By Chris Reed

California’s mainstream media is for the most part promoting Covered California’s spin that its implementation of Obamacare come Jan. 1 is going splendidly, and that insurance rates will be less than expected. Thankfully, smart blogger-experts have torn this myth to shreds. Rates will in fact soar for many groups of people, with the hardest hit going to be male non-smokers 40 and under.

Now David Hogberg, a health care policy analyst for the National Center for Public Policy Research, has detailed another big, related problem with an analysis headlined “California’s Coming Health Insurance Death Spiral.” Hogberg’s focus is on the likelihood that many young people skip purchasing health insurance because the fine for not having insurance is relatively small and the premium subsidies for the less affluent won’t help much in getting the young to buy coverage.

How Obamacare’s incentives will create an insurance ‘death spiral’

“The two most important regulations regarding whether younger and healthier people will participate are known as community rating and guaranteed issue.

“In its strictest form, community rating means that insurers must charge everyone the same premium, regardless of factors such as health status and age. ObamaCare uses a modified form that doesn’t allow insurers to vary rates based on health status.  …

“Guaranteed issue, in its strictest form, means that an insurer must sell a policy to a consumer anytime. …

“Both of these rules give young and healthy people big incentives to forgo insurance coverage altogether. Community rating means young people have a reduced incentive to buy insurance since they will pay a premium that is above the market rate. Guaranteed issue gives them even less incentive to buy insurance while they are healthy because when they get sick an insurer will have to sell them a policy.

“A handful of states tried to reform their individual markets this way in the early 1990s. Of course, many young and healthy people did drop out of those markets as a result. That meant that those who remained in the insurance pools were older and sicker, a factor that drove up the rate of premiums. As premiums rose, even more young and healthy people dropped their insurance. Insurance pools got even sicker and older, and rates continued to rise. The phenomenon became known as the ‘death spiral,’ and was chronicled in the late Conrad Meier’s monograph ‘Destroying Insurance Markets.^‘”

Some of sickest Californians in for sticker shock as well

Hogberg also focuses on a grim detail of Covered California’s plans that hasn’t gotten the attention it deserves.

“California officials treated some of their constituents less equally than others. People who need specialty drugs — high-cost drugs engineered to treat complex, chronic conditions — got the shaft. According to the Associated Press, ‘Such “specialty drugs” can cost thousands of dollars a month, and in California, patients would pay up to 30 percent of the cost. For one widely used cancer drug, Gleevec, the patient could pay more than $2,000 for a month’s supply, says the Leukemia & Lymphoma Society.’

“In response, Dana Howard, a spokesperson for Covered California, said ‘We are trying to keep the insurance affordable across the board. This is just part of trying to manage the overall risk of the pool.^‘

“As a list of specialty drugs from Express Scripts shows, those who need specialty drugs are some of the sickest of the sick, including (but not limited to) transplant recipients and those with blood cell deficiency, cancer, immune deficiencies, and multiple sclerosis.

“Presumably, these are the types of people for whom ObamaCare is supposed to provide the most protection against major health-care costs. So why did California officials — those generous, compassionate, concerned-only-with-the-best-interests-of-their-constituents officials — permit insurers to charge huge co-pays to very sick enrollees in order to keep premiums low?”

The frail and the medically ravaged won’t form picket lines

Hogberg suspects it’s because they’re unlikely to be much of a political headache to the politicians in Sacramento.

“… only about one in 100 users of commercial insurance need these expensive specialty drugs. … Most politicians will have little to worry about from people who take specialty drugs and who are looking to hold someone responsible for the shabby deal they get through Covered California.

“Furthermore, people on specialty drugs are probably too sick to engage in the sorts of activities necessary to make changes in policy –- activities such as get-out-the-vote drives, protests and lobbying. Thus, California’s officials probably don’t have to worry much about specialty-drug consumers stirring up trouble.

