The recent article in the New York Times "Surpluses Help, but Fiscal Woes for States Go On" is an interesting read that explains the causes of the surpluses and their possible one-off nature, and the ongoing issues surrounding underfunded state pension and health obligations. The bottom line is while these one-off surpluses are better news than continuing deficits, state legislators should exercise restraint and focus on long-term fiscal issues, such as massively under-funded pension plans and rising health care costs. Here's the link: http://www.nytimes.com/2013/06/01/us/surpluses-help-but-fiscal-woes-for-states-go-on.html?
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Each election, I compare the endorsements of the Chamber of Commerce, Democratic Party and Republican Party for the California and San Francisco propositions. In some cases all three of these organizations agree on a ballot measure. Here's a summary of the endorsements for San Francisco propositions:  Links to SF sites: www.sfchamber.com www.sfdemocrats.org www.sfgop.org Here's a summary of the endorsements for California propositions:  Paul Moreno, professor of history at Hillsdale College in Michigan, has published an informative opinion piece "How Public Unions Became So Powerful" in the Wall Street Journal. The opinion piece describes the history of public unions and how over time they have gained power. Here's the link: http://online.wsj.com/article/SB10000872396390444017504577645550224040874.html
The State of California and many of its cities and counties, including San Jose (the 10th largest city in America), San Diego and Stockton, are facing a massive financial crisis relating to pension liabilities. The Reuters article “INSIGHT-California city's pension vote-a precedent for U.S.?” provides a good analysis of the massive scope of the problem. The article discusses San Jose’s pivotal vote this Tuesday to reduce public employee pension benefits, and the controversy surrounding rate of return assumptions (which I believe are too high). In my opinion, this pension crisis could impact most Californians at some point in the future (via higher taxes or reduced funding for critical programs, like education) unless it is addressed very soon. Here’s the link: http://www.reuters.com/article/2012/06/02/usa-california-pensions-idUSL1E8GPIL620120602
Here are links to prior posts on California's financial crisis: http://www.allenlatta.com/1/post/2012/05/how-california-cities-are-dealing-with-the-pension-crisis.html http://www.allenlatta.com/1/post/2012/03/if-stockton-is-broke-then-why-isnt-san-diego-bloomberg-op-ed-piece.html http://www.allenlatta.com/1/post/2011/11/reforming-the-california-public-pension-system.html http://www.allenlatta.com/1/post/2012/02/californias-pension-crisis-a-collection-of-recent-articles.html A recent article on Calpensions.com entitled "Ballot-box Pension Reform Wins First Court Test" provides an interesting look at how several California cities are handling pension reform: through the ballot box. It's worth a read. Here's a link to the article:
http://calpensions.com/2012/05/14/ballot-box-pension-reform-wins-first-court-test/ Several California cities are broke, near broke, or on their way to being broke. There's an interesting (and likely controversial) op-ed piece that recently appeared on Bloomberg.com that discusses the financial mess that Stockton is in, the new 90 day mediation period required before a municipality can declare Chapter 9 bankruptcy, the genesis of the problem, and how San Diego has proposed to fix their financial mess.
Here's a link to the op-ed piece: http://www.bloomberg.com/news/2012-03-02/if-stockton-is-broke-then-why-isn-t-san-diego-steven-greenhut.html Here are links to my prior posts on California's pension crisis: http://www.allenlatta.com/1/post/2011/11/reforming-the-california-public-pension-system.html http://www.allenlatta.com/1/post/2012/02/californias-pension-crisis-a-collection-of-recent-articles.html California is in the midst of a pension crisis at both the state and local levels. Here are some recent articles discussing the problem:
Daily News: Editorial: Gov. Jerry Brown Must Curb Big Pension Paydays For Management http://www.dailynews.com/opinions/ci_20000737 LA Times: San Diego Tackles Municipal Pensions http://www.latimes.com/news/local/la-me-pension-20120220,0,6171706.story LA Times: Commit a Crime, Collect a Pension http://www.latimes.com/news/local/la-me-cap-pensions-20120213,0,2131610.column Sacramento Bee: Group Suspends California Public Pension Reform Ballot Effort http://www.sacbee.com/2012/02/09/4250305/group-suspends-california-public.html Here's a link to a prior post on California's Pension Problem: http://www.allenlatta.com/1/post/2011/12/californias-massive-pension-problem.html The technology industry's opposition to the Stop Online Piracy Act has been very visible and vocal. The NY Times story "A Political Coming of Age for the Tech Industry" is an interesting read on how technology firms, including Google, Wikipedia and Facebook, have lead efforts opposing SOPA. Here's the link: http://www.nytimes.com/2012/01/18/technology/web-wide-protest-over-two-antipiracy-bills.html?_r=1&pagewanted=all
California Governor Jerry Brown is confronted with an estimated budget shortfall of up to $13 billion, and limited tools to eliminate that shortfall. His solution: prepare a balanced budget that includes the impact of proposed tax increases, and if the tax increases aren't passed automatic spending cuts will occur. As one can imagine, the proposal has met with considerable mixed response. The LA Times essentially agrees that more revenues are needed and calls for lawmakers to "come to the table with an open mind and a willingness to compromise." An opinion column in the Orange County Register argues that Governor Brown's proposal to increase the sales tax and to raise income tax rates on the top earners in California are not the solution, but are a continuation of California's "failed management of existing resources and poor understanding of the dynamics of state revenue." In my view, this is a very complex problem that is compounded by a complex legal framework that no longer works in California.
