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Contra Costa Taxpayers Association

Issue Updates & Perspectives

  • 12 May 2016 1:43 PM | Anonymous

    Suggesting that the West Contra Costa Unified School District has “outstanding financial management” is akin to suggesting that the 7-9 Oakland Raiders had an outstanding season last year. Yet this is exactly what outgoing Superintendent Bruce Harter wrote in his recent April “Superintendent Message” that went out to all staff and was posted publicly on the District’s homepage.

    As citizen advocates for taxpayers whose money the District is managing, we are compelled to point out the myriad ways in which Superintendent Harter’s spin does not hold up to scrutiny. Here are the sobering facts:

    Harter suggests that complaints about the WCCUSD Bond Program being plagued by cost overruns are a myth because “During the formative years of the bond[s], our Board implemented a system of checks and balances to ensure that the schools were built as envisioned and that the bond dollars were spent as intended” and that “Annual external audits review the entirety of the program.”

    The fact is that until recently, school construction projects were not managed on the basis of carefully planned budgets! Instead, they were designed and managed “on scope,” a fanciful term meaning that cost was no object in pursuit of buildings with whatever features anyone wanted to include. The system of checks and balances that Harter cites was so weak that it took a whistleblower coming forward and alleging tens of millions of dollars of wasteful mismanagement (which Harter himself is asserted by the whistleblower to have “facilitated”) to get the board and the public to pay attention. The annual audits have been so flimsy that the school board was recently compelled to authorize nearly $1 million to conduct a full, independent forensic audit to uncover what’s been happening behind closed doors.

    What is most disturbing about Harter’s suggestion that costs have been kept in check is the stark reality that a huge $1.6 billion bond program is essentially out of money while thousands of WCCUSD students are still stuck in portables or buildings with worrisome seismic conditions, with few new facilities in operation. How could a well-run facilities program possibly produce that result?  It is like saying that your personal budget worked perfectly when you run out of money halfway through the month and still need groceries.

    Harter then goes on to state that “our construction costs are lower than the averages in the Bay Area or Los Angeles,” citing costs per-square-foot. This is simply incorrect. The costs per-square-foot measure does not take into account either the bloated building sizes (at 150-225% of State averages) or the other “soft” costs (no-bid contracts to favored campaign contributors) where ballooning always happens — it’s like figuring only the cost of a steak without considering the hundred-dollar bottle of wine you’ve also decided to order. One might expect Bay Area costs to be somewhat higher, but WCCUSD’s new facilities are enormously more costly than the state average, when measured on a cost per student basis.  For instance, the new Pinole Valley High School will be 268,000 square feet, 161% of the California average for high schools - if it had the 1,600 students for which it is designed.  In truth, there are currently only 1,200 students, which means 223% of the benchmark, and by the time it is complete the District projects only 1,000 students, driving the ratio to 268%.  On the soft cost side, the architect’s fee for this Taj Mahal is a whopping $14.8 million, or $12,300 per current student. For comparison, a full service charter high school campus at Hilltop was built recently by an outside foundation for a total construction cost, including land acquisition, of $30 million, or only about twice that of the Pinole project’s architect’s fees alone…stunning!

     A new Pinole Valley High School, with a $231 million budget, will cost nearly $200,000 per student! Let that sink in. Two hundred thousand dollars per student, half of the cost of the median home in Pinole. The average cost-per-student for California high schools is $61,000.

    From the experience of CoCoTax members serving for years on citizens school bond oversight committees in the county, we know that managing a facilities bond program is a complicated, complex and daunting task, one fraught with political challenges. However, we cannot mislead our way to an acceptable outcome. If we are going to move forward and provide the schools all of our students deserve, we must manage from a place of truth, transparency and reality. If voters and taxpayers are ever going to trust the District enough to support revenue measures in the future, district leaders must be open and truthful, and the board must hold accountable those who do not meet those requirements.

