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Tax Fax : November 2000

GOVERNOR DAVIS SIGNS BINDING ARBITRATION BILL SB 402 By the stroke of a pen, Governor Davis took away the budgetary control of every elected county supervisor and city council member in the state of California. He signed the malevolent Senate Bill SB 402 authored by Senator John Burton and supported by Assemblyman Antonio Villaraigosa. The bill gives the right of utilizing binding arbitration of labor disputes to unions representing local firefighters, police and sheriffs. The Sacramento Bee stated that, "Under its provisions powerful police and firefighters unions that don't like the pay and benefits an elected city council offers them can turn to an arbitrator - elected by no one and accountable to no one - to negotiate their contract. The law reduces local elected officials and voters to meaningless bystanders, spectators who sit idly by waiting for the arbitrator to tell them how much of the city's or county's budget will be left for citizens to control." The Bee is exactly right. It reflected the rationale used by the Sacramento Taxpayers Association in past actions taken to oppose this approach to labor relations, and the League will continue to oppose such an approach in the future. Locally, when the sheriff's union was successful in passing such a measure, the League joined with the Sacramento Metro Chamber of Commerce and the Board of Supervisors to pass a companion protective measure that requires voter approval of any decision resulting from such binding arbitration. The Associationof Cities in the state believes the law to be unconstitutional and intends to sue to keep it from being enforced. The Taxpayers League Board will be asked whether we should join with the cities, along with other taxpayer organizations in the state, in the effort to reverse this onerous action by the Governor. OIL EXPLORATION IN THE ARCTIC NATIONAL WILDLIFE REFUGE Many words are being spoken about the environmental impact of opening the Alaskan oil-rich Arctic National Wildlife Refuge to oil exploration and production. It is estimated that it contains 9.2 to 16 billion barrels of oil. Environmentalists have successfully prevented drilling in the region, and one of the complaints appears to be that such drilling and producing of oil will convert a "pristine wilderness into an ugly oil field." Such a contention is a little bizarre. The refuge covers about 19 million acres of which drilling operations would involve only about 1.5 million acres in the coastal plain of the far northeastern corner near the Beaufort Sea. And the oil companies go to extraordinary lengths to protect the Alaskan tundra, making sure that they literally obliterate the marks of human intervention. Considering the remoteness of the area, it would be interesting to try to find out how many people are planning visits to the region soon. SALES TAX TO BE REDUCED JAN. 1 ST The state sales tax will be reduced a quarter-cent beginning January 1 st because tax revenues will exceed estimates for two years in a row. This is a legal requirement stemming from a section of the bill that put a statewide sales tax increase in place in 1991. The bill had two requirements that govern a sales tax decrease. The state has to end a fiscal year on June 30 th with a reserve (excess taxes) of more than 4 percent of its General Fund, followed by a projection by the state finance director that the state will also exceed the 4 percent reserve in the following year. This past fiscal year the reserve (extra taxes) was nearly 10 percent of the General Fund, and for next year it is projected that the excess taxes will easily pass the 4 percent level. League Member Ted Costa, in his role as Chief Executive Officer of the People's Advocate pointed out to the state that it had ignored this provision of the law in the past, and pressed the issue. Ergo, A TAX REDUCTION! We rarely see these words in the state of California, unless it is fought for by tax fighting organizations such as the Peoples Advocate or the Howard Jarvis Taxpayers Association. On the local level, when the Sacramento Taxpayers Associationformed and led the Coalition that defeated Measure M, the county's attempt to raise the sales tax one-quarter cent, we learned the increase in local sales tax would take $30 million out of the pockets of taxpayers every year. So, on behalf of all Sacramento's taxpayers, THANKS TED, FOR SAVING US $30. MILLION NEXT YEAR! MEMBERSHIP Our Members constitute the League's strength and Members provide coverage on many issues we try to resolve. And toward that end we welcome the following new Members to the 39-year-old Taxpayers League: Nancy Dalgardo Bill Shepherd Ebba Calkins and Citrus Heights Councilman Bret Daniels We receive no outside funding other than membership dues and membership donations to our defense fund. We are always in search of new members to build our strength. In the next two years the League will be part of, or in charge of, some of the most serious battles we have ever been engaged in involving taxpayers protection. These fights will be at the local level, and also on the statewide stage as one of the lead taxpayer organization sponsoring a statewide initiative for the benefit of all taxpaying property owners. To win through on these endeavors we are asking all members to help by recruiting new members. The last page of the Tax Fax has a form for this purpose. Please call (916) 921-5991 if you have someone you believe would be interested in becoming a Member of the Taxpayers League. LETTERS TO THE ASSOCIATION We seek "Letters to the League" from members on present projects and issues on which we are working, and recommendations on those we should look at. Send letters to: Sacramento Taxpayers Association 1832 Tribute Road, #210 Sacramento, CA 95815. SCHOOL VOUCHERS The Associationreceived an interesting letter and set of questions from a reader regarding support of Proposition 38, School vouchers. The interesting feature of the letter was that it questioned vouchers from an entirely different standpoint than the standard boilerplate ground out by those supporting r opposing the Proposition. And it touched on sensitive areas not addressed by either side. Questioned was the support of school vouchers from the standpoint of one who intentionally pays to place a child in a private school specifically for exposure to