Pacific Progressive

Poor Unemployment Insurance Planning Adds Extra Burden to Conn., South Dakota Employers

by Olga Pierce, ProPublica

Employers in Connecticut and South Dakota face hefty tax increases in the midst of a recession because their states' unemployment insurance trust funds ran dry last week.

The two states, like many others, have solvency taxes -- a special tax increase that kicks in when their trust fund balance goes below a set amount.

In Connecticut, which has borrowed about $40 million so far, an extra 1.4 percent solvency tax has been tacked on to the tax rate businesses normally pay. Last year, the average employer in the state paid a tax rate of 1.7 percent.

In South Dakota, a solvency tax of 1.5 percent kicked in Oct. 1.

The South Dakota increase is especially significant because the state's unusual tax structure has allowed about a third of businesses to pay no unemployment insurance tax at all until now, said Don Kattke, spokesman for the South Dakota Department of Labor.

Even with the tax increases, both states are poised to borrow tens of millions of dollars from the federal government. A provision of the stimulus package allows states to borrow interest-free until 2011, but it will be difficult for states to do so without further tax increases or cuts to benefits just as the economy is predicted to be emerging from the Great Recession.

The result of a historical compromise, the U.S. has a patchwork unemployment insurance system where the 50 states, District of Columbia, Virgin Islands and Puerto Rico all maintain separate unemployment insurance trust funds. Each is given wide latitude to set benefits and determine how well- or poorly financed its fund will be.

Like most of the 22 other states that have borrowed so far -- to the tune of nearly $20 billion -- Connecticut and South Dakota have over the last five years maintained reserves in their trust funds far below the recommended amount of at least a year's worth. (Read ourinvestigation on unemployment insurance, which we did in partnership with public radio's Marketplace.)

Ideally, during good years states see their trust fund reserves go up, so money can be spent freely to help workers and stimulate the economy during the next recession. But for the past five years both Connecticut and South Dakota's tax rates have generated just enough revenue to cover benefits paid out.

So when the recession struck, both states were forced to raise taxes at the very time when businesses are struggling the most. (Is your state's unemployment system in danger? Check out our chart.)

This article is from ProPublica.

State's Letter to Costa Mesa About Fairgrounds Specific Plan Not Worth the Electrons to Email It

Costa Mesa has received a letter from the State of California informing them that the value of the Orange County Fair and Events Center is potentially  damaged by the Specific Plan they are developing.  The Specific Plan states the desires of the City to maintain the property much as it is while allowing for development of compatible uses.  The State feels this damages the value of their property because they appear to have estimated the value of the property using some fully built out, high density model that does not follow current zoning for the property and using  land values that are not current.

Bottom line: State is out of line.  

This situation is as if you want to sell your single family home.   Current zoning says one house per lot.  But you want more money than what your single family home would bring.  So, you tell the buyer that they can build several condos on the property, that there will be no problem changing the zoning to what they want.  

You're wrong (and misrepresenting the facts to the buyer) because the city is under no obligation to change zoning to match a new land use just because a new buyer wants to do something else.

The OC Fairgrounds is already zoned for "fairgrounds use."  Costa Mesa is clarifying the list of applicable uses so buyers know what they are getting.  By starting this process now, before the bids are due and before the deadline for bidder questions to be answered, Costa Mesa is putting potential bidders on notice that there use restrictions on the property, so plan and bid accordingly.  

Derail the Sale - Melissa Fox Speaks Out Against Sale of Fairgrounds

Melissa Fox, candidate for the 70th AD seat of termed out Chuck Devore, urges people to work to derail the sale of the Orange County Fairgrounds.  Assemblyman Chuck Devore voted to sell the Fairgrounds to the highest bidder, an act which could make the 2010 Orange County Fair the last Orange County Fair ever.

To close the budget gap, the Orange County Fairgrounds, along with the Cow Palace in San Francisco and the Los Angeles Memorial Coliseum were put on the "for sale" list.  Both the Cow Palace and the Coliseum were taken off the "for sale" list because elected representatives pushed back because they realized these sales were not in the best interests of the public.  Of the six properties originally scheduled to be sold, only one, the Orange County Fairgrounds, is being sold.

