Testifying at a recent hearing of the Assembly Committee on Privacy and Consumer Protection and Select Committee on Cybersecurity, Howle said 73 of the 77 agencies she reviewed had inadequate or worse safeguards against hacking. Her three biggest concerns: the state’s court system, the Board of Equalization and the California Public Utilities Commission.

Howle’s remarks were countered by a representative of the Brown administration. The state Department of Technology’s chief information security officer, Michele Robinson, said Howle had exaggerated the state’s problems.

But lawmakers didn’t appear to accept Robinson’s defense of the state’s efforts. Assemblywoman Jacqui Irwin, D-Thousand Oaks, told Sacramento TV station KCRA after the hearing that she considered Howle’s warnings “very disturbing. …  We have 160 departments that are holding your private information. So Social Security numbers, addresses, medical information — yes, there is a risk for the typical Californian.”

Here is the key summary of Howle’s 2015 audit:

In the past few years, retailers, financial institutions, and government agencies have increasingly fallen victim to cyber attacks. Most recently, in June 2015 the federal Office of Personnel Management announced that a cybersecurity intrusion had potentially exposed the personal information of approximately 20 million current and former federal employees and other individuals. Given the size of California’s economy and the value of its information, the state presents a prime target for similar information security breaches. Its government agencies maintain an extensive range of confidential and sensitive data, including Social Security numbers, health records, and income tax information. If unauthorized parties were to gain access to this information, the costs both to the state and to the individuals involved could be enormous. However, despite the need to safeguard the state’s information systems, our review found that many state entities have weaknesses in their controls over information security. These weaknesses leave some of the state’s sensitive data vulnerable to unauthorized use, disclosure, or disruption.

But Howle didn’t just offer this general conclusion. She also specifically criticized the Brown administration:

Despite the pervasiveness and seriousness of the issues we identified, the technology department has failed to take sufficient action to ensure that reporting entities address these deficiencies. In fact, until our audit, it was not aware that many reporting entities had not complied with its requirements. To determine whether reporting entities have met the security standards, the technology department relies on a self-certification form it developed that the reporting entities must submit each year. However, the poor design of this form may have contributed to many reporting entities incorrectly reporting that they were in full compliance with the security standards when they were not. Specifically, we received complete survey responses from 41 reporting entities that self-certified to the technology department that they were in compliance with all of the security standards in 2014. However, when these 41 reporting entities responded to our detailed survey questions related to specific security standards, 37 indicated that they had not achieved full compliance in 2014. … The technology department was unaware of vulnerabilities in these reporting entities’ information security controls; thus, it did nothing to help remediate those deficiencies.

According to KCRA, a state task force created last year could turn in the first draft of a state government cybersecurity initiative this month.

The Howle audit knocking the state government’s failure to worry enough about hackers was one of six harsh reports she issued in a three-month span last summer, as CalWatchdog reported. Perhaps the most alarming report found that the state did a poor job tracking mentally ill gun owners, despite a previous 2013 audit that warned about the shortcomings of the state’s efforts.

It is easily demonstrated that in some cases, no, revenue wasn’t depressed by a tax hike. Marginal increases in state sales taxes aren’t generally driving revenue decreases.

But it is also easily demonstrated with some other higher taxes that individuals and businesses do in fact respond with changes in behavior that decrease economic activity.

Incentives drive behavior

It appears a ballyhooed 2012 ballot measure closing a supposed corporate tax ‘loophole’ falls in the latter category. This is from Cabinet Report:

“Proposition 39 or the California Clean Energy Jobs Act changed a corporate tax law to require multi-state or out-of-state businesses to source their sales of services and intangibles to the state where they were sold, rather than the state where the majority of work to produce them was performed. As a result, supporters of the plan expected that California – the nation’s biggest consumer – would see a big uptick in revenues. …

“Anti-tax advocates have long argued that imposing new taxes on businesses and higher wage earners hurts California in the long run because those targeted adjust their practices or relocate to avoid paying more. … It is an issue that the Brown administration is reportedly keeping a close eye on because of the income tax hike another November measure – Proposition 30 – imposed on the state’s top earners.

