All Hands in the Piggy Bank: California’s Red Light District and the Money Whores at Work

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My goal was to uproot the following: Where was California spending money it doesn’t have to be spending, who is benefiting from this spending, and how might these funds be better routed and raised other than increasing taxes or cutting healthcare and education or other vital public services?

My Findings

California likes to spend in interesting ways. The following are just a few places I found exorbitant expenditures that probably could be cut back and which should not be prioritized over Education, Health Care, and Law Enforcement funding:

  • There are various management boards and commissions that appear to be not only way overstaffed and overpaid for their roles, but also rather unnecessary in their current respect. One scheming example is the California Waste Management Board, which the Sac Bee refers to as a “high-salaried recycling bin for termed-out politicians and political insiders.” This is one of the boards that the new political cronies put their old friends in when they’re no longer eligible for office in order to have an easy seat and salary on the taxpayers’ dime. For example, this year Legislature appointed termed-out lawmakers Carole Migden, Sheila Kuehl and John Laird to the board. “They [the board members] shouldn’t be former legislators, particularly people who are not qualified to serve. These people are not experts,” said Bob Stern, president of the Center for Governmental Studies in Los Angeles. “They should probably be getting paid $300 to $400 a day. But they’re getting full-time wages while only working part time. And that is a problem.”

    “The plan by the Governor to trash this silly board,” writes Bee analyst Peter Hecht, “would eliminate a perch for political appointees reaping sweet pay and benefits for duties that government watchdogs say could be done on a half-time basis or less… The waste board had its origins in lame-duck politics, as Gov. George Deukmejian created it in an end-of-term deal with legislative leaders in 1989. He quickly set up his finance director and chief of staff with well-paid appointments to the panel.” Last year, the board held only 12 meetings and attended 45 committee hearings. However, its six appointed members each earn an annual salary of $132,178. Meanwhile, voting members of some of California’s most high-profile boards earn only per-diem payments of $100 per meeting, including the California Transportation Commission and the California Coastal Commission. Nonetheless, Schwarzenegger’s proposed cuts over the waste board would leave intact the duties of a waste management agency with a $215 million annual budget and 450 employees. Perhaps the Governor should also considering reforming the name of the committee to the Board of Total Waste.

  • Speaking of high salaries, let’s take a look at some of the highest paid state-salaried positions. First and foremost are the Sports Coaches at our coveted state universities. Jeff Tefford, Head Coach at UC Berkley, for example, earns an estimated $2.8 million a year. Ben Braun, also on the team at Berkley, earns just under $1 million. Pride is important, and sports are her chariot-pulling horses. But how important really is our intercollegiate pride, when our undereducated kids are without affordable healthcare?

    And then there’s a little organization called CalPERS: California Public Employee Retirement System. CalPERS is an agency in the California executive branch that “manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families.” As of December 2008, CalPERS managed the largest public pension fund in the United States with $179.2 billion in assets; however, that represented a 31% decrease from the peak value of its assets of $260.6 billion in October 2007. And in lieu of this loss, contingent with the falling market, their staff is among the highest paid in the state. They have at least 8 “Chief Investment Officers” earning an average of $500k a year each, and a slew of other staff members, with an annual administrative budget which increases every year, with about $332 million spent in 2008! Where is all this money going? Who is getting rich?! Let’s see: Once again the 13 members on the board consist of 6 elected, 3 appointed, and 4 statutory-designated members. Hmm… I wonder who appointed them. The board meets on average 4 times a month, within the span of a week. What do they do during the other 3 weeks each month?

  • Another fancy, little shopaholic piggy-bank scheme is the $185 million approved in January to build a new headquarters for the California State Lottery. Here we stand, with a proposition on the ballot to “improve” the lottery because it’s not earning enough, and yet the Lottery Commission is about to spend what will probably come closer to a quarter of a billion dollars on a six-story headquarters and “campus” in Sacramento. This should make a comfortable little wallowing hole for the commissioners, who will no doubt have showers in their large, new, private offices to wash away the mud after their daily frolic.
  • Then there’s the marijuana issue. Under debate in the governor’s office are the obvious benefits, including state earnings and savings, involved in the legalization of marijuana. A bill introduced by State Assemblyman Tom Ammiano to legalize and tax marijuana sales to adults would potentially generate up to $1.3 billion in revenue for the state. According to NORML, in addition to the $1.5 – $2 billion in excise tax revenue, the state would save the $156 million it spends on enforcing marijuana laws via arrests, prosecution, and prisons. Retail sales would range from $3 – $5 billion, generating another $250 – $400 million in tax sales, and possibly as much as $8 – $13 billion in retail from related industries, such as coffee-houses and tourism. “If the marijuana industry were just one-third of the size of the wine industry, it would generate 50,000 jobs and $1.4 billion in wages, along with additional income and business tax revenues for the state.” A statewide Field Poll in May of this year found 56% of California voters support the idea of legalizing cannabis for recreational use and taxing its proceeds.
  • Speaking of enforcing laws and prison spending, one final example in the barrage of miscalculated over-expenditures—wherein no doubt someone is getting rich off keeping these programs—is the state prison system funding. Not to delve too far into this mess, which could take up an entire article on its own, is to say simply that 10% (yes, ten percent!) of the state budget goes towards prisons. California spends 2.8 times as much money per prisoner than they do per public school pupil. While its prison spending is one of the highest in the nation, California is funded in the bottom 20% of US States for per-student spending. Priorities?!To further my investigation into dubious beneficiaries, I also discovered several backdoor payoffs by big business to avoid tax hikes. It seems only some of us would be getting higher taxes should the propositions have passed:
  • The oil industry gave more than a million dollars to legislators, led by a $500,000 donation from Chevron, during this special election. For this, the Propositions avoid a 9.9 percent oil severance tax.
  • Increased alcohol taxes were shelved after a half-million dollars were donated to legislation, including $100k donations each from industry heavyweights E & J Gallo Winery, the Wine Institute of California, and Constellation Brands, Inc.
  • The Sporting Event industry managed to ease tax increases as well, with a few hundred thousand in donation monies, including $125k from Anschutz Entertainment and $25,000 from our very own beloved Los Angeles Lakers.

    According to Shane Goldmacher of the Sac Bee, “Legislative leaders knew that any well financed campaign against the delicate package [Props 1A-1F] could sink the whole thing.” Large special interests played a key part in determining which taxes were raised. “Any time you do a ballot measure, you always sit around and ask who could be the potential opposition?” said Assembly Speaker Karen Bass, a Los Angeles Democrat. “You always ask: How do I get that opposition on board or neutral at best?” The question is, who sees these donations, who spends this “hard(ly)-earned” money? Wouldn’t raising taxes on these highly-profitable industries be more beneficial than raising personal income taxes? But no, let’s remember who’s doing the raising. Politicians may as well be on the boards of these industry lobbies, and that would be like raising taxes on themselves. Of course, we can’t have that. Total chaos.

  • And, since we’ve been on the subject of saving education funding, when did the California Teachers’ Association decide to divert potential funds away from useful endeavors (perhaps funding salaries?) to lobby for the passing of various legislations? The CTA donated at least $5 million in 2008 either opposing or supporting various propositions; and they just donated $7 million to the passage of Propositions 1A and 1B! Who is running the show over there while valuable teachers’ jobs are being cut?!

WC6


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