Gov. Gavin Newsom and fellow Democratic lawmakers have expressed no contrition for their failed attempt to force President Donald Trump to release five years of tax returns to gain access to the California ballot in the 2020 general election.

The California Supreme Court recently ruled unanimously that Senate Bill 27, signed by Newsom in July, violated the state Constitution. The opinion by Chief Justice Tani Cantil-Sakauye at times had an incredulous tone, noting that advocates appeared unaware of SB27’s obvious conflict with Proposition 4. That’s a 1972 amendment to the California Constitution easily passed by state voters that requires presidential primaries must be open to all “recognized” candidates.

Further reflecting the state high court’s view that the law was frivolous, the unanimous verdict was delivered just 15 days after justices heard testimony in the case. Court watchers said that was highly unusual.

A federal judge had already ruled the law violated the U.S. Constitution in September. That decision was appealed by Secretary of State Alex Padilla, but the appeal was dropped after the state Supreme Court’s ruling.

Nevertheless, a spokesman for Newsom continued to depict the now-void law as well-intentioned.

Jesse Melgar told the San Francisco Chronicle that the governor “would continue to urge all candidates to voluntarily release their tax returns. … Congress and other states can and should take action to require presidential candidates to disclose their tax returns.”

Padilla issued a statement expressing disappointment with the state high court’s decision but also declaring “the movement for greater transparency will endure. The history of our democracy is on the side of more transparency, not less.”

‘Ridiculous’ bill said to reflect ‘arrogance and hypocrisy’

Defenses of the law were scoffed at by opinion writers.

The Sacramento Bee editorial board – which had ripped SB27 as “silly and destructive” when Newsom signed it into law – wrote that the measure  “was so ridiculous and flawed that even California’s justices could barely conceal their disdain.” 

The Southern California Newspaper Group’s editorial noted that the state high court “quoted former Gov. Jerry Brown’s veto of a similar bill in 2017: ‘Today we require tax returns, but what would be next? Five years of health records? A certified birth certificate? High school report cards?’

“Democratic lawmakers and a new governor refused to learn from that message. They tried again and embarrassed themselves. They richly deserved the court’s smackdown.”

The Los Angeles Times editorial board wrote that the tax-returns law “accomplished only one thing: giving Trump more ammunition against the state he loves to mock.”

Times columnist George Skelton was the harshest critic of all, noting that many of the Democrats who claimed the moral high ground in backing the tax-returns requirement were not transparent about their own finances.

“This is not about whether Trump should release his federal tax returns,” he wrote. “Rather, it’s about Democrats enacting a blatantly unconstitutional law with a straight face for purely political reasons. It’s about arrogance and hypocrisy.”

Part of SB27 that was reportedly included at Newsom’s behest remains intact. It’s the requirement that gubernatorial candidates provide five years of tax returns to qualify for the ballot beginning with the 2022 election.

The bill was introduced by Sen. Mike McGuire, D-Healdsburg, and Sen. Scott Wiener, D-San Francisco. It passed in Senate on a 29-10 vote and in the Assembly on a 57-17 vote in early July.

Despite the 2014 adoption of the most significant reforms to the initiative process in recent California history, two former state Supreme Court justices have gone public with criticism over the dominant role of money in direct democracy, suggesting that the process should be made harder and citing concerns about voter overreach.

The biggest 2014 change approved by the Legislature at the behest of the Think Long for California government reform group requires the Legislature to be notified when a ballot measure gets at least one-quarter of necessary signatures. At that point, lawmakers can confer with measure sponsors about qualms they have with their proposals. They can also head off ballot fights by passing legislation addressing the issues cited in ballot measures.

This is what happened in 2016 with a proposed measure raising the state minimum wage was circulated. The Legislature instead produced its own version of the plan, which Gov. Jerry Brown signed.

The second most important change requires the Legislature to hold public hearings on initiatives which qualified for the ballot via signature-gathering. The hearings must be at least 131 days before the election, promoting closer scrutiny of such legislation.

Special interests, money play dominant roles

But in an interview with the San Francisco Chronicle, former state Chief Justice Ron George said much more needed to be done to improve the initiative process. George said the very groups that direct democracy was supposed to help keep in check – powerful special interests – “have managed to seize control of the initiative process and, in a way, perverted the whole function of it.”

