Tag Archive for: California

Cry the Beloved California

Back in the waning days of the apartheid era, South African Zulu Chief Mangosuthu Buthelezi made an observation that echoes across the centuries. “We cannot have freedom if we don’t have bread.”

Such a predicament does not exactly repeat itself in California today, but there are echoes aplenty. Californians are oppressed, in different ways, for different reasons, than the blacks of South Africa during the apartheid years. But instead of demanding the equivalent of bread, in the form of affordable and reliable water, energy, and housing, Californians are divided into two warring tribes, with one side demanding pedagogy and policies oriented to critical race theory, and the other side rising up to stop them.

Meanwhile, in California today, water is rationed, energy is expensive and unreliable, and the prices of homes and rentals consume the incomes of all but the most fortunate.

It might be forgivable to obsess over issues of race and gender if California’s people of color, women, and gays were subject to anything remotely akin to the brutal regime of the Afrikaner. But California is the most tolerant state in the most tolerant nation in the most tolerant era in the history of the world. The hardships that members of California’s so-called protected status groups endure are indeed the result of systemic oppression. But this oppression is not the product of discrimination. It is caused by a ruling oligarchy and its retainers making the calculated decision that there is power and profit in denying economic opportunities to ordinary Californians.

There is utility in convincing Californians they are victims of phony oppression based on race and gender. It prevents Californians from uniting to fight their true enemies. An entire industry has been propped up in the service of this lie. The function of this industry is to identify a group, any group, so long as it isn’t white, straight, and male, and either demonstrate that this group does not achieve desirable things at a rate proportional to their percentage of the general population, or that they suffer undesirable things at a rate greater than their percentage of the general population.

This concept, disproportionate outcome, devoid of any normalizing nuances, is the tactical bludgeon used to demand a host of dysfunctional and epic shifts in policy. Defund the police. Empty the prisons. “Mainstream” students who should be expelled. Abandon advanced placement courses in the public schools. Construct prohibitively expensive low-income housing in the most expensive parts of town. Force people to sign diversity pledges and submit to sensitivity training. Rewrite history to accentuate the negative.

As these pointless excesses are carried out, they occupy center stage in the minds of activist proponents and activist opponents alike. Meanwhile, projects that might restore a reliable supply of electricity and water are denied with barely a squeak of protest. Reforms that might lower housing construction costs are shelved without comment.

None of this is happening by accident. Where there is scarcity, there is profit. Where there is rationing, there is power.

There was a time when there was nothing Californians couldn’t do. They built the best freeways, the best water infrastructure, and the best universities in the world. They exported energy and food, and led the world in aerospace engineering. But those men and women have come and gone.

Their descendants are a different breed. A new consensus exists among California’s elites, and it goes something like this: If we ration water, energy, and housing, prices go up but our costs stay the same. Since we are the ones who either privately own these productive assets, or wield public regulatory control over them, engineered scarcity will make us more money and we will wield even more political power. At the same time, our friends in Big Tech can embed surveillance devices in every water or energy consuming appliance, and into every modern home. Not only will this “help” people ration their consumption, but over time this will result in additional hundreds of billions in profits, with the added benefit of data collection and political monitoring.

What could possibly go wrong?

These are the overlords of California. Convincing even themselves, they feign concern over prejudice and the fate of the planet. But in reality their agenda evinces a misanthropy that would make an Afrikaner blush.

California’s reality today is one defined by owned, monitored space. Cars that watch you drive. Utility meters that track every drop of water or electron of energy you use. Televisions, phones, palmtops, virtual reality goggles, browsers, and social media accounts that watch, listen, and record your every move. This is the 21st-century version of apartheid. This is the high-tech Bantustan. You can’t see it. You can’t cross its border. But it’s all around you.

A famous book published in 1948 in South Africa during the heyday of post-World War II apartheid was Cry, the Beloved Country. In this desperate novel, the protagonist travels across South Africa, observing the inequalities and injustices tearing the nation apart.

But California’s inequalities and injustices are not rooted in racial prejudice. That is the great deception. That is the great distraction.

Californians must unite not to demand freedom from racial injustice, because they already have that freedom. They must demand bread. They must demand more water projects, more diverse and more conventional energy solutions, and fewer housing regulations to lower construction costs. That is the challenge that can unite them. That is the pathway out of poverty and that is the escape from oppression.

This article originally appeared on the website American Greatness.

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Red Pills Are Falling Down All Over California

California may not have had a lot of rain again this winter, but there are other kinds of heavy weather. An atmospheric river of red pills has collided with the Golden State, and by the millions, Californians are realizing how deeply deluded they have been about the condition of their state.

The first signs of enlightenment came when an intrepid band of dissidents tried yet again to gather enough signatures to force a recall election of Governor Gavin Newsom. With no money, and four failed attempts already on record, nobody expected the fifth effort to succeed. But a year later, this volunteer army of several thousand Californians gathered nearly 2.2 million signed petitions. In early May, California’s secretary of state will almost certainly announce certification of the signatures. And later this year, California’s feckless governor will be fighting for his political life.

Recalls are contagious. Inspired by the Newsom recall, efforts are now underway to force recall elections in San Francisco and Los Angeles County, targeting the District Attorneys in those cities. Elected with money from leftist billionaires, money that was primarily directed into smear campaigns against their opponents, these two crime-friendly idiots, George Gascón in Los Angeles and Chesa Boudin in San Francisco, are very likely going to have to defend their records in special elections in early 2022.

The Heart of the Beast

These are not small victories. California isn’t some remote appendage to the Matrix. California is the Matrix, its beating heart. But under the weight of years of abuse, its inhabitants are pulling the plugs and crawling out of their cocoons. The landscape they’re finally seeing with clear eyes is terrifying.

