California County News

Tax Swap: Expert on Local Finance Examines the Impact of a Reverse in Local Vote Rules

Michael Coleman from CaliforniaCityFinance.com has authored an interesting report on reforming local finance when it comes to reversing local vote rules. Through court battles and the initiative process, state law has outlined that a tax imposed for specific purposes requires two-thirds approval and majority voter approval is required for any new or increased general tax. But from the local government perspective, do these requirements allow for optimum governance and do tax limitations trump all other concerns? Coleman explores the ramifications of switching to a two-thirds supermajority vote for general taxes. In the following excerpt he writes:

“It sounds nifty on its face to simply swap the requirement but certainly, anyone suggesting a higher vote requirement for general taxes has not really considered the implications of the notion. What if the vote requirement were swapped: two-thirds for general taxes, majority for special taxes? Here’s what local finance and governance would look like:

1. Local general tax measures would never be seen again. General taxes would be too difficult to pass at two-thirds approval. Any proposal for a local tax increase, extension or revision would be a majority vote special tax increase. There would be more of them and more would pass.

2. Local budgets would become increasingly balkanized. General funds would shrink. Special funds would proliferate. The choices for city councils and county boards of supervisors would shrink. The overall total spending of whole departments and programs would go on autopilot.”

Read what other conclusions he draws from the impact on local finance and governance here.

Court Rules Sacramento County Must Reimburse Medical Center for Care Given to the Poor

Despite the fact that Sacramento County opted out of a contract with UC Davis Medical Center two years ago, a judge has ruled that the local government must pay the center for the medical costs it accrued providing care to the county’s indigent. When the county stopped paying for services offered to residents covered by the County Medically Indigent Services Program, the University of California Board of Regents filed a lawsuit back in 2009. The legal outcome means the county will have to pay tens of millions of dollars to the UC Davis Health System. The Bee points out that “Judge Connelly's action reinforces a July 2010 ruling. In that instance, the court invalidated the county's policy of denying benefits for emergency services in the absence of a county contract with the hospital.” In response to the court ruling, Sacramento County Executive Brad Hudson stated:

“It's unfortunate that an arm of state chose to sue Sacramento County for the cost of providing indigent health care services at UC Davis, when ironically the state has grossly underfunded this program at the county level."

David Levine, counsel for the medical center, commented the following: “We are pleased with this latest outcome and look forward to finally resolving this matter in a responsible way — one that ensures that indigent residents of Sacramento County receive the services and benefits to which they are entitled. Our hope has always been to resolve this matter outside of court. We are keenly aware of the county’s fiscal crisis and have always been open to negotiating a resolution that ends this litigation. Perhaps now the county will come to the table.”

Governor Pledges Maximum Support for Realignment; Grumbling Continues over Funding

Governor Brown pledged “maximum state support” for realignment as local officials have busily prepared for the transition, which officially began on October 1st. At a news conference with county officials and law enforcement authorities, the governor did his best to allay any fears about the large undertaking, which will hand off greater responsibility to counties when it comes to the management of low-level offenders. Brown commented, “There's no turning back. The only way is forward.” And the way forward when it comes to addressing county concerns is simple: funding. The governor promised to secure and support “full funding, flexibility to use local solutions, and a future ballot measure guaranteeing continuous funding.” Counties will be provided $5.6 billion this year, and that amount is expected to grow to $6.8 billion by 2014.

CSAC’s First Vice President and Yolo County Supervisor Mike McGowan, who was on hand at the press conference, commented the following:

“We think local government can do this and can do it better. That said, we need the tools, which in this case, means a constitutional guarantee that the funding necessary for success, is protected for the future. We appreciate that Governor Brown has strongly stated his support of this approach.”

Support for a ballot measure to ensure funding was reiterated by Linda Penner, Chief Probation Officer of Fresno County and President of the Chief Probation Officers of California. Penner commented, “If our new responsibilities are adequately funded, constitutionally guaranteed and stable, we can do a better job protecting our communities. That’s why we need a ballot measure for November 2012 which will guarantee funding year in and year out.”

