United States Supreme Court’s Janus decision

I commend the United States Supreme Court for freeing public employees from paying mandatory union dues with the Janus decision published this morning. This decision will have a profound impact on the lives of many California employees who want the choice of where to spend their hard earned money without being forced to subsidize public employee unions that do not represent them or their beliefs.

The court had it right when it referenced previous court decisions the five Justices felt were incorrect “when public-sector unionism was a relatively new phenomenon.” Writing for the majority, Justice Samuel Alito declared:

“For these reasons, States and public-sector unions may no longer extract agency fees from nonconsenting employees.… Neither an agency fee nor any other payment to the union may be deducted from a nonmember’s wages, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay. By agreeing to pay, nonmembers are waiving their First Amendment rights, and such a waiver cannot be presumed.”

As I have pointed out over the years, the unions are so powerful they effectively fund the campaigns of their potential bosses in the Legislature and in local representative governments. The Janus decision will loosen the vice-grip unions now have on state and local finances and operations.

Now unions will have to earn the trust of members by delivering actual benefits, much like a service club, instead of being preoccupied with political positions that often have nothing to do with proper representation.

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California’s Titanic budget heading for fiscal icebergs

By John M. W. Moorlach

Before the Titanic hit the iceberg in 1912, the crew and passengers were partying and enjoying the amenities of the greatest ocean liner the world had ever seen.

In 2018, the California Legislature passed a budget Titanic for fiscal year 2018-19, which begins on July 1. Gov. Jerry Brown signed it into law on June 27. Most legislators celebrated because it fills up the Rainy Day Fund and spends $139 billion for the general fund, up 9 percent from the previous year. Not one, but four fiscal icebergs lie ahead.

The first iceberg is the process itself, which has devolved to just three people deciding what’s in the budget: the governor, the Senate leader and the Assembly speaker. That means the concerns of 40 million Californians, as expressed through their 120 elected legislators, were almost entirely ignored.

The Senate-Assembly Conference Committee on the budget, on which I sat for the second straight year, became irrelevant. It is supposed to hammer out differences between the two chambers on some 100 budget proposals, but ended up not being a decision-making body, as established by the California Constitution and the legislative Joint Rules. This deal was foreordained and the Legislature was complicit in an abdication of its duty, acting only as a rubber stamp in the very end.

The Legislature ought to do an evaluation: Does it change the Constitution?

The second iceberg is the balance sheet of the state. It is still ugly. We have the largest unrestricted net deficit ($169 billion) and the largest unfunded pension liabilities in the nation.

And as of June 30, 2018, new Government Accounting Standards Board rules will require California to include an estimated $91.5 billion in unfunded retiree medical liabilities. The Golden State’s balance sheet deficit will be more than a quarter-trillion dollars!

The University of California’s unrestricted net deficit was $11 billion in 2016. The next year, 2017, it was $19 billion upside down. When we add the retiree medical for the UC system to the balance sheet for June 30, 2018, it will be more than $38 billion in the red!

And this additional ice mass is going to be the responsibility of the Legislature and taxpayers, because students don’t want to pay higher tuition.

The third iceberg is just dealing with the budget itself. This budget sets aside funds, including filling up the Rainy Day Fund. This is a good and righteous thing. It will help to reduce the deficit, but it doesn’t attack the debt.

In a year when one enjoys a bumper crop, one must set aside cash, but also pay down credit card balances. Sacramento is spending all the revenues, and it’s assuming this revenue level will be the case moving forward. It’s a common error, folks.

The new budget’s 9 percent spending increase over last year’s budget itself is but a fraction of a whopping 59 percent increase in just seven years. How many Californians are taking home paychecks almost two-thirds higher than in 2011?

This extravagant spending sets us up, again, for a massive hit when we’re struck by the next recession, something Gov. Brown himself keeps warning us about. And the Californians of the future will probably say, “What was the Class of 2018 thinking, when the icebergs were approaching, and they were partying?”

Sacramento has got to get ahead of this mess, but it isn’t.

The fourth iceberg is: What will happen tomorrow, and the next year and the following year? This state’s boom shows signs of leveling off. California is growing at the national average, no longer faster. It’s now following current trends. And actually we’re probably going to be growing slower than the national average. Silicon Valley is doing great, but the rest of the state hasn’t done nearly as well.

For these reasons, and many more, I did not vote for Gov. Brown’s farewell budget. When the next financial crisis strikes, the Good Ship Sacramento will hit not one, but four icebergs. Put your life vests on.

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

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MOORLACH UPDATE — Bay Area Bait Fishing — June 21, 2018

I do my best to respond to reporter inquiries, usually immediately. But, when I’m in Committee meetings nonstop, it does get difficult, as I do not leave them until they conclude, with rare exceptions.