This isn’t merely about Gavin Newsom having a maskless meal with his well-heeled cronies at one of the most expensive restaurants in the world. It isn’t just about Newsom’s shameful handling of the COVID-19 crisis, or even about his worst transgression—the epic failure of leadership that was his locking down of schools for over a year just to appease the teachers’ union. These are just the precipitating events. Horrendous as they were, they merely served as the alarm bell to far more pernicious realities.

Wide awake Californians view a state that once was beautiful and now is ugly. They recognize the slide has been years in the making. Public schools fail the students who are most desperately in need of a good education. The education bureaucracy has decided to abandon standardized achievement tests and cease enforcing school discipline, neglecting its duty to present immutable standards to students in order to prepare them for life.

Californians see a state where all the bureaucrats, along with corporate titans of staggering wealth, have decided that cramming everyone into densely populated cities—COVID or the next pandemic be damned—is necessary to prevent “climate change.”

Finally, they’re seeing the fraudulent essence of this con. A deliberately created housing shortage and voilà, higher property tax revenue, and better returns for wealthy real estate investors. Ditto for water and energy. Cram it all down in the name of being “green,” and let the “renewables” manufacturers make a killing selling surveillance gadgets into every appliance to “help manage” consumption. Meanwhile, the corrupt public utilities, with earnings capped at a percentage of costs, watch profits soar on the exploding cost for renewables.

Perennial forest fires were another wake-up call, and here as well, a red pill moment is at hand for Californians. All Californians have to do is let the timber companies go back to work, thinning the overgrown forests, to restore a balance to nature. But what do the politicians do? Cope with the latest super fires by announcing that by 2035, only electric cars can be sold in California. Because that will somehow stop the next round of fires this summer.

But it’s the life on the streets of California’s cities that has most made the residents pick up one of those red pills and drink it down. California has decriminalized crime, all but legalized hard drugs, and built shelters and services for the “unhoused” along the urban beaches of Los Angeles County. As a result, and this is not hyperbole, murderers are getting out of prison in the heartland and migrating to the California coast because methamphetamine is cheap and abundant and nobody cares if you use it all the time, or pay for it with stolen goods.

Reaching the Breaking Point

But the nutty, dangerous, debauched, deteriorating cities of California have finally reached the breaking point, thanks to yet another node of resistance that came out of nowhere and shocked the placid, slimy, sanctimonious, do-nothing establishment to its core.

On Tuesday, ruling on a lawsuit filed by fed-up Angelenos against the city of Los Angeles, Judge David Carter ordered officials to “move forward with immediate action to house the unhoused and to return to clean and safe sidewalks in the city and county.” The judge also “demanded financial accountability into the billions of dollars that are supposed to be used to house the unhoused (who actually aren’t being housed).”

This is a day that Californians may very well look back upon and say that was when the tide turned.

Another surprise victory came out of Sacramento on Tuesday. Some of the most corrupt legislators in America withdrew a bill that would have made the names of people who sign recall petitions public information. Justified as necessary to allow people a “meaningful opportunity” to rescind their signature in support of a recall, the bill was sailing through the state legislature until the sponsors realized they were going too far.

California has often led the way in America—culturally, technologically, politically. To remain charitably objective, that leadership has been a mixed blessing. But whatever society of the future California was headed towards before these events of 2021, at least one thing appears to have recently changed—the plane is no longer on autopilot, and the passengers are getting restless.

This article originally appeared on the website American Greatness.

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State Legislature Continues Assault On Local Zoning Decisions

With the introduction of the latest housing density mandate, AB 725 in the California state legislature, the battle between state control and local control in California intensifies. At the same time, the pandemic crisis and its economic consequences add additional complexity to an already complex issue.

The debate over California’s housing policies offers an unusual combination: vehement disagreement between two bitterly opposed groups, yet within both groups are factions holding thoroughly divergent political ideologies.

This probably should come as no surprise. California’s housing crisis, and the policies that created it, incorporate big, challenging issues: income inequality, how to treat the homeless, environmental protection, public finance. Libertarians and leftists, along with Republicans and Democrats, are lining up on both sides of the debate, confounding easy categorization.

A grassroots organization fighting to preserve local control over residential zoning decisions is Livable California, founded by SF Bay Area activists in opposition to state legislation that would override local control of zoning laws. In less than two years, Livable California has grown its direct statewide membership to well over ten thousand, and has networked with allied groups that have hundreds of thousands of members.

If you follow the money, however, Livable California’s opposition, California YIMBY (“Yes in my backyard”), is far better funded. Receiving millions in support mostly from Bay Area tech moguls, California YIMBY and allied organizations lobby for state legislation mandating high density housing, as well as sue cities that resist existing state laws mandating high density.

Needless to say, YIMBY groups are adored by the media and have sprung up around the world. But in California they haven’t resolved a fundamental economic problem: The price of housing construction is so high that the only high density projects that get built are either luxury high rises that displace low income communities, or a small number of fabulously expensive “low income” housing units that only a small number of low income families will ever occupy.

The Livable California website shows their opposition to an assortment of high density legislation, AB 725 chief among them. According to Livable California, among other things, AB 725 “would open thriving working-class and middle-class neighborhoods to speculation and buy-outs, destroying housing to make way for up to 30 units of apartment housing per acre in metro counties, 20 units per acre in suburban counties, 15 per acre in cities in rural counties, and 10 per acre in unincorporated areas,” and “it openly targets single-family and low-density areas for high-density development — whether the community is served by transit or not.”