“If you are willing to pay [signature gatherers enough] … I think you can qualify anything for the ballot,” he said. Those signature gathers in many cases “have no idea what the measure involves.”

George, who was chief justice from 1996 to 2011, also said the initiative process made it “far too easy” for the public to change laws – and the ballot measures they enact can only be changed, in most circumstances, by another ballot measure. Voters have approved more than 500 state measures since direct democracy began in 1911. To make the ballot, a citizen initiative must have signatures that total at least 5 percent of the votes cast for governor the previous gubernatorial election. For 2020, the threshold is just more than 623,000 votes. Twelve measures qualified for the November 2018 ballot. Six passed.

Majority uses votes to ‘impose will’ on a minority

In a recent speech in Berkeley, former state Supreme Court Justice Kathryn Mickle Werdegar, who served on the court from 1994 to 2017, raised additional concerns. She depicted voters as being eager to make sweeping changes in state laws in ever-broader areas and said initiatives are “empowering a majority to impose its will on a minority.” She also said voters didn’t appreciate that justices were expected to tweak ballot measures to ensure they stayed within constitutional boundaries and expressed frustration with the criticism she got in 1996 for a decision in which she concluded part of the state’s “three strikes” crime bill went too far in reducing judicial review.

One of the examples of a ballot measure that may go too far that was cited by the Chronicle was a proposed initiative to put a maximum of five years on alimony. In a telephone interview, Steve Clark – the Huntington Beach software engineer who is behind the proposal – said he was “unpleasantly shocked” at the idea his measure dealt with an issue that should be left to the Legislature. But he said that this view of alimony law reflected the “entitlement state” attitudes of many Californians.

A confusing 2017 California Supreme Court ruling about the threshold of approval for local ballot measures that are qualified for the ballot through citizen-led signature-gathering efforts – as opposed to being placed before voters by local officeholders – is causing major uncertainty in the Bay Area.

In the case of California Cannabis Coalition v. the City of Upland, the state high court appeared to suggest that citizen-qualified tax or fee measures needed only a simple majority for approval, while others required two-thirds support. But the court did not offer a definitive statement. Many legal experts questioned how justices came up with a new interpretation of 1978’s Proposition 13 and 1996’s Proposition 218, which generally imposed a two-thirds requirement for voter approval of local taxes.

This has created uncertainty around three measures in San Francisco and one in Oakland that were approved by strong majorities of voters – but not by two-thirds.

One city attorney says majority OK; other says two-thirds needed

Last week, the Harvard Jarvis Taxpayers Association, the California Business Roundtable and the California Business Properties Association launched a legal challenge to San Francisco’s Proposition C. It is a complicated measure that imposes a new tax on businesses with more than $50 million in gross receipts. Some industries are charged 0.175 percent, while others pay 0.69 percent – nearly four times as much. This is on top of San Francisco’s existing gross receipts tax on companies with $1 million or more in gross receipts.

Relying on City Attorney Dennis Herrera’s interpretation of the 2017 California high court ruling, the city has treated the new tax as valid despite its November passage with less than a two-thirds majority. Proposition C is expected to generate at least $300 million a year for homeless programs.

Herrera holds the same position on two measures approved by San Francisco voters last June. One imposed an annual parcel tax of $298 to help increase teacher salaries. The other raised taxes on some commercial rents to fund child care and education programs.

In interviews, Herrera has offered explanations for his position that seem more populist than rooted in any broader legal theory about how California direct democracy should function. He’s said voters should be able to impose tax hikes with simple majorities.

In Oakland, a divided City Council last week decided not to levy an annual $198-per-house, $135-per-apartment annual parcel tax in 2019. The parcel tax was passed by voters as Measure AA in November. It was expected to generate as much as $900 million for education programs over 30 years. While two council members wanted to begin collecting and spending the funds immediately, a council majority ended up heeding City Attorney Barbara Parker, who wrote in the official voters guide that two-thirds support was necessary for passage.

