U-T San Diego: "Governor must step in to right tax wrong"
The recent U-T Watchdog story on how the state Franchise Tax Board retroactively rescinded a tax break meant to encourage startup companies and small businesses is more confirmation of California government's enduring hostility to the private sector.
The tax break allowed investors in small firms to exclude half the profits from sales of their stock from income taxes if their companies had at least 80 percent of assets and payroll in California. In a court ruling last year, the latter requirement was found to infringe on the U.S. Constitution, which forbids tax rules favoring one state over others.
Officials chose to cancel the tax break for returns dating back to 2008, requiring about 2,000 small businesses and investors to come up with $120 million in principal and $8 million in interest. A spokeswoman suggested the agency had no choice. A private tax expert disagreed, saying the tax board chose the most aggressive option possible.
We say before retroactively punishing 2,000 taxpayers who had acted in good faith, tax bureaucrats should have at the least consulted with their governing board.
They didn't, and now their bureaucratic injustice needs to be corrected. If Gov. Jerry Brown truly means it when he says he wants to promote economic growth and job creation, he must intervene.
Los Angeles News Group: "No time for raises — School boards and parents should consider the rising pay of district chiefs"
State universities have been properly criticized the past few years for giving their presidents bigger and bigger salaries even as public funding for education shrinks and students are charged higher tuition. Elected officials have been slammed for handing out raises to their staffs while cutting government services to their constituents. And CEOs have been shamed for cashing huge bonus checks despite guiding companies into financial crisis.
A principle having been established, Californians should be equally upset to learn about the bigger paychecks going to superintendents of many of the state's struggling school districts.
Many of the most extreme examples are here in Southern California.
School-district bosses getting raises while school kids suffer from budget cuts and teachers are laid off looks just as bad as other well-paid leaders getting richer rewards while constituents and employees struggle.
This is happening too often, judging by results of an examination of dozens of financially imperiled school districts by the investigative journalists at California Watch.
Led by the Los Angeles Unified School District superintendent position's 32 percent increase in base salary (to $330,000) since 2009-10, a dozen California school districts have given superintendents raises of at least 10 percent over the same three years, and nine others have given smaller raises.
Among the superintendents' three-year increases: 23.2 percent (to $220,382) in the Garvey School District in the San Gabriel Valley, 22.5 percent (to $245,000) in Lynwood Unified, 14.3 percent (to $304,773) in Walnut Valley Unified, and double-digit percentage increases in districts in seven other districts in Riverside and Orange counties.
All of these superintendents make more in base salary than Gov. Jerry Brown or state Superintendent of Public Instruction Tom Torlakson.
Mind you, this only includes schools on a California Department of Education list of schools in financial peril.
Now that the pattern has been exposed, parents and other taxpayers should tell school boards what they think about it, and boards should be careful about the kind of leadership they're projecting.
School superintendents' contracts are matters for local control, unlike the outrageous California State University presidents' salaries that have been reined in by state legislation. Contracts should be subject to public debate and board votes.
Having approved Proposition 30, raising taxes to bail out schools, Californians must have their say on how the money is spent.
In the case of the LAUSD, Superintendent John Deasy was promoted from second in command in 2011 at a base salary of $330,000, an increase of $80,000 over what predecessor Ramon Cortines was making. This doesn't include benefits, an expense account and a district-owned car and driver. This, while the L.A. district has been facing a $2.8 billion deficit over the past five years and has cut 12,000 jobs.
Deasy's deal was approved by the school board in a closed-door meeting in January 2011 after the board declined to conduct a national search for Cortines' successor. The vote was 6-0, with member Steve Zimmer abstaining because he wanted a search.
Defenders of superintendents' rising salaries argue that they are needed to attract and hang onto top administrators to do big jobs in difficult times. This is the argument that university, government and corporate executives all make for controversial raises — and it sends a terrible message to employees about who's important and who's less so.
Some superintendents get it. In 2011, Larry Powell, superintendent of the Fresno County schools, voluntarily returned nearly $300,000 in annual salary and benefits for the remaining 3 1/2 years of his term, and earmarked the savings to fund threatened school programs. The past two years, Jacki Cottingim-Dias, superintendent of Fairfield-Suisun Unified in the San Francisco area, has donated $23,650 back to the district from her salary of $321,266.
Superintendents should not be expected to give money back. A deal is a deal. But school boards should be obliged to keep a sharper eye on their bosses' paychecks. There's a time for raises, and this isn't it.