Some of the bills that Livable California have opposed must be seen to be believed. AB 3173 (still active) provides incentives for developers to build 80 square foot “micro-units” – at least that’s a bit larger than the 70 square feet that the American Correctional Association recommends as the minimum size for a prison cell! SB 902 automatically up-zones single family areas to six units or more per parcel. AB 1279 designates “opportunity areas” where housing could be up-zoned to high rises accommodating as many as 120 units per half-acre.

YIMBYs, on the other hand, support legislation that mandates high density. They want massive up-zoning of existing cities and suburbs. Within their odd coalition, the libertarians want zoning laws all but scrapped and expect the private market to swoop in to construct massive new supplies of housing. The leftists, on the other hand, want massive government borrowing to construct affordable housing and massive ongoing government spending to subsidize the rent payments.

No matter which YIMBY solution prevails, corporate developers alongside speculative investors stand ready to demolish aging inner city tenements and leafy residential suburbs alike, regardless of their current vitality or the wishes of the inhabitants.

Names matter. Opposed to the California’s YIMBYs are not so-called “NIMBYs” (not in my backyard); those favoring local control consider their opponents’ choice of “YIMBY” for a name to be a clever ruse to stigmatize them as NIMBYs. But the issue, say the opponents to YIMBYs, is over who makes zoning decisions. Local residents, or the state government?

Keith Gurney, a member of Livable California’s board of directors, explaining their position, said “we are not NIMBYs because we recognize there is an affordability crisis, and we support things we believe will mitigate the affordable housing crisis. If a city council wants to build high density, we will not argue with that. But the affordability crisis is a result of the state policy that tries to channel population growth into constrained boundaries. There is no way that stacking and packing in San Francisco will lower rents and purchase prices. This three year binge of state legislation trying to cram high density housing into low density neighborhoods is the wrong way to go.”

Livable California’s president, Rick Hall, expanded on this, saying “the gospel of high density and mass transit, and destroying existing residential neighborhoods in order to stay within the urban constraint will not lower housing affordability. There are places in this state where you can build a house for $250,000 with no subsidy. We support companies starting up satellite offices in places where housing can be constructed much more affordably.”

Livable California founder Susan Kirsch has disputed the estimated shortage of 3.5 million homes, claiming it is a pretext for pushing through top-down housing policy. But this calls into question a more fundamental question: What happens if the supply of housing in California is so huge that housing does become affordable?

This is far from academic. A crash in the value of housing requires a commensurate crash in the costs to build homes – which would require extraordinary deregulation – otherwise California’s private homebuilding industry would die off completely. As it is, private developers cannot afford to build low or middle income housing in California without subsidies. But what else would happen?

If California’s housing prices ever fell significantly, millions of homeowners would be underwater on their mortgages, unable to move and struggling to pay in a presumably down economy. The only way out of this would be broad based inflation, raising wages which would make it easier to pay fixed rate mortgages. And of course, property tax revenues would fall, adding additional stress to municipal government budgets.

Legislative solutions that Livable California does support include SB 795 which would fund expanded infrastructure and resources to serve additional housing, and SB 1299 which would provide incentives to repurpose idle big box retail and strip malls with housing.

The YIMBYs, with a torrent of money coming from big tech, real estate developers, and big finance, will never take on the elephant in the room, which is the state legislature’s ongoing effort to establish and strengthen urban containment polices. Until developers can construct entire new cities on open land within California’s vast Central Valley, along the Highway 101 corridor, and elsewhere, the only thing that will make housing affordable will be an economic collapse.

The uncomfortable truth is that years of neglected infrastructure, defacto rationing, and urban containment legislation have already taken away much of the local control that would have allowed Californians to expand their cities and towns, and keep housing affordable.

Livable California, a genuine grassroots movement, has the potential to reverse this trend. If successful, they may eventually alter the policy driven economic conditions that prohibit lasting solutions.  The YIMBY movement, on the other hand, funded by billionaires, will never solve California’s housing crisis, because they aren’t questioning the doctrine of densification. But so what? Their donors will see their real estate portfolio investments soar into bubbleland, as they virtue signal all the way to the bank.

This article originally appeared on the website California Globe.

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What Democratic Party Rule Will Do to America

Recent and ongoing events, historic by any standard, have emphatically refuted anyone who thought a black swan event could not possibly disrupt America’s 2020 election. Recent events might also suffice to remind us that yet another Black Swan event could transpire before the November election, creating additional political disruption.

Regardless of how America’s public health and economic fortunes withstand this current ordeal, most establishment media along with the social media monopolies are firmly in the camp of the Democrats. They will present everything that happens between now and November in a manner to favor Democratic candidates and harm Republicans.

It’s hard to win when nearly every special interest group in the nation is getting its pockets greased by policies supported by Democrats, and every one of them is using every financial resource they’ve got to elect more Democrats.

What’s astonishing isn’t that Republicans still cling to a razor-thin majority in the U.S. Senate, it’s that there are any Republicans left, anywhere.

With billions of dollars pouring in from leftist billionaires, multinational corporations, and public-sector unions, the Democrats have set ambitious goals. The liberal website Vox identifies no fewer than 11 U.S. Senate races they claim Democrats could take and unseat incumbent Republicans. The politically neutral Cook Political Report ranks four races for the U.S. Senate, in Arizona, Colorado, Maine, and North Carolina, as “toss-ups.” As reported in The Hill, “changing demographics” (along with a stupefying amount of out-of-state money) have put North Carolina in play.

And what about Montana, one of four additional states ranked by Cook as “lean Republican”? To the delight of the Washington Post and the New York Times, popular Democrat governor Steve Bullock recently decided to run against Montana’s incumbent freshman Republican Steve Daines. Can he win? With or without additional black swan events, he’s got the entire weight of America’s Democratic establishment behind him. But Montana voters need to think carefully about the choice they make in November.