“There will undoubtedly be more examples of this inequity as ObamaCare unfolds, because, as government expands more and more into a health care system, the health care available is determined less by need and more by political clout. In general, the sicker one becomes, the less political clout one has. Few people get seriously ill each year, meaning that they are not a substantial number of voters. And most are in no physical condition to be actively engaged in politics.

“So when it comes time to cut costs, guess who is going to feel the brunt of it? Covered California just provided a prime example.”

At least it will deeply undermine faith in big government

The coming disaster that is Obamacare is going to do even more than the IRS and the spying-on-the-public scandals to undermine faith in big government. That will be a welcome development. But the price is going to be immense: costly chaos in health care.

By Chris Reed

Last week, when the California agency that has the lead role in implementing Obamacare announced the rate structure for various insurance plans to be offered beginning Jan. 1, 2014, the media jumped to a lot of conclusions — conclusions flattering to Obamacare, as one would expect from a media that mostly waited until after the health care overhaul was adopted to point out its many immense flaws. (The New York Times put out a devastating analysis — but it was three weeks after Obamacare was signed into law!)

On California’s version of Obamacare, here was what the Los Angeles Times emphasized early in its story:

“‘These rates are way below the worst-case gloom-and-doom scenarios we have heard,’ said Peter Lee, executive director of Covered California, the state agency implementing the healthcare law.”

Here was what The New York Times’ Paul Krugman emphasized:

” … important new evidence — especially from California, the law’s most important test case — suggests that the real Obamacare shock will be one of unexpected success. … the California bids are in — that is, insurers have submitted the prices at which they are willing to offer coverage on the state’s newly created Obamacare exchange. And the prices, it turns out, are surprisingly low. A handful of healthy people may find themselves paying more for coverage, but it looks as if Obamacare’s first year in California is going to be an overwhelmingly positive experience.”

LAT and Krugman: What they didn’t mention

Not so fast, say two journalists who have written extensively about Obamacare, and not from inside the tank that houses the mainstream media.

This is from Avik Roy of Forbes:

“If you’re a 25 year old male non-smoker, buying insurance for yourself, the cheapest plan on Obamacare’s exchanges is the catastrophic plan, which costs an average of $184 a month. (That’s the median monthly premium across California’s 19 insurance rating regions.)

“The next cheapest plan, the ‘bronze’ comprehensive plan, costs $205 a month. But in 2013, on eHealthInsurance.com (NASDAQ:EHTH), the average cost of the five cheapest plans was only $92. In other words, for the average 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.

“Under Obamacare, only people under the age of 30 can participate in the slightly cheaper catastrophic plan. So if you’re 40, your cheapest option is the bronze plan. In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261. But on eHealthInsurance, the average cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent.

“For both 25-year-olds and 40-year-olds, then, Californians under Obamacare who buy insurance for themselves will see their insurance premiums double.”

This is from Peter Suderman of Reason:

“… this good news is not as good as it might sound, because it’s based on a misleading comparison: next year’s individual market rates with this year’s small-employer plans. A more useful comparison would be with this year’s individual-market premiums. And what that comparison reveals is that rate shock is real, and that the hikes are far larger than the comparison with small-group rates would suggest.”

Karma time: Bay Area to be hardest hit

The good news here is that as much as the media has been cheerleading for Obamacare, it remains highly unpopular — even before it kicks in. When people actually have to pay much more for insurance than they used to, the backlash is likely to reach a whole new level.

And here in California, the hardest-hit will be Obama’s biggest fans. Karma, baby! Avik Roy of Forbes says Obamacare’s impact on premiums for 40-year-olds “is steepest in the San Francisco Bay area, especially in the counties north of San Francisco, like Marin, Napa, and Sonoma.”

More from Roy:

“Supporters of Obamacare justified passage of the law because one insurer in California [Anthem Blue Cross] raised rates on some people by as much as 39 percent. But Obamacare itself more than doubles the cost of insurance on the individual market. I can understand why Democrats in California would want to mislead the public on this point. But journalists have a professional responsibility to check out the facts for themselves.”

