🗳️ Nov. 2018 California General Election Analysis (III): Measure for Measure

My sample ballot has been received, indicating that (a) it is indeed Fall; (b) my TV will soon be inundated with political advertising; and (c) it is time for the General Election Ballot analysis. This election, it is being divided into three parts and a summary:

  1. Non-Judicial Offices: State, Federal, and Local
  2. Judicial Offices
  3. Propositions and Measures
  4. Summary

This is Part III: the state and local measures. It covers the following measures:

The last part in this series will be the summary post.

State Measures

Key: (LS) Legislative Statute ♦ (IS) Initiative Statute ♦ (ICS) Initiative Constitutional Amendment/Statute ♦ (ICA) Initiative Constitutional Amendment

I don’t know whether I am getting crotchety as I’m getting older, but the increasing amount of bond authorization propositions is getting to me.  Bonds are a fancy way of saying, “We’re borrowing money.”. We all know that when you borrow money, you have to pay it back with interest. The question then becomes: who pays that interest, and what is the real cost? Interest on the bonds can be paid by either the recipients of the bond proceeds (for example, veterans bonds and user fees), or from the general fund. If the general fund, that means we taxpayers are paying for them. I used to support that, but the net results are increases in taxes (which we can no longer deduct Federally). So I’m looking at bonds paid back from the general fund very carefully. They need to be for a specific purpose, and truly benefit the public and not the people building the projects. They need to be specific in what they are doing, and have strong oversight that the funds will be spent properly. If that’s not the case, I’m likely to vote “no”.

If you wonder why we see so many bond propositions, the answer is: Proposition 13. Many years ago, Prop 13 cut back and froze the assessed valuation of homes. This drastically reduced property tax income, and as California limited the ability to impose new taxes, the way around the problem was to issue bonds. At this point, I think Prop 13 needs rethinking. It primarily benefits corporations these days, and people who could afford to pass their house down to their children and children’s children. That’s rare, and the net result is that the property tax burden is now unbalanced, hitting younger families and families that have moved around or moved up more. I know our property tax bill is around $10K a year. Ouch! So I’m pretty much against continued ways to extend the Prop 13 benefits to an increasingly narrow segment, no matter how well intentioned it may be. As always: I need to be convinced why it is worth it. As a progressive, I’m willing to sacrifice some things to help society as a whole; but when the benefit is to a particularly narrow group, I need to ask: “Why?”

[✗] Prop. 1: Authorizes Bonds to Fund Specified Housing Assistance Programs. (LS)

This proposition authorizes $4 billion in general obligation bonds for existing affordable housing programs for low-income residents, veterans, farmworkers, manufactured and mobile homes, infill, and transit-oriented housing. Fiscal Impact: Increased state costs to repay bonds averaging about $170 million annually over the next 35 years. For the state housing program bonds, which are 75% of the bonds authorized, they would be paid back with interest from the state’s General Fund. The remaining 25% go to Veterans Housing Bonds, which are paid back by veterans participating in the home loan program. So my concern is that $3B of general housing bonds. We’ve had numerous housing measures both at the local and state levels. The program supported by those bonds are: ◊ Affordable Multifamily Housing Programs ($1.8B to build or renovate rental housing projects, with funds going to local governments, nonprofit organizations, and private developers; in exchange, projects must reserve units for low-income households for a period of 55 years); ◊ Infrastructure Programs ($450M to build housing in existing urban areas and near public transportation, as well as projects that support this housing—such as parks and water, sewage, and transportation infrastructure; ◊ Homeownership Programs ($450 million to encourage homeownership for low- and moderate-income homebuyers, providing down payment assistance to first-time homebuyers, as well as funds to assist low- and moderate-income families to build their own homes); and ◊ Farmworker Housing Program ($300 million in loans and grants to build housing for farmworkers).

The way I read this, of that $3B, lots of the money will go to developers, who are the folks that actually build housing, and the percentage of low income housing is negligible. It would make barely a dent in addressing the homeless problem, and it really only attacks the symptom of the housing crisis without attack the real problem — Prop 13 and its impact on new homeowners.

The arguments for the Yes side are that we desperately need this housing. It has loads of people behind it — lots of good organizations. The Yes side is heavily funded by Mark Zuckerberg. There does not appear to be an organized opposition to it. Looking at the papers and such for endorsements was quite interesting. I found positions in both the San Diego U-T and the SacBee in favor of Proposition. They talk heavily about the good this program will do, how the housing is sorely needed — all of which is true. This is why the YIMBY movement supports it.  Yet there are folks against it. The SoCal News Group (PE, Daily News, OCRegister) is against it, noting: “Since bonds are not free money, this comes at a cost much greater than $3 billion. The Legislative Analyst’s Office estimates the total cost, with interest, for the $3 billion in funding this measure calls for would end up at $5.9 billion. In other words, taxpayers will essentially squander a dollar for every dollar in actual revenue this measure raises.” The Howard Jarvis Taxpayers Association — a group I normally detest — notes in the SD Union Tribune: “We don’t dispute that Proposition 1 will result in more affordable housing construction. But are taxpayers receiving the biggest bang for their buck? Currently, it costs an average of over $300,000 to build a unit of affordable housing in California. At that rate, less than 15,000 units will be built as a result of Proposition 1. And remember, that doesn’t include the extra cost of paying the interest on the bond. Ultimately, legislators decided simply to throw more money at a serious problem instead of engaging in structural reform and asking a common-sense question: why does it cost $300,000 to build an affordable housing unit when it costs half that in other states?”

The refrain of the “no” side is “Heaven forfend, onerous regulations and environmental requirements.” I don’t buy that — often, regulations are put in with good intent. But what bothers me more is the question the SCNG raises: “if they insist on subsidizing housing, they should do so directly, rather than wasting taxpayer money on interest payments.” That I agree with. If we are running a state surplus, use it to help build the housing (if that’s what we want to do). If we want to help people afford housing, require that the low income housing employ under-employed folks in the construction, teaching them a trade at the same time. Ultimately, this bond issue is only attacking the symptom of the problem — it is not addressing why housing is so expensive, why it costs so much to construct, and how we can make our housing dollars more effective. If we’re going to be borrowing money, we should be using it in the most efficient manner. I’m not convinced this is it.