Melissa Fox reminded people about the role of the Fairgrounds, "The Daily Pilot has called the Orange County Fairgrounds our “crown jewel.”  It is not only home to the annual County Fair – the Fairgrounds also hosts wonderful community assets such as the Centennial Farm, visited by tens of thousands of school children a year, and the only affordable equestrian center remaining in Orange County.  It is home to many community organizations, including the All American Boys Chorus. And it is an important economic asset that we can’t afford to lose: the weekly Orange County Marketplace supports more than 1,000 small businesses."

Concerns about potential conflicts of interest have been recently raised because six of the eight Fair Board members are members of the newly formed Orange County Fair and Events Center Foundation established to buy the Fairgrounds.  At the most recent Fair Board meeting, Fair Board members stated that there currently is not a conflict of interest policy for relations between the Fair Board and the Foundation.  Members of the Foundation maintain there is no conflict of interest because the Fair Board will not determine the winning bidder in the sale.  When asked if there is a potential conflict of interest, Deputy Attorney General Helen Ahrens, representing the Fair Board,  would not answer the question and stated she did not know who in State government would be able to help the public answer this critical question.

Over 600 People at Berkeley Conference to Organize Against More Education Cuts

From the Daily Cal

Over 600 people gathered at UC Berkeley to discuss organizing against the anticipated further cuts to higher education.

San Joaquin River Water Flowing Again

The second longest river in California, the San Joaquin River,  once was almost dead.  Nearly 95% of the water was diverted for irrigation.  Over 60 miles of the river was left dry, killing salmon and degrading water quality for nearly two-thirds of Californians.  The San Joaquin River feeds the San Francisco Bay-Delta, the largest estuary on the West Coast and the source of drinking water for more than 22 million Californians.  

Water started flowing again on October 1, 2009, when water from Friant Dam was released.  In 2006, the San Joaquin River Restoration Settlement was reached.  The Settlement has two goals:  restoration and water management.  Goals of the restoration program include rebuilding and maintaining fish populations in the main stem of the San Joaquin River below Friant Dam to the confluence of the Merced River.  The restoration plan includes both salmon and other fish.  Water management includes reducing or avoiding adverse water supply impacts to all of the Friant Division long-term contractors that may result form the interim flows and restoration flows provided for in the Settlement.  The flow of the San Joaquin River will be fully restored no later than January 1, 2014.

Updates on Ballot Propositions - Oct 21

No new initiatives have qualified for the June 8, 2010 ballot.  There are many propositions circulating and many more in the Attorney General's Office for review.  The "California Cancer Research Act", which would have funded cancer research using a tobacco tax, has been withdrawn.

Here's a rundown of new ballot propositions submitted for review.

• Parental Notification, Child and Teen Safety, and Stop Predators Act - John Smith - Parental notification of minor children seeking to terminate a pregnancy.  There are several versions of the proposition.
• Public Employee Payroll Deductions - Allan Mansoor, Mark W. Bucher, Dawn M. Wildman, Lawrence D. Sand, Mark J. Meckler - Prohibits wage deductions of public employees from being used for political purposes.
• Public Employee Paycheck Protection Act - Allan Mansoor, Mark W. Bucher, Dawn M. Wildman, Lawrence D. Sand, Mark J. Meckler - Requires public employee union members to consent to deductions to be used for political purposes and to specify an amount.  Must be done once every twelve month period.
• California Taxpayer Protection Act of 2010 - Ted Hilton - Persons receiving public benefits must be able to prove "lawful residence" in the United States.
• Passing the Budget on Time Act of 2010 - James C. Harrison, Thomas A. Willis - Changes the number of votes required to pass a budget from 2/3 to a majority.  Legislators forfeit their pay if the budget is not passed on time.
• Repeal Corporate Tax Loopholes Act - Robin B. Johansen, Karen Getman - Repeals corporate tax breaks granted in 2008 and 2009 - elective single sales factor provisions (ABX3 15 and SBX3 15 of 2009); net operating loss carryback provisions in AB 1452 of 2008; tax credit sharing provisions in AB 1452 of 2008.
• Vote SAFE:  Secure and Fair Elections Act - George C. Runner Jr, Charles H. Bell Jr, Robert Ming - Requires photo ID to vote.

New Water Conservation Laws - Plumbing Fixtures, Landscaping, and Water Softeners

Three new laws about water conservation have been signed into law by Governor Arnold Schwarzenegger. 

