The CalPERS Brochure Selling California SB400

In 1999, the California Public Employees' Retirement System (CalPERS) convinced the California Legislature to grant retroactive, unfunded retirement benefits to state employees.

Thanks to a booming stock market, courtesy of the late 1990's Dot.Com bubble, these extra benefits would be paid from the incredible (but bogus) stock market returns, freeing both employees and taxpayers from the burden of funding retirement benefits.

Unfortunately, history has proven most unkind.

The full report is available here in PDF form.  The PDF file was created from an original faxed copy and has been OCRed so that most of the text is searchable.




See also ...

• "Scathing report alleges corruption at CalPERS"
  http://articles.latimes.com/2011/mar/14/business/la-fi-calpers-probe-20110315
• "CalPers offered incentives to inflate pension funds' value"
  http://www.capitolweekly.net/article.php?xid=ycaol6koumdme9
• "Schizo CalPERS ponders apocalypse while still mocking pension ‘myths’"
  http://www.calwhine.com/schizo-calpers-ponders-apocalpyse-while-still-mocking-pension-myths/2669/

California: The Oasis of Democratic Politics

At the 2012 Democratic National Convention in Charolette, North Carolina, Debbie Wasserman Schultz, Chairwoman of the Democratic National Committee (DNC) met with the California delegation and spoke of "the oasis of Democratic politics that California is."

Really?  REALLY?!?!  As a fourth-generation native Californian, a small businessman, and attempting to raise a family, I can assure you that I don't feel like I live in heaven with the Democrats running the state.

Democrats hold solid, nearly two-to-one majorities in BOTH Houses of the California Legislature.  Likewise, Democrats hold EVERY major statewide elected office.  Yes, California is an "oasis" of one-party rule. Let's see what a tremendous record of success that the "oasis of Democratic politics" has  delivered for Californians.  I'm just surprised that the rest of the nation isn't begging for California's Democratic Party to take over the rest of the nation.

As of January, 2013, California has the nation's highest unemployment rate, persistently well above the national average although tied with minuscule Rhode Island.  Some will argue that California has had some of the fastest job growth in the nation, which is true--since June 2012 and California needs exceptionally high job growth to overcome its massive jobs deficit.  Meanwhile, 8 of the 10 cities in the nation with the highest unemployment rate are in California.

California has among the nation's highest income tax rates.  California's second-to-top rate of 9.3% is higher than the maximum tax rate in 47 other states and begins at just $48,000 in income.  California's top rate of 10.3% is second highest in the nation, behind Hawaii's 11%. Despite that, California's high tax rates don't produce enough revenue to meet the Sacramento's insatiable spending appetite.  Consequently, the latest sham budget crafted by Governor Brown and the California Legislature includes new tax hikes via Proposition 30 that give California the nation's 1st, 2nd, 3rd, 5th, and 7th highest state income tax rates.  Perhaps not surprisingly, Debbie Wasserman Schultz lives in Florida, one of only seven U.S. states that have ZERO income tax.

Likewise, Proposition 30 increased California's state sales tax rates, which were already the highest in the nation.

California has the nation's highest gasoline tax--tied with New York--about 38% higher than the national average.  California pays some of the highest fuel costs in the nation.

California has lost income-producing taxpayers to other states, according to the Tax Foundation.  Most of the migration was to lower-tax or no-tax states.

In a 2011 Kauffman Foundation survey on small business friendliness, California was one of only four states that received an 'F' rating . Why? According to those surveyed, the primary reason was California's tax code.

California is ranked among the five worst business tax climates in the United States by the Tax Foundation.

California was ranked DEAD LAST by a nation-wide survey of chief executive officers as the worst place in the USA to do business.  California ranked last for nine consecutive years.

California was ranked as the nation's least favorable business climate on a survey by Development Counsellors International.

California is ranked #46 on the 2011 Small Business Survival Index, primarily due to high taxes.

California is the nation's 2nd-most broadly and onerously licensed state.

California is ranked #47 on its lawsuit climate, deteriorating from earlier ratings.

According to an October 2012 report by the California State Treasurer, California has the lowest overall credit rating of any state in the nation.  Sure, California is only ranked second-worst by Moody's but last place by S&P and Fitch.  Why is California now 2nd place with Moody's?  Did California's new sham "balanced" budget convince the credit rating agencies?  No, it's because Moody's downgraded Illinois to below California.  California has the nation's 3rd-highest debt per capita, 2nd-highest debt to personal income, and 2nd-highest debt as a percentage of state GDP.