California Illustrates the Consequences of Democratic Party Rule

Montana may have harsh winters, but these residents of the frozen north are spared the inclement consequences of Democratic rule. They are, along with residents of states like Oregon (except in Portland) and Vermont, living in societies that don’t have to shoulder the economic deadweight and social disruption created by Democratic Party policies.

They need to come to California, where Democrats wield absolute political power. Then they need to visualize these conditions in every city and town and county and school district in their own beautiful state.

The first thing to understand about California is that it is run by leftist billionaires in partnership with government unions. In exchange for pension benefits that were breaking the budgets of California’s state and local governments prior to the COVID-19 sparked economic crash, public-sector employees have become a Praetorian Guard for the super-rich in California. Their tactics are brilliantly deceptive.

The premise of California’s Democrats is that they are saving the planet from wealthy corporations and saving the people from racists and sexists. Both of these premises are wielded like bludgeons to silence anyone who tries to question their policies. But the policies they’ve enacted have ruined everything. The poor are trapped in poverty, the rich get richer, and the middle class is leaving.

A quick look at various aspects of life in California ought to make obvious the failure of Democratic rule. The teachers’ unions in California have negotiated work rules that make it nearly impossible to fire incompetent instructors. They’ve made it necessary during layoffs to retain teachers based on seniority instead of based on teaching performance. They’ve set it up so a public school teacher has a job for life after less than two years of classroom observation. Their war on charter schools has denied the vast majority of students access to innovative and promising educational alternatives.

Even worse, instead of focusing on fundamentals such as math and reading, California’s legislature, controlled by the teachers’ unions, now requires high school and college students to complete an “ethnic studies” course as a graduation requirement. Review the syllabus for these courses to get an idea of the world view of Democrats. California’s ethnic studies courses indoctrinate California’s straight white male students, who now constitute barely 10 percent of Californians under the age of 18, that they are privileged scions of the most hideous oppressors in the history of the world. At the same time, these courses indoctrinate the rest of California’s youth to believe they are disadvantaged victims, who deserve special treatment for the rest of their lives.

And to mitigate this historical injustice, every major institution in California enforces race and gender hiring quotas. College professors have to sign pledges to document their commitment to diversity. SAT scores are ignored in college admissions and are on the verge of being dispensed with entirely.

The destructive impact of divisive indoctrination and racial and gender quotas are impossible to overstate. At what point does a commitment to proportional representation in all institutions become intolerably destructive, when this commitment is heedless of massive and verifiable disparities in aptitude? At what point does it render these institutions irreparably compromised?

Fighting Racism, Protecting the Planet

If California’s institutionalized racist anti-racism and sexist anti-sexism weren’t bad enough, equally unsustainable is its commitment to “sustainability.” California’s environmentalist overregulation is the reason housing is unaffordable. State officials have declared vast swaths of land off-limits to development, supposedly because suburban sprawl causes excessive “greenhouse gas” emissions, with the consequence being skyrocketing prices for what remains of available land that isn’t restricted. They have enacted escalating mandates for energy efficiency now culminating in a requirement for homes to be “energy neutral,” producing as much energy as they consume; all of this greatly increases costs at the same time as it makes these homes uncomfortable to live in.

And hiding behind the pretext of environmentalism, cities and counties that are financial slaves to the insatiable, ever-increasing demands of the pension systems, no longer have budgets to pay for infrastructure.

It used to be that cities built the roads, developers built the homes, and homebuyers became a new source of tax revenue. No more. Now developers in California pay for everything, passing all the costs into the price of new homes. Making it much worse, where it takes weeks to get permits in places like Montana, it takes years to get construction permits in California; dozens if not hundreds of different permits, and just one denial will stop everything in its tracks.

And then there’s litigation by California’s robust ecosystem of environmentalist plaintiff attorneys, using the California Environmental Quality Act to tie development proposals up in court for years.

This is the way of life that Democrats are going to bring to the entire nation if they ever get control of the White House and the U.S. Congress. Buckle up.

Lockdown the Law-Abiding, No Laws for Homeless

The COVID-19 pandemic that has already killed thousands and crippled the economy shines further light onto California’s dysfunction.

Governor Newsom refuses to suspend AB 5, a hideous new law that prohibits independent contractors from working unless their employers formally hire them. This despicable power grab by unions had already put hundreds of thousands either out of work or into legal uncertainty regarding their future. Now it’s preventing hospitals from hiring part-time freelance nurses, among other things.

And in Los Angeles, where Democratic Mayor Eric Garcetti has just advised residents to wear masks when leaving their homes to perform “essential activities,” the homeless population, numbering in the tens of thousands, has been subject to almost no restrictions.

The irony is spectacular. This health emergency has enabled a suspension of individual rights amounting to de-facto martial law, and yet Garcetti is still unwilling to remove the homeless encampments.

The entire homeless epidemic in California is a result of Democratic policies. It was Democrats who pushed for policies to empty the jails and prisons of “nonviolent” offenders, and then it was Democrats who successfully pushed for laws that downgraded property and drug crimes. It was Democrats who successfully pushed for laws that made housing prohibitively expensive to those who were marginally employed. It was Democrats who built “shelters” at a staggering cost in the middle of stable neighborhoods, putting zero behavioral requirements on those being sheltered (no sobriety requirement, no curfew, no background checks).

What did they think was going to happen?

