NBLC Policy Watch: California’s Fiscal Outlook Remains Positive

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The California Legislative Analyst (LAO) has prepared his Fiscal Outlook for the Budget Year 2014-2015.

The LAO found that “Under Current Policies, $5.6 Billion Projected Reserve at End of 2014-15. The state’s 2013-14 budget plan assumed a year-end reserve of $1.1 billion.

“Our revenue forecast now anticipates $6.4 billion in higher revenues for 2012-13 and 2013-14 combined,” the LAO said.”These higher revenues are offset by $5 billion in increased expenditures, almost entirely due to greater required spending for schools and community colleges. Combined with a projected $3.2 billion operating surplus for the state in 2014-15, these factors lead us to project that, absent any changes to current laws and policies, the state would end 2014-15 with a $5.6 billion reserve.”

The LAO said, “We assume continued economic growth in future years. In such a scenario, we project that, under current laws and policies, state General Fund revenues will grow faster than expenditures through 2017-18, when the state’s projected operating surpluses reach $9.6 billion. The state’s temporary personal income tax rate increases under Proposition 30 (2012) expire at the end of 2018, resulting in a more gradual ramping down of these revenues over the last two fiscal years of our forecast. This helps prevent a ‘cliff effect’ in our forecast, as our projected operating surpluses remain stable at just under $10 billion per year in 2018-19 and 2019-20.”

There was more good news for the state given the healthy local property tax growth.

The LAO said, “Proposition 98 funding for schools and community colleges is provided by a combination of state General Fund spending and local property tax revenues. Throughout our forecast, healthy property tax growth — a byproduct of the recovering housing market — helps moderate the growth of required state General Fund spending on schools and community colleges. In addition to normal property tax growth, the state’s fiscal situation is helped by additional increases in school property taxes due to the dissolution of redevelopment agencies. … Both of these factors play a significant role in keeping annual state expenditure growth below revenue growth for much of our forecast period.”

The LAO urged continued caution noting that “the state’s continued fiscal recovery is dependent on a number of assumptions that may not come to pass. For example, our forecast assumes continuing economic growth and slow, but steady, growth in stock prices. As we discuss in this forecast, an economic downturn within the next few years could quickly result in a return to operating deficits. Further, the normal volatility of capital gains could depress (or boost) annual revenues by billions of dollars. In addition, our forecast assumes that the state repays liabilities with payment schedules set in current law. Other liabilities, including some items on the Governor’s wall of debt and the state’s huge retirement liabilities (particularly those related to the California State Teachers’ Retirement System), remain unpaid under our forecast. If additional payments are made in the future to repay these liabilities or to provide inflation adjustments to universities, the courts, state employees, and other programs, the operating surpluses in our forecast would fall significantly below our projections.”

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Cynthia Murray is the president and CEO of the North Bay Leadership Council. PolicyWatch is published regularly by the NBLC. You can sign up to receive the full report atnorthbayleadership.org. Email Cynthia at cmurray@northbayleadership.org or call 707-283-0028. The full report is available at lao.ca.gov.

North Bay Leadership Council Welcomes California Bank & Trust to its Board of Directors

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Petaluma, CA   North Bay Leadership Council (NBLC) welcomes California Bank & Trust (CBT) to its Board of Directors.  NBLC chairman, Brad Bollinger, said, “It is a pleasure to have CBT join our board because of their knowledge of business banking and commitment to building stronger communities.  We appreciate their desire to grow in the North Bay and to contribute to NBLC’s work in improving the prosperity and sustainability of this region.”

CBT has been in California for over 60 years.  CBT specialize in business banking.  CB&T is one of the largest banks headquartered in California, with over $11 billion in assets and nearly 100 branch offices statewide.  CB&T provides a full array of financial solutions for businesses and individuals, including commercial banking, business banking, small business lending, treasury management, international banking and wealth management.

At CB&T, community development is a top priority.  The bank strives to build deep roots in the communities in which they serve as responsible leaders and active partners and citizens.  The bank offers grants that help revitalize or stabilize low- and moderate-income communities that promote affordable housing, small business/micro-enterprise development and community economic development.

CB&T has won numerous awards including 12 Greenwich Excellence Awards (Greenwich Associates is a leading global financial services research and consulting firm.  The bank has an “outstanding” Community Reinvestment Act rating for the past decade.  They are a Preferred SBA Lender as designated by the U.S. Small Business Administration.  And the U.S. EPA has designated the bank as one of the “Best Workplaces for Commuters.”