Despite our high debt levels, Democrats in the California Legislature further burdened California taxpayers by pushing through a new, multi-billion-dollar, not-so-high-speed rail system.  The new plan is so misguided that even the author of Supertrains: Solutions to America's Transportation Gridlock and one of the key Democrat advocates behind the original rail plan recommended AGAINST passing the new plan.

Despite our high debt levels and a supposed lack of money, the California Legislature approved pay raises for Legislative staff.

California has 12% of the nation's population but 33% of the nation's Temporary Aid to Needy Family (TANF) welfare recipients. Why is that?

According to a California Fair Political Practices Commission (FPPC) report, the two biggest spenders in California politics are state public-employee unions California Teachers Association (CTA) and the Service Employees International Union (SEIU).  A majority of that political spending goes to the California Democratic Party.  According to a former California Democrat Legislator, the CTA considers itself as a "the co-equal fourth branch of government."  Even career Democrat, former Assembly Speaker Willie Brown acknowledges that California Governor Jerry Brown (no relation) is afraid to confront the teachers union.

These same unions are the two biggest spenders supporting Proposition 30, designed to raise your taxes.  Did I mention that California is a "union-only" state?

California's 8th-graders scored 3rd worst in the nation in science--tied with Alabama and ahead of only Washington, D.C. (the nation's brain trust) and Mississippi.  Naturally, the California Legislature discussed cutting the 2nd year of high-school to save money.  But, good news everybody, we do have state-mandated "gay history" classes!  Some will argue that California's poor showing is all about student funding.  Washington, D.C. scored dead last on the science assessment by a considerable margin.  Washington, D.C. also has among the nation's highest per student spending.

Democrat super-star Antonio Villaraigosa is Mayor of Los Angeles. Los Angeles is now ranked the 2nd most corrupt region in the United States behind infamously-corrupt Chicago.  You may remember him from the Democratic National Convention when he attempted to return the word "God" and recognize Jerusalem as the capitol of Israel in the Democratic Party platform.

Forty-two-year incumbent California Democrat Senator Dianne Feinstein is afraid to debate her Republican challenger, Elizabeth Emken.  As the July 17th Los Angeles Times editorial put it, "Nothing screams 'entrenched incumbent' more than a refusal to debate an opponent."

Democrat Congressman Pete Stark has been in Congress since 1973.  Although supposedly representing California, he has declared his Maryland home to be his primary residence.  In 2010, over 90% of his campaign contributions came from out-of-state donors, primarily political action committees (PACs).  Fortunately, he finally lost his seat in 2012--a long overdue win for California voters.

California's government was ranked the nation's worst-run state government in 2011 and, in 2012, for the 2nd year in a row.

Only three cities in the United States have a net "unfavorable" rating.  Two are in California (Oakland, Los Angeles) and governed by Progressive Democrats.  California's current Governor, Jerry Brown, was former Mayor of Oakland.

I could go on, but there's not enough room to categorize all the "success" bestowed on the "oasis" of California by the Democrats. In an extra moment of hilarity, leaders from the one-party rule California Democratic Party politburo call Republicans "Nazis." If this is "heaven," I wonder what hell feels like.

New Jersey vs. California--The Governor Smackdown!

Recently, New Jersey's rotund and robust Governor Chris Christie and California's venerable Governor Jerry Brown entered into what might best be called a smackdown.  The entire escapade is somewhat funny given the horrible economic condition of BOTH states.  It's like the zombie telling the corpse that he stinks.

The battle began when Christie Christie, during a speech at the Republican National Convention, called Jerry Brown an "old retread" and a "bad choice".  Jerry Brown, despite his advanced age, shot back with a physical fitness challenge to the immensely obese Chris Christie, including a three-mile race.  Apparently, Jerry Brown misheard "physical" for "fiscal" fitness.

The real loser in this "Battle of the Governors" are the people of California and New Jersey.  Both California and New Jersey suffer from a variety of similar economic maladies and for similar reasons.