The Wall Street Journal covers pushback against the plan and funding concerns here. And for a regional focus, KCRW has posted a podcast on how LA County will handle the influx of inmates. Guests include Sheriff Lee Baca, Elizabeth Ashford from the governor’s office, Supervisor Mike Antonovich, and Reaver Bingham from the Los Angeles County Probation Department. Listen to the podcast here:

Realignment

LA Supervisors Opt for the Status Quo on Redistricting; Setting the Stage for a Legal Battle?

Despite heated debate over how Los Angeles County’s supervisorial districts should change under redistricting, the Board of Supervisors voted to essentially keep the status quo in place. A majority of the county’s officials rejected the creation of a second Latino-majority district, which Latino activists and Supervisor Gloria Molina were pushing for to increase the influence of Latino voters in the county, as they argued a second district would reflect the demographic realities of L.A. County. Supervisor Mark Ridley-Thomas originally voiced support for Molina’s proposal, but ended up voting for Supervisor Don Knabe’s plan, which centered on preserving the current districts. Supervisors Zev Yaroslavsky and Michael D. Antonovich were also in favor of this plan. The question now is whether or not the vote will lead to a costly legal battle. The LA Times reports:

“Latino activists are expected to accuse the supervisors of protecting white incumbents at the expense of the voting rights of Latinos. They and Supervisor Gloria Molina argue that the county is repeating mistakes of the past. Two decades ago, federal courts sided with Latino activists and found white county supervisors for decades had systematically split growing Latino neighborhoods to protect incumbents and prevent the emergence of a Latino challenger. The voting rights lawsuit cost $14 million and the county was forced to adopt new maps, which led to the election of Molina. She was the first nonwhite supervisor elected to the board since the late19th century.”

Ridley-Thomas didn’t deny the vote would lead to a legal dispute, but stated his decision against the second Latino district was mostly because he wanted to avoid a deadlock, which would mean the outcome would lie with other countywide elected officials, namely Dist. Atty. Steve Cooley, Sheriff Lee Baca and Assessor John R. Noguez. We relayed recently that Asian American groups entered the fray by arguing against another Latino majority district, as they feel Asians benefit when no one racial or ethnic group has a dominant majority.

Orange County on the Losing End of Court Battle with Deputies Union over Civilian Jailers

Orange County suffered a blow in court when the local government found itself on the losing end of a battle with the Association of Orange County Deputy Sheriffs in regards to staffing at county jailhouses. The court also upheld a ruling that bars the Sheriff’s Department from making any staffing changes for the time being. The dispute arose when the county began replacing deputies with civilian jailers in order to save millions of dollars. The county runs a Correctional Services Assistants program that trains civilians to handle such jobs with the goal of having jail staff eventually comprised of 35 percent of civilian Correctional Services Assistants. The Sheriff’s deputies union objected to the practice of replacing deputies by arguing it was a violation of “meet and confer” requirements of the union’s contract. The county brushed aside the contention by pointing to the economic benefits the local government had the right to pursue. However, the courts didn’t see it that way. The OC Register reports:

“Superior Court Judge Kazuharu Makino sided with the union and issued the temporary restraining order. The county appealed Makino’s ruling, claiming that the restraining order was improper because AOCDS wasn’t likely to prevail in its lawsuit against the county. Justice Richard Fybel of the Fourth Appellate District, Division Three, sided with the union in a 25-page opinion issued Wednesday. ‘The trial court did not abuse its discretion by concluding a preliminary injunction should be issued pending trial in this matter, after balancing the likelihood the Association would prevail on its claims and the relative harm the Association and defendants would suffer as a result of the issuance or non-issuance of the preliminary injunction,’ Fybel wrote.”

Now the county will have to pay the union’s legal fees. The civilian jail workers save the county money because they do not receive the same generous benefits and pension packages. You can read the full ruling here.