    The painful truth is that WCCUSD has not exhibited “outstanding financial management.” The plain truth is that district taxpayers have much higher tax bills, with less new schools to show for them, than do the taxpayers in other communities. However, it is also true that we now have an opportunity for a better future, since many of the actors involved in the mismanagement have left or are leaving the district.

    Sunlight, as it is often said, is the best disinfectant. We believe by shining some light on the reality of WCCUSD’s financial management, we are taking a necessary step towards a future where it can be said with a straight face that such management is more like the Warriors than the Raiders – truly outstanding.

    Jack Weir, President

  • 07 Mar 2016 2:48 PM | Anonymous

                The Times editorial supporting the San Francisco Bay Restoration Measure AA misses the mark.  This seemingly minor tax increase to finance shoreline projects is actually the proverbial camel’s nose under the tent.

                The proposed $12 annual parcel tax is grossly unfair and inequitable.  Even though it amounts to what one might spend for lunch for two at McDonalds, it is a serious incremental burden for those seniors and others who are already strapped to meet the dramatically growing cost of living in this region - the highest in the nation.  The owners of multi-million dollar commercial properties along the shoreline will pay exactly the same as the elderly widow struggling to stay in her small inland cottage, but they will reap huge hikes in property value.

                Under the “environmental” banner, there is a politically correct implication that the proposal must be worthwhile.  Everyone is for a clean environment, but will this scheme really accomplish what it claims?  Or, is it more likely that once launched, we will be asked for additional taxes down the road?   As new regional agencies have evolved, local taxpayers have been asked repeatedly to pay new taxes for worthy infrastructure purposes.  Yet, we have witnessed the state correspondingly decrease its traditional funding for those functions, instead diverting funds to pay for ballooning pension costs and social programs. 

                In terms of jurisdiction, if the Bay is threatened by rising sea levels, why isn’t the US Army Corps of Engineers leading the way?  It is chartered by Congress and funded by our federal taxes to manage all navigable waterways in the nation, and spends mega-billions annually in regions other than California.  Why should the Bay Area pay higher taxes in order to lure back some of the money we send to Washington in the first place?  It is well known that California is viewed in Washington as a reliable cash cow “exporter” of tax revenues to subsidize other states’ needs.

                So, what is the SF Bay Restoration Authority agency?  Few knew of its existence before this tax proposal was announced, other than the various environmental groups and construction unions that stand to benefit financially from its activities.  The board is considering a Project Labor Agreement, which will raise costs by 15-20%, and lock non-union contractors out of bidding.  All publicly-funded projects should go to the lowest qualified bidder; PLA’s are bad public policy.

                The really scary thing is that this is the first “regional” government body empowered to levy taxes, and its governing board consists of officials NOT directly elected to the position; where is public accountability?

                If this measure passes, the camel will be back, again and again, sticking its nose deeper and deeper into our wallets.  Proponents proclaim there is no opposition to this proposal, of which the public only recently learned.  For over 75 years the Contra Costa Taxpayers Association has promoted “Good government at affordable cost.”  We vigorously oppose this scheme, because it is neither.

  • 07 Mar 2016 2:47 PM | Anonymous

    No good deed goes unpunished in the world of public union politics. The firefighters’ union and its cronies have attacked the efforts of two east county citizens to correct the local fire district’s underlying fiscal problem.  Hal Bray and Bryan Scott formed the East County Voters for Equal Protection (ECV) to develop a relatively painless tax reallocation solution that will allow the district to reopen several shuttered fire stations, significantly improving emergency response in the area.  They have the full support of the Contra Costa Taxpayers Association.

    A cabal of union-influenced proponents are pushing for an increase in local property taxes, an idea that surfaced in the past.  It was opposed by CoCoTax, and was soundly rejected by voters for good reasons:

    • The district has done little to correct its crippling unfunded pension obligation, a problem that can only be addressed if the board opens its eyes. It must reject the assumption that taxpayers will somehow foot the bill; municipal bankruptcies in Vallejo, Stockton and San Bernadino have shattered that myth.
    • The unwillingness of the fire district board to even seriously acknowledge the problem is evidenced by the fact that they recently granted a 5% across-the-board wage increase, thereby exacerbating the pension shortfall.
    • Area taxpayers are already struggling to make ends meet with recent tax increases at every level of government, and face a flood of new tax hikes on the June and November ballots. Most of these proposals are generated by the reality that unfunded public employee post-retirement obligations - whose disclosure is now required by new national accounting rules - represent hundreds of billions of debt statewide, and are clearly unsustainable.