If only California journalists lived up to that professional responsibility.

By Chris Reed

The best “Hogan’s Heroes” in-joke of all time:

By Dave Roberts

If you’re curious what health care insurance might be like when the government takes it over, a preview was provided on Tuesday at an informational hearing of the Assembly Committee on Aging and Long-Term Care. State Capitol Room 127 was packed with seniors angry about the false promises, mismanagement and exorbitant rate increases of the long-term care insurance program provided by the California Public Employees Retirement System.

The retirees are among the 150,000 state employees who thought they were doing the right thing for themselves and their families by agreeing to pay monthly premiums for the rest of their lives to ensure that they would be taken care of should they become incapacitated in their old age. About 119,000 of them signed up when the insurance was first offered in 1995. Many of them bought policies providing lifetime coverage and inflation protection. They believed that rate increases would not occur or would be modest if they did.

But CalPERS, which had no experience providing long-term coverage, over-promised and under-delivered. Officials failed to do the underwriting necessary to ensure that only the better risks would be allowed to purchase insurance. They failed to invest the premiums wisely and safely, and the fund was hit hard by the Great Recession. They failed to anticipate that people are living longer. And they didn’t recognize how expensive it would be to care for patients for those extra years.

As a result, just eight years after the long-term insurance program was launched, it was nearly broke.

“The margin in the fund had begun to decrease and was down to about 2 percent,” CalPERS Deputy Executive Officer Ann Boynton told the committee. “In 2003, the board then began the difficult process of implementing premium increases to address the shortfall.” But those increases were so inadequate, only four years later “the fund was in serious trouble.”

Rate increase Hell

Since then, policy holders have been in rate-increase hell with many suffering annual 5 percent hikes. And in 2015-16, they will be hit with a whopping 85 percent increase. Letters informing them of the bad news were sent out at the end of April. The only way to avoid the hike is either to drop coverage, thereby losing the tens of thousands of dollars already paid into the program with nothing to show for it, or to opt for lesser coverage in the form of a 3-, 6- or 10-year benefit plan.

But there’s no guarantee that these will be the last rate hikes.

“We believe, but cannot guarantee, that this [85 percent rate hike] action will avoid the need for further rate increase in the future,” said Boynton.

That statement was met with groans by many in the audience, prompting a call for civility by committee chair Mariko Yamada, D-Davis.

Earlier in her remarks, Boynton acknowledged, “We know this has been an incredibly difficult time” for the policy holders.

Tales of woe

That might be an understatement. Dozens of retirees on fixed incomes told the committee their tales of woe, complained about feeling ripped off and pleaded for help.

One Bay Area woman, who is 68 and her husband 74, said they have already invested more than $50,000 in their policies and now are “facing dropping our policies and losing our investment. We are victims of circumstances and consequences by an agency that has had no oversight or regulation [by government]. There is no guarantee that after 2015 there won’t be additional consequences. There has been 400 percent of increases. That is a violation of public trust. Why would we continue to invest one more dollar in this program? This must stop. We have done our part to protect ourselves in our desire not to be a burden to our society. The increases need to be halted.”

Another woman complained, “I feel I was the victim of fraudulent practices. Where is the honesty and integrity? When I first enrolled I was paying $40 a month. Now my premiums will go close to $200 a month. How many people can afford that. Is that fair?”

Ivonne Ramos Richardson, who said she had been a negotiator in the administration of Gov. George Deukmejian, is one of those who signed up for long-term insurance in 1995.

“I did it because my Mom died of cancer and Dad became caretaker,” she said. “That will not happen to us. We started at $42 per month and are now paying $142. It will go to $588 a month. Money that we don’t have. In my family there is dementia, Parkinson’s, Lou Gehrig’s disease. It frightens me to leave that lifetime and inflation protection [benefit].”