“Proposition 39 was aimed at corporate taxes, but some of the same issues are at work.

“Based on 2010 income tax data, the Brown administration estimated that Proposition 39 would bring in $928 million in 2013-14 and nearly $1 billion annually the next four years. But 2011 data showing a drop in those revenues forced the governor to revise Prop. 39 figures downward to $675 million in the current year and $726 million in 2014-15 budget.”

Runner is right

Cabinet Report puts this in perspective by talking to former state Sen. George Runner, who’s now on the Board of Equalization:

“We do a terrible job in all of our estimating of doing any kind of dynamic analysis that takes into consideration what the behavior of a taxpayer’s going to be. … One of the issues I always keep telling people is that tax policy changes behavior, and as a result of that, often times you’ll find government over estimates what it is that revenues are going to be because they forgot to or they can’t, sometimes, take into consideration the behavior of the taxpayer.”

Or maybe it’s that they refuse to “take into consideration the behavior of the taxpayer.”

Instead of calling for the governor and the Legislature to sharply increase its annual payments to the funds responsible for these liabilities, Taylor called for relatively slight increases phased in for years — increases that are far short of what an actuary would recommend.

It’s as if a family declared its finances to be in great shape so long as one ignored the $500,000 in credit-card debts.

What makes the LAO’s current insanity so tough to figure out? The fact that at other times, the LAO makes powerful arguments that completely counter the budget assertions Taylor offered last month.

LAO: CalSTRS’ debt much worse than Brown’s ‘wall of debt’

For one example, this is from Ed Mendel’s piece on Calpensions.com in March of this year:

“The nonpartisan Legislative Analyst’s Office yesterday recommended that the Legislature adopt a plan to fully fund CalSTRS in 30 years — an estimated cost of $4.5 billion a year, a hefty addition to current annual contributions totaling $5.7 billion. …

“… after years of ignoring a growing CalSTRS debt … the Assembly and Senate public employee retirement committees held a joint hearing yesterday on proposed solutions requested by a Senate resolution last year.

“Ryan Miller of the Legislative Analyst’s Office told the committee that the unfunded liability of the California StateTeachers Retirement System, a century old this year, ‘may be the state’s most difficult fiscal challenge.’

“The analyst said the CalSTRS unfunded liability is twice the size of what Gov. Brown calls ‘the wall of debt’ from years of budgetary borrowing. The governor’s proposed budget spends $56 billion on K-12 funding under the Proposition 98 guarantee.”

Let’s contrast that with what Mac Taylor said three weeks ago in Sacramento at a legislative hearing.

“’The state’s budgetary condition is stronger than at any point in the past decade. … The state’s structural deficit – in which ongoing spending commitments were greater than projected revenues – is no more.’”

Does LAO staffer have a bloody lip?

Huh? So paying the actuarial minimum for retirement benefits that are contractually guaranteed and protected by a welter of state laws isn’t a “spending commitment”?

What’s going on in Sacramento? Is there something in the Capitol water supply? Psilocybin, perhaps?

I wonder how the LAO staffer who correctly warned the Legislature about CalSTRS’ horrible finances in March deals with his boss’s denial and declining math skills. Does he have to bite his lip to keep quiet when Mac talks of budget surpluses as far as the eye can see? Does he chant “om” to maintain his mental equilibrium? Does he furtively scan the jobs.ca.gov site so he can get away from the Lunatic Analyst’s Office?

I’m not being completely facetious here at all. This was the official position of the LAO when the staff was doing the talking, not the boss:

“If the state’s current $1.4 billion annual contribution to CalSTRS were combined with the $4.5 billion additional contribution that may be necessary to achieve full funding in 30 years, the sum would exceed state spending on the University of California and California State University systems combined. The additional CalSTRS contribution alone would represent about one-half of state corrections spending.”

Now the LAO’s position has become “the state’s structural deficit … is no more.”

Wow. And a whole bunch of other less-family-friendly exclamations.