And if California’s remaining voices of common sense suggested that instead of building “supportive housing” at an average cost to taxpayers of $500,000 per unit, that maybe there was some more cost-effective, feasible way to get the homeless into tent cities on less expensive land, they were branded as lacking “compassion.” Meanwhile, the stakeholders in the Homeless Industrial Complex—“nonprofit” developers with for-profit vendors, public bureaucrats and their expanding bureaucracies, attorneys, and consultants—all got to wet their beaks, while only a small fraction of homeless got a roof over their heads.

What COVID-19 and the economic misery that follows will enable is further industry consolidation. For the wealthiest Americans and for multinational corporations, this is a rare opportunity to expand and consolidate their positions.

California, with regulations atop regulations—ostensibly implemented to curb the power of big business—is the epicenter of big business. The big lie—alongside the lie that Democrats are the party of ordinary workers—is that regulations curb big business. The truth is regulations empower big business because small businesses don’t have the financial resilience to comply.

Come this November, in states like California, legalized election rigging such as ballot harvesting, absentee ballots, vote by mail, early voting, and same-day voter registration will all be enforced, with billionaire-funded operations to exploit them to the fullest. Expect a push to lower the voting age to 16, and continued efforts to expand the rights of noncitizens to vote. Let nothing surprise you.

And just like COVID-19, this is rolling out of the coastal Democratic strongholds to infect the entire nation. And just like COVID-19, if and when it does, nothing will ever be the same again.

This is life in California. One could go on, and on, and on, and on. It’s true, the Republicans aren’t perfect. Indeed, they are far from it. But Republicans are not Democrats, and that makes all the difference in the world. Wake up.

This article originally appeared on the website American Greatness.

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Post-Coronapocalypse Pension Reform Checklist for California

In a perfect world, California’s state and local public employees would receive exactly the same retirement benefits as federal employees. They would receive a modest defined benefit, a contributory 401K, and they would participate in Social Security.

Unfortunately, in California, while some state and local public employees are offered 401Ks, and many participate in Social Security, all of them rely inordinately on a defined benefit pension. Far from being modest, even the most minimal examples of defined benefit plans for California’s state and local government workers provide roughly twice the value of the typical defined benefit offered federal workers. And where there’s twice the value, there’s twice the cost.

In reality, however, twice the cost would be a bargain. It’s much worse than that, and very little has been done. In 2013, the PEPRA (Public Employee Pension Reform Act) legislation lowered pension benefit formulas in an attempt to restore financial sustainability to California’s public employee pensions. But these revisions, which resulted in defined benefit formulas only about twice as generous as the federal formulas, only applied to new employees.

California’s Pension Systems Were Crashing Before the Coronapocalypse

Two years ago, and after more than eight years of a bull market in the stock market indexes, CalPERS, which is by far the largest pension system in California, had already announced that contributions from participating agencies were going to roughly double. They posted “Public Agency Actuarial Valuation Reports” that disclosed the details per agency.

At the time, in partnership with researchers at the Reason Foundation, the California Policy Center used these reports from CalPERS to summarize the impact on 427 cities and 36 counties (download full spreadsheet). As shown on the table below, two sets of numbers are presented – payments to CalPERS for the 2017-2018 fiscal year, and officially estimated payments to CalPERS in the 2024-25 fiscal year.

The most important distinction one should make when reviewing the above data is the difference between the “normal” and the “catch-up” payments. The so-called “normal contribution” is the amount the employer has to contribute each year to maintain an already fully funded pension system. The “catch-up” or “unfunded contribution” is the additional amount necessary to pay down the unfunded liability of an underfunded pension system.

As can be seen in the example of Millbrae (top row, right), by 2024, the “catch-up” contribution will be nearly six times the amount of the normal contribution. But in the PEPRA reforms, new employees are only required to contribute via payroll withholding to 50 percent of the “normal” contribution.

A separate California Policy Center analysis, also published two years ago, attempted to estimate how much total payments statewide would increase if all of the major pension systems serving California’s state and local public employees were to require similar levels of payment increases. The analysis extrapolated from the consolidated CalPERS projections for their participating cities and counties and estimated that in sum, California’s state and local government employers would have paid $31 billion into the 87 various pension systems in 2018, and by 2024 this payment would rise to $59.1 billion.

As noted at the time, and now more than ever, this was a best case scenario.

A Financial Snapshot of CalPERS Today

The next chart, below, depicts financial highlights for CalPERS – either officially reported or projected – in a format which ought to be publicly disclosed, every quarter, in this format, from every state and local public pension system in California. The first two columns depict data as reported by CalPERS for their most recent two fiscal years, ended 6/30/2018 and 6/30/2019. The final column, which consists of CPC estimates (not provided by CalPERS), shows how their financial condition could appear three months from now.The first thing to note from the above chart is the fact that CalPERS was only 70 percent funded (“funded ratio,” bottom line) in June of 2019. The next thing to note, and this is crucial, is that the actuarial estimates of the total pension liability lags behind one year. That is, the $504.9 billion reported “actuarial accrued liability” is reported as of 6/30/2018, even though that figure is used to report the funded ratio as of 6/30/2019.

Take a deep breath, because the significance of this delay requires further discussion. From page 122 of CalPERS most recent CAFR, here are the trends for the actuarial accrued liability: 6/30/2009 = $294B, 2010 = $308B, 2011 = $328B, 2012 = $340B, 2013 = $375B, 2014 = $394B, 2015 = 413B, 2016 = 436B, 2017 = $465B, and 6/30/2018 = $504B. Based purely on the trend, is there any reason to believe this liability will not exceed $550 billion by June 30, 2020, two years later? Why isn’t that estimate being made?