higher standards of education, and to a climate of biblical moral values and behavior by both staff and students in church owned schools. The fear is that vouchers, by providing a state supported legal system revised to put anyone in private schools, could inadvertently introduce all the harmful influences that go on in public schools, as is readily seen in our public junior and senior high schools. Pointed out was the possibility that lawsuits ill pummel private schools if they refuse voucher students. Among questions asked was what happens with voucher money if a child gets expelled? What happens if a school accepts non-voucher students before voucher students? Will voucher money be used to expand schools? What if the private school only wants to hire staff with certain religious beliefs - will that be changed to accommodate voucher kids? The key question is how much control will the government have over any school receiving government voucher money? It was pointed out by the letter writer that private schools not only have a high standard for education, but also have more fundamental differences between them and the public sector that go beyond education. Contended was that religious people aren't held in high regard by their more liberal counterparts, and asked was whether government and all parents of voucher kids would really subject themselves to the more conservative and religious manner found in most private religious schools? A fear expressed was that trying to make private education accessible to every child can't happen without grave damage and government control to private school sectors. Given such control the private schools would eventually look like public schools. Part of the answer to the letter writer appeared in an Opinion editorial by the Pacific Justice Institute. Attorney Brad Dacus of the Institute wrote, "Some of you reading this article have probably heard some scary radio ads describing how Prop 8 is going to subject private schools to dastardly government control and inhibit religious schools from evangelizing. Nothing can be further from the truth! The truth: Prop 38 provides unprecedented protection for all private schools in he state of California. Here's how. First, any and all future regulations of private schools by the state legislature will require a 3/4 vote of both houses of the state legislature. With regard to local governments, all local regulations would require a 2/3rds majority vote and a majority of qualified lectors. (In addition, local regulations must not, among other things, unduly burden or impede private schools or the parents of students, suppress private schools, or parents' freedoms to make decisions on whether the child attends a public or private school.) Most importantly, land use regulations would become virtually inapplicable to private schools - opening the door for an unparalleled explosion of few private religious schools at churches and other facilities." He added, "Maybe that's why the Association of Christian Schools International (ACSI) has openly endorsed his initiative." The letter made clear that the writer has put a lot of thought into the voucher recommendation, and is worried about some of its impacts. The Proposition should have been given careful consideration before blithely punching a hole in the ballot card. MILKING THE PUBLIC CASH COW - EXPANDED Note: This article was prepared as an Opinion piece in answer to interest expressed by the publisher of the Sacramento monthly newspaper Inside the City. It expands an article in the September 2000 issue of the Tax Fax. The Sacramento Taxpayers Association has always been opposed to city and county elected officials acting like bankers, using Sacramento taxpayers as guarantors of loans made to private investors, and as providers of selective direct and tax subsidies to commercial enterprises. The City, for example, has been banker for ventures such as the office building across from the convention center, Packard Bell NEC in the closed Army Depot, and now is providing a $2.9 million subsidy for a hotel on the waterfront. It is also preparing to buy the Woolworth building downtown to give a news service company time to come up with the money to buy the building from the City. In addition they have given tax rebates and loans to help and keep companies in town. They provided a 5-year $152,000 tax rebate to Ebara Technologies Inc., a $73 million loan to the Kings, and similar deals to others to stay in town. And such deals are not peculiar to the City. Deals are also made by Sacramento County. Paul Hahn, Director of Sacramento County's Department of Economic Development once said that he would rather not offer economic incentives, but added, "They are a necessary evil." The County offers new companies rebates on the County's share of a company's property taxes on equipment, and a rebate of the county's 2.5% utilities tax, both for a period of 5 years. To receive these benefits companies must demonstrate that they will bring in at least 50 new obs worth over $25,000 a year each. To convince companies that plan to leave the County to stay, they offer the similar incentives, but the companies must agree to stay at least 10 years. Rationale behind such deals is termed by some as "Corporate Welfare". Conversely, those generating the deals term them ecessities aimed at attracting or expanding new businesses and regional developments, and retaining existing companies. They cite as benefits the jobs generated, and the related tax revenues that flow from the enterprises and those that they employ. Among the most egregious of methods being used to divert taxpayer money into questionable areas is formation of Redevelopment Agencies, originally designed to assist cities in cleaning up inner-city neighborhoods. These have been termed "The Unknown Government". Redevelopment Agencies can be created without a vote of the citizens affected, and can incur bonded indebtedness without voter's approval, notwithstanding the existence of Proposition 218. RedevelopmentAgencies consume more than 8% of all property taxes statewide, and have developed a massive public debt with little public awareness or oversight. Unlike other levels of government, they can use the power of eminent domain to benefit private interests. The Agencies, created by counties and cities, are governed by appointees of the city councils or board of supervisors, whom