📋 Conclusion

No on Proposition 1.

[✓] Prop 2: Authorizes Bonds to Fund Existing Housing Program for Individuals with Mental Illness (LS)

Amends Mental Health Services Act to fund No Place Like Home Program, which finances housing for individuals with mental illness. Ratifies existing law establishing the No Place Like Home Program. Fiscal Impact: Allows the state to use up to $140 million per year of county mental health funds to repay up to $2 billion in bonds. These bonds would fund housing for those with mental illness who are homeless.

The basic function of this measure is to provide bonds to implement two previously approved measures. The SacBee, in its endorsement, captured it well: “The measure would finally let counties use money from Proposition 63 to pay for the construction of permanent housing for homeless people, as long as that housing includes a direct connection to supportive social services. Voters initially approved Proposition 63, commonly known as the Mental Health Services Act, in 2004. It was written by then-Sen. Darrell Steinberg, who after becoming mayor of Sacramento, worked with Sen. Kevin de León, D-Los Angeles, to get the Legislature to tweak it in 2016. The result was the No Place Like Home program, which authorized the use of money from Proposition 63 to finance $2 billion in revenue bonds for programs to alleviate homelessness. The program has been tied up in the courts ever since. Proposition 2 would end that legal maneuvering once and for all.”

That particular aspect of this is made clear in the analysis from the Secretary of State: “The measure allows the state to carry out No Place Like Home. In particular, the measure: (•) Approves the Use of Mental Health Services Act Funds for No Place Like Home. The measure says that Mental Health Services Act funds can be used for No Place Like Home. No more than $140 million of Mental Health Services Act funds could be used for No Place Like Home in any year. (•) Authorizes $2 Billion in Borrowing. The measure allows the state to sell up to $2 billion in bonds to pay for No Place Like Home. The bonds would be repaid over many years with Mental Health Services Act funds. With this measure, the state would no longer need court approval on the issues discussed above to carry out No Place Like Home.”

So how would this be paid for? In 2004, California voters approved Proposition 63, also known as the Mental Health Services Act. The act provides funding for various county mental health services by increasing the income tax paid by those with income above $1 million. This income tax increase raises $1.5 billion to $2.5 billion per year. In 2016, the Legislature created the No Place Like Home Program to build and rehabilitate housing for those with mental illness who are homeless or at-risk of becoming homeless. The state plans to pay for this housing by borrowing up to $2 billion. The state would borrow this money by selling bonds, which would be repaid with interest over about 30 years using revenues from the Mental Health Services Act. This means less funding would be available for other county mental health services. No more than $140 million of Mental Health Services Act funds could be used for No Place Like Home in any year. The bond payments would be around $120 million in a typical year.

Translation: The money is not coming from the general fund.

The Yes on Prop 2 Supporters have a large list of endorsers. This includes the major papers: S-D Union Tribune, Press Democrat, SF Chronicle, SacBee. There appears to be no media opposition to this one, nor is there an organized web page for those opposed to it. The only “no” argument I could find came (unsurprisingly) from the Reason Foundation, which argued not that this measure was bad, but that the surtax on millionaires should be abolished.

This proposition appears to fit my criteria.

📋 Conclusion

Yes on Proposition 2

[✗] Prop 3: Authorizes Bonds to Fund Projects for Water Supply and Quality, Watershed, Fish, Wildlife, Water Conveyance, and Groundwater Sustainability and Storage. (IS)

Authorizes $8.877 billion in state general obligation bonds for various infrastructure projects. Fiscal Impact: Increased state costs to repay bonds averaging $430 million per year over 40 years. Local government savings for water-related projects, likely averaging a couple hundred million dollars annually over the next few decades.

The key words here: “8.877 billion” and “various infrastructure projects”. It seems like every election the state is coming to us with more and more requests for bonds for water projects, yet we see very little in terms of water projects in return. My inclination is to say, basta Enough, as my wife would say. But what are they proposing? First, note that this is an initiative status. It was put on the ballot by the people, vs. the legislature. Reading through the list of what they want to fund, this is a “you get a car, and you get a car, and you get a car”, all paid for with general obligation bonds. Who’s behind it? According to Ballotpedia, “The largest contributions to the support committees were the Ducks Unlimited ($400,000), California Waterfowl Association ($395,000), and Western Growers ($275,000).” The San Diego UT piece, where they oppose the measure, notes: “The first and most obvious is that Proposition 3 is on the ballot not because the Legislature thought it was necessary but because of signature-gatherers paid by those who stand to benefit from the bond. A July 16 CALmatters story noted that more than half the money raised to promote the measure came from business groups and farmers seeking specific improvements, especially to the 152-mile-long Friant-Kern Canal in the Central Valley. That’s why $750 million in the bond is set aside for canal repairs.”

The UT goes on to note: “The second reason to vote no is that voters just approved a $4 billion state bond in June to pay for improvements at parks and for water projects, on top of a $7.5 billion water bond that passed in 2014. Passing a third water bond in just four years feels like throwing money at a problem.”

Both, I think, are valid concerns. The San Francisco Chronicle is also against it, noting “This scheme was devised as an initiative that is being funded, in part, by individuals and entities that are going to be receiving a share of the bond money. The pay-to-play aspect in itself should give voters ample reason to reject Prop. 3. There are also good policy reasons to vote no.”  The Sacramento Bee is also against it, noting “The measure promises money for quite a few local agencies, nonprofits, private water companies and others, which is great for them. It’s not clear, however, that these are the projects that California needs most right now, or that they couldn’t get the money elsewhere.” The SCNG (So Cal News Group) is also against it, complaining not only about the “Pay to Play” aspect, but the cost: “With interest, Prop. 3 would ultimately cost taxpayers twice as much. According to the legislative analyst, taxpayers would be on the hook for an average of $430 million in repayments every year for 40 years.” The LA Times hasn’t weighed in yet.

