California teachers unions go all in on tax increases

“It all belongs to us” could be the mission statement of some public employee unions in California as they seek legislation to raise taxes in midst of the economic devastation wrought by the COVID-19 pandemic and response.

The Education Coalition, a group of nine statewide K-12 associations that represent teachers, administrators and other school employees, called on state lawmakers this week to “adopt additional revenue streams” to close what the groups say is a $20-billion budget shortfall for education.

The 2021-22 education budget signed by the governor includes $12.5 billion in deferred payments, as well as a projected reduction in the share of revenue that goes to schools under Proposition 98

The unions want the Legislature to eliminate what they call “tax expenditures,” defined as any deductions, tax credits, exemptions or exclusions that reduce taxes. Never mind that some of these provisions were enacted to incentivize desired actions, or that some were negotiated in order to pass legislation that otherwise would have been defeated. The unions’ point of view is that the high tax rates in state law are the “fair share,” and any provisions in law that reduce taxes are “unfair” to the schools.

The unions also want the high tax rates to be even higher. “The Education Coalition looks forward to working with the Legislature and the Administration in identifying and securing these revenues,” the California Teachers Association said in a statement.

Some of the tax increases on the wish list have already been introduced as legislation. Assembly Bill 1253 would raise the state’s highest-in-the-nation top income tax rate from 13.3 percent to 16.8 percent. Another bill would enact a wealth tax that would impose an annual tax of 0.4 percent of a state resident’s “worldwide net worth in excess of $30,000,000, or in excess of $15,000,000 in the case of a married taxpayer filing separately.” This may sound like a document from the Kremlin archives, but it’s Assembly Bill 2088 in the Legislature.

Because of California’s progressive income tax, 0.5 percent of taxpayers pay more than 40 percent of individual income taxes in the state. That sounds like more than a “fair share,” but for some union leaders, nothing less than “all of it” will ever be enough.

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California still unprepared for online learning

Gov. Gavin Newsom last week announced that the state will not allow public schools on its COVID-19 “watch list” to reopen on their usual back-to-school schedule. The list, as the health department explains, includes “counties where coronavirus trends are getting worse.” All Southern California counties have been on that list for at least two weeks, which means disruptions this fall.

The California Teachers Association sent a letter earlier this month to the governor and legislative leaders that generally opposes a timely reopening. The union complained that districts “don’t have the necessary resources or capacity to maintain even the most basic prevention measures” to allow for in-person schooling.

Likewise, State Superintendent of Public Instruction Tony Thurmond last week held a virtual press conference, where he echoed these concerns. “We know most school districts are going to open in distance learning,” he said. “That means we have to really move quickly to make a dent in the number of folks without a computing device or a hot spot.”

Yet a new report from the Sacramento Bee found that school officials aren’t nearly ready for online learning. It found 20 percent of the state’s student population “didn’t have the technology necessary to participate in distance learning.” Districts lack 700,000 computers and 300,000 hot spots – even though the recently approved budget earmarks $5.3 billion for local schools to meet these distance-learning needs, the Bee reported.

That’s a shocking development, given that California’s schools systems have had months to prepare for the new school year. Schools shut down in March and nearly five months later they are as ill prepared for the classroom studies as a student who didn’t study for that long-expected final exam.

The state’s schools have seen their budgets increase significantly over the last few years, but they remain painfully unable to adapt to these unusual circumstances. We can understand why state officials want to be careful about reopening schools, but the Catch-22 is unfair for students. Officials don’t want to reopen classrooms, but they haven’t adequately geared up for distance learning.

By contrast, many of California’s private and charter schools have been more adept than the traditional public schools at preparing for web-based alternatives in the face of the coronavirus situation. In fact, some charter schools report a wave of renewed interest, given that they have effectively combined online elements in their curriculum for years.

Last year, at unions’ urging, the governor signed laws that severely limit charter-school expansion, with one measure even imposing a two-year moratorium on new online charter schools. During the current crisis, one teachers’ union has listed some potential policies, including further charter restrictions, as a way to free up classroom space and financial resources for traditional schools.