SB 407 (Padilla) requires the owners of most residential and commercial properties built before 1994 to replace water inefficient plumbing fixtures with water conserving fixtures.  Home owners have until 2017 to do the retrofits.  Apartments and business owners have until 2019 to make the changes.  

As part of the law, sellers would be required to disclose as part of real estate transfer disclosures if plumbing fixtures were in compliance with the law.  Under the law, noncompliant plumbing fixtures are any toilet which uses more than 1.6 gallons of water per flush, any urinal using more than one gallon of water per flush, any showerhead having a flow capacity of more than 2.5 gallons per minute and and interior faucet which allows flows of more than 2.2 gallons per minute.

AB 1061 (Lieu) allows home owners who live in condos or other planned developments which are governed by the Davis-Sterling Act to plant drought tolerant plants regardless of landscaping guidelines put out by the HOA.  This law allows saving water to take priority over HOA rules requiring grass and other thirsty plants.

AB 1366 (Feuer) regulates the salt water discharge from water softeners.  Mixing salt and fresh water can be problematic, and it isn't any different when thousands of water softeners discharge saltwater into the local water treatment systems.  Saltwater discharge requires additional chemicals and water to treat the discharge, increasing both water usage and treatment cost.  The law now requires a permit to install self-regenerating water softeners, standards for new self-regenerating water softeners, and replacement of current equipment that does not meet the new standards.

Furloughs of State Workers - Lost Revenue, Family Hardships, and Not Cost Effective

Any time there is a layoff, reduction in force, furlough, or paycut, the local economy feels the impact.  Workers with loss of pay have a hard time paying for a place to live, feeding the family, and keeping the car running.  A new study by Ken Jacobs from the UC Berkeley Center for Labor Research and Economy, The High Cost of Furloughs, quantifies the impacts.

The study finds that a one-day a month furlough would save more General Fund money than current three days a month furlough.  In FY 09-10, the estimated General Fund savings from the furloughs is just $738 million, not the $2.01 billion estimated reduction in wages and benefits.  The FY 09-10 furloughs will result in a loss of $503 million in future years, which brings the actual General Fund savings down to $236 million, which is a little more than 10% of the projected savings of $2.01 billion.

The furloughs impact workers paid both from the General Fund and federal funds. If a worker is paid using federal funds, the state cannot collect the federal money for the furloughed time, resulting in a loss of revenue. Additionally, workers paid using federal funds include staff who help qualify California residents for federal programs.  Cutting qualification workers cuts federal payments to Californians, which leads to a further economic loss.

The report, The High Cost of Furloughs, discusses other points such as CalPERS payments, losses to businesses, losses to revenue generating departments, rise in foreclosures, and the price for disruptions in state services.

Temporary Restraining Order Issued to Prevent IHSS Cuts

IOn October 19, 2009, US District Court Judge Claudia Wilken issued a temporary restraining order on the cuts which were set to begin on November 1, 2009.  The temporary restraining order does not show that the judge will rule in favor of IHSS clients but only prevents California from sending out notices of service reduction until the case has been heard in court.

A class-action suit was filed on October 1, 2009,  by United Domestic Workers (UDW/AFSCME) ,Disability Rights California, Disability Rights Legal Center, National Health Law Program and National Senior Citizens Law Center,  to stop the service reductions.  The suit contends that the functional index score is arbitrary, unscientific, and not designed to determine eligibility for services.  The suit also argues that the cuts violate due process, the Medicaid Act, and the Americans with Disabilities Act. 

UDW President Laura Reyes, an AFSCME International Vice President, described the cuts, "By cutting IHSS, the Governor and Legislature are actually putting people's lives at risk.  A person with Alzheimer's may be capable of capable of cooking and cleaning for herself, but without assistance, she is likely to leave the stove on after she finishes cooking and burn her house down."  She continued, "Instead of using each consumer's individual needs to determine what services they need, the Governor and his supporters are cutting services the quick-and-dirty way. This is arbitrary, ineffective, and morally disgraceful."

IHSS cuts were used to close the budget gap. The plan was to have IHSS clients disallowed from receiving services if their functional index score was below 2.0.  Clients are ranked for a variety of tasks, and a composite score is calculated.  A score of 2 means verbal assistance or reminding is needed to perform a task.  Scores of 3 or above indicate the help of another person is needed to some degree to complete a task.  For instance, a healthy Alzheimer's patient in the early stages of the disease could have a score of 2 because they are physically able to complete the tasks, but they need verbal coaching to finish the task safely. 