Richardson complained that the CalPERS letter she had received a few days earlier specified a May 29 deadline to decide whether she wants to exchange her current benefit plan for a shorter-term option in order to avoid the 85 percent rate hike.

“That is not enough time,” she said. CalPERS officials need to provide more education on the various options through “dog and pony shows” around the state, she added.

Boynton, who is as well versed in the program as anyone, acknowledged that it can be confusing.

“I’ve had a long-term care representative come to my house, and it makes no sense when trying to understand it,” she said. “Most people, until they have someone in a claim circumstance, don’t really understand the nuances of what’s going on when you talk about long-term care insurance. People carrying insurance may not know what they purchased, they may not know what the real value of what they currently have in their hand is worth.”

Legislature’s hands are tied

Although the policy holders are seeking help in stopping the rate hikes, Yamada told them the state Legislature’s hands are tied.

“The Committee on Aging and Long-Term Care does not have jurisdiction,” she said in her opening remarks. “CalPERS has its own independent board. We are bringing this hearing forward today in an effort to get at some of the facts. I know there is a lot of concern and fear and anger, quite frankly, about these issues.”

The one thing Yamada offered to do was to author a letter to CalPERS signed by other legislators asking that the May 29 deadline for switching benefits be moved back to allow more time for policy holders to consider their options.

“At our very minimum, I think in the strongest terms that we can articulate to the president of the CalPERS board there’s insufficient time for retirees to process this information and these kinds of changes,” she said. “I will start a sign-on letter to get an extension on the time for these life-changing elections. It takes time and effort. We do have to address this immediately as well as on a mid-term and long-term basis.”

Although there is widespread concern about losing lifetime benefit coverage, Boynton indicated that those fears are overblown for the vast majority. Fewer than 1 percent of policy holders require care for longer than nine years, she said. The average length of care is about 3.6 years.

Nearly one-third of those needing long-term care do so as a result of dementia, followed by cancer (18 percent), stroke (13) and fractures and injuries (9).

The highest rate of recovery , 17 percent, is for those with fractures and injuries, followed by stroke (11 percent), cancer (10) and dementia (9).

How long will it last?

In terms of how long benefits last for those with limited coverage, it matters where the care is received. A five-year policy actually may not last five years if the person is in the most expensive option, a skilled nursing facility. But it may last longer than five years if the patient is cared for at home with nursing support.

In 2012, only 7,300 of the 59,000 CalPERS benefit claims were used in skilled nursing facilities. The cost for those claims totaled $34 million. In contrast, more than three times that number of claims, 26,000, were used for home health care. But the cost, $59 million, was less than double the cost of the skilled nursing facility claims.

It’s estimated that about 70 percent of people who reach 65 will require long-term care at some point, but few have prepared for that contingency, according to The SCAN Foundation. That could result in a crisis as the Baby Boomers age, decline and become debilitated.

Currently, older Americans comprise 12 percent of the population. By 2030, they will make up 19 percent of the population, a cohort of 72 million.

By Chris Reed

For years, Cal Watchdog founder and now regular CWD contributor Steven Greenhut has depicted media favorite Nathan Fletcher, a one-time Republican assemblyman from San Diego, as a phony and a turncoat waiting to happen.

Boy, was Steve right. Over the weekend, the guy who was Karl Rove’s buddy 14 months ago and a fierce independent 13 months ago suddenly announced that, hey, he’d had an epiphany and figured out he was a strong Democrat. Here’s how Tuesday’s U-T San Diego editorial dealt with this ridiculously expedient posturing:

‘Who is Nathan Fletcher? Who knows?’

By Laer Pearce

I have a financial planner friend who often includes tax-free municipal bonds in his customers’ portfolios and therefore closely tracks matters like the Stockton bankruptcy’s potential impact on municipal bond rates. He definitely did not smile as he took the accompanying photo near his Newport Beach office.