Whatever the problem, school officials point to a lack of public resources. But that’s not a credible reason why these well-funded districts can’t even get the online educational basics right. California’s public-school system is a bureaucratic enterprise, hobbled by union work rules and layers of administration.

Such a bloated system simply is incapable of responding adeptly to the unusual challenges posed by a pandemic.  It might be news to state education officials, but the answer is not to throw more money at this problem, but to increase the number of choices for students.

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Dentistry bill limits consumers’ choices

Too often, “consumer protection” laws are little more than efforts by established industries to use the government to stifle the competition. One recent example is Assembly Bill 1998, which requires firms that provide direct-to-consumer orthodontics – so-called teledentistry firms – to meet a host of new regulatory requirements.

You won’t be surprised to learn that the bill, which last month passed the Assembly and is headed for a Senate vote, is backed by the state’s dental industry. For instance, the California Dental Association argues that the measure simply ensures that these competitive companies “have the same level of dentist oversight and patient safety as in person … models of dental care.”

That sounds reasonable until one looks at the details of the bill. As the Sacramento Bee summarizes it, the bill “would require teeth-straightening patients to get an X-ray if they don’t already have one in their medical records – regardless of whether a dentist thinks it’s clinically necessary.”

Current law requires teledentistry firms to review a patient’s most recent X-ray and other records before approving teeth-straightening or other treatments, as the Assembly analysis explains. AB1998’s supporters don’t think that goes far enough and want California to mandate brand new X-rays before dental treatment is approved.

The obvious goal is to force Californians to see a dentist, which will provide more work for dentists and dissuade consumers from using these alternative approaches. Some of the bill’s disclosure rules seem reasonable, but its protectionist results are unacceptable.

“(W)e cannot sacrifice patient health and safety in exchange for making billionaires out of tech bros,” said the sponsor, Assemblyman Evan Low, D-Silicon Valley. Teledentistry isn’t primarily about protecting “tech bros,” however, but expanding access to dentistry services to Californians who can’t afford the prices dentists charge.

Like other rapidly expanding telehealth services, teledentistry might not be as ideal as in-person visits, but these it provides lower-income residents with access to the kind of dental care that they’ve never had before. It would be a shame if lawmakers put the demands of the dental lobby above the needs of California residents.

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California’s crackdowns on the gig economy

California Labor Commissioner Lilia Garcia-Brower has filed her office’s first lawsuit against a company for allegedly violating labor laws by classifying its workers as independent contractors instead of employees.

Unlike independent contractors, employees in California are entitled to minimum wage, overtime, rest periods, reimbursement of business expenses, paid sick leave and various notifications, including specific information that must be printed correctly on pay stubs.

But companies in the gig economy have thrived by creating apps that allow willing buyers of services to find and pay willing providers of those services. That’s the business model of Uber, Lyft and the company that was just charged with violating state labor laws under Assembly Bill 5, the 2019 law that made it generally illegal for companies to hire independent contractors.

The labor commissioner chose a Bellflower company called MobileWash to be the first target of an AB5 enforcement lawsuit. MobileWash uses an app to offer car wash and detailing services. Customers order and pay for the services, including a tip, and workers use their own cars and supplies to go to the customer’s vehicle and provide the services that were ordered.

This arrangement works well for the company, the customers and the workers, or none of them would be participating in it. That’s not good enough for the state of California. An analysis by the labor commissioner’s office calculated that a MobileWash employee working 10 hours a day, six days a week, is entitled to $1,521 in weekly wages, penalties and damages.

On what planet are these bureaucrats living?

MobileWash and companies like it are never going to operate like a factory, with employees clocking in and out during their breaks in a 10-hour workday. The concept offered by these companies is services on demand. If they’re required to keep a full-time workforce standing by across a wide region such as Southern California, there will be no MobileWash, and there will be no companies like it.

Who benefits from that?

Not customers, who will lose access to a convenient and affordable service. Not workers, who will lose the opportunity to pick up extra cash by working when and where they choose. Not investors, who will decline to provide the start-up funds for innovative companies that are certain to be hounded into bankruptcy by bureaucrats enforcing California’s senseless law against freelance work.