But what does the Yes side have to say for itself? Well, the Santa Rosa Press Democrat notes “What tips the balance? Much of the money will be distributed as grants by state agencies, and Sonoma County Water Agency officials anticipate funding from several categories, including wastewater recycling, urban and agricultural water conservation, flood control and storm water management. ” Translation: “We get a car!”. The Fresno Bee likes it as well, noting “[T]he author of Proposition 3, Gerald Meral of the Natural Heritage Institute,says no other previous water bond has had a focus on the Valley like this one. To start, $750 million would be devoted to repairing and restoring the Friant-Kern and Madera canals, key parts of the federal system that delivers water from Millerton Lake to Kern and Madera counties. Along the way, the canal provides supplies to Fresno, Orange Cove and Lindsay, as well as irrigation districts that serve much of the farmers on the Valley’s eastside.”. Translation: “We get a car!”

The “No” site is paid for by the Sierra club, and doesn’t list as many organizations that are against. Still, much as I understand the importance of water to the state, this initiative does not appear to be the way to do it.

📋 Conclusion

No on Proposition 3.

[✓] Prop 4: Authorizes Bonds Funding Construction at Hospitals Providing Children’s Health Care (IS)

Authorizes $1.5 billion in bonds, to be repaid from state’s General Fund, to fund grants for construction, expansion, renovation, and equipping of qualifying children’s hospitals. Fiscal Impact: Increased state costs to repay bonds averaging about $80 million annually over the next 35 years.

This is another initiative statue, So who is behind it? According to Ballotpedia, “The California Children’s Hospital Association’s Yes on Children’s Hospital, a ballot measure committee, had raised $10.90 million to support the ballot initiative. Contributions were from eight children’s hospitals that would receive bond revenue from the measure.” Hmmm, “You get a car!”

So what does it do? According to the legislative analyst, “This measure authorizes the state to sell an additional $1.5 billion in general obligation bonds for capital improvement projects at (1) the 13 children’s hospitals and (2) other public or private nonprofit hospitals that treat children eligible for the CCS program. As shown in Figure 1, the measure provides 72 percent of the bond funds—roughly $1.1 billion— to the eight private nonprofit children’s hospitals. Each of these eight hospitals may apply for an equal share of this funding. The measure provides 18 percent of the bond funds—$270 million—to the five UC children’s hospitals. Each UC children’s hospital may apply for an equal share of this funding.” How would these be repaid? “using the state’s general tax revenues.” So, we have a direct benefit to the initiative sponsors, paid for by the taxpayers.

But that might be worth it if this is necessary? Is it? The Yes on 4 side shows that most of the major papers in the state are in favor of this one. The LA Times notes that this is the smallest of the bond measures, and that “Many of these hospitals serve a disproportionate share of low-income patients, leaving them dependent on the state’s help to meet their construction needs. Voters have approved two similar measures before, in 2004 and 2008, and they should pass this one as well.” That aspect is true: these are nonprofit hospitals.  The Times goes on to note: “The eight children’s hospitals that would be the main beneficiaries of this bond issue are being squeezed financially by the state in two ways. A growing percentage of their patients — 63% — is on Medi-Cal, and the state reimburses hospitals for those treatments at one of the lowest rates in the country. At the same time, the state has imposed more stringent seismic retrofitting standards that the hospitals must meet by 2030, and to do that, almost 30% of their inpatient capacity needs to be upgraded.”

Seismic issues are a big factor for hospitals, and many have closed because of the costs of repair. Especially for our children, we need to make sure these places are open. Even the SD Union Tribune, which is cool to bonds, notes “

At a time when the state regularly sets aside billions of dollars in reserves, it’s tough to grasp the logic of using borrowed money to fix up hospitals that will end up costing taxpayers about $2.9 billion. Nevertheless, The San Diego Union-Tribune Editorial Board supports Proposition 4. Thanks to Gov. Jerry Brown’s coolness to bonds, even if all the measures now before voters pass, the state is on track to spend less than 5 percent of its general fund budget on bond payments — a relatively small amount. And as Zocalo Public Square columnist Joe Mathews recently pointed out on these pages, two previous state bonds helping children’s hospitals were well-managed. He also makes the case that the 13 hospitals do an admirable job helping the children of California deal with potentially devastating illnesses — and that their needs for capital improvements are undeniable.”

What does the No side have to say? They don’t have a website, but the League of Women Voters notes “State funds should not be used to support private facilities. This principle stands even when, as is the case in this measure, the facilities serve severely ill children.” The OC Register is also against, noting “While we appreciate the fact that raising $1.5 billion in bonds will make it easier for children’s hospitals to meet their construction and renovation goals, we question the wisdom of relying on bonds. If most agree the projects covered by this bond measure are truly needed, why doesn’t the state save taxpayers $1.4 billion in interest payments and make room in its ever-expanding budget to help cover the costs?”

My thoughts? I think this one is a small bonds, as bond measures go, and ensuring that the seismic upgrades are done is important.

📋 Conclusion

Yes on Proposition 4.

[✗] Prop 5: Changes Requirements for Certain Property Owners to Transfer Their Property Tax Base to Replacement Property (ICS)

Removes certain transfer requirements for homeowners over 55, severely disabled homeowners, and contaminated or disaster-destroyed property. Fiscal Impact: Schools and local governments each would lose over $100 million in annual property taxes early on, growing to about $1 billion per year. Similar increase in state costs to backfill school property tax losses.