S.F. unruffled by loss of city’s highest-grossing firm

By far the most controversial of the four measures in legal limbo is Proposition C. It was opposed by Mayor London Breed and Twitter co-founder Jack Dorsey not just because it could be seen as creating a hostile business climate but because the measure would fund homeless programs without setting up metrics to determine what worked and what didn’t.

One huge multinational corporation made plain its unhappiness with the new levy. On Nov. 30, 11 days after a CalWatchdog report anticipating the decision, pharmaceutical giant McKesson Corp. announced it was relocating its headquarters from San Francisco to a Dallas suburb. The loss of McKesson – by far the highest-grossing San Francisco company, the second-largest in California after Apple and the sixth-largest in the U.S. – appeared to vindicate Breed’s and Dorsey’s warnings.

But despite McKesson’s exit and huge problems with housing and homelessness, San Francisco officials are much more upbeat than those in elsewhere in Silicon Valley about the sustainability of the tech boom. From 2010 to 2017, while tech job growth began to slow in the region, the number of tech jobs in San Francisco went from about 21,000 to 84,000.

A San Francisco Chronicle analysis noted that no large tech firm had left the city in recent years. Such companies, development analyst Colin Yasukochi told the Chronicle, are “in the innovation business. Being able to attract the best and brightest minds is going to give them a competitive advantage when it comes to innovating new products and services.”

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At issue was Proposition B, approved by San Diego voters in 2012 by a nearly 2-to-1 margin. The measure required that all city employees who began their jobs on or after Jan. 1, 2013 – except for police officers – get 401(k)-style retirement benefits instead of the defined benefit pensions that left San Diego finances in near ruins more than a decade ago because of City Council decisions to underfund them.

But San Diego employee unions and the California Public Employees Relations Board (PERB) argued even before the measure reached the ballot that it violated state collective bargaining laws because the campaign for the pension changes was led in 2011 and 2012 by then-San Diego Mayor Jerry Sanders. He claimed that his role in the Prop. B campaign was as a private citizen – not as mayor – and thus he faced no obligation to collectively bargain with public employee unions before touting the direct-democracy initiative.

Before reaching the state high court, a trial judge first disagreed with Sanders and San Diego, then an appellate court sided with the city. But all seven state justices joined in a ruling that found that city leaders had not met their requirement to first seek changes at the bargaining table before seeking to impose them through direct democracy.

“Allowing public officials to purposefully evade the meet-and-confer requirements of [state collective bargaining rules] by officially sponsoring a citizens’ initiative would seriously undermine the policies served by the statute: fostering full communication between public employers and employees, as well as improving personnel management and employer-employee relations,” the court held. It ordered the case be sent back to the appellate court to determine how San Diego should untangle its mess.

Elected leaders may be less likely to lead ballot fights

The decision seems likely to change the nature of direct democracy going forward – at least at the local level of California government.

Direct democracy, brought forward in California by Gov. Hiram Johnson in 1911, has greatly benefited from the active participation of elected officials. They are often more able to win public approval of sweeping reforms through the ballot box than they can through the Legislature or city or county governing boards, which are often allied with deep-pockets special interests.

For example, Earl Warren – the former U.S. Supreme Court chief justice and California governor – repeatedly led ballot campaigns as Alameda County district attorney that directly affected many areas of California life.

But similar efforts by a politician in 2018 would face a different kind of vetting than Warren faced. Going forward, any ballot proposal that affects public employees in any way is subject to a potential court veto if it can be established that it were led by elected officials who didn’t live up to their collective bargaining obligations.

The California PERB Blog’s analysis noted that justices “did leave open the possibility that government officials can separate their official actions from their private activities. However, the court did not provide any guidance on what a government official would have to do to make such a distinction clear.”

The case, Dynamex Operations West, Inc. v. Superior Court of Los Angeles, dealt with a delivery service that classified its workers as ICs. A driver filed a class action suit, arguing that the classification was improper.

While the ruling did not resolve this specific case, it provided a new framework for lower courts adjudicating the dispute and others like it.

In an unexpected turn, the court established an entirely new test. Under the previous “Borello” framework, the main consideration was whether the company had the right to control the manner by which the worker performs the work.