often appoint themselves as the Agency governing members. Such Agencies are an entirely separate government authority, with their own agenda, revenue, staff, and expanded powers enabling them to issue bonds and condemn public property. In recent years such Agencies have been loosely used to expand a city's tax base rather than to correct in-city blighted areas. Dan Walters, in his Sacramento Bee October 7 th article "Cities playing a blight game" pointed out one that has all these earmarks. To quote Walters, "the City of Sacramento proposed a new redevelopment zone linking a marginally blighted residential and commercial area along Northgate Boulevard to some vacant fields alongside Interstate 80 - land the city wants to develop into a tax producing auto mall. The proposed mall would attract dealers ensconced along Fulton Avenue, an unincorporated area whose taxes now flow into county coffers." What is not emphasized in all these activities is, as former Labor Secretary Robert Reich once called, "a vast zero-sum game. They rob the public of funds that otherwise could be used for better schools and roads." The practice of providing loans, exemptions, and rebates, even though they involve using public money, are usually conducted in secrecy, with the public in the dark as to how their money is being handled, or the manner in which they are being indebted. The public is often advised after the deals are made, and as a result, are committed to financial risk without input. And that's why we object. TRUTH IN ADVERTISING, EXCEPT FOR PROPOSITIONS Without a doubt, the sum total of the TV, radio, mail-outs and flyers advertising either side of virtually every Proposition on the November ballot are so packed with distortions and outright lies aimed at deceiving the public, that they are ludicrous. Voters should be offended by every one offered, and if wise, should have carefully read the Propositions in state and county provided official voter's information pamphlets. Then, they could have made up their own minds as to a position. And the worst of the lot of distortions are flashy, slick, slate mailers, with grand sounding names, implying they represent long standing (actually non-existent) organizations which have carefully reviewed each issue and made a grave decision as to what and who you should vote for. Actually, they are prepared by hacks, who surface before every election, and canvas backers and opponents of each Proposition, or elected position, for money to put their positions, and names, in these spurious completely useless documents. When they are received, they should have been checked for the asterisk behind the stated positions on the Propositions, or so-called "selected" candidates' names. If there, it was paid for by whoever put up the buck first. For fun, I'll point out what I believe, in my absolutely prejudiced opinion, were a couple of the most flagrant misrepresentations of the Propositions. On Proposition 34, the Veteran's Home and Loans, it was contended that just because a member of the armed forces wore a uniform they might not be a "veteran" and should not get a loan. Wrong, the dictionary defines a veteran as "a former member of the armed forces". During War II, I spent 18 months in Italy among loud noises and broken furniture, while a friend, Frank DiMazo, who entered the Army at the same time I did, never got more than 40 miles from home in three years. He spent his entire war service as a Military Policeman patrolling the seamiest sections in New York City. And I guarantee he was in more danger than I on almost any given day! Our pet peeve, the supporters of Proposition 39 were the most disingenuous of all. Never once did they mention their aim was to change the state's Constitutional protection of property owners. Instead they threw in everything, kids, mom, apple pie, feeding the family pet, and the grand old flag. This time the same crowd changed their name. When Proposition 26 (same subject as 39) was defeated last March, they were the "National Taxpayers Alliance" a phantom group unknown to any major taxpayer organization in the U.S. For Proposition 39, effectively the same bunch reinvented themselves as "The Taxpayers for Accountability and Better Schools." Membership? Millionaires Reed Hastings, John Doerr and few f their friends. So much for truth in advertising! Joe Sullivan TAXES TO WATCH Proposition 39 - A copycat Proposition to Proposition 26, defeated by the state's voters last March is on the November 7th ballot as Proposition 39. Proposition 39, financed by a number of Silicon Valley multi-millionaires, will once again try to change the state's Constitutional two-thirds vote requirement to pass local school bonds. This time the vote target is 55% in lieu of a simple majority. Sacramento Utility and Transient Occupancy Taxes - The Taxpayers League has filed a lawsuit in Superior Court challenging the creation of the Utility Tax in 1991, and the increase in the Transient Occupancy Tax (Hotel Tax) in 1994, as violations of Proposition 62. Neither of these taxes was submitted to the voters for approval as required by law. A final resolution on the lawsuit is on hold, pending a California Supreme Court decision on two other lawsuits to resolve a question on the Statute of Limitations for Proposition 62 lawsuits. City Bond Measure for Theater Improvements -A combination of the City Council and the Board of Supervisors has approved an agreement to pay for $11.4 million in bonds for major improvements of the Music Circus and the theaters at 15 th and H streets. The cost has increased from the $8.2 million conceptually approved last year. Final approval of the bond issue is scheduled for next January. (Also see Page 5) AB 484 - This bill was signed by the Governor and is devised to take state General Funds and give local government agencies up to $300 thousand to subsidize Movie Industry filming activities. Consider that the state takes our local property taxes under ERAF, allegedly for schools, puts ERAF funds in the General Fund, and then uses General Fund money to subsidize the Movie Industry through local governments. This is a warped concept, and is grist for the mill aimed at removing control of property taxes from the state, and returning the property taxes to local control. This feature of TAX FAX is published monthly to keep you up-to-date.

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