There’s more. Why are actuaries permitted to have an entire extra year to complete their estimate of the total pension system liability, when changing single variables will cause the estimate to massively fluctuate? Sure, it is a complex exercise, and at some point an official calculation, based on all known data, should be reported that amends a preliminary estimate. But if, for example, you vary the earnings projection downwards from 7.0 percent to 6.0 percent – which needs to be done sooner not later – using calculations provided by Moody’s Investor Services, the amount of the CalPERS liability soars from $550 billion to $621 billion. You don’t split hairs when you’re being scalped.

And what about the employer contribution (second row of data)? Why did it go down from $20 billion in 2018 to $15 billion in 2019? From the “Basic Financial Statements” in the CalPERS CAFRs for the last few years, here are the totals for payments by employers: 2015 = $10.2B, 2016 (page 38-39) = $11.0B, 2017 = $12.4B, 2018 (page 40-41) = $20.0B. With the payment for FYE 6/30/2019 back down to $15.7B, the trends suggest that the large payment of $20.0 billion in 2018 was an anomaly. But assume that much money will come again from employers in 2020. But based on historical trends, probably not more than that. Yet.

Where does this put CalPERS?

All of this discussion is to explain the reasoning behind the figures in column three on the above chart. What might be materially different? What estimate isn’t best case? Does anyone believe CalPERS will actually break even in the return on their invested assets between 6/30/2019 and 6/30/2020? Does anyone believe the most accurate estimate of the total liability belongs anywhere south of $550 billion, particularly when they’re still using a discount rate that’s too high? And yet this puts CalPERS in what is arguably the worst shape it’s ever been, at 64 percent funded as of this June.

This paints a very grim big picture. CalPERS is on track to collect over $20 billion from taxpayers in the current fiscal year, and CalPERS, while the biggest pension system, only manages just over 40 percent of the state and local government pension assets in California. This suggests that the total taxpayer contribution to California’s state and local government pension systems in 2020 is already up to around $50 billion. And it isn’t nearly enough.

Steps to Reform CalPERS and all of California’s pension systems

1 – Admit the long-term rate of return projection is too high for calculating the value of pension liabilities. Move it down to 6 percent. Increase the required “normal contribution” accordingly, and, in turn, increase the share required from active employees via withholding.

2 – Once a more reasonable long term rate of return projection is adopted by the pensions systems, the goal of pension reform should be to stabilize pension system payments at some maximum percent of total personnel costs. With cooperation from union leadership, agree on what that maximum percent should be, then determine how to spread benefit reductions in an equitable manner between new hires, current employees, and retirees.

3 – For all state and local government employee pension plans in California, start providing consolidated quarterly financial summaries (without gimmicks), using the above chart as an example. Include a footnote indicating how much of the total employer contribution is for the unfunded liability vs the normal contribution.

4 – If a pension system falls below 80 percent funded, agree on an escalating series of remedies to be implemented to bring the funded ratio back up. They would include suspension of COLA, prospective further lowering of the annual multiplier for active workers, retroactive lowering of the annual multiplier for active workers, reduction of the retiree pension payment, and increasing the required payment to the pension plan by active workers via withholding.

5 – Pressure the California State Supreme Court to swiftly hear and rule on the cases Alameda County Deputy Sheriff’s Ass’n. v. Alameda County Employees Retirement Ass’n (filed 1/8/2018), and Marin Ass’n of Pub. Employees v. Marin Cnty. Employees Retirement Ass’n (filed 8/17/2016). These cases may provide clarity on the “California Rule,” which currently is interpreted as prohibiting lower pension benefit accruals, even for future work.

6 – With or without a decisive ruling (or any ruling) on the California Rule, work with government union leadership to revise pension benefits. If union leadership is uncooperative and the courts fail to offer an enabling ruling, than as a last resort, to bring the unions back to the negotiating table, lower salaries, current benefits, and OPEB benefits.

7 – In the long run, move towards a system modeled after the federal system. This would be a logical next step, following in the footsteps of PEPRA. It would create three basic tiers of public sector workers in California, the pre-PEPRA workers (who may submit to lower benefit accruals for future work), the post-2013 hires who are subject to the PEPRA reforms, and new hires starting in, for example, 2021, who would enjoy retirement benefits similar to what Federal employees receive.

The Ripple Effect of Unreformed Pensions

There are two problems with a bullish outlook today. First of all, the great returns of the past few years may have been unsustainable, a super bubble. And then that super bubble was not popped by a pin, but rather by a wreaking ball, the Coronapocalypse. There are tough economic times ahead.

In a severe downturn it is conceivable that annual taxpayer contributions to California’s public employee pensions systems will not merely soar from around $50 billion in 2020 to $60 or $70 billion within a few years. They could go even higher. For example, over the total three year period through June 2020, it is quite possible that CalPERS will collect more from taxpayers – $65 billion – than it will have earned in investment returns – $52 billion.

This is the new reality of public sector pensions in California. And because taxpayers have been increasingly on the hook to bailout these pensions, taxes have increased, services have been cut, and there has been a gradual wearing away of trust by citizens in their local governments. This is why, for the first time in decades, more local taxes and bonds were rejected by voters in March 2020 than were approved. Absent pension reform, this backlash has just begun.

So-called “crowding out” of other public services in order to pay for pensions doesn’t just impel an insatiable drive for higher taxes. It also works its way into higher fees, building fees in particular. Infrastructure investments such as connector roads and parks for new housing subdivisions used to come largely out of municipal operating budgets. It was a fair trade – the city builds the roads, the builders sell the homes, and the new residents pay taxes. But now, all of those costs are paid for by the builders and passed on to the home buyers. The rising cost of pensions can be directly tied to the unaffordable cost of homes.