The license plate translates as “Ex Newport Beach Fire Department” and it’s affixed to a 2013 Ferrari California 30, a car that retails for $208,000 before all the costly extras and options Ferrari offers are added.  It didn’t help that earlier in the week he saw another very expensive car — a Shelby Cobra 427 — with the license plate “I  STERS,” as in CalSTERS, the California State Teachers’ Retirement System. And keeping up the car/pension theme, he knows a retired water district general manager who recently spent $200,000 on a professional rebuild of his late 1960s Oldsmobile 442.

It’s possible these three well off former “public servants” could have lucrative side businesses, but more likely they’ve just got great retirement benefits. It’s common for a retired fire chief, for example, to receive a retirement pension of $200,000 a year or more, along with Cadillac (or Ferrari) medical coverage.

To add salt to the taxpayer’s wound, Newport Beach currently pays 94 percent of fire employees’ pension costs, with the firefighters contributing just six percent. It’s actually considered a significant pension reform by some within government that the city’s contribution will drop to “only” 80 percent of the costs in 2014.

The death of CalPERS?

Ferrari pensions — even Buick pensions — given away for just pennies on the dollar are proving to be unsustainable, as reflected by the recent announcement from CalPERS that it is going to hike employer contributions by 50 percent. Sure, they’re going to phase it in over six years, but a 50 percent hike is still a 50 percent hike. And when you multiply it by 1.6 million, the number of California government workers covered by CalPERS, you’re looking at some very serious financial impacts on municipal and state budgets.

The rate increase was foretold by a recent California Public Policy Center report, covered in CalWatchdog.com as California’s pension Death Star, that predicted CalPERS’ pension costs would increase by 50 to 100 percent of the net property tax income of six Northern California counties it studied.

To see how the new increase hits home, look at the small town of Canyon Lake in Riverside County. CalPERS already has increased the town’s contribution rate from 12.8 percent of an employee’s salary to 17.9 percent over the last three years, and the City Council was looking at its contribution going to 26.8 percent this summer — before the 50 percent rate hike starts to kick in.

In response, the Canyon Lake city council did what any logical person would do: It voted to quit CalPERS. According to news reports, saying farewell is going to cost the tiny city $660,000, the amount of unfunded liability CalPERS is carrying on Canyon Lake’s small employee base. The city figures the cost of financing the $660,000 will be less than the cost of putting up with CalPERS jacking up rates instead of paring down benefits.

Bigger settlements

Cities with more employees, especially those who have been shorting CalPERS because of their own financial woes, would be looking at much bigger settlements, should they decide to divorce CalPERS. They’re looking, nonetheless.

San Jose recently found it would cost $5.7 million just to end CalPERS pensions for its city council; and Modesto determined it would have to pay $1.1 billion to fully exit the retirement system. I know of one special district that is developing a strategy for raising the money needed to divorce itself from the system without raising rates, and I’m sure the newest CalPERS rate hike will swell the numbers of municipalities looking at a CalPERS divorce.

If American business ingenuity kicks in, as I suspect it will, you’ll see new financing tools to fund CalPERS split-ups. When that happens, the move toward more sustainable pensions could become a stampede, which would leave the nation’s biggest pension plan little more than a big chunk of space junk.

In Crazifornia, my recent book, I predict it is likely California will only reform itself one catastrophe at a time. If so, we should hope the pension catastrophe will arrive before things get too much worse — and increasingly, it’s looking like it might.

Laer Pearce, a 30-year veteran of California public affairs, is the author of Crazifornia: Tales from the Tarnished State.

By Chris Reed

President Barack Obama’s re-election has led some California small-government types to pull back on their criticism, perhaps thinking that the Chicago Republican must be doing something right if he can win the Golden State’s popular vote by 23 percent with the state economy in such terrible shape.