But under the new ABC test, businesses must show that the worker is (1) free from the control and direction of the employer; (2) that the worker performs work that is outside the hirer’s core business; (3) and the worker is customarily engaged in an independently established trade, occupation or business.

“When a worker has not independently decided to engage in an independently established business but instead is simply designated an independent contractor … there is a substantial risk that the hiring business is attempting to evade the demands of an applicable wage order through misclassification,” Chief Justice Tani Cantil-Sakauye wrote for the court.

The decision has particularly stark effects for the so-called gig economy, as ride-sharing giants like Uber and Lyft have increasingly come under scrutiny for classifying their workers as independent contractors and not employees. Additionally, the ruling is likely to have a major effect across almost all sectors.

The court provided other examples for occupations like plumbing.

“A plumber temporarily hired by a store to repair a leak or an electrician to install a line would be an independent contractor. But a seamstress who works at home to make dresses for a clothing manufacturer from cloth and patterns supplied by the company, or a cake decorator who works on a regular basis on custom-designed cakes would be employees.”

Furthermore, a worker won’t be considered an employee “only if the worker is the type of traditional independent contractor … who would not reasonably have been viewed as working in the hiring business,” the court added.

More broadly, the court also framed the issue as one of fairness, believing that denying employee status is harmful to a large swath of workers.

Companies have a substantial incentive to classify workers as ICs over employees, as they don’t have to pay their social security or payroll taxes. Furthermore, workers have additional protections if they’re employees, such as unemployment insurance.

Worker rights groups are hailing the decision as a win, with the National Employment Law Project declaring that “the gig is up.”

“It means that companies in industries from construction to tech to homecare and trucking will no longer be able to dodge minimum wage laws by pretending that the workers who form their workforces are somehow not their employees,” the group’s spokeswoman Rebecca Smith added.

To read the ruling, visit: http://www.courts.ca.gov/opinions/documents/S222732.PDF

Legislators have largely avoided the pension issue since passage of a reform law that went into effect in 2013, and reformers have struggled to settle on an initiative strategy to take to voters. That’s unlikely to change. But last week the high court agreed to review a union appeal of a decision involving an obscure concept known as the California Rule. The decision could change everything.

The California Rule is not actually a rule, but a legal doctrine that emanated from a 1955 court case. Essentially, it states that no vested public-employee benefit such as a pension can be reduced unless public employees are granted another benefit of equal or greater value. Unions claim that a 2013 state law unfairly deprives them of vested benefits.

The rule remains the stumbling block for most efforts to reduce pension costs, given that it severely limits public agencies’ efforts to slice current pension costs. Hence, pension reformers and unions alike are eager to get a final verdict on the matter.

In the private sector, companies that offer defined-benefit pension plans – those plans that guarantee a pension payout based on a formula, as opposed to 401(k)s – are free to reduce the benefits going forward. In other words, employees must be made whole through today, but may start receiving lower benefits tomorrow. By contrast, in California and other states that follow this rule, government workers must be paid the full amount of the promised benefits until they (and their spouses) pass away.

The accepted interpretation has been that a benefit hike, once approved by a government agency, is permanent. It can never be rolled back. As a result, most pension reform proposals deal only with shaving benefits for new hires, who won’t start retiring for 25 or 30 years. That leaves service cuts and tax hikes as the only way to deal with increasing pension debt.

Some localities have tried to take on the rule. In 2012, for instance, San Jose officials put a pension-reform measure on the ballot that required current city employees to choose between new pension plans that offered fewer benefits than current plans. It passed with 70 percent of the vote, but the courts later gutted that measure. They relied on the California Rule.

But now the California Supreme Court is ready to address the issue, at least around the margins. Last week, the court, without comment, agreed to a union challenge of a San Francisco appeals court that put limits on the application of the rule. Last summer, unions appealed a similar Marin County case, in which an appeals court also put some limits on the rule’s application.

At issue is the California Public Employees’ Pension Reform Act, which went into effect in January 2013. Most analysts viewed the law as a modest attempt to get control of the state’s growing unfunded pension liabilities, or debt. Most of it applied only to newly hired state workers. But it did include a handful of provisions that affect current workers.

