PENSION REFORM BILL SIGNED INTO LAW

FOR IMMEDIATE RELEASE: Contact: Governor's Press Office Wednesday, September 12, 2012 (916) 445-4571 Governor Brown Signs Bipartisan Pension Reform Bill to Save Billions by Capping Benefits, Increasing Retirement Age and Stopping Abuse LOS ANGELES – Governor Edmund G. Brown Jr. today signed sweeping bipartisan pension reform legislation that saves billions of taxpayer dollars by capping benefits, increasing the retirement age, stopping abusive practices and requiring state employees to pay at least half of their pension costs. “This is the biggest rollback to public pension benefits in the history of California pensions,” said Governor Brown. “We’re lowering benefits to what they were before I was Governor the first time and reducing costs by up to $55 billion in PERS and billions more in other local pension systems. Under the new rules, employers and employees alike are going to contribute their fair share of the costs, resulting in a more sustainable system.” The pension reform law, AB 340 (Furutani), requires current state employees and all new public employees to pay for at least 50 percent of their pensions and establishes this as the norm for all public workers in California. Importantly, these new reforms eliminate state-imposed barriers that have prevented local governments from increasing employee contributions. The new law also bans abusive practices used to enhance pension payouts. “I am very proud of my colleagues for their hard work to achieve these historic, bipartisan reforms,” said Assembly Speaker John A. Pérez. “The pension reform law outlaws the most objectionable practices, creates new accountability for pensions and saves state and local government as much as 70 billion dollars in the coming years while keeping faith with California’s hardworking public servants. These are meaningful reforms that address one of the biggest long-term challenges facing California, and I believe this is a major victory for the people of our state.”   “Until recently, pension reform was defined by ending the system’s abuses. The reforms we have accomplished do just that but we also ventured significantly further,” said Senate President pro Tem Darrell Steinberg. “Some say that it is far too much and others say that it is not enough but this much is undeniable: the result is a fair and defined middle-class retirement package that goes a great distance toward protecting taxpayers and the fiscal health of our pension systems.”   AB 340 also increases the retirement age for new public workers and caps the salary amount that can go toward pensions.   “The pension reform plan that Governor Brown signed today will save taxpayers billions of dollars by making important changes to the way we calculate pension benefits and eliminating opportunities for abuse,” said Assemblymember Cameron Smyth. “Having been involved in pension discussions with the Governor for many months, I can say that all of us wanted to see this plan go further. We have to be careful, though, not to make the perfect the enemy of the good. This plan is a step in the right direction, and lays the groundwork for more comprehensive reform going forward.”   On Monday, Moody’s Investors Service said that California’s pension reform legislation boosts the credit outlook for state and local governments participating in CalPERS. Moody’s currently rates California an ‘A1’ with a stable outlook.   “Thanks to the Governor's leadership and signature today we have a Win-Win for California's public and private sector,” said Dan Dunmoyer, Senior Vice President for Farmers Insurance and CalPERS board member. “It is a win for the public sector because the new law will take positive steps to ensure we can keep our commitment to our new public servants for decades to come and a win for the private sector as a better funded pension systems will result in less pressure to raise taxes and reduce support for much needed education and infrastructure projects.”   Public Employee Pension Reform Act of 2012 Caps Pensionable Salaries ·         Caps pensionable salaries at the Social Security contribution and wage base of $110,100 (or 120 percent of that amount for employees not covered by Social Security). Establishes Equal Sharing of Pension Costs as the Standard ·         California state employees are leading the way and are paying for at least 50 percent of normal costs of their pension benefits. Requires new employees to contribute at least half of normal costs, and sets a similar target for current employees, subject to bargaining. ·         Eliminates current restrictions that impede local employers from having their employees help pay for pension liabilities. ·         Permits employers to develop plans that are lower cost and lower risk if certified by the system’s actuary and approved by the legislature. ·         Provides additional authority to local employers to require employees to pay for a greater share of pension costs through impasse proceedings if they are unsuccessful in achieving the goal of 50-50 cost sharing in 5 years. ·         Directs state savings from cost sharing toward additional payments to reduce the state’s unfunded liability. Unilaterally Rolls Back Retirement Ages and Formulas ·         Increases retirement ages by two years or more for all new public employees. ·         Rolls back the unsustainable retirement benefit increases granted in 1999 and reduces the benefits below the levels in effect for decades. ·         Eliminates all 3 percent formulas going forward. ·         For local miscellaneous employees: 2.5 percent at 55 changes to 2 percent at 62; with a maximum of 2.5 percent at 67. ·         For local fire and police employees: 3 percent at 50 changes to 2.7 percent at 57. ·         Establishes consistent formulas for all new employees going forward. Ends Abuses ·         Requires three-year final compensation to stop spiking for all new employees. ·         Calculates benefits based on regular, recurring pay to stop spiking for all new employees. ·         Limits post-retirement employment for all employees. ·         Felons will forfeit pension benefits. ·         Prohibits retroactive pension increases for all employees. ·         Prohibits pension holidays for all employees and employers. ·         Prohibits purchases of service credit for all employees.   For full text of the bill, visit: http://leginfo.ca.gov/bilinfo.html.   # # #