The analysis of this is a bit complicated, but basically, it is this: normally, if you are over 55 or severely disabled, you can transfer your low property taxes once to a new home. This would allow you to do it more than once, to a more expensive home, and have it adjusted down for a lower-priced home. But now ask yourself: Who would really benefit? Prop 13 was passed in the 1970s, meaning that most of the people it benefited will have already passed their homes to their kids. Lower and middle income families couldn’t afford to do that; most kids will have moved around. My gut tells me this will benefit wealthy families more.

The Yes side does not list endorsements, but notes that it is funded by “California Association of REALTORS®. Committee major funding from:  California Association of REALTORS® , National Association of REALTORS® “. Translation: People who make money from property sales.  Oh, and the OC Register also likes it.

What about the No side? They are upset about cuts to schools that would result from lower property taxes. They do list their coalition on the website: teachers, Democratic organizations, loads  of associations. They also note that the BANG (Bay Area News Group — think Mercury News) and Sacbee are against it. So is the San Francisco Chronicle, noting: “It’s hard to describe how many different bad policies Prop. 5 would create or exacerbate. The idea behind the initiative, which was developed by the California Association of Realtors, is to increase the number of housing units on the market.”

My gut feeling is that we need to fix Prop. 13, not keep creating exemptions.

📋 Conclusion

No on Proposition 5.

[✗] Prop 6: Eliminates Certain Road Repair and Transportation Funding. Requires Certain Fuel Taxes and Vehicle Fees Be Approved by the Electorate (ICA)

Repeals a 2017 transportation law’s taxes and fees designated for road repairs and public transportation. Fiscal Impact: Reduced ongoing revenues of $5.1 billion from state fuel and vehicle taxes that mainly would have paid for highway and road maintenance and repairs, as well as transit programs.

You have to ask on this one? I’m the California Highway Guy.

Let me give some history on how California has traditionally funded its roads. I’m quoting from my Chronology here: In 1947, in response to the recommendations of the Joint Interim Commission on Highways, Roads, Streets, and Bridges, the Legislature passed the Collier-Burns Act (Chapter 11). This act, among other things, (a) Raised the gasoline and diesel fuel tax to 4.5 cents per gallon; (b) Increased automobile registration fees from $3 to $6, with a proportionate increase in the weight taxes on trucks; (c) Created a fund for all highway revenues and motor vehicle taxes. (d) Revised apportionment of revenues from fuel taxes to cities, counties, and the state. (e) Directed gasoline tax and registration fee revenues toward construction of freeways in urban areas and highways in rural areas of the state. (f) Divided state highway construction funds with 55% allocated to the southern half of the state, and 45% to the northern half of the state. This was a significant shift from the previous 49%/51% allocation. This also provided minimum funding for each county. Since 1947, the fuel tax increased very little, certainly not equivalent to the increase in costs. During that time, fuel economy went down, more cars went electric, and construction costs skyrocketed. There were insufficient funds for maintenance. So about a year ago, the legislature passed SB1. This increased the exise tax and diesel fees, increased other fees such as weight fees and fees for vehicles that don’t use fuel.  There are specific purposes for which these funds can be spend — basically, things under the purview of the California Transportation Commission. This includes not only roads, but transit, air facilities, rail, and such. It can also be spent on local (city and county) highways. The law has strict rules on accounting for costs. There is complete transparency on how the funds are being spent; just visit http://rebuildingca.ca.gov/.

There are some people who are upset that the fuel tax went up, notably Republicans who hate any form of tax. Never mind that this is a tax that is going to services paid for by the users of those services. Never mind that having safe roads and modern transit systems make the state better for business and to live in.

The “Yes” side is intentionally trying to mislead. They bring up problems with mismanagement at the DMV. Never mind the fact that this tax has nothing to do with the DMV. They bring up problems with mismangement of high speed rail. Never mind the fact that SB1 has nothing to do with high speed rail. They want you to translate your hatred of DMV or transportation bureaucracy into voting down an excise tax the greatly benefits, and already has benefited, the state.

The “No” side has almost unified support from the cities and the media. If you read my headline article, you’ll find the editorials. SacBee: “Hating Caltrans isn’t a reason to repeal the gas tax“. LA Times: “It’s hard to overstate how destructive Proposition 6 would be for California. Vote no.”. SF Chronicle: “No on Proposition 6 — cynical political ploy would destroy California’s roads“. Redding (a part of the state that doesn’t love taxes): “Gas tax increase repeal supporters not telling entire story to voters“.  Mercury News: “No on Prop. 6 to keep state roads, transit funds“. SD Union Tribune: “Proposition 6: Vote no because gas tax-funded improvements are much-needed“. Petaluma: “Vote no on Prop. 6 gas tax repeal.” The San Bernardino Sun even has a look at how roads would change if it was repealed.

Look at the “No on 6” website for more details. This one isn’t just a no, it is a “hell no!”

📋 Conclusion

Hell No on Proposition 6.

[✗] Prop 7: Conforms California Daylight Saving Time to Federal Law. Allows Legislature to Change Daylight Saving Time Period. (LS)

Gives Legislature ability to change daylight saving time period by two-thirds vote, if changes are consistent with federal law. Fiscal Impact: This measure has no direct fiscal effect because changes to daylight saving time would depend on future actions by the Legislature and potentially the federal government.

Some people absolutely hate Daylight Saving Time. It doesn’t bother me; I like not having to drive to work in the dark, and having more daylight during the evening hours. But still, they got this initiative on the ballot. As for what this does: right now, it does nothing, as the legislature has taken no action. If they do something, we adjust when we change our clocks. It may mean we need to patch software, or manually adjust things for which the old calculations don’t work.

The Yes side claims Daylight Saving Time is dangerous, and for some reason the California Democratic Party is in favor of this. But other than the party, the page lists no endorsements.  Oh, the LA Times is in favor of it.

There doesn’t seem to be an organized opposition either. But the papers, in general, are against it. SF Chronicle: No. SacBee: No. Mercury News: No. Press Democrat: No. Most of the papers in the southern half the state haven’t weighed in yet.