Pensions for state and local government employees in California are literally three to five times as costly as Social Security, and at least twice as costly as the Federal Retirement System. Ultimately, this disparity divides Americans and undermines what it means to be an American citizen. Why should public employees care if Social Security is inadequate, if they don’t depend on it? Why should they care if all public benefits offered private taxpayers is diluted, or if citizenship itself becomes less meaningful, if their membership within the public sector is the primary source of their security?

America is entering difficult economic times. Maybe one good thing to come out of this will be a willingness on the part of public sector union leadership to make common cause with all of California’s workers, and agree to reasonable concessions on pensions that will help everyone living in this great state.

This article originally appeared on the website California Globe.

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Is Gavin Newsom California’s Denier-in-Chief?

California’s newly elected governor, Gavin Newsom, gave his first “state of the state” address on February 12, and it was a speech more noteworthy for what he didn’t than for what he did mention. Were Newsom’s sins of omission the conscious choice of a seasoned politician, or is he in denial, like so many of his California leftist cohorts?

Before criticizing the content, and the omissions, of Newsom’s speech, it’s necessary to make something clear: Nobody can deny California’s accomplishments; its great universities; its vibrant, diverse industries; its global economic and cultural influence. But California’s accomplishments are in spite of its state government, not because of it. That cannot be emphasized enough.

Newsom began by saying Californians had to make “tough calls” on the issues of transportation, water, energy, migrants, the homeless, healthcare, and the cost-of-living. He proceeded next to make no tough calls.

Forget About Fixing Roads, Let’s Build Half a Bullet-Train
With respect to transportation, Newsom made no mention of California’s crumbling, clogged freeways and connector roads. To be fair to Newsom, when you don’t have to commute day after day during rush hour—and even when you do drive, you have a driver so you can sit in the back seat of a very quiet, very smooth ride, and conduct teleconferences—you don’t really think about “roads” the same way the rest of us do. So understandably, Newsom chose to talk about high speed rail, and even on that topic, he hedged his bets. He proclaimed the project would cost too much and take too long to build a track from Sacramento all the way to San Diego, or even from San Francisco to Los Angeles. Instead he committed to focusing on completing the track from Merced to Bakersfield, where work has already begun.

Is this denial? Or just the out-of-touch priorities of an extremely wealthy man who doesn’t have to drive? Merced? To Bakersfield? Along the entire 163 mile stretch between these two cities, including everyone living in all the five surrounding counties, there are only 2.8 million people. How much will that cost? $10 billion? $20 billion (more likely)? Has Newsom considered how much highway improvement could be done with all that money? For that matter, might we ask the voters of Fresno and Kern counties, as if all that money should be spent there—“would you rather have $20 billion spent on road improvements, or that train?” Or are we afraid of the answer? Does Gavin Newsom understand that even if high-speed rail were built in all its original scope, it would still do virtually nothing to ameliorate California’s transportation challenges, which can only be solved by building new roads and widening existing roads?

Forget About Increasing Water Supply, Let’s Build Half of the “Twin Tunnels”
On the issue of water, Newsom also split the difference on what promises to be California’s second biggest infrastructure money pit after high-speed rail. That would be the two proposed “delta tunnels” that would transport runoff from Northern California, under the Sacramento River Delta, and onward to thirsty farms and cities in arid Southern California. But the governor didn’t call for two tunnels, nor did he kill the project. Like Solomon, Newsom is going to give the “water fix” advocates half of their baby. He wants to build one tunnel.

Newsom correctly stated that demand for water exceeds supply in California, but he was firmly in denial as to the solution, which is to create more supply. For the cost of even just one delta tunnel, massive desalination plants could be constructed on the Southern California coast. Those facilities, combined with runoff capture and sewage reuse projects throughout California’s coastal cities, could make them water independent. Seismic upgrades to levees along with new fish hatcheries could preserve cost-effective, environmentally acceptable movement of northern water to southern customers through the delta, something that’s worked for decades. And more storage via new off-stream reservoirs, aquifer recharge, and raising the Shasta Dam would supply additional millions of acre feet. Instead? A tunnel that will cost at least $20 billion, and add zero water to California’s annual supply.

Never Mind the Shortages We Created, Let’s Invite the World to Migrate Here
California’s politically sacred mission these days, of course, is to invite the migrants of the world to settle here. Newsom didn’t disappoint his crowd, trotting out dubious statistics to prove that undocumented immigration is a “manufactured problem.” But again, Newsom is denying the big picture: If California rolls out the welcome mat for the destitute masses of the world, where does it end? There’s good, accurate data available on this.

More than 800 million people in the world live in extreme poverty—defined as living on less than two dollars per day. What about Latin Americans, who according to Newsom’s equally photogenic counterpart in the U.S. Congress, Alexandria Ocasio-Cortez (D-N.Y.), “must be exempt from immigration laws because they are ‘native’ to U.S. lands”? Over 150 million Latin Americans live on less than $4 per day. Hundreds of additional millions of Latin Americans struggle economically. Why not form “caravans” to bring them all here? Newsom, along with the entire California Legislature, will cheer them on and let them in, no matter what the cost.

As it is, currently 2.6 million undocumented immigrants live in California. Even the liberal website politifact.com acknowledges that 55 percent of immigrant households in California benefit from welfare, with their only supposedly debunking caveat being that some of these households have U.S. born children. Other recent studies put the California total as high as 72 percent. There is a cost to Californians for all this, estimated as high as $25 billion per year, so where does Gov. Newsom draw the line? Three million more migrants? Five million? Ten million? One hundred million? Or is he in denial?