My Chief of Staff spent time explaining our calculations showing that only 20 percent of every gas tax dollar collected actually goes towards fixing roads.

Without any data or links to indicate that our research was missing critical information, the reporter of the San Jose Mercury News piece below simply implies that it is “disputed.” Well, if it is not 20 percent, what is it? Is it 15 percent? 25 percent? Aren’t journalists supposed to do a little heavy lifting, as using a disparaging adjective is a tad lazy, no? I can’t even think of an article where someone “disputed” our metrics.

The joys of teaching government how to manage taxpayer resources. When I was younger, banks offered Christmas Savings Clubs. The discipline of setting funds aside on a regular basis seems to be a lost art. But, wouldn’t it be nice if California would set funds aside in advance to repair its roads?

Why does the Capital wake up on December 1st, sees that Christmas is only a few weeks away, and realizes that it has no funds? Then Sacramento looks at the taxpayers as the source of additional funding, thanks to its misprioritizing, shaming the citizens by imposing more new taxes, acting as if the financial mismanagement was the fault of the state’s residents.

At least with the gas tax recall on the November ballot, the voters will have the chance to give a thumbs up or thumbs down. This was something that Gov. Brown promised originally, so he should not have his nose too tweaked when disgruntled citizens sign petitions for a ballot measure.

And when enough signatures were gathered to put a recall of a state senator on the ballot, the Democrats provided so much gamesmanship to delay the vote that when it finally occurred, gasoline was selling at $4 per gallon! Oops.

The Golden State’s Democrats have so badly botched providing quality roads and road maintenance. No wonder Domino’s Pizza has stepped into the vacuum (see

So, why shouldn’t Caltrans start hundreds of projects and threaten to stop them if the gas tax is repealed? Sounds like a baited hook to me.

While we’re at it, why do we have to spend so much money in the Bay Area? Just look at the projects that are proposed. BART improvements and no car lane expansion? With “gas” tax proceeds? Wasn’t $6 billion for their Bay Bridge enough?

Other than that, enjoy the piece, as it does provide important details, even though it seems that the reporter may have bitten the hook.

Gas tax repeal: Billions in Bay Area transportation projects at risk

By ebaldassari |

Bay Area News Group

From Oakland to San Jose, pavement crews are already at work repairing roads and tackling long-deferred maintenance of city streets. Caltrans contractors earlier this month started grinding and repaving a 104-mile swath of Interstate 880 in the East Bay, a freeway one commuter called “the crappiest in all of California.”

All that work is partially funded from the state’s new gas taxes and registration fees, which will generate more than $3.1 billionfor Bay Area highway repairs and public transit upgrades over the next several years, along with nearly $496 million cities and counties are slated to receive this year to repair local streets.

But now, with the release of a Los Angeles Times and USC poll last month showing more than half of California voters would repeal those taxes and fees, it’s looking more likely that many of the newly funded projects are at risk of being delayed or eliminated.

One state senator, Josh Newman, D-Fullerton, has already felt the wrath of constituents who voted this month to boot him out of office over his support for the measure, called Senate Bill 1 (SB1), electing Republican Ling Ling Chang in his place.

The same coalition that led the charge against Newman submitted 963,905 signatures in April to put the SB1 repeal on the November ballot and amend the state constitution to ensure any future gas or diesel taxes, along with certain transportation fee increases, must first come before voters. The measure is expected to be certified for the ballot next week.

If it’s successful, roughly half of the recently-approved highway improvements and public transit projects in Californiacould lose funding in a battle that’s shaping up as major statewide campaign issue. Cities and counties would also see their newly-approved funding for road repairs slashed by half. Republican gubernatorial candidate John Cox has already sparred with Democrats who support the measure.

Among the Bay Area projects at risk are $730 million to help extend BART to San Jose, $318.6 million for BART to buy new train cars and carry more passengers by running longer trains, $233 million for toll lanes on Highway 101, $164 million to help electrify Caltrain, $150 million for more AC Transit buses, and $67.5 million in pedestrian and bicycle improvements. Just which projects will continue and which will be delayed depends in part on how far along they are if and when the new taxes and fees are repealed, said Melissa Figueroa, a spokeswoman for the California State Transportation Agency, or CalSTA.

“Projects that are already well into construction would most likely be funded through completion – Caltrans would not leave projects under way half done, for safety reasons,” she said. “However, future projects would be delayed or deleted.”