On Dec. 30, the First District Court of Appeal in San Francisco rejected a challenge by a state firefighters’ union claiming that PEPRA’s elimination of a 2003 benefit that let firefighters purchase up to five years of additional credits (airtime) before retiring was in violation of the rule.

“The unions argued that their members had a legal right to the pension benefits that were in effect when they were hired and that the state broke its contractual promise to them by eliminating those benefits,” according to a San Francisco Chronicle analysis. The 3-0 written opinion found that public employees have a right to a “reasonable pension” but they aren’t guaranteed “fixed or definite benefits immune from modification or elimination.”

“(P)laintiffs assert a vested contractual right to purchase up to five years of airtime service credit that is not subject to elimination or destruction by legislative amendment or repeal ‘even before the benefit has been accessed or the time for retirement has arrived.’” The court said plaintiffs “disregard the fact that, when amending the statutory scheme governing pension rights, the Legislature in fact provided (eligible public employees) … a several-month window in which to purchase the airtime service credit before the option terminated.”

The high court could uphold the rule or overturn it, or put certain limits on its application and deal narrowly with the “airtime” issue. In that separate Marin County case, five unions challenged PEPRA’s limitation of various ways that public employees enhance, or spike, their end-of-career salaries (bonuses, unused leave, etc.) to boost their lifetime retirement pay.

Unions argue that the reform reduced their vested pension benefits and was therefore in violation of their constitutional rights, as upheld by – you guessed it – the California Rule. “(W)hile a public employee does have a ‘vested right’ to a pension, that right is only to a ‘reasonable’ pension – not an immutable entitlement to the most optimal formula of calculating that pension,” ruled Justice James Richman, in language similar to the San Francisco ruling. He wrote that the Legislature may “prior to the employee’s retirement, alter the formula, thereby reducing the anticipated pension.”

As reporter Ed Mendel has explained in Calpensions, “The high court will wait until an appeals court rules on three similar spiking ban suits consolidated from Alameda, Contra Costa and Merced counties.” That might take some time, but this issue is definitely coming to the state’s high court in one form or another, sooner or later.

Battle lines are drawn. The unions claim that state and local agencies may not reduce any pension benefits. Pension reformers – and the courts, in recent decisions – say that while a reasonable pension remains a right, that doesn’t stop localities from reducing some things. These cases deal with pension-spiking enhancements and the purchase of airtime – controversial and somewhat limited practices. But the future of pension reform is on the line.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

For instance, the California Supreme Court issued a Jan. 23 ruling in a case that challenged the insurance commissioner’s authority to issue rules governing how insurance companies calculate replacement-cost estimates for homeowners’ policies. The trial and appeals courts ruled the commissioner exerted power not granted to him by the Legislature, but the high court overruled those decisions.

The decision has broad implications for the California Department of Insurance, which has been granted vast new regulatory powers. And while the 1959 statute at issue relates solely to the insurance industry, the court’s opinion could embolden other California regulatory agencies to take wider latitude as they implement business-related regulations.

The regulation in question was promulgated in 2010 under former Insurance Commissioner Steve Poizner, a Republican, and defended by the current commissioner, Dave Jones, a Democrat. Following wildfires in the 2000s, some homeowners complained their policies did not provide enough coverage to cover the total cost of rebuilding. They argued the insurers’ replacement-cost estimates, which they relied upon in their coverage purchases, often excluded major items like debris removal that should have been factored into the calculation.

The resulting “replacement cost regulation” requires insurance companies that choose to provide replacement-cost estimates to include a detailed list of requirements and standards that must be followed before communicating any such estimate. Those that provide estimates that diverge from the standard would be deemed to have provided a “misleading” statement – a serious matter under the state’s Unfair Insurance Practices Act.

In a brief submitted to the court by two trade associations, the insurance industry argued the commissioner “attempted to run roughshod” over the authority granted by that 1959 law by “expanding the legislatively prescribed list of unfair or deceptive acts spelled out in the UIPA.” The industry further argued the insurance code doesn’t allow the commissioner to mandate only one type of replacement estimate and that restrictions on communicating other types of cost estimates would abridge the First Amendment.