Here's a link to a Bloomberg article on the issue: http://www.bloomberg.com/news/2011-12-08/brown-to-seek-more-automatic-budget-cuts-if-california-tax-increase-fails.html Here's the link to the LA Times piece: http://www.latimes.com/news/opinion/opinionla/la-ed-brown-20111209,0,4157624.story Here's a link to the Orange County Register piece: http://www.ocregister.com/opinion/state-330661-income-tax.html There's a bill working its way through Congress which will loosen the rules requiring private companies to publicly disclose their finances. Currently, once a private company reaches 500 shareholders, the company must begin to publicly disclose its financial and operating information, similar to a public company. This rule has been around for many years, but is now under scrutiny as companies like Google, Facebook and Zynga reach this threshold. These companies grant employees stock options, and under the existing rule the employees receiving these stock options are considered to be shareholders. Thus as a private company grows and grants options to its employees, it may run afoul of the 500 shareholder rule and be forced to become a public company.
The legislation currently being proposed raises the 500 shareholder limit to 2000 shareholders. Accredited (wealthy) investors and employees receiving options will count against this limit. Here are some links to this story: The Atlantic Wire: http://www.theatlanticwire.com/technology/2011/11/lawmakers-sponsoring-very-facebook-friendly-bill/44748/ Fortune Term Sheet: http://finance.fortune.cnn.com/2011/11/08/ending-the-500-shareholder-rule/ The original purpose of the 500 shareholder rule was to force a company with 500 or more shareholders to publicly disclose its financials in order to provide the shareholders with information that they otherwise wouldn't have. The basic tenets of the securities laws are disclosure and protection. Accredited investors are deemed to be sophisticated and in need of less protection. But employees and investors who are not accredited investors deserve disclosure and protection, which in my view should be purpose of the 500 shareholder rule. Therefore I would argue that the 500 shareholder limit should remain, but accredited investors should be exempt from the rule. Brad Feld, a Managing Director at Foundry Group in Boulder, Colorado, has an insightful posting on Patent Trolls on his blog FeldThoughts. Here's the link: http://www.feld.com/wp/archives/2011/11/another-day-another-patent-troll.html. Also, some of the comments posted to his blog present some interesting ideas for reform.
In a recent article in the San Francisco Chronicle "Google lawyer: Why the patent system is broken," Google's patent counsel discusses why he believes the system is broken. Here's the link: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/06/BUQP1LQN3V.DTL In an article by Timothy B. Lee on ars technica, he expands on the San Francisco Chronicle and offers some poignant insights on the matter. Here's the link: http://arstechnica.com/tech-policy/news/2011/11/google-microsoft-uses-patents-when-products-stop-succeeding.ars Governor Jerry Brown recently proposed a 12-point pension reform plan for all California public employees. Here's a link to the proposal: http://gov.ca.gov/docs/Twelve_Point_Pension_Reform_10.27.11.pdf. The Los Angeles Times has a good editorial on the Governor's proposal, which can found here: http://www.latimes.com/news/opinion/opinionla/la-ed-pensions-20111028,0,394461.story. This is a difficult issue that must be dealt with to ensure the future economic soundness of the State.
California is now one of 11 states nationwide that offer online voter registration. Good discussion at TechCrunch: http://techcrunch.com/2011/10/28/california-finally-approves-online-voter-registration-sadly-its-just-1-of-11-states-to-have-done-so/.
Here's a link to a fun video by people endorsing Ed Lee for Mayor of San Francisco: http://www.youtube.com/watch?v=fbdd_Fasz0k
Here's a TechCrunch article discussing the video: http://techcrunch.com/2011/10/25/ron-conway-marissa-mayer-mc-hammer-and-others-endorse-sf-mayoral-candidate-ed-lee-in-amazingly-silly-video/. According to the article, the video was financed by Ron Conway and Sean Parker, and features Brian Wilson of the SF Giants, former SF 49er Ronnie Lott, will.i.am of the Black Eyed Peas and former SF mayor Willie Brown, among others.Note: this is not an endorsement of Ed Lee, just a link to a fun political video. In an Op-Ed piece that appeared yesterday on WSJ.com, Steve Malanga outlines how California is driving away jobs. Interesting read and it adds to the discussion of articles from Michael Lewis and the Economist which are discussed in an earlier blog post. Here's the link: online.wsj.com/article/SB10001424052970204422404576594890367486316.html?KEYWORDS=california
The November 2011 edition of Vanity Fair magazine contains a Michael Lewis article entitled "California and Bust." Here's a link: http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111. In this article, Mr. Lewis describes the dismal financial condition of California, both at the state and local level. To me, it highlights the difficulties we face as a state, and how difficult it will be to change the situation. The article also introduces me to a term that I'm going to try to incorporate into my vocabulary: lizard-brained.
In my view, the Michael Lewis article echoes the article "California reelin'" which appeared in the Economist in March 2011. Here's a link: http://www.economist.com/node/18359882. The Economist article examines some specific causes of the problems that now exist in California and is an interesting read. |
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