In May, California Attorney General Xavier Becerra and a group of city attorneys in the state filed a lawsuit against Uber and Lyft, charging the companies with wrongfully classifying drivers as independent contractors in violation of AB5, which according to the state requires the companies to make its drivers employees. The lawsuit is seeking penalties and back wages for drivers that could total hundreds of millions of dollars.

Uber and Lyft, joined by restaurant-delivery service DoorDash, are backing an initiative on the Nov. 3 ballot that would exempt them from AB5. State lawmakers have already granted exemptions from the law to companies and workers in some industries, while leaving others out in the cold.

AB5, authored by Assemblywoman Lorena Gonzalez, D-San Diego, is based on an outdated caricature of the workplace in which employers are rich robber barons and workers can only avoid exploitation by joining labor unions.

Union membership is declining. In California, many businesses are struggling. Many workers are struggling. Nothing is improved by the state filing lawsuits to stop people from earning an honest living.

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Jim Beall, Scott Wiener go off the rails defending bullet train boondoggle

This week, state Sens. Jim Beall, D-San Jose, and Scott Wiener, D-San Francisco, took up the quixotic cause of defending the boondoggle that is the high-speed rail project.

In an op-ed for CalMatters, the state senators insisted that Californians just show some patience and stop calling the boondoggle a boondoggle.

“This project is moving along,” they note, and “is not only creating jobs but also connecting the major economic regions of our state.”

Like the Golden Gate Bridge, they write, “high-speed rail will hold a similar place in California’s economy and vitality.”

This fanciful characterization of the high-speed rail project only makes sense if one is completely blind to the basic facts of the high-speed rail project.

First, just the facts.

Initially pitched as a project linking the state that could be built at as low as $33 billion. By 2016, it was $64 billion. Now it’s $80 billion, but with estimates of as much as $98 billion.

Over the years, the project has been the subject of considerable delays and scathing reports from the nonpartisan state auditor.

In 2010, the auditor noted that the High-Speed Rail Authority “risks delays or an incomplete system because of inadequate planning, weak oversight, and lax contract management.”

Two years later, the auditor credited high speed rail officials for having addressed “some of our prior concerns,” but noted that “its funding situation has become increasingly risky and the authority’s weak oversight persists.”

Fast forward to 2018 and the auditor said of the California High-Speed Rail Authority: “Its flawed decision making and poor contract management have contributed to billions in cost overruns and delays in the system’s construction.”

The project remains subject to ongoing uncertainty about funding and if the past is any indication, the idea that the project will now become a shining example of government competence and efficiency is a foolish one.

Miraculously, Beall and Wiener wonder why it is that “somehow this infrastructure project… continues to remain controversial.”

Being blind to reality is evidently what passes for leadership in Sacramento.

Unfortunately, rather than heed his past skepticism of the project, Gov. Gavin Newsom has dropped the ball on every opportunity to “get real” about   the project.

Now, Californians are supposed to watch as the state pours billions into linking Bakersfield and Merced, while politicians desperate to keep the boondoggle engage in unpersuasive and out-of-touch PR.

Even in good economic times, the high-speed rail project was a boondoggle that needed to be put to an end years ago.

To keep the bullet train going doesn’t serve the best interests of Californians.

There are better uses of finite resources. These are times for making serious decisions, not wasting money on elaborate pipe dreams. Any elected official who can’t see a boondoggle when they see one shouldn’t be trusted with public office.

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Sanctuary policies rightly left to the states

During the most recent years of the national immigration debate, when California has led the way with a swaggering braggadocio in the fight with the federal government over protecting undocumented residents, this editorial board has agreed with state laws such as SB54 limiting local law enforcement’s cooperation with federal immigration agents with respect to enforcing federal immigration law.

State and local law enforcement officials should focus on state and local laws. Federal immigration officials should focus on federal immigration laws.

We have also viewed with skepticism some local jurisdictions’ on the left and the right grandstanding either as “sanctuary cities” or adamantly against offering sanctuary for immigrants. It always seemed more about political posturing than anything else. Cities should concentrate on providing local services.