    Mary Piepho and other officials who have attacked the ECV effort should be ashamed of themselves for encouraging such bald falsehoods:

    • The tax reallocation proposal does NOT force any participating agency to cut its current spending. It does ask them to forgo a very small portion of their projected future tax revenue increases in order for the fire district to receive funding at the average of all the county’s fire agencies. Any of the government bodies involved should easily manage this shift, given the importance of effective emergency response.
    • Bray and Scott do NOT oppose a parcel tax increase. They have made clear that if area voters wish to impose such a tax on themselves, so be it. They are focused solely on correcting a structural tax imbalance that has persisted for decades.
    • “Sacred cow” school districts should NOT be exempt from contributing. These agencies receive by far the largest share of county property tax revenues. Any incident involving large groups of school children to which the fire department cannot promptly respond is potentially devastating.

    CoCoTax has met with various parties in east county and stands ready to work with anyone who is truly dedicated to finding sound long-term solutions to the dire need for better emergency response, but only at a cost taxpayers can afford.  We do not wish to demonize firefighters, whose emergency response efforts we fully appreciate, but we vigorously oppose this campaign of lies and slander for the ultimate purpose of kicking the public pension can down the road.

    Jack Weir

    President, Contra Costa Taxpayers Association



  • 22 Feb 2016 3:56 PM | Anonymous


    Fire District Funding Committee Reviews Progress, Goals

    February 19, 2016, Brentwood, CA --   About a dozen members of the East County Voters for Equal Protection (ECV) met in the Brentwood Raley’s Event Center on Wednesday, February 17th, and reviewed the citizens action committee’s progress as well as short-term plans.

    The ECV committee has developed a program that would shift $7.8 million of the current $154 million in property tax funds collected within the fire district boundaries to the East Contra Costa Fire Protection District (ECCFPD), following procedures outlined in the California Revenue and Taxation Code and elsewhere.   These funds would allow the district to permanently open and staff three additional fire stations with no additional taxes imposed on residents.  The special assessments appearing on tax bills would not be effected. 

    The ECV program calls for government entities, recipients of the 1% ad valorem property tax, to voluntarily shift a small portion of their property tax allocations to the fire district.  District tax payers would not be asked to pay any additional taxes.  Phasing in the program over three or four years would mean that no current budgets would be cut, and the reallocated amount would bring the ECCFPD allocation percentage level to approximately average for all fire districts within the county. 

    Hal Bray and Bryan Scott, Co-Chairs of the committee, reviewed recent informal meetings with elected members of the Contra Costa Board of Supervisors, the City Councils of Brentwood and Oakley, and civic administrators.  Meetings with candidates for the District 3 Board of Supervisor position, to be open in November of this year, were also discussed, as well as past and planned presentations to civic and service groups.  The ECV is continuing to make progress in researching the leadership of the many Special Districts that receive property tax funds within the ECCFPD, in anticipation of garnering their participation.

     Members of the ECV reviewed their progress in setting up presentations to civic and service groups as well as progress in researching the leadership of the many Special Districts that receive property tax funds within the ECCFPD. 

     Changes to the organization’s Facebook page were discussed, as were plans for a printed brochure.  Members contributed $150 to defray printing expenses. 

    The next ECV meeting will be held on Thursday, March 3rd at the same location, the Raley's Event Center, 2400 Sand Creek Road, in Brentwood.  The Event Center is located within the grocery store, next to the Pharmacy.  The public and all interested parties are invited to attend.