Governor Edmund G. Brown Jr. State Capitol Building Sacramento, CA 95814

Protecting California's Timber Industrry - Governor Signs AB 1492 Fire Liability Reform

By Thomas L. Sheehy

For the first time in more than a decade a significant piece of forest legislation has been enacted that enjoys both industry and environmental community support.  This thanks to Governor Brown signing AB 1492 today in Sacramento. The legislation provides critical relief for all private landowners from excessive liability claims made by the federal government for wildfires.   The legislation is a package deal, forged through a collaborative process with compromise from all parties – environmentalists as well as timber industry interest. It is has been controversial because it makes significant reforms to fire liability provision in current law, changes to timber harvest plan (THP) regulations and includes a stable funding source to pay for the regulatory structure. The funding source is a 1% levy on timber products sold in California estimated to raise up to $30 million annually (50 cents on the average lumber ticket at a big box retailer in the state, and less than $150 on a new $300,000 house).

This reform package has been desperately needed. California is subject to substantial forest fire threat and when public lands are damaged through negligence occurring on private lands, the damage liability under current law is eight to ten times the actual commercial value of the property. No other state in the country has such a fire liability scheme.  The result of this is that California timber operators are facing a terribly difficult time getting liability insurance, and when they do; it costs more and covers less. Inability to get liability insurance will simply put many family companies and other operators out of business. And with them, thousands of good paying jobs with benefits that are highly coveted in the rural areas of the state. Indeed, the cost of the current regulatory structure and cost of liability insurance has made California lumber less competitive. Today, up to seventy percent of lumber consumed in this state is imported from the Pacific North West, Canada and other areas. California is exporting thousands of good paying jobs to other areas as our friends and families in the industry suffer and lose their livelihoods.

Some opponents to this reform package expressed concerns over limiting fire liability to a more reasonable approach like all the other states have. Others made a major issue out of the one percent timber fee to pay for forestry regulation.  The fact is, this new funding source will provide a stable stream of revenue to pay for THP review, allow the state to eliminate highly regressive regulatory fees now being paid, and will level the playing field so that all producers of lumber selling into California have skin in the game. For smaller timber producers in rural California, it gives them a better opportunity to compete with large out-of-state producers and to create good jobs in Northern California. Many politicians and policy makers constantly repeat that they want to help the state’s economy and create jobs. Well this THP reform legislative package is ground zero in job creating and economic development. With it, we can expand California’s share of timber production and consumption in the state and create thousands of new jobs. Without it, more producers would have been forced out of the business causing California to import thousands more truckloads of lumber from out of state and send our coveted jobs across the state’s border.

 

SB 1118 Mattress Extended Producer Responsiblity - Top 10 Reasons Why It Failed

Top Ten Reasons SB 1118 (Hancock) Was Stopped

Mattress Extended Producer Responsibility
 

Lack of mattress recycling fee is severe financial burden.

Like existing California recycling programs, mattress recycling must be funded by a uniform fee collected at retail. It is unfair and completely unworkable to make the manufacturers pay 100% of the cost to implement an extended producer’s responsibility (EPR) program in the state. The bill should explicitly require that the recycling obligations imposed by the law be funded by a fee collected at retail. California has never enacted an EPR program that did not include a recycling / disposal fee paid up front by the consumer. This precedent would be extremely bad policy.

Major new costs imposed on manufacturers.