The member representative to NBLC’s board is Michael Kadel, senior vice president and business center manager for the North Bay. Kadel plans to increase the presence of CB&T in the North Bay by opening more branches and becoming more involved in North Bay programs and initiatives.  Kadel said, “CBT thinks that NBLC’s priorities to improve education, economic competitiveness and transportation are well aligned with our priorities.  We look forward to working collaboratively with the other members to make the North Bay economy and communities thrive.”

Kadel has worked more than 24 years in the banking industry, including positions in regional branch management, commercial and business banking, relationship management, lending, private banking, sales management and banking operations.  He previously served as regional manager for Bank of Marin, where he oversaw five retail branches in the Marin area.  Kadel earned a Bachelor of Science degree from Kansas State University in agricultural economics and has a master’s in executive management from Pacific Coast Banking School. He served as president of the San Rafael Chamber of Commerce and the Marin Economic Forum, and on the board of Hospice by the Bay and the California Family Health Council.

North Bay Leadership Council is an employer-led public policy advocacy organization committed to providing leadership in ways to make the North Bay sustainable, prosperous and innovative.  The Council includes 46 leading employers in the region.  Our members represent a wide variety of businesses, non-profits and educational institutions, with a workforce in excess of 25,000. For more information, contact Cynthia Murray at (707) 283-0028 or cmurray@northbayleadership.org

Congratulations to the North Bay Election Winners!

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Santa Rosa City Council: 

Tom Schwedhelm

John Sawyer

Petaluma City Council:

Chris Albertson

Dave King

Rohnert Park:

Amy Ahanotu

Pam Stafford

Napa City Council: 

Juliana Inman

Peter Mott

Previously endorsed in primary:

James Gore for Sonoma County Supervisor – District 4

Mike McGuire for State Senate – District 2

Marc Levine for Assembly – District 10

Bill Dodd for Assembly – District 4

Ballot Measures

Sonoma County Measure  H (Santa Rosa Junior College Bond)

County of Marin Measure A (MERA parcel tax measure)

Prop 1 (State Water Bond)

North Bay Leadership Council Endorsements

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North Bay Leadership Council is proud to make the following endorsements for November 2014 election:

Santa Rosa City Council: 

Tom Schwedhelm

John Sawyer

Ashle Crocker

Petaluma Mayor:

Mike Harris

Petaluma City Council:

Chris Albertson

Dave King

Rohnert Park:

Amy Ahanotu

Pam Stafford

Santa Rosa Junior College Board

Bob Burdo

Don Zumwalt

Kathleen Doyle

Napa City Council: 

Juliana Inman

Peter Mott

Previously endorsed in primary:

James Gore for Sonoma County Supervisor – District 4

Mike McGuire for State Senate – District 2

Marc Levine for Assembly – District 10

Bill Dodd for Assembly – District 4

Ballot Measures

Sonoma County Measure  H (Santa Rosa Junior College Bond) – SUPPORT

County of Marin Measure A (MERA parcel tax measure)  — SUPPORT

Prop 1 (State Water Bond)  — SUPPORT

Marijuana seeds are the foundation of any marijuana grow operation. That is because they contain the genetics of the marijuana plant and therefore determine what kind of plant will eventually grow. There are two main types of seeds: male and female. Male and female plants differ for reproduction purposes, but both can be used to produce both male and female flowers that produce buds, or flowers that will produce seed pods- the fruit of a marijuana plant.

NBLC Calls For Review of CEQA Guidelines

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NBLC, other business council leaders and the leaders of five of the California Summit action teams are urging the governor and his Administration to complete a peer review of a scheduled update to CEQA’s administrative regulations—known as the CEQA Guidelines—before they are made public later this year. The letter also urged the Administration to include in the process state agencies that are obligated to comply with the California Environmental Quality Act for critical infrastructure, renewable energy, economic development, and regulatory activities.

In the letter to the governor, it said, “We believe that experienced CEQA practitioners…can efficiently advise the Administration, and OPR, on the extent to which the proposed updates to the Guidelines would achieve the Administration’s policy objectives to improve CEQA.  We believe these practitioners can [also] identify the types of ambiguous or impractical Guideline provisions that are likely to result in more lawsuits and litigation uncertainty.”