    #   #   #

    “East County Voters for Equal Protection” is a non-partisan grass roots citizens action committee formed to address the unequal funding of fire and emergency medical services existing in 249 square miles of Eastern Contra Costa County.  About 110,000 residents, as well as those who work and play in Eastern Contra Costa, have services funded at a level one-fourth to one-third of those levels in other parts of Contra Costa County.  For more information contact committee Co-Chairs Hal Bray at hal.bray@pacbell.net or Bryan Scott scott.bryan@comcast.net.   The group’s Facebook page is located at https://www.facebook.com/EastCountyVoters/ on the Internet. 

  • 02 Feb 2016 4:34 PM | Anonymous

    From the Contra Costa Times:  

    Tax propositions might rain down on Bay Area residents like an El Niño downpour this year as cities, counties, school districts and agencies try to persuade voters to pay for improved transit, smoother roads, school repairs, city building rehab, and bay water and wildlife conservation.

    Transportation authorities in Contra Costa, Solano, Santa Clara and Santa Cruz counties are planning sales tax elections. Santa Clara County is also talking about a sales tax to help the homeless. BART directors plan a $3 billion bond measure in Contra Costa, Alameda and San Francisco counties. AC Transit directors are talking about a bond measure for the bus system's Oakland to Richmond area. An obscure SF Bay Restoration Authority led the rush to the ballot box with a nine-county parcel-tax measure for the June election. The Walnut Creek City Council and the Walnut Creek School District are discussing measures; so are Orinda, Lafayette and its school district. Not to be left out: the city of Hayward and the Hayward Area Recreation and Park District. On top of that not necessarily complete list, Gov. Jerry Brown has said that the state needs new taxes and fees to maintain its transportation systems. The legislative fist fight between Democrats and Republicans over taxes vs. reallocating existing money has led to months of inaction. An initiative petition campaign has qualified for the November ballot a $9 billion statewide Public Education Facilities Bond Initiative for new and modernized school and community college facilities.

    "It does seem somewhat unusual," said Mark Baldassare, president of the Public Policy Institute of California. "Anyone thinking about asking voters to raise taxes or fees is aiming for the November 2016 ballot" that will draw more voters, he said.

    Low voter turnout has plagued California elections in recent years, he said. Los Angeles city elections in March drew just 10 percent of eligible voters.

    Historically low bond rates might also be driving governments to the ballot box, he said, before the Federal Reserve starts ramping up interest rates.

    The rush to get a hand into residents' wallets unnerves taxpayer advocates.

    "Why didn't anyone tell me it was open season on taxpayers?" asked Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association.

    He challenged the bay conservation measure as one that many would pay for but that would most benefit the corporations ringing the bay shoreline, not the people in the outer reaches of the bay.

    The "Clean and Healthy Bay Ballot Measure" on the June ballot would charge residents $12 a year, raising $25 million a year for 20 years to reduce trash and pollution, improve water quality, restore habitat, improve shore access and protect against floods.

    Another taxpayer advocate cast a gimlet eye over the ballot prospects and said he was appalled. "We're certainly challenged just to keep track of them," said Jack Weir, president of the Contra Costa Taxpayers Association.

    The problem he and others see is the growing burden of paying for underfunded public employee retirement benefits.

    Under new rules that require public agencies to account for their unfunded pension liabilities, the state pension deficit could reach $250 billion, state Sen. John Moorlach, R-Costa Mesa, said in a Jan. 24 Orange County Register column.

    That figure does not include the hundreds of cities, school districts, community college districts and utility districts, each with pension obligations, he said.

    As the public agencies try to meet new requirements to fund that debt, they have less available for the services they are meant to provide, Weir said. That sends them to voters pleading for more money.

    "We have to solve the problem," he said. "We can't continue to spiral into fiscal insolvency."

    Pension woes driving down the cities? Maybe, maybe not, said a state expert.

    "We have 482 cities, and it is hard to make a general statement," said Mike Coleman, a fiscal adviser for the League of California Cities and the California Society of Municipal Finance Officers.

    "Each community is in a different place on pension and health benefits," he said.