Mattress manufacturers will face MAJOR untold costs to set up new recycling centers, pick up and transport mattresses, store mattress, coordinate with retailers, consumers, waste companies, police illegal dumping, run a public relations campaign and otherwise become waste management experts (in areas where they have little or no expertise) to comply with the bill’s provisions. The cost to implement this EPR program statewide will be $10’s of millions of dollars.

 

Unrealistic recycling targets with draconian fines.SB 1118 also contains arbitrary and unrealistic recycling targets and there is no evidence to show that these mandatory targets are practical or achievable (75% recycle rate by 2020). As a result, the unattainable targets set by SB 1118 could guarantee excessive fines approaching $2 million annually (up to $5,000 per day) for every mattress manufacturer and retailer in the state. 

 

Retailer mandate to pick up mattresses but no ability to recover costs.

SB 1118 mandates that mattress retailers who deliver mattresses to their customers must offer a pickup service or provide a voucher for mattress recycling. However, it prevents them from charging for this service thus placing a great burden on the retailers.

On-line versus brick and mortar – unfair competition.
The bill exempts on-line retailers of mattresses from having to participate thus creating an unfair advantage over brick and mortar sellers. 

Unlimited fee authority by state Cal Recycle.

The bill grants unlimited fee authority to CalRecycle to pay for the regulatory scheme. These fees must be remitted by the manufacturers and the state can set the fees at whatever level it deems appropriate.

Higher prices to consumers / lost jobs in the economy.

The net effect of the EPR regulatory scheme in SB 1118 is going to be significantly higher prices for consumers and lost manufacturing and retail jobs as a result. This is an anti-business, anti-economic development piece of legislation that will hurt the state’s economy.

Where’s the problem?; Retailers already pick up old mattresses.

This bill appears to be a solution in search of a problem. Mattresses are already collected in a responsible manner.  Most retailers offer a collection service when a new mattress is purchased.  Retailers then dispose of these mattresses through the proper channels and established mattress recyclers.

Eight new recycling centers established in California.

The industry has not turned a blind eye to recycling. In fact, there have been 8 new recycling centers opened in California in the last decade including a very large and successful one right in the middle of the author’s district.

Recession hit industry hard in California.

The mattress industry was hit hard by the recession.  Sales dropped by over 20%, bankrupting large and small manufacturers and retailers in California and across the country.  As the industry struggles to recover from this very difficult period, now is not the time to impose substantial new costs on vulnerable businesses or impede their ability to sell new products.  Higher costs will jeopardize businesses and jobs.  But laws like SB 1118 will be a step backward for the industry by significantly increasing costs, reducing demand for new product and killing jobs.

 

Governor Brown's Pension Reform Agreement With Democrats

Public Employee Pension Reform Act of 2012

 

Caps Pensionable Salaries

·         Caps pensionable salaries at the Social Security contribution and wage base of $110,100 (or 120 percent of that amount for employees not covered by Social Security).

Establishes Equal Sharing of Pension Costs as the Standard

·         California state employees are leading the way and are paying for at least 50 percent of normal costs of their pension benefits. Requires new employees to contribute at least half of normal costs, and sets a similar target for current employees, subject to bargaining.

·         Eliminates current restrictions that impede local employers from having their employees help pay for pension liabilities.

·         Permits employers to develop plans that are lower cost and lower risk if certified by the system’s actuary and approved by the legislature.

·         Provides additional authority to local employers to require employees to pay for a greater share of pension costs through impasse proceedings if they are unsuccessful in achieving the goal of 50-50 cost sharing in 5 years.

·         Directs state savings from cost sharing toward additional payments to reduce the state’s unfunded liability.

Unilaterally Rolls Back Retirement Ages and Formulas

·         Increases retirement ages by two years or more for all new public employees.

·         Rolls back the unsustainable retirement benefit increases granted in 1999 and reduces the benefits below the levels in effect for decades.

·         Eliminates all 3 percent formulas going forward.

·         For local miscellaneous employees: 2.5 percent at 55 changes to 2 percent at 62; with a maximum of 2.5 percent at 67.

·         For local fire and police employees: 3 percent at 50 changes to 2.7 percent at 57.

·         Establishes consistent formulas for all new employees going forward.

Ends Abuses

·         Requires three-year final compensation to stop spiking for all new employees.