Senate Bill 1, which was enacted last November, added 12 cents to the price of a gallon of gasoline and 18 cents to a gallon of diesel fuel. It also raised registration fees, starting last January, by $25 for vehicles valued at under $5,000, $50 for vehicles between $5,000 and $25,000 and up to $175 more for the highest-end luxury cars. Starting in 2020, the state will also add $100 to the cost of registering electric vehicles. Together, the new taxes and fees are expected to generate $5.2 billion annually, money that would disappear if supporters of the repeal effort have their way.

Carl DeMaio, a San Diego talk show host and former city councilmember who launched the repeal effort, says waste and inefficiency are to blame for the rough shape of California’s roads.

He cited a disputed statistic generated by Republican state Senator John Moorlach that, prior to SB1, only 20 percent of the existing gas tax and other transportation revenues, such as registration fees, went into state road repair and new construction.

“We could fix all of our roads if we simply allocated 100 percent of gas tax revenues to roads, but the politicians will never do that because this has never been about fixing roads, but rather getting more of your money,” DeMaio said.

It’s true that not all of the money generated by the gas tax prior to SB1 went into state roads. But, that doesn’t mean the money didn’t support transportation throughout the state. Moorlach only counted roads owned by the state, such as highways, in his tally, omitting streets owned by cities or counties, which make up the majority of California’s roadways, public transit assistance, bike paths and pedestrian amenities, ports and waterways, the California Highway Patrol, DMV and airports — all of which also receive funding from the existing gas taxes and registration fees.

According to the proposed state budget, which estimates $16 billion in transportation revenue from all diesel and gas taxes, along with registration and license fees, about 57 percent of the funds will be dedicated to highway maintenance, road repairs and public transit.

Of the remainder, roughly 9.5 percent is dedicated to paying off debt related to transportation construction projects, just over 1 percent supports reducing the environmental impacts of vehicle emissions and public transit expansions, and 29 percent funds the DMV, CHP and other state agencies involved in the administration or regulation of the state’s transportation network.

Just over 3 percent is transferred to the general fund, to the Department of Agriculture and to the Department of Parks and Recreation to return revenues for gas consumed in vehicles that are used off-road, such as tractors, ATVs or jet skis.

Moorlach wasn’t available for an interview, but in a statement, he slammed Caltrans for its inefficiency: “There’s no question that Caltrans is bloated and mismanaged and is not held accountable. And a mismanaged Caltrans is doing its best to prove its critics right.”

Oakland resident Katie Sleeth shrugged off the criticism. That’s no reason to stall needed bridge, road, highway and transit improvements, she said.

“All governments are inefficient,” Sleeth said. “That’s just the system we have.”

But other residents shook their heads. Lynn Hall, of Oakland, is skeptical the extra money will actually go to roads — whether it’s highways or city and county streets.

“The roads are going to be bad anyway,” Hall said. “I don’t trust them to do a good job with that money.”

Showing the money is going to road repairs and transit projects will be a major strategy in the campaign to keep the new taxes and fees in place, said Michael Quigley, executive director for the California Alliance for Jobs, a coalition of construction unions and the companies that employ them. The lobbying group is trying to stop the repeal effort, along with the Silicon Valley Leadership Group, Bay Area Council and chambers of commerce in major cities throughout the state, unions, local governments and others.

“The needs of California’s transportation system are great,” Quigley said. “Repealing the gas tax is only going to take away projects from communities and cost jobs statewide, resulting in more unsafe roads for all Californians.”

He’ll have his work cut out for him if recent poll results hold steady. The LA Times/USC poll released last month showed 51 percent of registered voters throughout the state supported the repeal, compared to 38 percent who favor of keeping the taxes and fees in place. Support for the new gas tax and registration fees was heavily skewed in the Bay Area, where 72 percent of voters supported it.

But, that approval drops in rural and inland areas of the state, leading Jill Darling, the poll’s survey director, to believe the repeal effort has a good chance of succeeding.

“It’s definitely not popular,” Darling said of SB1. “Even among Democrats and groups that would in general support this kind of work, it’s pretty muted.”

That’s bad news for cities like Oakland and San Jose, which have road repair backlogs of $443 million and $453.4 million, respectively.

Over the years, lack of funding has led to deferred maintenance, which makes the roads much more costly to repair, sometimes quadrupling the price to completely redo a street when preventative maintenance could have extended its life for years more, said Jim Ortbal, San Jose’s director of transportation. The last time the gas tax was increased was in 1994. And, for years, the city’s been stuck in a vicious cycle of under-funding maintenance and then overpaying for repairs, a cycle Ortbal is hoping SB1 can reverse.

“It’s essential,” he said. “It will stave off a crisis in terms of our ability to maintain the condition of our city streets.”

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