• Both California and New Jersey have among the nation's highest state income tax rates.  New Jersey's top income tax rate is 8.97% and starts at incomes over $500,000 (single taxpayer).  In contrast, California's second-highest rate is 9.3% and starts at incomes over $48,000 (single payer)!  California also adds a 1% surtax on incomes over $1 million, resulting in a 10.3%, which is second nationally only to Hawaii's top rate of 11%.
  
  California Governor Brown wants to raise California's ALREADY-high state income tax rates via Proposition 30.  Under Governor Brown's plan, those making over $250,000 would pay 10.3%, which is the rate currently only paid by millionaires in California.  Proposition 30 adds two new tax brackets, including an 11.3% bracket at incomes over $300,000 and a 12.3% bracket at incomes over $500,000.  Both new brackets are higher than any other state in the nation.  As before, the 1% surtax on millionaires would boost California's top income tax rate to 13.3%--a full 21% higher than the next highest state, Hawaii!

• Both California and New Jersey have among the nation's highest state sales tax rates.  California currently has the nation's highest statewide rate, although the combined state, city, county, and local rates in other states may be higher. Governor Brown's Proposition 30, if passed by California voters, would raise the state sales tax rate to 7.50%.

• California has the nation's highest gasoline tax.  Surprisingly, New Jersey's gasoline tax is relatively low--well below the national average.

• Both the California and New Jersey Legislatures are dominated by Democrats with close ties to powerful public-sector unions.  In California, public-sector unions are among the biggest spenders in California politics.  Both the Speaker of the California Assembly and the President pro Tempore in the California Senate have strong ties to California labor unions.  Perhaps unsurprisingly, California's public-sector unions are also major funders of Governor Jerry Brown's Proposition 30 tax hikes.

• Both California and New Jersey are union-only states, where some jobs in the public sector require union membership. In fact, Jerry Brown expanded collective bargaining for California's teachers.
• Both California and New Jersey have among the nation's worst-rated business climates. Both California and New Jersey duke it out for one of the "coveted" bottom five positions.

On the Kauffman Foundation survey of small business friendliness, California ranked 'F'--primarily for its tax code.  Proposition 30, if passed by voters, will no doubt lower California's already dismal ratings.

• Both California and New Jersey have unemployment rates well-above the national average. As of July 2012, California had the nation's 3rd worst unemployment rate at 10.7%.  New Jersey had the nation's 4th worst but is almost a full percentage point better than California.  California's unemployment remained steady from June-to-July while New Jersey's rate worsened slightly from 9.6% to 9.8%.

• Both New Jersey and California have low credit ratings, although California's currently ranks the lowest in the nation. Illinois has since been downgraded since this chart was created, but still ranks above California.

• California has the nation's largest population of Temporary Aid to Needy Families (TANF) welfare recipients, while New Jersey's TANF population is toward the low end nationally.

While California's Governor Jerry Brown in old and New Jersey's Governor Chris Christie is fat, neither state Governor can boast he has a beautiful economy.  However, in my opinion, Governor Brown is leading California in the wrong direction with his Proposition 30 tax hikes.  I encourage California voters to VOTE NO on PROPOSITION 30 this November.

California Proposition 30: Governor Jerry Brown's Big-Government Tax Hike

California Governor Jerry Brown, in partnership with public-sector unions such as the California Teachers Association (CTA), the California Federation of Teachers (CFT) and the Service Employee International Union (SEIU) proposes big tax hikes on a small number of Californians in order to close a multi-billion dollar budget hole.  Despite the budget hole, threats to public safety, and threats to close public schools for weeks, the California Legislature continues to block prudent comprehensive public-pension reforms, to fund tuition benefits for children of undocumented workers, and to fund a not-so-"high-speed" rail line between Merced and Bakersfield.  The California Legislature has NO SPENDING PRIORITIES.

The latest incarnation of the Governor's plan will appear on the November 2012 ballot in California as Proposition 30.

California already has some of the highest state taxes in the United States.  Those earning over $48,000 incur a 9.3% state tax rate--California's second-highest rate, which by itself is already the fourth highest in the nation even without any tax hikes.  Only the top tax rates in Hawaii, California, and Oregon are higher.

If passed, Proposition 30 would burden California the nation’s first, second, third, and fifth highest marginal state tax rates!  The following chart compares California's current state income tax rates and proposed increases against the highest income tax rates in other states.  Billed by the Governor and his allies as a "temporary" tax hike, these rates would be in effect for seven years.  The income tax increases fall exclusively on the top 2-3% of taxpayers who already pay roughly half (or more) of California's entire tax bill.