    And, until the final decisions come down, it won't be possible to say whether it will be an unusual election year.

    Whatever happens, Weir said putting such a number of tax measures before voters would lead many to say, "Hell, I can't afford this," and vote no on all of them.

  • 01 Feb 2016 4:45 PM | Anonymous

    Community Choice Power:

    Government at its worst

    Community Choice Aggregation, also known as Community Choice Power, has landed in San Francisco, Sonoma and Marin counties and crept into Contra Costa via Marin Clean Power in Richmond.  Contra Costa County is now considering going “full steam ahead”, if you pardon the pun, as a Community Choice provider via a government JPA (Joint Powers Agreement) with local city governments.

    Let’s hope not.  Community Choice Aggregation is government at its worst.  Government has proven incompetent at regulating PG&E so now it wants to ratchet up its efforts by giving local governments the power to make PG&E their indenture servant and us its ultimate victims.

    Community Choice Aggregation:

    - Wrongly expands the coercive powers of local government;

    - Has several negative tax impacts;

    - Allows the JPA to legally misrepresent the quality of the electricity it sells;

    - Gives the JPA the abusive roles of partner, competitor, regulator and taxing authority over PG&E and their joint customers - us.

    Community Choice Aggregation is coercive in several ways.  The 2002 legislation that created Community Choice Aggregation allows for a sophisticated, uncompensated “taking” by local government without payment by forcing PG&E into a “master/slave” relationship with government agencies.  PG&E must do ALL the work: build and maintain the distribution system, the billing system, the customer relationship system, and the support systems needed to run a utility.  PG&E must hire, train, and manage the employees that perform all the work and  handle all interaction with customers.

    Government just takes the profits.

    CCA is also coercive in its implementation.  The legislation creating this monster mandates that all residents in the geographical area of the JPA are automatically switched to the JPA as customers.  To not be switched, a customer must beg (“opt out” in government terminology) to stay with PG&E.  It is government force substituting for a marketing and sales capability.  Why be good when you can be government?

    Next, a government  JPA pays no taxes.  PG&E does.  Who is going to make up for the loss of tax revenue?  There is a reason there is no mention of taxes on the Marin or Sonoma clean energy websites. 

    Community Choice aggregators frequently brag about being less expensive; when they actually are in it primarily because they pay no taxes (and can tax PG&E their “competitor”).

    Their tax advantage also allows them to use tax free bonds to purchase or build power generation facilities, again giving them a competitive advantage in the market and reducing tax income for government.  Who do you think will be forced into making up for the lost tax revenue?

    A Community Choice aggregator can also legally misrepresent the quality of their service by delivering coal or natural gas powered electricity without telling their customers.  How?  By purchasing “unbundled” (not attached to any specific project) Renewable Energy Certificates.  RECs are certificates sold in the open market that allows the buyer to claim legal ownership of 1 megawatt of renewable energy anywhere in the world.  Originally accepted in the financial marketplace these certificates have been found to be deceptive and have lost favor with investors.

    And I’m sorry, but there is not enough “green power” to meet the claims of Community Choice Aggregators and I find this deception reprehensible.

    Finally, there is something inherently wrong with a program that allows government to be the partner, competitor, regulator and taxing authority over a company and an entire industry.  Or as the old saying goes, “power corrupts, absolute power corrupts absolutely”.

    We, as citizens, rightly give some coercive powers to our government.  Policing, taxing, and regulating are powers needed to be a government.  Giving Community Choice Aggregators the powers detailed above is wrong and needs to stop here.  

    Hal Bray

    473 Coronation Dr.

    Brentwood, Ca 94513


    Mr. Bray, a resident of Brentwood is Vice Chairman Emeritas, Contra Costa Republican Party

  • 25 Jan 2016 4:49 PM | Anonymous
    Click on the link to scroll through the slides.  Please read the President's Report for more information on the presentation.