We do agree that state and local police are not immigration agents and shouldn’t jail people solely for their immigration status.

So we agreed with the United States Court of Appeals for the Ninth Circuit 2019 ruling that the feds aren’t allowed to requisition California law enforcement to advance their immigration to-do list.

This week — this landmark week for jurisprudence — the United States Supreme Court, by declining to hear the Trump administration’s objection to the ruling, agreed.

The executive branch point is a simple one: it believes the federal government has an expectation that a state government will cooperate with it.

In the Ninth Circuit ruling, Judge Milan D. Smith Jr. succinctly writes why this is interesting, but wrong: “when questions of federalism are involved, we must distinguish between expectations and requirements. In this context, the federal government was free to expect as much as it wanted, but it could not require California’s cooperation.”

The administration seems obsessed with its desires “to arrest aliens — often criminal aliens.” But California law-enforcement agencies are perfectly capable of handling community safety and other police work without federal agents’ involvement. And many California police chiefs say the more their officers are seen to be involved with ICE and other federal authorities, the less comfortable community members are reporting crime and cooperating with local cops.

That’s reason enough to welcome the Supreme Court decision not to hear the case.

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The Legislature should pause and rework ACA25

Perhaps all Californians can agree, after more than three months of living under a state of emergency that has devastated the state’s economy and treasury, that state constitutional provisions regarding emergency powers need a few tweaks.

Unfortunately, a proposed state constitutional amendment now under consideration in the Legislature would worsen what we have already seen is the risk of unaccountable and secretive government overreach in an emergency.

Assembly Constitutional Amendment 25, authored by Speaker Pro Tem Kevin Mullin, D-San Mateo, would allow remote voting by lawmakers during a state of emergency and proxy voting if the state of emergency prevents the member from “safely attending the proceeding in person.”

Further, the measure would change the rules for a quorum. If one-fifth or more of the members of the Senate or Assembly could not attend because they are deceased, disabled or “missing,” bills could be passed by a simple majority of those members able to attend.

Because the terms “emergency” and “missing” are not narrowly defined, there is a concerning vulnerability to abusive practices. “State of emergency” is said to mean “the existence of conditions of disaster or of extreme peril to the safety of persons and property within the State, or parts thereof.” That covers a lot of ground, from the fear of a possible global pandemic to a local flood. “Missing” could mean anything from lost in a natural disaster to visiting another state to get a haircut.

ACA 25 was prompted by legislative pique that Gov. Gavin Newsom was issuing dozens of executive orders during the coronavirus state of emergency and signing contracts that committed the state to hundreds of millions of dollars in spending, with no transparency or legislative oversight. These are valid concerns.

It certainly makes sense to allow lawmakers to vote remotely during an emergency when travel to the state Capitol in Sacramento may be difficult or impossible. Proxy voting is more problematic. The constituents of an elected representative have the right to expect that their interests will be actively represented by the person they elected, not by a person designated to cast votes on behalf of their representatives.

A form of unofficial proxy voting has caused problems before. Tim Anaya of Pacific Research Institute pointed out that in the Assembly, lawmakers sometimes reach over and press the voting button for a seatmate who is away from the desk, a practice that draws little attention unless the vote is cast in opposition to that member’s position on a bill. In 2008, the San Francisco Chronicle reported that then-Assemblyman Kevin de Leon cast such a contrary “ghost” vote for Assemblywoman Mary Hayashi.

It’s not difficult to imagine that with a long list of bills to consider, the chaos of remote and proxy voting would decrease transparency to the point that the public was unable to determine what legislation was being passed and whether their representative supported or opposed it.

Any constitutional amendment revising emergency powers should include protections against abuse, including a precise definition of when an emergency has ended.

ACA 25 has already passed the Assembly and is under consideration in the Senate, where it would need a two-thirds vote to be placed on the ballot for voter approval. Lawmakers should slow down and consider more fully how best to revise emergency powers to maintain the operations of government during a disaster.