But the California electorate’s conclusions can’t hide the wreckage from Obama’s years in the White House. He’s been one of our worst presidents, a smug faculty-lounge smart guy who has no understanding of or sympathy for the private sector — as well as being the epitome of the liberal big-spender who thinks you can print borrowed money for years on end with little consequence. And on the management front, for all his political savvy, the president’s administration is loaded with examples of incompetence and wastefulness.

Case study: the Federal Aviation Administration. When the stimulus bill’s $800 billion was being spread around, the FAA was insanely wasteful, according to an internal probe released in August 2009:

“Officials in the U.S. Department of Transportation have allocated millions of dollars in stimulus funds for small airports, even though the projects did not qualify for funding under the criteria established by the agency. The findings were uncovered by the Transportation Department’s inspector general, whose August 7 advisory reported that 50 projects were given money despite the fact that they scored less than the minimum required 62 on a 0-100 scale created to determine eligibility for federal stimulus funds. Inspector General Calvin Scovel III said the Federal Aviation Administration chose low-priority airports for stimulus money so that every state got at least some of the funding.

“One example cited in the IG’s report was the new airport in the remote Alaskan village of Ouzinkie on Spruce Island, population 167, which received $14.7 million even though it already had a gravel airstrip, landing area for sea planes and access to cargo barges. Ouzinkie averages 42 flights a month.

“An airpark near Dover, Delaware was given $909,806 to design (rather than build) a runway because that was Delaware’s only ‘ready-to-go’ project.”

Before that report came out, Pro Publica and CBS News also had this stomach-turning scooplet:

“The Federal Aviation Administration has now allocated all of its $1.1 billion in stimulus money for airport improvements. But the complex set of rules laid out in the recovery act has led to some counterintuitive results.

“The biggest winners aren’t the busiest airports. And more than $100 million is going to airports that have fewer than one flight an hour—airports that cater to recreational fliers, corporate jets or remote communities.”

Prudent cuts? Nah! Let’s endanger people!

By John Hrabe

Jim Brulte was elected chairman of the California Republican Party in a landslide vote on Sunday. But despite winning support from 90 percent of convention delegates, the former state senator kept campaigning until the end.

“Leaders lead by example,” Brulte, who served as Republican leader in both houses of the California Legislature, told reporters shortly after the party closed its 2013 spring convention. “That’s why I campaigned right up until the votes started to be cast.”

Brulte’s chief adviser, Michael Schroeder, himself a former state party chair, told CalWatchdog.com that Brulte spent the weekend “campaigning around the clock.” At a Sacramento Hyatt that was blanketed with hundreds of “Brulte for Chairman” signs and stickers, he spoke to 10 Republican groups on Friday, followed by 11 more speeches on Saturday, before hosting a 15th-floor hospitality suite late Saturday night.

Leadership, candidates, fundraising all faulted

If he’s to orchestrate a Republican renaissance, Brulte needs his take-nothing-for-granted leadership style to rub off on legislative leaders.

“There were three Assembly seats that were lost because we got lazy,” the state’s new Republican chairman said. “Leaders lead by example, and we have to be in the precincts working, standing shoulder to shoulder with our volunteers.”

Brulte did not specify which districts he believed Republicans should have won in November. However, state Republicans have been heavily criticized for being caught off-guard with lackluster campaigning and poor fundraising in several Assembly seats during the 2012 cycle.

Perhaps the most egregious case: the 36th Assembly District in the High Desert. Republican candidate Ron Smith reportedly stopped campaigning after the primary and ultimately lost by 145 votes.

“Smith’s loss is typical of the self-inflicted wounds that have destroyed the Republican Party in California, leaving it with fewer legislators than any time in the state’s history,” wrote Tony Quinn, a political commentator and former Republican legislative staffer, in a scathing election post-mortem on Fox and Hounds. “Once he was the only Republican in the runoff, he coasted, assured of election in this ‘safe’ Republican district.”

Smith was too busy hiring staff and hanging pictures, according to the Sacramento Bee.