    CCTAXv1 from Steve.pdf

  • 17 Dec 2015 3:21 PM | Anonymous

    Contra Costa Times

    Guest Commentary: Bryan Scott

    Elected representatives should fix the funding problem with East Contra Costa Fire Protection District

    By Bryan Scott   For the Times        12/1/2015


    Posted:   12/01/2015 04:25:31 PM PST

    The East Contra Costa Fire District is experiencing significant financial difficulties as it tries to provide fire and emergency medical services to an ever-growing region of the county. This is no secret as the district has reduced the number of fire stations from eight to three recently.

    What might be a surprise to most residents is that the ECCFPD has been operating on a funding level that was set when the East County region was primarily corn fields and fruit orchards, with a population of one-tenth the number of current residents.

    The ECCFPD receives most of its money from property taxes. In the 1970s, when Proposition 13 was enacted, the three rural fire districts covering Eastern Contra Costa County received about 8 percent of the property tax dollars collected within the 249 square miles that encompassed the districts. They did a fine job, back then, of protecting corn fields and fruit orchards.

    This 8 percent average property tax allocation percentage was fixed at this level, cast in concrete, and has not changed in the nearly 40 years that have transpired since it was established.

    When viewed against today's demographics it shows that residents of the area served by the ECCFPD allocate $106 per person, on average, of their property tax dollars towards fire and emergency medical services.

    Other fire districts in the county allocate considerably more of their property tax dollars toward this life-preserving service, and end up setting aside considerably more on a per-person basis for this purpose. San Ramon Valley Fire Protection District receives roughly $349 per person for each of the 169,900 district residents. The Moraga-Orinda Fire Protection District, a smaller district in terms of population and area, receives $366 per person.

    Both of these fire districts were well-established residential areas when the property tax allocation percentages were determined in the 1970s. Back then the Moraga-Orinda and San Ramon Valley communities were setting aside what they felt was an appropriate amount for fire and emergency medical services, and so having their property tax dollar allocations set at 21 percent and 15 percent, respectively, has provided and continues to provide an acceptable level of service.

    That is not the case in East County, where our service levels are below acceptable standards.

    When the coverage area of each fire district is compared with ECCFPD the local fire district comes up short again. The ECCFPD property tax allocation percentage of 8 percent provides just $47,000 for each square mile within its district. The Moraga-Orinda Fire Protection District's 21 percent property tax allocation provides $366,000 per square mile of its 47-square mile area, and the San Ramon Valley Fire Protection District's 15 percent allocation provides $383,000 per square mile for coverage of its 155 square miles.

    The region covered by the San Ramon Valley Fire Protection District is probably most similar to eastern Contra Costa County. Its 155 square miles is less than the 249 square miles of the ECCFPD, and its population of 169,900 is greater than the ECCFPD's 110,000 resident.

    Considering these factors it is not a surprise that the ECCFPD property tax allocation funding is less than the allocated funding of San Ramon Valley Fire District. The current property tax allocation funding of the ECCFPD is $11,654,565. The property tax allocation funding of the San Ramon Valley Fire Protection District is $59,300,000.

    Twelve million dollars versus sixty million dollars!

    Should the ECCFPD allocation be just 19.7 percent of the San Ramon Valley Fire Protection District's budget? Should it be only about one-fifth as large? No, it should not.

    The first step in changing the property tax allocation rate requires the endorsement of a plan by the city councils of Brentwood and Oakley as well as the approval of the members of the Board of Supervisors. From there a state law needs to be written, submitted to the legislature and then voted on by the Assembly and the Senate.

    A number of concerned residents have been meeting lately, and a plan to change the property tax allocation percentages appears to be emerging.

    As one resident of East Contra Costa, I feel that it is better to spend our tax dollars on the preservation of life services provided by the ECCFPD than on other government services that only deal with my quality of life.

    Bryan Scott is a Brentwood resident who occasionally becomes a community affairs activist. Those interested in contributing to this grass roots effort can reach him by email at scott.bryan@comcast.net or by telephone at 925-418-4428.