In order to appear "fair" and "broad-based", Proposition 30 also increases California’s state sales tax, already the nation’s highest. The following chart compares California’s state sales tax rate to the other 49 states.

Despite all of Governor Brown's talk of tax fairness, Proposition 30 circumvents the Legislature’s 2/3rd requirement to raise taxes. In fact, Proposition 30 is “electioneered” by Governor Jerry Brown and his allies to only require a simple majority to pass. Proposition 30 asks the 50% of California voters--who pay little or no state income tax--to pass a big tax increase on the top 2-3% of California taxpayers, who already pay roughly 50% of ALL state income taxes. Proposition 30 is an abuse of the so-called “democratic process”, especially for so-called Democrats. Is this what “democracy” looks like?

Proposition 30 asks California voters for a four-year, 0.25% rate increase to the state sales tax, which equates to a 3.4% rate increase. The sales tax hike applies to ALL Californians. Proposition 30 also asks voters for a seven-year increase on only the top 2-3% of income taxpayers.  This equates to a 9.7% to 24.4% rate increase for the taxpayers who ALREADY pay the highest effective tax rate and roughly 50% of all state income tax.

In 2009, the average tax liability for every California taxpayer was about $2,655.  However, averages usually hide some important details.  For example, the average human being has one testicle and one ovary.  The bottom 50% of taxpayers (and possible voters) pays between $0 and $500 in TOTAL California income tax.  Meanwhile, Governor Brown's tax increase targets the top 2-3% of taxpayers who earn $250,000 or more ever year, despite that they ALREADY pay the highest effective tax rates.  These taxpayers also already pay between $9,000 and $1.3 million.

The primary reason that California income tax revenues collapsed during the financial crisis is that INCOMES collapsed for ALL Californians, but especially for those at the top. The following chart shows the incomes and income taxes collected in 2007 (before the financial crash) and in 2009 (after the financial crash).  Why the big swings in income and taxes for those making over $1 million?  Unlike the federal tax system, California treats capital gains exactly like ordinary earned income.  The California Legislature loves all the extra revenue generated from stock market and real estate gains.  Unfortunately, this over-reliance means huge decreases during market crashes.  The subprime crisis causes simultaneous crashes is BOTH real estate and on Wall Street.  The California Legislative Analysts Office (LAO) has long recognized this problem as a cause for California's revenue volatility.

Despite that top taxpayers still  pay the highest marginal tax rates, Proposition 30 wants to increase those rates even more, leaving California even MORE VULNERABLE to future market swings. 

California ALREADY suffers from its high taxation. The result is that California suffers from a poor business tax climate that drives away jobs and causes are above-average unemployment.  Many Democrats within the California government refuse to believe that high taxes have any effect on California's economy, despite ample evidence to the contrary.  Why have California's tax revenues dropped?  It is NOT because tax rates are too low.  The fundamental problem is that California's private-sector economy is stagnating while government expenditures have increased.  Simply raising taxes, even if it is limited to the top 2-3%, will NOT fix what ails California.

California currently has the nation’s 3rd-worst unemployment rate, beating out only Rhode Island and Nevada.

Naturally, the public-employee unions are bankrolling Proposition 30 and have spent over $31.6 MILLION as of November 3, 2012.

Many of these groups are also recognized as the biggest spenders in California politics, according to a March 2010 report by the California Fair Political Practices Commission.  The California Teachers Association (CTA) has spent $10.7 MILLION on Proposition 30 so far and the Service Employees International Union (SEIU) has spent over $11.1 MILLION as of 11/3/2012.  The spending will likely be even higher by the time the election is over.

What kind of access does that kind of money buy? Just ask California Governor Jerry Brown, who has private town-hall meetings with California's public-sector unions.  Even career Democrats such as Willie Brown (no relation)--California's longest-serving Assembly Speaker and former Mayor of San Francisco--recognize that Governor Brown is a prisoner of the teachers unions. These are the same unions that are bankrolling his tax hike and likely will be out campaigning for it before November.

Meanwhile, the amount of money that the State of California spends continues to grow.  State spending is up 23% since 2000, even accounting for inflation.

Political columnist Dan Walters asks some very good questions about Proposition 30.