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Lawmakers in denial over budget realities

Most California lawmakers are facing a situation that isn’t particularly unusual over the years, but is a novel occurrence for them: a budget soaked in red ink, a troubled economy and a bevy of tough choices about which programs to fund and which ones to cut. Instead of rolling up their sleeves to make tough choices, many are digging in their heels.

Until the coronavirus-related economic shutdowns, the state had no problem finding the cash to pay for its proposed $222-billion budget. The state had a large surplus and a flush rainy-day fund. Debates centered on how to spend the extra dollars. That’s an enviable position for a legislator, but the surplus has morphed into a predicted $54 billion deficit.

Gov. Gavin Newsom now is tussling with his fellow Democrats, who have supermajorities in the Legislature, over proposed cuts as they march toward the June 15 budget deadline. The governor has proposed $14 billion in cuts to schools and social programs by July 1 unless the federal government provides extra money, which has drawn the ire of the legislative leadership.

As budget negotiations continue, Democratic lawmakers would give the feds until October to provide the state with coronavirus-related support – and then would limit cuts to half of what the governor is proposing. The legislators propose burning through reserve funds, shifting funds with an accounting gimmick and relying on optimistic assumptions about congressional stimulus spending.

Newsom is no fiscal conservative, but his plan at least faces reality. For instance, the governor has planned cutbacks in public-employee pay through negotiations with state worker unions and, perhaps, monthly furloughs. But the Legislature isn’t banking on any salary cuts and even is resisting limits on planned pay raises, thanks to their closeness with the state’s public-employee unions.

The legislative plan is a flight of fancy and something of a temper tantrum. We agree with lawmakers who have complained that the governor had cut them out of their constitutional role in approving his COVID-19 spending plans, but that objection has become louder now that they have to cut other programs to pay for the governor’s unaccountable spending.

“You’re dealing with a generation of elected leaders in Sacramento that probably have not been in a position where they have to make cuts to programs they care about,” former Assembly Speaker Fabian Nunez, D-Los Angeles, told CalMatters. Indeed. Legislators now are limited to 12 years in both houses, so the 2008 to 2012 crisis is more a history lesson than a teachable moment. Lawmakers mostly have spent their careers devising new spending plans.

Legislators apparently weren’t paying enough attention during former Gov. Jerry Brown’s myriad budget unveilings, where he warned that a recession always is around the corner. He cautioned against passing permanent new programs and argued for building up reserves. The latter approach is particularly helpful now, but many lawmakers still are arguing about spending extra dollars to, say, expand Medi-Cal programs for unauthorized immigrants.

We’ve long bemoaned the approach of California officials who want to spend as much money as conceivably possible on new programs, without worrying much about reforming old ones. It’s been difficult for lawmakers to grapple with tough choices during boom times, but the latest bust will give them a new opportunity to reorder their priorities.

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With budget woes, public schools need a focus on outcomes

In light of an expected $54 billion budget deficit following the COVID-19 economic shutdown, Gov. Gavin Newsom announced budget cuts including a reduction of $7 billion to local school districts.

The cutbacks may be deeper than those made during the last decade’s recession, which has led California school officials to sound the alarms.

“We believe our school districts can’t reopen safely if they have to implement these kinds of cuts,” California Superintendent of Public Instruction Tony Thurmond said last week. Despite an influx of federal dollars from two stimulus packages, Thurmond wants more federal assistance.

Newsom and four other Western governors have asked the feds to provide an eye-popping $1 trillion. Such a massive bailout seems unlikely given the needs of other states, the exploding deficit and the political reality of a Republican administration that’s not particularly sympathetic to the plight of big-spending blue states.

Some obvious facts are lost in these discussions. Despite record-setting funding levels and slowing student populations, “local school districts are hitting the panic button,” wrote the Los Angeles Times’ John Myers in May 2019 — long before anyone had heard of coronavirus. Schools had been facing skyrocketing special-education, pension and health-care costs, leading to “compelling evidence that the status quo is unsustainable.”

Before the crisis, Newsom had announced a budget that was generous to public schools. But his proposed 2.29 percent cost-of-living adjustment upset school officials, who had sought a 3 percent hike. “Districts are complaining that the difference … is compounding an already financially fraught year, in which there’s not enough money to cover basic operating expenses,” as EdSource reported in March.