  • 15 Dec 2015 4:28 PM | Anonymous

    (Pinole, CA, December 15, 2015) ­ Only two bidders responded when the cities of Pinole and Hercules sought bids for construction of a joint Pinole/Hercules wastewater treatment plant upgrade. The lowest bid is $4 million over the engineer¹s estimated project costs  http://www.ci.pinole.ca.us/publicworks/docs/WPCP2015Project/Water%20Pollution%20NIB.pdf of $39 million.

    The Contra Costa Taxpayers are asking Pinole city leaders to rebid the project without the controversial project labor agreement,² said President Jack Weir. The cities united about the need for the project but divided over the proposed use of a Project Labor Agreement (PLA) that was not in the original construction plans. PLAs are highly controversial pre-contracting provisions advanced by labor unions which receive exclusive representation of all workers on a project including all funding for union dues and health and pension fund payments.

    The PLA was originally requested by Pinole Councilmember Debbie Long on behalf of the Contra Costa County Building and Construction Trades Council but was also pushed aggressively by Councilman Pete Murray, a union electrician. Hercules leaders resisted until Pinole leaders announced intentions to advance the project with the PLA with or without agreement from Hercules.

    According to Weir, PLA proponents insisted that the PLA would not add cost and that there would be plenty of bidders. Had even one bidder come in under the estimate we would not have a problem. Had 10 bidders offered proposals and all were high; we could maybe blame the engineer. With just two bidders and both well above the estimate, what can we blame except the objective evidence that contractors are not interested in working under a PLA when they have lots of places to work without PLAs?

    The two bidders out of the eight who prequalified are Kiewit at $43million and Overaa at $49 million. Two of the largest EBMUD projects were built without PLAs - the $637M Freeport Regional Water Project and the $120M Walnut Creek-San Ramon Valley Improvement Project.  Both were large, long-term, multi-craft and complex construction projects successfully completed and without labor strife.

    Founded in 1937, CoCoTax leads the way in providing fiscal oversight of local government. We actively resist unwarranted taxes and fees, discriminatory regulations, ill-advised public expenditures and government secrecy, inefficiency and waste.

    We challenge government at all levels to be accountable, responsive, efficient and fair and to deliver optimal value for every tax dollar.


  • 12 Nov 2015 10:23 AM | Anonymous

    Former San Jose Mayor Chuck Reed acknowledged at a recent taxpayer forum that his latest proposed pension reform initiatives won’t solve California’s $350 billion unfunded retirement benefit liability problem. But he thinks they’ll help.

    “Sometimes you have to eat the elephant one bite at a time,” Reed told the Contra Costa Taxpayers Association at an Oct. 30 luncheon. “So these are bites out of this elephant that’s $350 billion big.”

    Reed and former San Diego City Councilman Carl DeMaio have submitted two initiatives that would limit pension plan benefits for government employees hired after Dec. 31, 2018.

    Third Time the Charm?

    Reed and DeMaio are hoping the third time is the charm. Previous pension reform efforts last year and in June were canceled due to concerns about ballot descriptions by Attorney General Kamala Harris.

    The first initiative, The Voter Empowerment Act of 2016, requires voter approval before governmental agencies can enroll new employees in pension plans and increase their pension benefits. Voters also must approve if an agency wants to pay more than half of the total cost of retirement benefits for new hires.

    In addition, the initiative would prevent retirement boards from imposing fees or other punishments on governments that don’t allow new employees to participate in a pension plan. The California Public Employees Retirement System requires its member agencies to pay three-to-five times the cost of their unfunded liability in order to opt out of the system, according to Reed.

    These changes are needed, according to the initiative, because “state and local governments face elimination or reduction of essential services because of costly, unsustainable retirement benefits granted to government employees. Almost all of these benefits were granted without the consent of voters.”

    The other initiative, “The Government Pension Cap Act of 2016,” limits government contributions for new employees at 11 percent of base compensation; 13 percent for new safety employees. It also requires voter approval before an agency can pay more than half of the total cost of retirement benefits for new employees.

    “We are trying to empower the voters,” said Reed. “Either of these two initiatives would have a significant impact on the cost of new employees.”