People who work with IHSS patients help with cooking, transportation, bathing, laundry, and other household tasks which the patient would be able to do if well and able-bodied.  Everyone knows an Alzheimer's patient or a disabled person or an elderly person who lives with family because the patient can't live on their own.  Their family makes sure they are fed healthy meals, their laundry is done, their personal hygiene needs are met.  

What if there was no family available to do this?  Or if the family members couldn't quit their jobs to stay home full time to take care of this person?  This is when IHSS workers can come in and help out everyone - the patient and the family. IHSS allows everyone, patient and family, to live higher quality, more independent lives.  IHSS is an important service for all Californians and should be supported to allow all Californians to live their lives with independence and dignity.

 

State Water Crisis - Hearing on Regional Approaches to Statewide Problem - Nov 4

The last event at the Municipal Water District of Orange County (MWDOC) was "sold out", so get your reservation in if you want to attend this hearing.  

The hearing is being held by the Assembly Select Committee on Regional Approaches to Addressing the State's Water Crisis chaired by Assemblyman Jose Solorio.  The hearing is from 9 - 11:30 AM at the Boardroom of the Metropolitan Water District of Southern California Headquarters, 700 N Alameda St, Los Angeles, CA 90012. The site is located near bus, train, light rail and public parking.  

Invited speakers include:

• David Freeman - Deputy Mayor and Interim General Manager, Los Angeles Department of Water and Power
• Tim Brick -  Chair, Metropolitan Water District of Southern California Board of Directors 
• Albert Robles - Chair, Water Replenishment District of Southern California
• Paul Rodriguez - Chair, Latino Water Coalition
• Gary Toebben - President and CEO, Los Angeles Chamber of Commerce
• Andy Lipkis - Founder and President, TreePeople
• Javier Gonzalez - Executive Directors, Strengthening Our Lives (SOL)

RSVP by Friday, Oct 30, 2009 to John Nam at [email protected] or 714-939-8469.

Costa Mesa City Council Discussing Orange County Fairgrounds Specific Plan

Costa Mesa City Council will discuss creating a Specific Plan for the Orange County Fair and Events Center (OCFEC).  Currently, the OCFEC is for sale, and the 10 year Master Plan adopted in August 2003 by the Fair Board carries no legal weight with a new owner.  Costa Mesa City Council will meet on Tuesday, October 20, 2009 at 6 PM.  Council chambers are at 77 Fair Drive, Costa Mesa, CA.

Costa Mesa City Council is looking to adopt a Specific Plan as a way to clearly define uses for the property which complement the Fairgrounds uses and allow for buildout of the existing Fairgrounds Master Plan.  The City Council is able to adopt a Specific Plan by ordinance or resolution without involving the State of California or future property owner because planning and zoning authority lies with Costa Mesa.

The proposed Specific Plan would allow the legal non-conforming use as a fairgrounds to continue.  The use is considered legal non-conforming because the City of Costa Mesa did not approve the OCFEC Master Plan.  In planning department speak, legal non-conforming means the land use is for a legally allowed use but does not meet current planning criteria, and use can continue on in the same manner.

Other uses for the fairgrounds which could be allowed include botanical gardens, a zoo, specialty retail stores, art and historical artifacts gallery, and restaurants or hotels which are ancillary to the Fairgrounds uses.  Uses for the property which would not be allowed under the proposed Specific Plan include hospital or medical offices, hotels/motels, department store, supermarket, general retail, liquor store/convenience store/mini-market, car dealership, among other uses.  

Additionally, the noise restrictions for the Pacific Amphitheater reached under the 1990 Court Order (Case Nos. 42-07-28 and 55-65-08) would be maintained.

The staff report is here. Download 102009SpecificPlan88FairDrive

OC Fairgrounds: Sum of the Parts Worth More Than the Whole

The pending sale of the Orange County Fair and Evens Center (OCFEC) (aka OC Fairgrounds) has many people who work at the facility nervous and community leaders either excited or nervous.

The RFP that was released says the property will go to the highest bidder who can complete the deal and the State receives profit participation after the sale.  Sales of property like this are rarely an all cash sale, especially when profit participation is on the table.  