NBLC serves on the Summit’s Regulations action team, which has formed a group of experts dedicated to exploring administrative options for improving CEQA. Įtempiamos lubos Vilniuje Gera kaina Montavimas ir priežiūra cempianos.lt. These include updating the CEQA Guidelines, a set of regulations that explain and interpret the law for both the general public and the public agencies that administer CEQA.

Earlier this year, this Summit team offered a detailed analysis of a preliminary evaluation of the CEQA Guidelines conducted by the Office of Planning & Research (OPR)—a process set in motion by a piece of legislation, SB 743, signed into law in 2013. In that letter, the Summit applauded the Administration’s commitment to curtail CEQA litigation abuse, more effectively integrate compliance with California’s many other environmental laws into CEQA practice, and to reduce the time, cost, and uncertainties that have undermined effective CEQA implementation. The Summit identified several areas where OPR could advance these goals.

“All CEQA lawsuits target public agencies, and public agencies bear the highest burden of CEQA’s costs, delays, and uncertainties,” the letter said. “Updating the CEQA Guidelines can either increase this burden—or provide practical and clear direction on lawful compliance practices that reduce it. We urge the Administration to reach beyond OPR to other CEQA practitioners in key state agencies—and to complete this interagency peer review process, prior to releasing proposed revisions to the Guidelines.”

How The Past Can Devour The Future

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In “How The Past Can Devour The Future,” David Crane, President of Govern for California,

(Fox & Hounds, July 22, 2014), shows why public pension liabilities are increasing despite the strong economy and record stock market growth. Crane says Thomas Piketty’s Capital in the 21st Century, “explains that capital is wealth derived from past activities (e.g., your savings represent wealth you accumulated over the past) that combines with labor to produce, and split the benefits from, economic growth. Everything works fine so long as returns promised to capital are lower than economic growth rates. But when returns promised to capital are higher than economic growth rates, Piketty says the past ‘devours the future.’”

Crane says, “That’s what’s happening with public pension costs. When elected officials promise pensions to public employees they create capital (assets for employees, liabilities for governments) requiring a high rate of return that forces governments to divert spending from current activities. Public pension funds must earn the expected return or governments have to divert money from other activities to cover the deficiency. Historically, according to Piketty, capital tends to expect a return of 4.5-5% per annum. That’s tough enough when GDP growth doesn’t reach those levels, but governments like California base upfront contributions on an even higher rate of return, usually 7.5-8% per annum. That’s why public pension costs are rising.”

Crane says, “Another consequence is that, once public pension assets fall behind pension liabilities, it’s virtually impossible to catch up if a high expected rate of return was employed to set upfront contributions. Even though the stock market is up more than 100% since 2009 and CalPERS has averaged extraordinary annual returns of 14% since then, the unfunded pension liability (i.e., the deficit when pension liabilities exceed pension assets) owed by California governments has improved (declined) only 30%. Even now, five years into a great bull market, CalPERS needs to earn double-digit annual returns just to keep the unfunded liability from growing.”  He claims achieving returns at 7.5% would require the stock market to be over 30,000.

Crane and others saw that “governments were way behind on their pension promises even before the Great Recession. With the market just now reaching a record 17,000, the difference must come from governments. That means more cuts to services, higher taxes or both (emphasis added).  Unless political leaders and labor unions work together to fix the problem, “meeting that rate of return will continue devouring the future. Citizens must plan accordingly.”

Policy Update: Community College Degree Tracking Bill Moves Forward!

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SB 1425, a bill to provide degree tracking and retroactive awarding of degrees supported by NBLC passed out of the Senate unanimously.

SB 1425, co-sponsored by the Campaign and Southern California College Access Network (SoCal CAN), creates a degree tracking system at the California Community Colleges that will keep current and future students on track to successfully reach their educational goals, as well as award retroactive degrees and certificates to former students who are eligible to receive one. We are pleased to share the update that SB 1425 passed out of the Senate unanimously on May 28th, and unanimously out of the Assembly Higher Education Committee on June 24th! This proposal has received overwhelming support throughout the Senate legislative process, and we hope to continue this momentum as the bill moves on to the Assembly Appropriations Committee.

 

NBLC Supports The Passage of the California Film and Television Tax Credit Program

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NBLC supports the passage of AB 1839, which would extend, expand and restructure the California Film and Television Tax Credit Program.  This legislation would support California’s hometown, homegrown, 100 plus-years-old motion picture production industry. The North Bay has benefited from this industry and, if AB 1839 passes, will benefit in the future.  This sector is a significant economic and job creation engine for our state and the cornerstone of California’s leading export-oriented entertainment industry cluster, directly responsible for more than 190,000 well-paying middle class jobs in California.