Current law requires the state to comply with federal law in this area. That makes it much easier when I have to schedule things with East Coast folks. I see no reason to change.

📋 Conclusion

No on Proposition 7.

[✗] Prop 8: Regulates Amounts Outpatient Kidney Dialysis Clinics Charge for Dialysis Treatment (IS)

Requires rebates and penalties if charges exceed limit. Requires annual reporting to the state. Prohibits clinics from refusing to treat patients based on payment source. Fiscal Impact: Overall annual effect on state and local governments ranging from net positive impact in the low tens of millions of dollars to net negative impact in the tens of millions of dollars.

If you watch TV at all, you’ve been hit over the head with ads against this… paid for by the dialysis clinics. That’s not surprising, as this regulates their business and what they can charge, and forces them to accept patients that may not be the class of who they want to treat. And, from the other side, I get that prices are high and that everyone who needs dialysis should be able to get it. But is this the way to solve the problem?

The Yes side argues that the clinics are raking in the profits, and poorly maintaining their facilities. They want more spent on patient care. On their side are is the Democratic party, unions, healthcare coalitions, diversity and social action groups. Who is funding them? “Sponsored by Service Employees International Union—United Healthcare Workers West.” In other words: the healthcare workers.

The No side argues that this will close clinics, and that it is opposed by doctors and nurses, as well as patients. When you look at their coalition, you see dialysis patient groups, doctors and nurses groups, veterans organizations, some seniors groups, taxpayer associations. Their major funding is from the folks whose ox is being gored: the folks who operate the clinics.

Where is the media on this? Pretty much opposed. SD Union Tribune. SF Chronicle. Mercury News. SCNG. LA Times.

I don’t think this is an area the state should be meddling. If you want to fix health care costs, we need to do it at a National level.

📋 Conclusion

No on Proposition 8.

[✓] Prop 10: Expands Local Government’ Authority to Enact Rent Control on Residential  Property (IS)

Repeals state law that currently restricts the scope of rent control policies that cities and other local jurisdictions may impose on residential property. Fiscal Impact: Potential net reduction in state and local revenues of tens of millions of dollars per year in the long term. Depending on actions by local communities, revenue losses could be less or considerably more.

First and foremost, it is important note that this proposition does not impose rent control. That appears to be a FUD-tactic (fear, uncertainty, distrust) being used in the ads. So what does it do? It repeals the limits on local rent control laws in Costa-Hawkins, meaning that after it passes, cities and counties can regulate rents for any housing. They also can limit how much a landlord may increase rents when a new renter moves in. The measure itself does not make any changes to local rent control laws. With a few exceptions, cities and counties would have to take separate actions to change their local laws. It also requires a fair rate of return, which puts the results of past court rulings into state law.

As background, the 1995 Costa-Hawkins Rental Housing Act, protects properties built that year or later from rent control. The law also prevents cities with preexisting rent control laws from extending them to newer units; San Francisco’s ordinance, for example, remains limited to housing built before 1980. And Costa-Hawkins exempts single-family homes from rent control while guaranteeing property owners the right to raise rents to market value when units are vacated.

What this means is that the argument devolves into: is rent control a good thing? From the renter’s side, it is: it means that the likelihood of there being affordable rental units increases, although whether they can be found is a different question. In many cities with limited rent control, finding controlled units can be difficult because they are so desired supply is tight. From the landlord’s side, the view is less rosy. Sure you can rent your units, but the profits you can make are severely limited (and may, depending on the rates that the city permits, may mean you lose money). This sometimes means that landlords will remove rental units from the rental stock, converting them to condos not subject to these rules (and which are more expensive, increasing the affordable housing supply problem). There’s also the question of how this interacts with short-term rentals like AirBNB. If this passes, will it regulate AirBNB rates? Will it result in units being removed from the long-term rental market into the short-term rental? There is already one case of a landlord who increased the rent on his rentals, promising to lower it if Prop 10 fails.

What this means is that we have a pitched battle between those advocating for affordable housing and those who provide rental units. Each side is trying to scare you into voting their way. But remember the key point here: This does not impose rent control in and of itself — it just makes it possible for cities and counties to do so.

The Yes on 10 camp notes that the measure is supported by a number of progressive cities (LA, San Francisco, Berkeley, Oakland), housing providers, tenants organizations, labor organizations, Democratic clubs, urban leagues, social-action based faith organizations, and so on. Media supporting this includes the LA Times and the SacBee. The major funding for the Yes side comes from the AIDS Healthcare Foundation, the California Teachers Association, and the California Nursing Association. Why the latter two? Because teachers and nurses often are paid at a scale that forces them to rent. The League of Women Voters is also in favor.

The No on 10 camp also has some affordable housing and seniors groups, unions in the construction trades, and a lot of businesses — especially apartment owners associations, construction businesses, chambers of commerce, mortgage associations, and a number of politicians. Their major funding comes from Equity Residential; California Association of Realtors Issues Mobilization PAC; and Essex Property Trust, Inc., and Affiliated Entities. Why this association? The fear is that rent control will (a) impact the income of apartment owners; (b) lead to less new construction of rental housing, impacting construction businesses and banking and mortgages; and (c) there will be less sales of rental property because of the reduced income. Media opposing the proposition includes the SF Chronicle, the OC Register, the Fresno Bee, the SD Union Tribune, and, quite interestingly, the LA Sentinel, a black-owned and focused newspaper.

Reviewing the media, the argument on the “Yes” side appears to be that this does not impose rent control in and of itself, and it is appropriate that this issue be decided at the local level, based on the needs of a particular community. The argument on the “No” side appears to be in two different directions. Some do not believe that the local officials can decide the issue right (SF Chronicle). Others focus on the economic problems that rent control brings (and that the “Yes” side acknowledges). The Sentinel has an interesting variant on that, focusing on the imposition of rent control on single family homes, noting that these homes (and the renting of them) has been a big avenue of wealth building in communities: You move up and out, and then rent out your old house at market rates. But the economic makes the assumption — possibly false — that rent control will be imposed, that it is a fait accompli. My thought on that is: if you think rent control will be imposed, what does that say about the rents that you are charging? It is like the company that fears unions, where other companies that treat their employees well have no fear. If you charge reasonable rents, why would you fear rent control?