The lower courts ruled in favor of the industry on the “limits of power” issue, so the courts never examined the legal issues surrounding those other points. The state attorney general’s office took the side of the state Department of Insurance. In its 2015 ruling, the appeals court noted that, while the Legislature could “regulate the form and content of replacement cost estimates” if it wanted to, “the UIPA has not as of yet given the commissioner authority to regulate the content and format of replacement cost estimates.”

The state Supreme Court, however, found that neither “the UIPA nor any other statute categorically limits the commissioner’s authority to issue the regulation. On the contrary: section 790.10 explicitly vests in the commissioner authority to issue ‘reasonable rules and regulations’ to administer the UIPA. Which is what the commissioner sought to do here.”

The industry groups that were party to the case obviously disagreed with the court’s opinion with leaders of the Association of California Insurance Companies and the Personal Insurance Federation of California noting in a short statement their belief that “it does not accurately reflect the Legislature’s intent.”

While this case dealt with the relatively obscure issue of underinsurance — i.e., when consumers have too little insurance to meet their needs — the ruling’s implications are potentially quite broad. The term “reasonable rules and regulations” could be taken to mean that an insurance commissioner — and perhaps leaders of other regulatory agencies — is free to delve into lawmaking. Future regulators could use that broad rubric essentially to write vast new regulations and impose them on businesses. That’s certainly how Jones appears to be taking it, with his office writing in a Jan. 23 statement that “the Supreme Court ruled the insurance commissioner has broad discretion to adopt rules and regulations as necessary to promote the public welfare.”

Under our system of government, legislatures are the proper place to write laws, which are then implemented by the administrative agencies. Should insurers be compelled to provide more coverage than the policyholders purchased? What responsibility do policyholders have in assuring they purchase the right amounts of coverage? There are various remedies for these problems in the marketplace and via the legislative process. The long-term result of this case, however, is to allow an insurance commissioner to try to fix the problem with a regulatory edict.

The Supreme Court left open the opportunity for insurers to challenge the decision on other grounds and the insurers are mulling their options. But the ruling clearly gives insurance commissioners broader discretion than before in crafting and implementing regulations. 

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

U.S./Mexico water negotiations closely watched

Good morning. Happy Hump Day. A deal between the U.S. and Mexico on how to apportion Colorado River water in drought conditions expires next year and negotiators are in overdrive to renew the pact before President Barack Obama leaves office on Jan. 20.

The talks are being closely watched by California officials. The Golden State relies heavily on Colorado River water, with an entitlement to 4.4 million acre-feet a year. That’s enough to supply nearly 9 million households, though a big chunk of the supply is used to irrigate the hundreds of square miles of agricultural fields in Imperial County (pictured) and the Coachella Valley.

Why the rush? Because U.S. and Mexican officials believe a new deal is crucial to preserving fragile Colorado River supplies. 

CalWatchdog has more. 

In other news:

• “California officials are pushing back on SEIU Local 1000’s plans for a one-day strike next week, warning employees that they could be subject to disciplinary action if they participate in what the state regards as an unlawful walkout,” writes The Sacramento Bee.

• “The state Supreme Court last week agreed to hear an appeal of a groundbreaking ruling that allows cuts in the pensions earned by current state and local government workers, including judges,” reports Capitol Weekly. 

• “A San Francisco supervisor is proposing more money for lawyers to defend immigrants who face possible deportation under a Trump administration. KCBS radio reports that San Francisco Supervisor David Campos will introduce legislation Tuesday setting aside $5 million from the city’s budget to help pay for lawyers to represent people in deportation proceedings.” The Los Angeles Times/Associated Press has more. 

• And in case you missed it: What a Democratic supermajority in the Legislature in the upcoming session may mean for the state. CalWatchdog has more. 

Legislature:

• Gone till December.

Gov. Brown:

• No public events announced. 

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New follower: @richardsstarr

But in recent years, a variety of criminal-justice reforms have been pushing the pendulum back in the other direction, albeit in a relatively quiet way. In 2014, California voters approved Proposition 47, which reduced some crimes from felonies to misdemeanors. Furthermore, Gov. Jerry Brown succeeded in implementing his “realignment” plan that moved many state prisoners to county jails.