·         Calculates benefits based on regular, recurring pay to stop spiking for all new employees.

·         Limits post-retirement employment for all employees.

·         Felons will forfeit pension benefits.

·         Prohibits retroactive pension increases for all employees.

·         Prohibits pension holidays for all employees and employers.

·         Prohibits purchases of service credit for all employees.

CA Formations Have Enormous Amounts Of Oil, Up to 500 Billion Barrels In Monterey Formation Alone

Petro-State Of California Needs Crude Awakening
By TOM GRAY
Posted 08/08/2012 07:05 PM ET

By refusing to tap much of the oil wealth off its shoreline, California is forgoing a resource that could go far to revive its economy and bring state and local governments back to fiscal health.

On dry land, too, California is missing an opportunity: Its vast onshore oil reserves are underused, thanks to a green-energy agenda that raises the cost of oil production and refining.

Policymakers have to realize that their quixotic quest to outgrow fossil fuels isn't helping the state.

California's attitude toward oil began to shift in January 1969, when a well six miles off the Santa Barbara coast blew out just after workers had finished drilling it. The spill was the largest in American waters at the time; it now ranks third behind the Deepwater Horizon and Exxon Valdez spills.
Its impact extended far beyond California; more than any other single event, it brought the various strands of environmentalism and conservation together into a national movement.

But the spill's most immediate result was that California stopped leasing tidelands — the zone within three nautical miles of shore, whose resources the state owns — to oil companies. Not a single acre of this oil-rich seabed has been auctioned since, though drilling continues in areas leased before 1969.

Onshore, the situation is less dire: New wells are continually being drilled, mostly on private or federal land. But the state no longer goes out of its way to attract oil investment, and environmental and land-use laws give local opponents tools to stymie drilling plans.

Outside of regions like the southern San Joaquin Valley — where drilling has been an important part of the economy and landscape for a century or so—Californians don't like drilling rigs and can block projects at the local government level.

Another problem for onshore oil producers is California's ambitious climate-change law, AB 32, passed in 2006 but only now starting to take hold in the form of specific regulations. When fully in effect, it will slam drillers with a cap-and-trade system that amounts to a carbon tax.

Second, AB 32's Low Carbon Fuel Standard (LCFS) requires that the "carbon intensity" of all transportation fuels sold in California from production to transportation to combustion — fall by 10% by 2020.
Despite its evident distaste for oil, California is still the country's fourth-largest producer — behind Texas, Alaska and North Dakota — and yields more than 15 million barrels of crude per month, about 9% of the U.S. total. That doesn't count the output from offshore federal tracts, which is still a respectable 22 million barrels per year.

The biggest onshore story is the potential of the Monterey Formation (also known as the Monterey Shale), a zone of petroleum-rich rock that extends much of the state's length. The Monterey holds an enormous amount of oil, estimated at up to 500 billion barrels.

Though it has long been difficult to extract oil directly from it, advancing technology, along with rising oil prices, has put much more of its oil within reach. If even a small fraction of its reserves proves accessible, the Monterey would be the biggest shale oil play in the nation.

In July 2011, the federal Energy Information Agency (EIA) estimated that the Monterey had 15.4 billion barrels of recoverable crude — four times what's estimated to lie within the Bakken Shale formation, which is fueling North Dakota's current oil boom.

Those 15.4 billion barrels would be worth about $1.5 trillion at today's crude prices. If the EIA estimate is reasonably close to the mark, the Monterey Formation would be in a class with oilfields in Saudi Arabia.
California could certainly use an oil boom right now. Its jobless rate is stubbornly running nearly 3 percentage points above the national average, and most new drilling in the Monterey Formation would be taking place in the San Joaquin Valley, where unemployment is chronically high.
(In the four counties most likely to be sites for drilling — Kern, Fresno, Tulare and Kings — the March 2012 jobless rate averaged 17.5%, compared with 11.5% for the state as a whole.)

It's too early to tell how much of a boost the state would gain from tapping the Monterey, but the impact could be huge. The state government would reap these rewards without having to spend much initially, since the oil industry provides its own infrastructure of pipelines, tanks, pumps, drilling rigs and refineries. All the drillers need is a green light.