Right now, I’m inclined to support this measure. This is not because I believe rent control is always the answer. Rather, I buy the argument that this should be a local decision, in response to local needs after debate by the local community. Every locality has different needs. Rent control might be appropriate, for example, in a college town or the area near a university, or in low-income portions of a community, but not everywhere. Making it local provides the opportunity.

📋 Conclusion

Yes on Proposition 10.

[✗] Prop 11: Requires Private-Sector Emergency Ambulance Employees to Remain On-Call During Work Breaks. Eliminates Certain Employer Liability (IS)

Law entitling hourly employees to breaks without being on-call would not apply to private-sector ambulance employees. Fiscal Impact: Likely fiscal benefit to local governments (in the form of lower costs and higher revenues), potentially in the tens of millions of dollars each year.

There is a long and good explanation by the legislative analyst, but the gist of it is this: Most ambulance service is provided by private companies. In the past, they required employees to be “on-call” during meal breaks so that they didn’t have to hire additional people to cover during those breaks. In 2016, a court decision determined that was in violation of California labor law. This measure, essentially, makes that practice legal. It also addresses the fines that those companies would have incurred due to the past violations, as well as providing some mental helps support for the Paramedics/EMTs to deal with the traumatic environments they work in.  There are some nuances, such as making up meals missed due to a call, but that’s the essence.

So you can anticipate who is in favor of this: Ambulance companies, clearly. Insurance companies, because with out it ambulance costs increase and therefore insurance has to cover more. Emergency responders, because they often put the people they take care of first. Doctors, nurses? Clearly in favor, for it helps patients. Against it? Unions, perhaps.

The Yes on 11 side emphasizes the importance of timely response. It’s primary funder? American Medical Response (AMR) — an ambulance company. The coalition description shows the suspects above in favor: ambulance companies, cities, medical providers, senior groups, chambers of commerce, taxpayers associations. It also shows that almost every major paper in the state is in favor of this proposition. That includes papers on both sides of the political spectrum.

So who is on the “No” side? The SF Chronicle for one. They appear to feel this is a fix for a specific company: “The union representing 4,000 ambulance workers agrees with the need for a fix. In fact, it supported AB263, which spelled out that employees could be required to monitor pagers, radios, station and alert boxes, intercoms, cell phones and other communications devices during their breaks — and could be required to answer an emergency call. That bill cleared the Assembly on a 56-17 vote on June 1, 2017. However, that bill stalled in the state Senate over two key issues: One was whether the interruptions could include less serious calls; the other was whether the legislation should effectively void pending labor-related lawsuits against American Medical Response, which also happens to be the funder of Prop. 11. Those workers should not be denied their day in court. This issue should be resolved in the Legislature, with all parties at the table to negotiate and compromise.” Also against it, less surprisingly, is the California Labor Federation. Their concern is similar to the Chronicle: This benefits one company that abused their workers and now will get away with no fine, and that ads are misleading people into thinking first responders care more about meals, when the concern is having first responders be in their best shape when they respond.

This is a clear example of the pitfalls of the California initiative process: you need to see who is behind the measure, who benefits, how it is being presented and how truthful it is, and whether it was put on the ballot for a public or private interest. Most of the time, initiative statutes are flawed in some way. The voters must determine if it can live with those flaws, or whether (like Prop 13) there are going to be more problems down the roads because of it.

I went to go look at the actual measure. It’s problematic. First, it only talks about the responders being on-call — it never defines what types of emergencies require immediate response and which don’t. “Cat up a tree” is the same as a heart attack. That’s bad. With respect to the legal aspects, there’s “Notwithstanding any other provision of law to the contrary, Sections 887 and 888 are declaratory of, and do not alter or amend, existing California law and shall apply to any and all actions pending on, or commenced after, October 25, 2017, alleging a violation of Section 11090 of Title 8 of the California Code of Regulations (Industrial Welfare Commission (IWC) Order No. 9-2001) or any amended, successor, or replacement law, regulation, or IWC order.”. Translation: If it happened before 10/25/2017 (presumably when AMR agreed to comply), it was legal. That’s a problem. But what is most problematic isn’t mentioned anywhere, and is with respect to amending this puppy: “The Legislature may amend this chapter by a statute passed in each house of the
Legislature by rollcall vote entered in the journal, four-fifths of the membership concurring,..”  That’s 80%. That’s a higher bar than tax law. That’s just too high; this will never be amended.

I think I agree, in essence, with the Chronicle. This is too biased in favor of one company, and is badly written.

📋 Conclusion

No on Proposition 11.

[✗] Prop 12: Establishes New Standards for Confinement of Specified Farm Animals; Bans Sale of Non-Complying Products. (IS)

Establishes minimum requirements for confining certain farm animals. Prohibits sales of meat and egg products from animals confined in noncomplying manner. Fiscal Impact: Potential decrease in state income tax revenues from farm businesses, likely not more than several million dollars annually. State costs up to $10 million annually to enforce the measure.

This is one of those “only in California” propositions. That doesn’t make it bad, but does reinforce the impression of California as much more progressive than other parts of the country. Those who care about animal mistreatment are clearly in favor. Farmers probably are not, because it increases their costs. It may hurt the farm business environment in the state.

Prop 2, in 2008, established some standards for the treatment of some animals. This measure (Proposition 12) creates new minimum requirements on farmers to provide more space for egg-laying hens, breeding pigs, and calves raised for veal. These requirements, which apply to farm animals raised in California, would be phased in over the next several years. The measure also makes it illegal for businesses in California to knowingly sell eggs (including liquid eggs) or uncooked pork or veal that came from animals housed in ways that do not meet the measure’s requirements. This sales ban applies to products from animals raised in California or out-of-state. The sales ban generally does not apply to foods that have eggs, pork, or veal as an ingredient or topping (such as cookie dough and pizza).