Balancing Out: Study Shows Modest Differences Between Public and Private Compensation

Yet another report has been conducted to compare public vs. private pay and the Center for State and Local Government Excellence finds that state and local workers' salaries are an average of 9.5 percent lower than private sector workers; however, pension contributions and retiree health insurance help close this gap. So the report posits that overall total compensation for public sector workers is about 4 percent less than that in the private sector. Compensation was compared for workers of similar age, education and other personal characteristics. Here are some highlights from the report:

• “Average wages for state-local sector workers between 25 and 64—even without controlling for education and other factors—are lower than those in the private sector, and the ratio of public to private sector wages has been declining over time
• Dueling studies have appeared arguing that state-local workers are paid less or more than their private sector counterparts. Virtually all agree that wages of state-local employees are lower than for private sector workers with similar education and experience, but researchers differ on the extent to which pensions and other benefits compensate for the shortfall.
• At this point in time, virtually all analysts agree that wages in the state-local sector—particularly, as discussed below, when adjusted for the higher educa¬tional attainment of public sector workers—are lower than those in the private sector. The big debate, as will become evident, is the extent to which fringe benefits—pensions, retiree health insurance, and other ameni¬ties—offset the lower wages
• Public employees in the lowest one-third of the wage distribution are paid more than their private sector counterparts. Those in the middle third are paid about the same. And those state-local workers in the top one-third are paid about 20 percent less than private sector workers.”

The report’s conclusion states: “Our re-estimation of the much-used wage equation plus adjustments for proper valuation of pensions and retiree health insurance indicates that the two roughly balance out. In short, for the nation as a whole the difference between public and private sector compensation appears modest. The relatively modest differential should make policymak¬ers cautious about massive changes without carefully studying the specifics of their particular situation.” Read the full report here.

Voting and Registration Rates in CA among the Lowest in the Nation

The Census Bureau has released a new report that shows California has one of the lowest rates in the country for voter registration and voter turnout. The Golden State has 27.4 million voting-age residents, but of those eligible voters, only around 50 percent were registered to cast their ballots during the 2010 elections. For the sake of comparison, the national average is 59.8 percent. And when it comes to the turnout rate for the state’s registered voters, only 39.2 percent of voting-age residents show up at the polls, which is one of the lowest rates in the nation (but not the lowest). Texas actually had the lowest rate in the country at 31.4 percent.

So why are California’s voter rates so poor? One big factor is that a large part of our population is comprised of non-citizens. In more diverse states like California and Texas, voter participation is generally lower due to low levels of citizenship for many ethnic groups. But Joe Matthews over at Prop Zero argues there are other determining factors:

“Why don't Californians do better? The short answer is: political participation appears to be a product of social connection, and Californians are not connected closely to each other. People who study civic engagement ask questions like: Do you eat dinner often with your family? Do you know and work on community problems with your neighbors? Does your family discuss current events? The answers to those questions tend to be yes in places with high levels of voter registration and participation. But Californians, according to surveys like the California Civic Health Index, are less connected to their families and communities on these kinds of measures.”

See more here.

CalPERS Chief Calls 7.75% Gain Unrealistic for the Next Few Years; Low-Return Environment

The 7.75 percent return rate is overly optimistic this year, according to CalPERS Chief Investment Officer Joe Dear. The lagging economy has put a damper on expectations and Dear believes overall the next few years will be tough for the pension fund. The officer commented that “This low-return environment is structurally driven, and there’s not a lot of policy to move it.” While losses and gains are spread out over 15 years, Bloomberg reports that “Even with gains in fiscal 2011, the pension fund has earned 3.41 percent annually on average in the past five years, 5.36 percent in the last 10 and 6.97 percent in the last 15. It has only beat its assumed rate of return with a 20-year average of 8.38 percent annually.” Back in the spring, the Board of Directors rejected a proposal to reduce the assumed rate of return. While the pension fund was fully funded before the recession, it is now at about 70 percent.