School officials now are complaining about layoffs, which likely are necessary given dropping revenues. They had, however, been warning about that possibility before the latest reductions. As usual, debates about California’s public schools center on funding formulas, rather than educational outcomes.

The goal of public schools should be to effectively teach schoolchildren — not maintain growing administrative fiefdoms and world-class retirement benefits. Unions should have a voice in the process, but their employee-protection priorities shouldn’t top the list. Yet once again, these bureaucratic priorities are dominating the school debate.

In recent years, the Legislature and governor have imposed restrictions on charter schools, which have had a remarkable record at boosting student achievement in a cost-effective way. The California auditor found last year that the state “does not explicitly require districts to spend their supplemental and concentration funds on the intended student groups or to track how they spend those funds.” That issue was never resolved.

California’s student performance has not noticeably improved over the past decade, even as public-school budgets have soared by 60 percent.

Nevertheless, Thurmond and others would have us believe the main obstacle to safely operating the public schools is a lack of additional money. At some point, we’d hope the state’s educational brain trusts might realize that they need to focus on other subjects than accounting.

Here’s the reality: A bailout won’t fix the fundamental budget problems faced by the state’s public schools, which long predate the COVID-19 budget shortfalls. It’s time for state officials to focus on serious reforms that boost education outcomes and not just incoming dollars. The solution will come from creativity here at home, not from federal bailouts.

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Newsom, Legislature should prepare to downsize state government further

In light of the deep and long-term projected impacts of the coronavirus pandemic and government-ordered lockdowns, Gov. Gavin Newsom’s May Revise budget proposal predictably calls for significant spending cuts while also holding out hopes for a federal bailout.

As much as it goes against their instincts, Newsom and the Democratic supermajority in the Legislature must prepare to downsize state government further and maybe even work with Republicans in the Legislature to figure out how to do that.

The full extent of the budget deficit facing the state is hard to completely determine at this point.

Newsom’s Department of Finance has suggested a deficit of as high as $54.3 billion when considering $41.2 billion in General Fund revenue declines relative to projections made in January, along with higher expenditures necessitated by COVID-19.

The nonpartisan Legislative Analyst’s Office, meanwhile, has forecast scenarios where the budget deficit is either $18 billion to as much as $31 billion in the next year, and continued deficits through 2023-24.

Either way, the downturn will require both a scaling back of proposals to expand existing programs and cuts to what’s left.

Newsom’s ambitious agenda will have to be put on hold and he will instead have to work on steering the state toward on a more sustainable trajectory.

“We will find efficiency. You deserve a leaner government that’s more nimble, more effective and targets the needs of the most vulnerable,” Newsom said on Thursday.

It has to be said that California’s state budget even before all of this was on an unsustainable trajectory.

As we wrote in January in response to the governor’s budget proposal at the time: “The budget spends more, taxes more and avoids addressing systemic reforms or fixing newly created problems. The proposal definitely could be worse, but Californians would be wrong to think it will make anything better.”

Newsom to his credit has outlined some spending cuts, including pay decreases for state employees, as well as calling off some new spending proposals made in the January budget.

But just as former Gov. Jerry Brown saw the need to put pension reform on the table in response to the economic fallout of the Great Recession, Newsom needs to be prepared to lead discussions on that front.

Additionally, a plainly frivolous project like the high-speed rail boondoggle need to be seen for what it has been all along: a terrible joke of an idea long past the point of salvaging. It has to go.

What cannot be allowed to happen is for Sacramento lawmakers to drag their feet. Much of this situation, while not wholly of their own making, was foreseeable. Preparing for a recession and keeping expenditures in line with revenues, and not just hoping that the good economic times would continue indefinitely, is what California has needed all along.

Unfortunately, the eagerness of state lawmakers over the years to indulge in additional spending sprees  necessitated difficult cuts once the hard times hit. Leaner government, focused on the essentials and core competencies of state government, is what was needed before and it is certainly needed now.

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