The sales ban, to me, is the problematic part. It is like California’s fuel standards for cars, which were intended to pull up the standards of the rest of the country, at a cost to Californians of more expensive cars. Same thing with pollution standards. Same thing with the standards on fuel with respect to pollution. This would make it so that meat raised elsewhere in the country — think pork or veal from other states (and possibly things like imported ham) has to be humane, or they lose the California market. It doesn’t, by the way, apply to Tyson chicken, as we only care about the eggs, not the chicken itself (hmmm, perhaps Republicans might support that to be consistent, but I digress). The main concern is that this will raise prices for you and I at the market, especially if you are buying big-business meat.

There is also the question of: Why these animals? Why these products? Gastropod just did an episode on why we eat the animals that we do, and there’s a similar question here. Why do we care about how veal is treated, but not the cow as an adult? Why breeding pigs, and not pigs raised for meat and other purposes? Why only egg-laying chickens, and not the chickens we raise for their meat? What about other meat animals — sheep and goats? Do we care about fish and sustainable aquaculture? We are being incredibly inconsistent, if we are really concerned about animal welfare.

Supporting this measure are primarily animal welfare groups, such as the Humane Society, farmworker groups, selected elected officials. Papers include the LA Times and the Bay Area News Group chain (Mercury News, etc.). Faith organizations, family farmers, and veterinarians also support this. The “No” side makes an interesting argument: This is badly written, delays implementation of the cage-free standards, has significant legal problems, and doesn’t protect animals. They note that PETA is against this.

As is common with initiative efforts, they point out the fatal flaw: Look to who benefits: “Deceptively promoted as a cage-free measure, this backsliding proposition, in fact, explicitly legalizes the continued use of egg-factory cages until, at the very least, 2022! And even that date is tentative, because Proposition 12 also would allow the Legislature to make additional changes without the consent of voters. This capitulation to the egg industry is the result of a public relations alliance between the co-opted [Humane Society of the US (HSUS, out of Washington DC) and the industry’s national trade association, United Egg Producers.” They also note: “Proposition 12 would repeal [the requirements of Prop 2 that hens be given enough room to “…fully spread both wings without touching the side of an enclosure or other egg-laying hens.”] and allow egg factories to give each hen only ONE SQUARE FOOT of cage or floor space. This cruel and unethical space allotment (one square foot per hen) is an outright betrayal of farm animals and California voters.  And it’s precisely why Central Valley Eggs, the largest factory-farm complex ever to be built in California, actively supports this initiative.”

Media against Prop 12 include the Santa Rosa Press Democrat.

I also found an interesting piece from a scientist at UC Davis. The school is officially hands off on this, because the last time they got into a lawsuit. The blog piece goes into the humane society vs. humane society aspects of the piece, and notes the problems with HSUS. But it goes on to note that this proposition also removes the exemption for scientific and medical research. As the blog notes: “In other words, scientific and agricultural research animals at universities and other research facilities are subject to the provisions of the initiative – just like all of the farm animals. The implications of this change to the research exemption on things such as teaching, scientific or agricultural research, especially for genetic and nutrition research (we need individual cages to collect observations or phenotypes on each animal, and to record which egg comes from which hen), may well not be discovered until after the ballot votes are cast when agriculturalists and scientists go to perform specialized research on calves, pigs, or poultry.” There’s another article on the scientific view here; evidently the blog I found was the first of three.

Although I believe in animal welfare, my research on this proposition shows that it is a flawed way to do it.

📋 Conclusion

No on Proposition 12.

County Measures

[✓] Measure W: Los Angeles Region’s Public Health and Safe, Clean Water Program (LAFCD).

Shall an ordinance improving/protecting water quality; capturing rain/stormwater to increase safe drinking water supplies and prepare for future drought; protecting public health and marine life by reducing
pollution, trash, toxins/plastics entering Los Angeles County waterways/bays/beaches; establishing a parcel tax of 2.5¢ per square foot of impermeable area, exempting low-income seniors, raising approximately $300,000,000 annually until ended by voters, requiring independent audits, oversight and local control be adopted?

LAist has a great summary of this measure. It would be “a new tax on impermeable land (aka surfaces that don’t absorb water). That’s money that would go to fund new projects to catch stormwater, clean it and percolate it underground. The goal in this drought-plagued region is to increase the region’s future water supply. The bar for passage is high. Two-thirds of voters in the Los Angeles County Flood Control District need to say yes. If that happens, then property owners would be charged a new tax of 2.5 cents each year for every square foot of land that sheds water.” They would determine the impermeable square footage by satellite maps. They note that “The tax would add about $83 to the annual property tax bill for owners of a typical parcel of about 6,000 square feet. ” Where does the money go? According to LAist, “The $300 million annual tax revenue would fund jobs to build and maintain stormwater capture structures. Some of the projects would involve tearing out ballfields at schools and parks, installing underground water collection vaults and then rebuilding the play areas above. The projects are intended to also increase the amount of green and open space within the mountains-to-ocean watershed. Some advocates for the tax translate that to mean that some parts of the L.A. Basin that are hot and treeless could get a better tree canopy, which could cool the neighborhood down.”

The Yes on W side emphasizes this is a four part plan: capture it, clean it, make it safe, make it for everyone. That page is paid for by the county. There is no opposition page. Media has not yet taken a position. Other endorsements fall where you would expect: conservation groups and Democratic groups – in favor. Howard Jarvis and Republican groups – against.