“I had most of my staff getting ready to be hired, my picture was up on the wall, I had my office that was assigned to me, and I already had two pieces of legislation that were going to be introduced Monday,” a perplexed Smith said in December.

In Orange County, a lack of mother’s milk of politics

If Smith’s loss epitomized lazy legislative campaigning, GOP incumbent Chris Norby’s surprising defeat in the 65th Assembly District in Orange County symbolized the party’s fundraising problems in the lower house. In a span of 18 days, late in the campaign, six Democratic county central committees contributed $292,200 to the Assembly campaign of Sharon Quirk-Silva.

Allan Hoffenblum, publisher of the California Target Book, told CalWatchdog.com that legislative Republicans struggled in 2012 due to a lack of funding.

“The caucus’ problem with the last cycle was the lack of money,” Hoffenblum said. “The one who influences the targeting is the one who raises the money.”

Hoffenblum believes that Brulte’s coronation as chairman will change the party’s fundraising and targeting.

Brulte was less critical of Republicans’ poor showing in state Senate and congressional races.

“We lost some congressional and Senate seats and frankly I’m not sure in a plus-23 election we could have won those,” he said, referring to President Obama’s 60 percent to 37 percent pasting of GOP nominee Mitt Romney in California.

More than 1,300 people attended the state party’s convention. In October, delegates will reconvene in Anaheim.

By Wayne Lusvardi

Is the third time the charm for an $11.1 billion water bond? Postponed two times by the California Legislature because of budget problems, the bond now is scheduled to be on the November 2014 ballot.

The bond is advertised to restore the ecology of the Sacramento Delta and possibly fund the construction of two new reservoirs — provided the reservoir projects are not killed by environmental lawsuits.  But what is to guarantee the funds won’t be turned into slush funds for NIMBY (not in my back yard) greenscaping projects, as happened to the last five water bonds in California?

California has spent about $18.7 billion — including bond interest — on five water bonds since 2000 and hardly has a drop of water to show for it.  The money mainly went to funding open space acquisitions, green landscaping and urban community gardens that appease NIMBY voters. And a portion of previous water bond funding from Proposition 84 went to funding activities that have nothing to do with water supply or conservation: subsidizing the governor’s Strategic Growth Council that is a clearing house for distribution of Cap-and-Trade funds.

If you want a winning political formula for passing a bond in California, just put the words “clean water,” “safe neighborhoods,” “parks,” or “coastal protection” in the title and the NIMBY voters will vote for it.  Witness the titles of the last five water bonds in California:

* Proposition 12: The Safe Neighborhood, Parks, Clean Water, Clean Air, and Coastal Protection Bond Act of 2000 — $3.8 billion (with interest);

* Proposition 13: The Safe Drinking Water, Clean Water, Watershed Protection, and Flood Protection Bond Act of 2000 — $3.4 billion (with interest);

* Proposition 40: The California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002 — $4.3 billion (with interest);

* Proposition 50: The Water Quality, Supply, and Safe Drinking Water Projects (Coastal Wetlands Purchase and Protection) Act of 2002 — $5.7 billion (with interest);

* Proposition 84: Bonds for Clean Water, Flood Control, State and Local Park Improvements Act of 2006 — $10.5 billion (with interest). 

NIMBYism

NIMBY voters will vote for nearly anything that enhances greenery and views around their homes.  The result is about $19 billion in waterless water bonds for NIMBY’s that have yielded no significant new sources of water to solve California’s perennial water crisis. And during that same time, California has run structural budget deficits and farms have suffered from court lawsuits to protect fish in the Sacramento Delta.

State legislators, newspaper journalists and water experts are clamoring for cutting out all the political pork in the proposed $11.1 billion Consolidated Water Bond for the 2014 state ballot. The bond has twice been taken off the ballot due to unfavorable public opinion.