And What About Those Politically Created Shortages?
Newsom mentioned “overcrowded classrooms,” and talked about “too much demand, too little supply” for housing. But his solution for education was, what a surprise, more money and “accountability for all public schools, traditional and charters” (a slap at the charter schools, well received based on the applause from the union-controlled audience). Newsom remained in denial as to the real reason California’s public schools are failing, the fact that teaching professionals have been unionized, and the unions have used the dues revenue to exercise nearly absolute control over state and local politicians. Thanks to the teachers union, bipartisan reforms to union work rules (dismissal policies, layoff criteria, lengthened tenure) are watered down or completely squelched, and charter schools are under constant attack.

As the old cornball adage goes, denial ain’t just a river in Egypt, Gov. Newsom. Public sector unions destroyed public education in California. Do something about that, if your thousand watt compassionate smile is doing anything more than hiding a vacuous brain, guiding a feckless, morally indifferent human, attracted to nothing more than publicity, power, money, and beautiful women. That’s probably an overly harsh, unfair and inaccurate assessment of the Governor. So maybe he will silence his skeptics, by doing something that takes actual courage. Take on the teachers union. Don’t talk about it. Fight them. Fight them tooth and nail. Fight them on the beaches. Fight them in the streets. Fight them in the hills. Never give up.

Wasn’t Newsom’s campaign slogan “courage for change”? Offer that slogan, but nothing else, to the semi-literate, totally innumerate, thoroughly indoctrinated products of California’s public schools, and see how much good it does. They are the victims of the teachers unions. Theyneed courage from the Governor. Not a pretty face. Not a pretty phrase.

Newsom’s solution for the housing shortage, so far, is to sue cities and counties that won’t build government subsidized “affordable housing.” But “affordable housing” is never affordable, and everyone knows that by now. It’s just a money tree for connected developers. To make homes “affordable” doesn’t have to cost taxpayers a dime. Just deregulate the private housing industry, making it easier to develop land. Then, strip away the overreaching design mandates that turn ordinary homes and apartments into hermetically sealed, stupefyingly expensive, miniature Borg cubes with embedded, connected chips in everything from the toilets to the coffeemaker, festooned with phony “gingerbread” eaves and trim that some marketing department tested with focus groups.

Newsom, to his credit, did mention the need to modify the California Environmental Quality Act (CEQA), an absurdly intrusive law that is a gold mine for trial lawyers and unions who use it to stop land development in its tracks. But his solution? Turning CEQA reform over to a task force consisting of union officials and large home developers.

Newsflash, Gov. Newsom! Union officials and large home developers won’t benefit from CEQA reform, so they won’t come up with anything useful. They like CEQA just the way it is. Because CEQA is the reason the median home price in California is $547,400. That is an absolutely obscene amount for anyone to have to pay for a home. But it further enriches the billionaire land developers who have the political clout and financial heft to withstand the avalanche of CEQA lawsuits and regulatory hurdles. Who is harmed by CEQA? The average Joe who owns ten acres and knows a building contractor. Those guys can only dream of meaningful CEQA reform. Better yet, they should move to Texas which is still open for business. Or, that is, move to Texas before Gov. Newsom’s other photogenic counterpart, “Beto,” and his gang of Leftists with a twang, manage to turn that state into another California.

Charisma Can’t Make Up for Denial, But Redemption is Possible
On every topic, Newsom’s theme was at least consistent. Let’s be tough, let’s be honest, let’s do our duty to ALL Californians. But he wasn’t tough, and he wasn’t honestly choosing the right questions to ask, so it’s hard to see how he was doing his duty to all Californians. And for a man leading the biggest state in the United States, who could very well end up being inaugurated as the next U.S. President in January 2024, we need more. Much more. Here are three topics of bipartisan urgency that Newsom should have, but didn’t touch.

He didn’t talk about how on the next economic downturn, state and local public employee pensions are poised to bankrupt half of California’s cities and counties and totally blow up the state budget.

He didn’t talk about how California’s public employee unions have formed a coalition with extreme environmentalists and Leftist billionaires to stop all development of land and energy in order to create an asset bubble that benefits public coffers and private investments while screwing everyone else.

He didn’t talk about how, even if you believe all the alarmist hyperbole regarding climate change, you can’t possibly go “carbon free” without more hydro-electric and nuclear power.

Newsom’s mannerisms might remind one of Chris Collinsworth, a tall and well-liked sportscaster who talks with a perpetual smile on his face. But Newsom isn’t a sportscaster. He’s presiding over a state—with 40 million people and “the fifth largest economy on earth”—that has been taken over by a gang of money grubbing, power-mad, opportunistic, platitude-spewing con artists.

If Newsom’s intentions are half as benevolent as that compassionate smile of his tells us they are, and if his “courage for change” is sincere, then here’s another way he can redeem himself in the eyes of his skeptics. He can live the life that his political comrades have imposed on California’s hardest working residents. Instead of moving into a 12,000-square-foot mansion, located on an eight acre compound in one of the wealthiest ZIP codes in Sacramento County, Newsom should move his family into one of those California median priced $547,400 homes, situated on a 3,200 square foot lot, surrounded by other homes on 3,200-square-foot lots, and send his four children to a public school.

Redemption is good for the soul, so there’s more: for Newsom to fully live the California dream, and prove he cares about “ALL Californians,” he should give his personal wealth away to charity—or better yet, send it to the CalPERS public employee pension fund because they’re going after every dime they can get their hands on. Then, Newsom should cut his governor’s pay to $71,805, which is California’s median household income, and refuse all outside honorariums and fees. And he should do this not for two weeks to make a statement, or even for the next four years. He should do this for the rest of his life.

He would be in denial no longer.

This article originally appeared on the website American Greatness.

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