Crime has gone up in major California cities since then and it’s not clear how much those measures contributed to the problem. But it doesn’t appear the recent uptick has slowed the push for reform.

In the Nov. 8 general election, voters rejected an effort to repeal the death penalty and, by a close margin, appear to have approved a measure designed to speed up executions. Nevertheless, voters also approved Proposition 57 by a wide margin. As the Legislative Analyst’s Office explains, the measure will “increase the number of inmates eligible for parole consideration” and make “changes to state law to require that youths have a hearing in juvenile court before they can be transferred to adult court.” The marijuana-legalization measure voters also approved would enable judges to expunge some people’s marijuana convictions.

The ballot box isn’t the only place where reform is moving forward. When the Legislature reconvenes in December, some legislators will almost certainly introduce bills that would reform the state’s system of “money bail.” It’s part of a nationwide reform movement headed by groups such as the American Civil Liberties Union.

Many are unfamiliar with the system by which criminal defendants post a bond that allows them to avoid jail time as their case winds its way through the system. A judge will set a bail amount that reflects the severity of the alleged crime and the defendant’s perceived flight risk. The defendant can post the full amount, which would be forfeited if he or she doesn’t show up at the appointed court date. Those who lack the resources also can go to a bail bonds company and pay a nonrefundable percentage (commonly 10 percent) of the bail. The bail bondsman posts the full amount and assumes liability to assure the defendant shows up for trial.

The bail bonds industry argues the system works well as it is designed. “When it comes to guaranteeing appearance at court, surety bail outperforms every form of public sector pretrial release and own recognizance release as well,” according to the American Bail Coalition. The group, supported by bail-bonds companies, argues the current system also offers a cost-effective approach that costs the courts nothing for to supervise 2 million released defendants each year. Bail defenders also point to the taxes paid by the bail industry – and cite studies showing cost savings to counties.

But critics of the system, including the chief justice of the California Supreme Court, have raised some concerns. “Over time the discussion about bail (has become): Does it really serve its purpose of keeping people safe? Because if you’re wealthy and you commit a heinous crime, you can make bail,” said Chief Justice Tani Cantil-Sakauye, in a March 2016 editorial board meeting with the Sacramento Bee. The problem, as the Bee and others have raised, is that poor people often don’t have the financial wherewithal to post bail. That forces them to stay in jail while wealthier people get to go home on their own recognizance and await trial. The chief justice has created a task force to review the issue.

Critics say the bail situation also encourages poor people to accept plea bargains, given that months in jail — and our court system moves very slowly — could cause their lives to collapse. If they are in jail rather than working, they lose their apartments and their possessions. Their kids are often taken by Child Protective Services. It’s a problem not just for the poor people who are affected, but also for the state’s perpetually overcrowded jail system. More than 60 percent of people in California jails have not yet been sentenced for any crime.

As the nonpartisan Public Policy Institute of California reports: “From 2000 to 2009 (the latest comprehensive data available for felony cases), California’s large urban counties relied on pretrial detention to a much greater extent than did large urban counties elsewhere in the United States. … Part of the difference in detention rates may be attributed to California’s higher bail amounts. The median bail amount in California ($50,000) is more than five times the median amount in the rest of the nation (less than $10,000). Research has demonstrated that pretrial release rates generally decline as bail amounts increase.”

In July, some Democratic state legislators held discussions in Oakland on the matter. San Francisco District Attorney George Gascón said that “at least 29 jurisdictions have developed ‘risk-assessment’ models, which allow court and pretrial staff to use data and other evidence to determine whether a person should be released,” according to a news report. That’s a likely model for coming proposals: shifting toward a system based more on judicial risk assessments than on the ability to post a bond. Assemblyman Rob Bonta, D-Oakland, announced his intent to introduce legislation when the Legislature is back in session.

The U.S. Justice Department also has weighed in on behalf of bail reform in a Georgia case. The department argues that “bail practices that incarcerate indigent individuals before trial solely because of their inability to pay for their release” violate the 14th Amendment of the U.S. Constitution. However, a U.S. district judge rejected a similar argument in a Sacramento County case.