Global pensions reports:

“Dear said the $237.5bn pension fund has positioned its portfolio defensively with a "significant" underweight towards equities of 4% and a slight underweight in fixed income. The pension fund is overweight in private equities and absolute return. He also said uncertainty in the both Europe and the US is driven by political uncertainty. Dear said investors will remain cautious on Europe ‘while there is uncertainty about the ability of the political system to deliver on hard choices.’”

Cal Watchdog piles on the criticism of the pension fund here.

Sac County DA’s Office Dumps Additional Criticism on City Officials for Failed Pot Deal

Over the summer we relayed that the city of Isleton ran into a bit of trouble with the Sacramento District Attorney’s Office after ignoring requests for public documents about a deal between the city and Delta Allied Growers for a massive pot farm. The DA eventually initiated a grand jury investigation of the city, and every manager and elected official in the town was subpoenaed by Sacramento County District Attorney Jan Scully. The jury ultimately concluded that Isleton officials allowed procedures and laws to be compromised because they had their sights set on receiving $25,000 in monthly revenue from Delta. In an update, the District Attorney’s Office has now released a report of its own that continues to dump on the criticism of the city’s officials.

However, no charges will be filed against Isleton officials or Michael Brubeck, the man behind Delta who offered up the lucrative revenues. That being said, the 21-page report doesn’t hold back in criticizing the city’s decision process. For instance, one section reads: “Had the marijuana cultivation farm project become operational it would have been illegal under state and federal laws and not in compliance with attorney general guidelines.” The DA report is particularly critical of City Attorney Dave Larsen due to concerns that he worked through a conflict of interest by being paid $150 an hour by the city while being paid $250 an hour by the developer. Reportedly the issue will be brought to the attention of the California State Bar Association. Conclusions from the District Attorney’s Office are as follows:

• The City Attorney provided incorrect information about the California Environmental Quality Act [CEQA] when he advised the City Council that the marijuana cultivation farm was not subject to CEQA and exempt from CEQA. The consequence of the incorrect information was to expedite the adoption and implementation of the development agreement and mislead the City Council.
• Members of the City Council and Planning Commission were not provided with objective and well-researched information by the City Manager, the City Attorney, or the City Police Chief.
• Conflict of Interest – City council members need to be better informed about what constitutes a conflict of interest. It appears that they did not know or at a minimum did not understand the conflict of interest laws. They should participate in conflict of interest training and make appropriate disclosures.
• The City’s public records maintenance should be improved.

You can read the full report here. It provides a detailed account of how the deal proceeded with specific dates.

Fresno County’s Decision to Reject Health Care Funds Draws Potential Legal Backlash

Earlier this month Fresno County’s Board of Supervisors voted to withdraw a bid to launch the federally sponsored Low Income Health Program. Community groups were outraged due to concerns that poor residents would be unable to receive medical service in accordance with national health-care reforms; however, supervisors argued that they did not want to interrupt care for the needy or change a contract with Community Medical Centers, which currently provides medical attention for the county’s poor. The county pays the group $20 million a year and is only halfway through its 30-year contract. Reportedly Fresno will be the only county not to participate in the federal program that will provide millions in funds. The Fresno Bee reports:

“The Low Income Health Program calls on counties to expand services for the poor at medical clinics and ensure that uninsured residents get primary care, not just hospital treatment. It's a first step toward implementing the federal health-care legislation passed last year, dubbed ObamaCare. The two-year program offers federal funds to match dollar-for-dollar all local spending on indigent services. County health officials, when they initially applied for the program, believed the county would get $56 million through 2013. But health officials, who have been meeting with representatives from Community Medical Centers, have been unable to forge a new arrangement that would accommodate the federal program.”

In response to the county’s decision, it is facing the threat of legal action. Supervisors received a letter from Central California Legal Services outlining objections. The State Department of Health Care Services also expressed disappointment that the county had withdrawn its application.