Why should we pay more ...

• when we already have one of the nation's highest tax burdens,

• when the Legislature is handing out raises to its staff,

• when politicians haven't curbed rapidly increasing pension costs,

• when they're wasting billions on prisons, 

• when they've shunned a spending limit,

• when they've squandered money on a hapless bullet train project and unworkable computer systems, 

• when they're spending tens of millions on illegal immigrants' college educations, and 

• most importantly – when the state is mired in recession and 2 million-plus are jobless?

Fellow Californians, I urge you to VOTE NO on PROPOSITION 30!  It's bad tax policy and an abuse of the democratic system.

See also ...

• California Secretary of State: Text of Proposition 30
  http://ag.ca.gov/cms_attachments/initiatives/pdfs/i1057_12-0009_governors_initiative_v3.pdf
• California Legislative Analysts Office: Proposition 30
  http://www.lao.ca.gov/ballot/2012/120208.aspx
• MapLight.org: California Proposition 30
  http://votersedge.org/california/ballot-measures/2012/november/prop-30/funding
  
• KCET: Prop 30 Cheat Sheet: Jerry Brown's Tax Measure
  www.kcet.org/news/ballotbrief/elections2012/propositions/prop-30-cheat-sheet-jerry-browns-tax-to.html
• KCET: Who's Funding Prop 30, Jerry Brown's Temporary Tax for Education and Guaranteed Public Safety Funding?
  www.kcet.org/news/ballotbrief/elections2012/propositions/database-whos-funding-prop-30-temporary-tax-to-fund-education.html
• Ballotpedia: California Proposition 30, Sales and Income Tax Increase (2012)
  www.ballotpedia.org/wiki/index.php/California_Proposition_30,_Sales_and_Income_Tax_Increase_(2012)
• California Secretary of State: Political Committees to Support or Oppose Proposition 30
  http://cal-access.sos.ca.gov/Campaign/Measures/Detail.aspx?id=1346100&session=2011
• Election Track: Californians Working Together To Restore And Protect Public Schools, Universities And Public Safety
  www.electiontrack.com/lookup.php?committee=1346049
• Election Track: Californians To Protect Schools, Universities And Public Safety, A Ballot Measure Committee Supported By Governor Jerry Brown
  www.electiontrack.com/lookup.php?committee=1343257
• Election Track: Reclaim California's Future - Yes On Prop. 30
  www.electiontrack.com/lookup.php?committee=1347688
• Election Track: Educators And Working Families To Restore California, A Coalition Of Educators, Community Groups, And Grassroots Organizationswww.electiontrack.com/lookup.php?committee=1344079
• Dan Walters: "Censorship rears its ugly head in California Senate"
  www.sacbee.com/2012/08/10/4712081/dan-walters-censorship-rears-its.html
• Sacramento Bee:  "Viewpoints:  Prop. 30 will hurt state's economic prospects"
  http://www.sacbee.com/2012/10/06/4885977/viewpoints-prop-30-would-hurt.html
• Santa Clarita Valley Signal: "Kevin Korenthal: Prop 32, not 30, deserves your vote"
  http://www.the-signal.com/section/33/article/77367/
• Santa Cruz Sentinel: "Prop. 30 neither honest nor transparent" http://www.santacruzsentinel.com/opinion/ci_21814545/harold-griffith-prop-30-neither-honest-nor-transparent
• Daily Titan: "Prop 30 can't save California from debt" http://www.dailytitan.com/2012/10/prop-30-cant-save-california-from-debt
• CATO: "86ing the Arguments for California Props 30, 38"
  http://www.cato-at-liberty.org/86ing-the-arguments-for-california-props-30-38
• BLOG: "Was the California Senate Censorship of Proposition 30 Intentional? You Decide!"
  http://soquelbythecreek.blogspot.com/2012/08/as-reported-in-sacramento-bee-democrat.html
• BLOG: "The Hollywood and Media Hypocrisy on California Proposition 30 and Possible Media Bias"
  http://soquelbythecreek.blogspot.com/2012/08/prop30mediabiasquestions.html
• BLOG: Proposition 30 "Trigger Cuts" Threat Add Up to a Whole Lot of Nothing http://soquelbythecreek.blogspot.com/2012/10/proposition-30-trigger-cuts-add-up-to.html