Until California surrenders to realism, its oil drillers will be fighting political and regulatory head winds. If they can look anywhere for hope, it's not to the political elites but to the broader public. Ordinary Californians are not anti-oil ideologues, and a fair number favor drilling off the state's coast.
If California's political leadership agrees at some point to commence new drilling off the coast, the prospects for the local economy would be bright. California was once a genuine petro-state, one of global importance. If it so chooses, it stands a good chance of becoming one again.

• Gray, formerly editorial-page editor at the Los Angeles Daily News and senior editor at Investor's Business Daily, writes on California's economy and politics. This article was adapted from the Summer 2012 issue of City Journal.

HOW REGULATIONS COST JOBS - A MUST READ

August 9, 2012

Don't Be Fooled, Regulations Cost Jobs

By Adrian Moore

Mitt Romney has made reforming regulations a key, if vague, part of his economic plan. While acknowledging the multifaceted nature of weak economic conditions in America, the presidential candidate's website argues "a major part of the problem over successive presidencies, and one that the Obama administration has sharply exacerbated, is the regulatory burden on the economy." Naturally, those who are suspicious of the private sector and look to bureaucracies for true wisdom scoff at this claim. They defend regulation by arguing that benefits exceed their costs. Sometimes that is true, sometimes not. Either way, it ignores the fact that often there are less costly ways to realize those benefits. And what is worse are claims that regulations are costless and even economically beneficial, resulting in new jobs!! As Travis Waldron put it at ThinkProgress "the GOP's 'job-killing regulations' rhetoric is built on a myth."

Hmmm. According to a Gallup poll, 22 percent of small business owners say that "complying with government regulations" is the most important problem facing them today, beating out weak consumer confidence and demand as a concern.

Even more awkward, Obama's Small Business Administration (SBA) says that complying with federal regulations alone costs $1.7 trillion annually. That's about half of the federal budget and nearly 12 percent of GDP. Moreover, the SBA says that federal regulations cost on average $10,000 per employee. That means in the absence of federal regulations a typical business with 10 employees would have $100,000 lower costs. Even in this uncertain economy, most businesses of that size would use some of the additional capital to expand business and possibly hire an additional worker.
And that is just federal regulations. State and local regulations often add dramatically to those costs.

Those mere facts have not slowed the "regulations don't cost jobs" mantra from many one bit. Their arguments tend to come in three forms.
First, saying that the economy has grown even while regulations have expanded, so clearly businesses adapt and we are all better off. Second, arguing that data show few layoffs are due to regulations. And third, suggesting that regulations actually drive change and innovations, which in turn create jobs.

Well, wrong on all counts. Lets break it down.
First, let's look at the argument that the economy and jobs have grown in spite of the increase in regulations, therefore there is no problem with more regulations. As Rex Nutting put it at MarketWatch, the businessman fights "regulation tooth and nail, but if it is approved, he finds a way to make money without poisoning the water, fouling the air, employing toddlers or killing his customers." Well, regulations certainly have grown. According to the Regulatory Studies Center at George Washington University, from 2000-2012, the number of federal regulatory officials grew 66 percent and the budgets of federal regulatory agencies (adjusted for inflation) grew 75 percent. Over the same period, the U.S. population grew 14 percent but the number of jobs in the U.S. grew by only 4 percent. Of course, correlation is not causation, but combine this with the experience of small business owners and a pattern seems to emerge. One might imagine that if federal regulatory staff and budgets had grown by an outrageous, but more modest than reality, 33 percent or so, that job growth might have been 5-6 percent.
Yes, business managed to create jobs in spite of exploding growth in regulatory costs. But the pace of job creation did not keep up with population growth. And there are many jobs that businesses had to forego creating because of over regulation This is the insight of economist Frdric Bastiat's "that which is seen and that which is not seen" argument. We can see the regulations and the modest job growth, but we cannot see the jobs that were not created due to regulatory costs, because they are not there to see.

