California: Referendum on the Car Tax Increase

The purpose of this press conference is very simply to put the legislature and the governor on notice that they should not expect to see a penny from increased car taxes if they adopt AB 4X.

If the Democrats want the biggest statewide tax revolt in 24 years, this is the quickest way to get it.

Within minutes of that measure being chaptered, the paperwork will be filed with the Secretary of State to referend it. This will automatically suspend the act for 90 days.

We have with us today representatives of the major grassroots taxpayer organizations in the state, who are already pledged to make a referendum of the car tax their top priority. I can certainly pledge the statewide campaign structure that I have built during my campaign for the state controller's office. And I intend to request the formal support of the California Republican Party as well.

It will require 373,000 signatures to qualify the referendum, at which time the effect of the tax increase will be stayed until the next election. At that time, the people will have the opportunity to reject the tax increase, which I believe they will do overwhelmingly.

I also want to address the canard that somehow the state legislature intended the current car tax rate to increase in bad economic times. If that were the case, you wouldn't need to change the law, would you?

Existing law has been clearly understood and practiced by the state controller's office from the first day of its enactment. There are only two circumstances that would trigger an increase in the car tax under existing law.

The first is gross incompetence by the Controller in failing to maintain sufficient funds in the treasury to cover the anticipated obligations of the state. The other is if the state was closed out of the capital market. Neither of these events has ever occurred in the history of California.

The Democrats want to fundamentally change this law in a manner that would automatically triple the car tax.

Last week, local government officials said they "already" were reducing police and fire protection. That's not because of the car tax.

In fact, local governments have never lost even a penny of revenue in the five years since the car tax was first reduced. It would take a majority of the legislature to do so, and before the local government horror stories are given any credence, I challenge them to name even one legislator who supports such a measure.

And there's a reason for that. There is no excuse for the state raiding local government funds at a time when it is already spending a higher percentage of people's earnings than ever in its history.

As the Sacramento Bee pointed out yesterday, California's CURRENT car tax is higher than the next five largest states in the country, and in fact is twice as high as the next runner-up.

The $4 billion of tax increases proposed by the Democrats is about what the Governor has allowed his bureaucracies to overspend—beyond the approved budget—even knowing the condition of the state's finances.

Indeed, the legislature's Democrats have already rejected billions of dollars in actual program reductions that the Governor proposed in December. So to the inevitable question, "What do you substitute for the tax increase?" let's start with the program reductions that the Governor has already proposed.

An overall reduction in the neighborhood of 9.5 percent of state spending, held constant for 18 months, would completely address the budget deficit without raids on local governments, pilfering of pension funds, tax increases, or accounting gimmicks.

So those who vote for this bill should be on notice not to expect a penny from this tax. The filing and qualification of the referendum will stay the effect of this bill until the people of California have the opportunity to soundly repudiate it. And then they will have the opportunity to repudiate the politicians who sought to triple their car taxes.

"Another Davis Disaster! Calpers Turned Over to Politics"
By ChronWatch Founder, Jim Sparkman
Friday, January 31, 2003

Do you have any idea whay we have to read about Calpers problems in the Wall Strreet Journal, instead of in the Chronicle? Journalistic incompetence is certainly a big factor, but the sort of problems pointed out in this article are simply accepted liberal practice. What's wrong with putting Willie Brown on the Calpers Board?

That's the way the liberal game works. Brown, whose entire sphere of expertise, insofar as I can tell, is in keeping up his level of personal influence in whatever is going down. And, in buying Brioni suits with the proceeds, of course. Read all of the article for the full story of this political mess.

How the have mighty fallen. And how quickly. For decades, Calpers, the giant California state pension fund, set a standard of excellence in investment performance and probity. Lately, however, Calpers has become the poster-plan for bad performance, cronyism, and lousy corporate governance. And it's about to get worse.

Calpers's slide is a familiar tale of California politics, and one almost ordained given the makeup of Calpers's board of trustees. There are 13 members--six elected by members of Calpers, four appointed by the governor, and three state officials designated by statute.

Since Governor Gray Davis has enormous influence over board membership, it's no surprise that a majority represents, or is supported by, labor or the Democratic Party. But Mr. Davis's choices to run the largest pension fund in the country are especially questionable. His most recent appointee, San Francisco Mayor Willie Brown, is a classic political favor-grantor and insider. And a great chum of Mr. Davis.

Under this board, investment strategy has become increasingly twisted toward what the board calls socially responsible investing, but what others see as the pursuit of the political dictates of its union-affiliated members. Some also detect an investment strategy designed to reward the Democratic faithful.

Last year Calpers invested $100 million in a real estate partnership run by Richard Wollack, a major fund-raiser for Mr. Davis. Calpers also invested more than $760 million in funds run by Ronald Burkle, a big contributor to Mr. Davis and to two state officials who served on the board, Treasurer Philip Angelides and Controller Kathleen Connell. Mr. Burkle has also contributed to the various campaigns of Willie Brown and has employed Mr. Brown to do legal work for his companies. Both Mr. Brown and Mr. Angelides (former state Democratic Party chairman) voted in favor of giving $760 million to Mr. Burkle. The state's taxpayers deserve to know how this not-so-little investment turns out.

Well, during this period of increasing politicization Calpers's investment returns have taken a dive. Since 2000 the fund's investments have underperformed other large pension funds. In the three years ending September 30, 2002, returns posted a negative 2.5%.

Between June 2000 and the end of October 2002, Calpers's assets dwindled to $136.6 billion from $172 billion--a decline of more than 20%. If returns don't improve, the fund may show unfunded liabilities by the end of its fiscal year.

Into this dangerously lethal mix of politics and desperation comes the election of a new president by the Calpers board next month. The first two candidates to declare themselves were Sean Harrigan, a boss of the Food and Commercial Workers Union who became a Calpers board member after Governor Davis appointed him to the State Personnel Board, and Bob Carson, a retired general counsel for the State Department of Transportation. Then a third candidate popped up--with the support of Mr. Davis--Mayor Brown.

If Calpers were a private investment fund, this would all be hilariously high comedy. But Calpers is a public fund. Ultimately the buck stops with the taxpayers of California. For them, it might turn out to be pure tragedy.

Liz as usual you are right on top of these rat financial messes.

Would you please post this as a separate thread so it will get read.

As the editor of the Chron Watch noted, it is amazing that we in California have to read the WSJ to find out about these criminal activities with Cal Pers.

My neighbor who takes the WSJ and is normally an apolitical conservative was livid. He actually left his yard to walk over and show me the editorial. (He is also semi anti social).

I asked him if he had read about this in the Chronicle, his wife is a liberal who loves the Chronicle? He said no. Then, I asked him why not? He had no answer. I said that the Chronicle and every left wing fish wrap was in bed with Davis, Willie Brown and the other crooks. I thought that he was going to stroke out as he got mad that the WSJ had the word. Not the Chronicle that he as paid a lot of money for each month his adult life.

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