“The state’s interest in ensuring criminal defendants appear for trial dates is a legitimate one, and detaining individuals before their arraignment is rationally related to that legitimate interest,” U.S. District Judge Troy Nunley wrote last month in the case. As the San Francisco Chronicle reported, “Nunley refused, at least for now, to dismiss a claim that the bail system is unfairly punitive.” Nunley is an appointee of President Barack Obama.

Other similar cases are moving forward across the country, including in San Francisco. There, Public Defender Jeff Adachi commissioned a study finding that black inmates are more likely to be kept in jail awaiting trial than their white inmates facing similar charges. Clearly, this issue will be heating up in the coming years, with a new Republican administration throwing more uncertainty into the situation, given the role the Obama Justice Department has played in the matter.

Critics also note the current system isn’t cost free, and that some states have moved to a risk-assessment system. “Risk assessment detention not only stems some of the unjustified inequalities on the impoverished but it also has proven to save the state money and actually prevent further crime by trying to keep the accused employed and out of trouble,” argues my R Street Institute colleague, Arthur Rizer, director of criminal justice policy. The current system, he adds, ends up “bloating our already bloated jails.”

Not all reformers look to eliminate money bail. Various compromises could emerge, including measures that eliminate bail for certain cases, or efforts to create easier ways for poor defendants to afford bonds. This is an emerging reform movement, so we’ve yet to see the kind of compromises that might emerge in the California Legislature. 

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

Escalating pension debt may rest on CA Supreme Court ruling

Good morning. Happy Hump Day. While it seems everyone is trying to get footage of Trump speaking candidly in recordings of “The Apprentice,” which we’ll call the “Trump tapes,” we start this morning with some pension news.

A decision by four Marin County public-employee associations to appeal a pension-related case to the California Supreme Court could ultimately determine whether localities have the tools needed to rein in escalating pension debt.

At issue is how far officials can go to reduce some benefits for current employees after a state appeals court has chipped away at a legal “rule” long favored by the state’s unions.

In August, a California appeals court ruled against the Marin County Employees’ Association in its case challenging a 2012 state law reining in pension-spiking abuses – i.e., those various end-of-career enhancements (unused leave, bonuses, etc.) that public employees use to gin up their final salary and their lifetime retirement pay. …

Even though the dollars at issue are relatively minimal, the case has become a major flashpoint. California courts have long abided by something known as the “California Rule.” It’s not a law or even a rule, actually. It refers to a series of court rulings concluding that once a pension benefit is granted to public employees by a legislative body (board of supervisors, city council, state Legislature), it can never be reduced – even going forward. 

CalWatchdog has more. 

In other news:

• “(Secure Choice) has several provisions protecting the state (and employers, which are required to enroll employees into Secure Choice) against liability. … To protect against losses, the state plans to invest in low-risk securities, like treasury bonds or the federal MyRA program, while another section in the law allows for the state to adopt recommendations that address “risk-sharing and smoothing of market losses and gains.” CalWatchdog has more. 

• “Feminist attorney Gloria Allred, who has represented an army of women in legal actions against rich and powerful men — Bill Cosby, Tiger Woods, Anthony Weiner and ex-Clippers owner Donald Sterling among them — is demanding the release of footage from Donald Trump’s reality show, ‘The Apprentice,'” reports Politico. 

• “When Palo Alto software entrepreneur Ron Unz led a campaign to ban bilingual education 18 years ago, California erupted in an acrimonious debate that drew national attention, with proponents expressing fears about the decline of English and opponents charging racism and predicting an educational Armageddon. But today, in a sign of the Golden State’s dramatically changing demographics and politics, the campaign to roll back the “English-only” Proposition 227 seems low-key and uncontroversial, overshadowed by a bevy of hot-button ballot initiatives and the emotionally charged presidential race,” writes The San Jose Mercury News. 

• “Opponents of Donald Trump have launched a crowdfunding effort to raise cash that could cover the legal costs of unveiling more lewd video featuring the GOP presidential candidate,” reports LA Weekly. 

Legislature:

• Gone ’til December.

Gov. Brown:

• No public events announced.

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