Second, in May, the Bureau of Labor Statistics released data from a survey of reasons for layoffs showing that regulations are a very minor cause. The media and regulation-loving blogosphere lit on fire with variations on the story that, as MediaMatters put it, "Government Regulations Do Not Have A Meaningful Impact On Unemployment." What a classic straw man. The argument has not been that regulations cause layoffs, but that they prevent new jobs from being created. Take the Sarbanes-Oxley Act. Since Sarbox passed, the number of IPOs in the U.S. has fallen 80 percent according to researchers at the University of Florida. IPOs fund businesses to expand and hire. Fewer IPOs, all other things being equal, means fewer jobs created. When businesses must spend money to comply with new regulations, they have less money to spend on other things, including hiring.
Finally, possibly the richest argument in defense of regulations is that in fact regulations drive innovation. As Bill Fulton argued in Governing, just look at renewable energy requirements. By mandating the use of new technologies, they force companies to hire people to innovate, or at least install existing technologies.

In some ways there is truth to this argument. After all, the wind and solar energy industries would be mostly nonexistent right now without renewable portfolio standards ensuring their existence. However, this does not mean employment is higher on net because of the regulations. The Washington Post last November told a story of an old coal plant in Ohio being shut down at the loss of 159 jobs, but an hour north a new natural gas plant opening up with 25 employees. "The two plants tell a complex story of what happens when regulations written in Washington ripple through the real economy. Some jobs are lost. Others are created." And overall the effect of regulations on jobs is a wash, the Post article concludes. Maybe I am not up on the new math, but to me that story looks like a loss of 134 jobs, not a wash. Besides that, the story ignores the fact that all the resources used to replace a working power plant are resources that cannot be used elsewhere to create jobs. Again, the jobs forgone to pay for regulatory costs are not seen (at least not seen by the Post reporter).

But wait, there's more. In the same story Mike Morris, CEO of American Electric Power (AEP), says "We have to hire plumbers, electricians, painters, folks who do that kind of work when you retrofit a plant. Jobs are created in the process - no question about that." Wow, yet another classic fallacy. Anyone that owns AEP stock is brave, because by the CEO's logic if the government said to tear down ALL of his power plants and replace them, that would be a good thing because it creates jobs. Heck, if that is true, lets mandate tearing down and replacing everyone's houses and get another construction boom going!

This is a reminder of another gem from economist Fredric Bastiat known as the "broken window fallacy." Economies don't create jobs and wealth on net by destroying things that are working well or with unproductive busy work. All those jobs have costs, costs that could pay for jobs producing something new rather than complying with regulatory mandates.

None of this is to say that we should have a completely unregulated economy. Rules restricting fraud and theft of consumer property, for instance, are critical for a well functioning financial system. Regulations that are about providing a system of justice and rule of law are necessary for a free market to flourish. However, regulations are not job creators and policymakers should be well aware of their costs.

Dr. Adrian Moore (adrian.moore@reason.org) is a vice president at Reason Foundation.

Page Printed from: http://www.realclearmarkets.com/articles/2012/08/09/dont_be_fooled_regulations_cost_jobs_99812.html at August 09, 2012 - 12:25:54 PM CDT

City of LA is Saving Millions with CSC and Google Apps

 

The City of Los Angeles turned to cloud computing and Google Apps for Government to replace its legacy email system. The CSC-led effort has saved Los Angeles taxpayers more than two million dollars, and the City expects to save millions more in the future. Furthermore, the system is delivering powerful new capabilities to the city's employees and its constituents.
CSC's expertise in integrating cloud services, combined with Google Apps, Google's suite of Web-based productivity tools, is providing mission-critical communications and collaboration capabilities to more than 17,000 city employees. Google Apps includes email, calendar, documents and spreadsheets, Google Sites, instant messaging and video. These applications enable government organizations to do more with less and be more responsive to the needs of citizens.

In addition, CSC is providing its Trusted Cloud Computing services to include systems integration and end-user services, including solution architecture and design, integration with the city's identity management services, migration of live and archived email data, set up and training.

By combining CSC proven cloud computing integration and security expertise with Google's cloud computing applications, the City of Los Angeles is experiencing dramatically lower operational costs while increasing productivity and improving the end-user experience. Visit the site LA GEECS for historical data on this landmark project.
Today, thousands of city employees are benefiting from the Google Apps cloud computing solution -- a money-saving, functionally superior and user-friendly email and collaboration system. This migration is part of the contract awarded to CSC in November 2009 to replace the City of Los Angeles' current email system and other applications with Google Apps for online collaboration. The city is experiencing improved application availability and disaster recovery with the Google Apps solution.

From  http://www.csc.com/public_sector/offerings/76342/76369-city_of_la_google_and_csc