AB 1839 would invest in California’s highly lucrative film and television production industry, making the entire state more competitive against other states and countries in the escalating competition to attract, retain and grow more of the highly coveted “below-the-line” motion picture and television production jobs (e.g., grips, costume designers, graphic artists, technical engineers, hair stylists), as well as all the numerous indirect (e.g., trucking, food services, equipment rentals) and induced jobs that are also supported by this industry.

Over the last decade, “runaway film” has unfortunately become the rule, not the exception, in California as more and more states and countries have successfully lured our valuable film and television productions and jobs away in what can best be described as a film incentive “arms race.” In 2009, California enacted a modest tax credit program that helped ease runaway production, encourage in-state production, and retain a portion of the motion picture and television production sector’s extremely sizeable direct, indirect and induced economic, job and fiscal impacts.  With an average 11 percent positive return to local and state governments, there is no cost to state and local governments in terms of spending tax expenditures. This program is actually a smart business move (the public is earning income on its investment), a good investment in job creation, and wise public policy.

AB 1839 addresses the deficiencies in the current program and has received widespread bi-partisan support.   It passed the State Assembly on a unanimous 76-0 vote. The measure now moves to the State Senate where it will be heard on June 25th in the Senate Committee on Governance and Finance.  For more information on the effort and to find out how you can help maximize the positive fiscal, job and economic returns of AB 1839, visit www.filmworksca.com.

June 2014 Primary

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NBLC’s endorsed candidates and ballot measure were all victorious in the primary. Congratulations to the candidates and Measure B supporters!

Mike McGuire running for State Senate District #2 came in first with almost 60% of the votes. He will face Republican Lawrence Weisner who received 26.9% of the votes in the runoff.

Incumbent Assembly member Marc Levine, District #10, received nearly half of the votes, at 49%. His will face Republican Greg Allen who received 20.5% of the votes in November. The closest Democratic challenger was Diana Conti.

Bill Dodd and his Republican challenger, Gary Schaupp, tied at 25.7% qualifying both to be in the runoff for the Assembly District #2 seat.

Running for termed out Assembly member Wes Chesbro’s seat, Jim Wood received almost 45% of the vote ahead of three others.

In the Supervisors’ races, incumbent Marin County Supervisor Judy Arnold narrowly beat Toni Shroyer with only 140 votes separating the two. Marin Supervisor Susan Adams was unseated by Damon Connolly.

In Sonoma County, Supervisor David Rabbitt easily won re-election with almost double the votes of his contender. The fight for the 4th District seat vacated by Mike McGuire continues to November with James Gore and Deb Fudge squaring off. Fudge topped Gore but led by less than 300 votes.

Measure B, the Marin County Farmers’ Market won handily, allowing a permanent Farmer’s Market to be on the Civic Center property.

NBLC’s Legislative Advocacy Day Reaps Rewards

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On NBLC’s annual Legislative Advocacy Day, we were pleased by the response of Senator Pro-Tempore, Darrell Steinberg, with our request for expanded pre-school.  Sen. Steinberg shared with us his new plan the Senate Fair Start proposal, which:

  • provides high-quality pre-k opportunities to all low-income 4 year olds—an additional 234,000 children;
  • provides full-day, full-year pre-k to those with at least one working parent, totaling 77,000 children; and
  • takes effect in fall 2015 at a modest additional cost of $378 million.

The senator also backed the goal of the Legislative Women’s Caucus to offer more than 40,000 child care opportunities for low-income children, largely focused on those ages from birth to age 3, starting this year.

The NBLC delegation was also pleased with the Assembly budget subcommittee proposal, which was also approved:

  • includes $440 million to add 47,000 new early education spaces;
  • increases reimbursement rates and family eligibility;
  • eliminates the Preschool Family Fee;
  • improves provider quality; and
  • reinstates a state stipend for nutrition.

The legislation will move on to the budget committees.  Please add your voice that these proposals that put our youngest learners first are important and need to pass. With their leadership, we can send a strong budget proposal to Governor Brown with a clear message: our children deserve a fair start!

Please take two minutes to contact your legislators and urge them to support high-quality early childhood education for our youngest learners!