About $2 billion is pure political pork to gain statewide support to get the bond passed. But cutting political pork out of the proposed 2014 water bond won’t assure Californians that the bond funds will produce any new water or restore the Delta ecology.  The proposed water bond is yet another blank check for the state Legislature to spend as it wishes within vague program categories.

Water bond advocates want the bond cost trimmed down by removing the political pork.  But without specified projects and water supply metrics, it can only be inferred that the 2014 water bond will be yet another NIMBY water bond full of jobs programs for environmentalists, nonprofit agencies and bureaucracies — but hardly a drop of water for farmers or cities.

Cutting out the fat in the water bond isn’t enough.  What is needed is binding words in the ballot initiative of how much new water Californians will get, at what cost, and from what specific projects.

If California Gov. Jerry Brown wants to exert leadership with the proposed water bond, he could start by un-muddying the waters about where the bond money is going and how much water will be produced.

By Chris Reed

Despite some pension reforms and program cuts, the city of Los Angeles remains in difficult financial shape. A Jan. 24 Fitch credit-rating service analysis says the L.A. economy is rebounding, but that city leaders struggle to find the political will to deal with structural budget problems, and that huge annual deficits will cause headaches for many years to come.

What is a key culprit in L.A.’s financial woes? You guessed it. Fitch says that of the city’s $3.9 billion 2011 general fund budget, nearly 20 percent ($773.5 million) went to fund retirement health care and other post-employment benefits and that nearly 15 percent ($577.4 million) went to city employee and public safety pension funds.

So what are the three key candidates in the March 5 mayor’s race saying they’ll do to deal with the budget and the daunting fact that more than one-third of the city general budget goes to fund public employee retirement benefits?

As this L.A. Times story makes clear, all want to basically duck the topic. Still, at least one candidate, City Councilwoman Jan Perry, knows tough times are ahead, with bankruptcy a possibility.

Wooing cops, firefighters and the SEIU

But two candidates want to make the problem even worse. Candidate Wendy Greuel wants to add 2,000 police and 800 firefighters — a 20 percent increase in a city where crime and fire problems are near modern historic lows. As the city controller, one would think Greuel should know better.

Meanwhile, City Councilman Eric Garcetti, the third major candidate, is in a fight with Greuel to see whom can do the most pandering to the Service Employees International Union, according to a Feb. 5 L.A. Times report:

“[Greuel and Garcetti] offered strong commitments of solidarity with the union representing a major chunk of civilian employees at City Hall, according to recordings of the [candidate interview] sessions obtained by The Times.

“The pledges [were] made last week in a members-only meeting for union workers considering a possible endorsement …

“Greuel … accused city leaders of failing to follow collective bargaining procedures when cutting retirement benefits for future city employees — a complaint being voiced loudly by the SEIU. …

“When it was his turn, Garcetti repeated a pledge to make all of the city’s department heads reapply for their jobs — offering a commitment that city workers would play a role in deciding which managers will remain. …

“The remarks show how much Greuel and Garcetti covet the backing of a union that represents thousands of janitors, trash truck drivers and other blue-collar city workers. If SEIU weighs in on the contest to replace Mayor Antonio Villaraigosa, it could mean hundreds of thousands of dollars and scores of volunteers for a favored candidate.”

Unfortunately for L.A., Greuel is considered the clear favorite, not the far more clear-eyed Perry.

Having lived in Southern California since 1990 and watched the city of Los Angeles go downhill under labor-friendly mayors (Antonio Villaraigosa and James Hahn) and do well under pro-business moderates of both parties (Richard Riordan and Tom Bradley), I’ve wondered when Angelenos would become as pragmatic as New Yorkers.

The same dynamic of mayoral success holds in the Big Apple — pro-business centrists like Michael Bloomberg and Rudy Giuliani have a way better record than labor-friendly liberals like David Dinkins and Abe Beame. And in New York, the heavily Democratic electorate figured this out long ago. When was the last time New York City voters elected a Democrat to be mayor?

All the way back in 1990.