There are two extreme ends of the deal.  One is to leave the Fairgrounds intact and continue to operate everything the way it is done now. This is unlikely because this does not result in a sufficiently high price for the property in order to be the winning bid. The current cash flows for the property are rather low due to the seasonal operation of the Pacific Amphitheater and OC Fair.  

The other extreme is to knock down every building and create mixed use residential and shopping. Think something like downtown Pasadena - high end residential over shops, with some higher end retail in the mix. This may bring the biggest cash flows and result in the highest potential profit participation for the State because of the rents.  However, this scenario is unlikely because of the zoning battle that would ensue.  Costa Mesa planning commission, city council and residents would have to agree to the higher density zoning. Even if the planning commission and city council agreed, there would certainly be an outcry and subsequent legal maneuvering from the residents to block the deal. 

One scenario is to "part out" the Fairgrounds. 

• The Pacific Amphitheater could be sold (or leased long term) to a company like AEG or the House of Blues, for example. The cash flows from the venue operator would be split with the State.  Ideally, the venue operator would to bring money to the table to help close the deal.  However, to make this deal work the Amphitheater would have to book many more dates than it does now.  In prior years, longer and more frequent concerts have caused Costa Mesa residents to go to court over noise.  
• The Equestrian Center could be converted to high end residential or a mixed used district or an entertainment district.  

Update on New Propositions - Oct 12

These propositions are in the Attorney General's office for review before being assigned a number and sent out for signature gathering.

Citizen Legislature Act from Gabriella Holt, Citizens for California Reform - Legislature limited to meeting for 30 days beginning in January and 60 days beginning in May.

The Free Exercise of Religion from Allan Esses of Yes Jesus is Lord.org - Allows the Bible to be used as legal authority for determination of law.

Religious Freedom from  Allan Esses of Yes Jesus is Lord.org - Allows discussing the Bible in public.

California Cancer Research Act from N. Eugene Hill -  Increases tobacco tax and creates a cancer research oversight committee.

California Taxpayer Protection Act of 2010 from Ted Hilton - Requires proof of "lawful presence" to receive state, local or federal benefits.  Requires proof of "lawful residence' to obtain a regular birth certificate. Lack of proof of "lawful presence" would require issuance of "foreign parent" birth certificate.

Cal Students Talk About Saturday Library Closures and Donation for 24 Hr Libraries During Finals

from The Daily Californian

Learning From Past Mistakes - The California Budget Process Timeline

The Legislative Analyst's Office (LAO) has released their review of the current California budget.  This is the first part in a series that looks at how far California has fallen.  California has fallen into legislative gridlock even though there is a clear majority in Sacramento because a minority of legislators can block passage of a budget.  As a result, California is trapped on frightful roller coaster ride that goes down more than it goes up.  This is how the latest wild ride unfolded.

September 23, 2008 - 2008-09 Budget is passed. The budget covers July 1, 2008 to June 30, 2009

November 4, 2008 - Barack Obama is elected President

November 6, 2008 - Special Session of Legislature called by Gov. Schwarzenegger.  Between signing the budget in September and calling the Special Session, the projected $1.7 billion reserve turned into a possible $9.5 billion deficit caused by revenue projections falling by $11 billion.  Revenues for the 2009-10 budget are projected to be $13 billion lower than anticipated and $22.5 billion would have to be cut from the budget over two years to balance the budget.

November 2008 - Gov. Schwarzenegger proposes a package of $14 billion in tax increases to close the gap.  The increases include a 1.5 cent increase in the sales and use tax for three years, expanding the sales and use tax to services, and imposing a tax on oil pumped out of the ground in California (oil severance tax).  Proposed cuts include reducing Prop 98 funding by $2.5 billion and reducing Supplemental Security Income/State Supplementary Payments (SSI/SSP).

November 30, 2008 - Regular session of the Legislature ends without a revision of the 2008-09 budget.

December 1, 2008 - Legislature begins 2009-10 session.  Governor declares fiscal emergency.  2008-09 revenue shortfall is $11 billion. The shortfall over two budget cycles has gone from $22.5 billion to $28 billion.

December 17, 2008 - 2000 bond funded projects stop receiving advance payments as a result of a decision by the Pooled Money Investment Board.  Funding was stopped for many projects until the State received over $13 billion from the sale of general obligation bonds in March and April 2009.