This is property tax based, but it is not based on assessed valuation — so it isn’t subject to the Prop 13 imbalance. It is impacted by how much hardscape you have vs. greenscape. It might push me to finally get rid of some concrete in our backyard (hmmm, the measure does allow the county to establish an incentive program, which might help us do it). It will greatly impact those who ripped out their lawns to save water, only to replace it with plastic sheeting or hardscape, as opposed to xeriscaping. But doing what we can to save clean water, especially in the era of climate change, is important.

I guess I could spare $100.

📋 Conclusion

Yes on Measure W.

City Measures

[✗] Measure B. Municipal Financial Institution (Charter Amendment)

July 2017, Councilpresident Wesson and Councilmember Krekorian introduced a motion asking the City Administrative Officer and the Chief Legislative Analyst, with the assistance of the Office of Finance and the City Attorney to report on the feasibility, requirements, legislative barriers and any other relevant aspects of creating a state-chartered public bank, or other similar such financial institution, names “Bank of Los Angeles” that would provide banking services to reinvest in the communities, neighborhoods and rehabilitation of affordable housing and workforce housing, utilizing deposits and providing financial services and products to local businesses, including the cannabis industry. This City ballot initiative is a LA City Charter amendment that would allow the City to begin the process of looking into the possibility of a City Municipal Bank.

Essentially, the notion is that businesses, such as pot, can’t work with normal banks. Similarly, conventional banks don’t want to invest in low income neighborhoods. Therefore, the city should create a bank. Before it can, however, it needs to change the city charter.

According to the “Yes on B” side, this is the first step towards exploring the creation of a socially, economically, and environmentally responsible city-owned bank. At this point, things are cost-free and risk-free. The measure simply removes one barrier to establishing a bank. A sound business plan would follow, to be approved by voters and officials. They note that last year the City of Los Angeles paid $170 million in banking fees and $1.1 billion in interest to big banks and investors. Banks have leveraged our tax dollars to finance harmful industries including private prisons, fossil fuel extraction, and weapons manufacturing. In 2017, the City of Los Angeles divested its funds from Wells Fargo, which was fined billions of dollars for creating illegal customer accounts, has a history of discriminating against Latino and African-American home buyers, and finances industries harmful to Angelenos. Local community banks are too small to manage the city’s funds, but Wall Street is not the only alternative. Banking as a public utility is a proven model worldwide. Public banks keep money local and cut costs by eliminating middlemen, shareholders and high-paid executives. They claim the proposal “is supported by a broad-based coalition including labor unions, social justice organizations, environmental groups, and local community organizations.” Public banking has a lot of supporters, and the notion has worked in other areas.

Unsurprisingly, the California Bankers Association is against the measure. The LA Times is also against it, calling it “one of the most ill-conceived, half-baked ballot measures in years”. Why do they feel that way? According to the Times, “There’s been no formal study, no plan, nothing of substance completed to determine whether a Bank of Los Angeles is even feasible, much less a good idea. Voters are being asked to approve a vague concept and put their trust — and their money — in City Hall to figure it all out.” They go on to note that “Of the many cities and states that have recently proposed creating a public bank, not one has actually done it yet. In fact, there is only one established public bank in the United States: the Bank of North Dakota, which was formed a century ago to help farmers there get credit. (American Samoa, the tiny U.S. territory in the South Pacific, was cleared to create a public bank in April after the last major bank left the island.)” They also talk about the incredible risk for the city: “it’s a really expensive, complicated and risky business, particularly when it involves taxpayer dollars” … that “requires a huge up-front investment” as well as “changes to state and federal law, along with changes to the City Charter”. Additionally, it “runs the risk of political interference, as elected officials might put pressure on the bank to make risky loans to and investments in favored individuals, causes and communities.” Those are all valid complaints.

I’m not sure I see a strong need for a public bank.

📋 Conclusion

No on Measure B.

[✓] Measure E. Realign City and State Election Dates (Charter Amendment)

Back in 2015, according to Ballotpedia, Amendment 1 moved the city’s primary and general election dates to June and November of even-numbered years beginning in 2020 in order to align them with federal and state elections. One of the chief purposes for this change was to increase voter turnout. Amendment 1 also allowed initiative and referendum measures to be scheduled for city or state elections and allowed initiative proponents to withdraw their measure at any time prior to the scheduling of an election. The measure also made several other changes in the city’s laws governing initiative, referendum and recall to make them more closely align with the California Constitution. A related measure – Amendment 2 – that was also on the March ballot made three changes to the laws governing LA Unified School District Board of Education elections to make them also coincide with city, federal and state election dates by 2020. Another temporary but significant effect of the passage of Measures 1 and 2 was the extension of the terms of both city council and school board member selected in 2015 and 2017. These candidates were given five and a half-year terms instead of the customary four in order to compensate for the changed election timing. The changes resulted in additional pension benefits for city council candidates elected in 2015 and 2017.

So why are we seeing this on the ballot again? According to the LA Times, these are cleanup ballot measures that are necessary because the changes approved in 2015 required Los Angeles to hold a primary in June 2020 and a runoff in November 2020 for City Council and school board seats. But in 2017, California lawmakers moved up the state’s primary to March 2020 in an attempt to give California more sway in the presidential primaries. So… LA (and the LAUSD) need to change their charters… again. The Times also notes: “Charter Amendments E and EE would again move the local primary election date — this time to March 2020 — to bring the city and state back into alignment. The amendments would also give the City Council the authority — with no need to go back to the voters — to change future election dates if lawmakers decide to move the statewide primary again.” They conclude we should make these changes.

There is no organized support either for or against.

I agreed with Amendments 1 and 2 back in 2015, and I agree with this.

📋 Conclusion

Yes on Measure E.

LAUSD Measures

[✓] Measure EE. Realign LAUSD and State Election Dates (Charter Amendment)

This was essentially discussed with Measure E, above. It brings the revised election dates from Amendment 1 and 2 back in 2015 back into alignment with the state.

📋 Conclusion

Yes on Measure EE.


One Reply to “🗳️ Nov. 2018 California General Election Analysis (III): Measure for Measure”

Comments are closed.