    Those costs are increasing rapidly, according to Reed. In the next five years, state and local governments will need to increase contributions by 50 percent to CalPERS. This is resulting in less state funding for universities, courts, roads, social services, parks and recreation, Reed said.

    Price of Pensions

    School districts have it even worse. Their contributions to the California State Teachers Retirement System will more than double in five years.

    “Where the money goes determines the priorities of the state,” Reed said. “And we are putting our money, I believe, into the wrong priorities.”

    Failure to correct those priorities will result in more jurisdictions going bankrupt like Stockton, Vallejo and San Bernardino, he said.

    “The people in those cities suffered; the employees working in those cities suffered,” he said. “And we need to avoid that. And so, giving local governments some things they can do to deal with their problems has been the focus of the initiatives.”

    A successful pension reform initiative campaign will require $25 million, in addition to the $2-3 million for signature gathering, Reed said. He anticipates raising much of it from Silicon Valley executives wanting to avoid future tax hikes as well as from pension reform advocates around the country.

    If they are successful, California will begin making a dent in its unfunded retirement benefits liability, he said.

    “Although we acknowledge this will not solve the $350 billion problem,” he said, “if these initiatives were passed, we could save money on new employees that will allow us to help pay down that $350 billion of unfunded liabilities. This is not a solution to those unfunded liabilities, but it would be helpful.”

    Potential Savings

    The savings could be significant, according to a state Legislative Analyst’s Office analysis of Reed’s June initiative, which also was called the Voter Empowerment Act of 2016. It’s similar to the current VEA, but also allows voters to decide compensation for current employees.

    “It is likely that [pension] benefits would be reduced or eliminated in many jurisdictions,” the LAO said. “These changes would reduce governmental employer costs significantly in the future.”

    Critics of Initiatives Speak Out

    Naturally, the public employee unions are opposed to benefit reductions for their current and future members. Three people handed out leaflets outside of the luncheon at Back Forty Texas BBQ in Pleasant Hill that were critical of Reed, DeMaio and their initiatives.

    “These two former politicians are currently championing a State-wide initiative approach to destroy retirement security for all new employees that would chose [sic] to work in the public sector, including law enforcement, firefighters and teachers,” said Mike DeBord, a committee co-chairman of the California Retired County Employees Association, in an essay titled “Pension Reformers Continue Their Long List of Failures.”

    In another piece, “Proponents Still Trying to Undermine Retirement Security,” DeBord said that the “initiatives would amend the state constitution and erode retirement security for public employees, targeting new hires. If any are approved by the voters, they would likely be subject to many costly and lengthy legal challenges.”

    Vested Rights

    But the luncheon’s other speaker, Contra Costa Times columnist Dan Borenstein, believes Reed’s initiatives don’t take a large enough bite out of the $350 billion elephant. He wants Reed to challenge state judicial rulings specifying that pension benefits for current employees can be increased but not decreased.

    “It’s a one-way ratchet,” said Borenstein. “Someone likened it to a mouse trap.”

    Pension reforms would not affect benefits that have already been accrued; only accrual rates for future work would be affected, he said. Borenstein said he’s aware of the political headwinds that an initiative challenging vested rights would face, but he asked Reed to take on that more substantial fight.

    “Aside from politics, why not challenge the vested rights question?” Borenstein asked. “And if you don’t, how much are you really accomplishing?”

    But given California’s political climate, Reed said the focus has been on getting an easily understandable and supportable initiative on the ballot.

    “Something that’s hard to misconstrue,” Reed said. “Although this is a political campaign – truth is never really a limitation of any political campaign in California. So we know they’ll be misconstrued. But we want people to be able to pick it up and decide for themselves.”

    The legislative analyst will begin a financial analysis of the initiatives probably on Nov. 9, according to Reed, with the attorney general filing titles and summaries by the end of the month.

    After that, “we’ll do some polling, try to decide what to do,” said Reed. “And hopefully we’ll be in a position where we’ll actually have these in front of the voters in November of 2016.”

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