Los Angeles Times: "Warning: It's a quake"
The San Andreas Fault is overdue for a powerful earthquake, geologists say, but there is no way to predict when it will strike. Yet as Japan has demonstrated, it is possible to detect the start of a quake and alert at least some potential victims moments before the most damaging shocks hit. That country's detection and warning system helped minimize the casualties from the massive quake off its coast in 2011, although the resulting tsunami claimed thousands of lives.
Last week, scientists at the U.S. Geological Survey, the California Institute of Technology and UC Berkeley, backed by state Sen. Alex Padilla (D-Pacoima), called on the state to develop a similar system. They want to upgrade the existing California Integrated Seismic Network, a joint effort by federal, state and university geologists to monitor seismic activity along multiple fault lines, to deliver alerts to the public when a sizable quake strikes. It's an idea worth pursuing, although policymakers shouldn't minimize the challenges that remain.
Earthquakes in California typically start about 5 miles below the surface when giant land masses shift. The first sign of trouble is a wave of compression that ripples outward, followed by more vigorous (and potentially damaging) shaking. The gap between the compression (known as P waves) and the slower-moving vibrations that follow (called S waves) is what creates an opportunity for a quake alert system. Theoretically, seismometers could gather data about the P waves, then computers could calculate the intensity of the quake and send an alert before the S waves have reached much of the population.
The nontrivial challenge, however, is analyzing the data from the P waves quickly enough to provide a timely warning, yet without sending out false alarms. Lots of events other than earthquakes can rattle the ground enough to be detected by a seismometer. And it may not be clear from the initial burst of underground energy just how bad a quake will be.
Scientists working on the state's seismic network have developed a trial version of an early warning system that can trigger an alert within about 8 seconds of an underground rupture. Such a delay would give a quake's S waves enough time to travel about 18 miles from the epicenter before the alert sounded. If the technology had been in place during the 1994 Northridge earthquake, the temblor would have passed through downtown Los Angeles before the first warning went out.
With a blind zone that large, taxpayers might question whether it's worth investing in an alert system at all. Seismologists working on the project insist that they can speed the analysis significantly and cut the size of the blind zone as they perfect the system. But developing faster and more reliable detection technology will require more software engineers and more seismometers because even the most effective algorithms can't prevent a blind zone if there's no seismometer within miles of the epicenter. They estimate that for $16 million a year — about twice what the federal and state governments now spend on the seismic system in California — they can develop and operate an alert system they can start phasing into service within two years.
The state's effort has at least one potential ally — or rival — in the private sector. Seismic Warning Systems of Scotts Valley, which aims to build its own statewide network of quake sensors, says its patented technology can verify the start of an earthquake and send out an alert in less than 1 second. In a decade of providing alerts to industrial sites, fire stations and schools, executives claim, their technology has yet to register a false alarm. Officials at the state seismic network are skeptical but say they can't verify or debunk the company's claims because it won't share its data.
The biggest drawback to Seismic Warning System's approach is that the company is unwilling to send alerts to the general public. Its executives argue that doing so could cause more harm than good; not knowing what to do in an earthquake, many people would unwittingly put themselves in harm's way. And if there were false alarms, the public might come to disregard legitimate alerts. But that's a reason to educate the public, as Japan has done, not to withhold potentially life-saving information from it.
Nevertheless, the efforts of companies such as Seismic Warning Systems could be an important supplement to the state's seismic alerts. Even with the investment proposed by Padilla, private industry will still need to translate an alert from the state network into the right preventive response, such as automatically stopping trains, closing pipeline valves and opening garage doors (to prevent them from being jammed shut). And some industrial sites and corporate customers may seek even more advance notice than the state network can deliver.
Another issue is how to get alerts out to the general public. Software developers in Japan have created cellphone and computer apps that can receive and display signals from that country's early warning system. In this country, television and radio stations and mobile-phone companies also have voluntary systems for broadcasting emergency messages, although it's not clear that the phone companies are ready to blast text messages at the speed and volume demanded by a major quake.
Assuming those issues are resolved, the alerts could reach at least some people a few seconds or more before the shaking begins (the farther from the epicenter, the more advanced the warning). That's enough time not just for automated controls in buildings and transit systems to react but also for people to take cover. Again, however, notifying the public won't be worth much without an effective campaign to educate people about what to do.
The implementation issues notwithstanding, it's clear that the technology exists to mitigate the potentially catastrophic damage a major earthquake would cause in California. Lawmakers should find a way to put it to use.
San Francisco Chronicle: "Perry's pitch to California businesses"
Gov. Rick Perry seems to think a little of his Texas smooth talk can convince California businesses and would-be entrepreneurs that they would be better off in the Lone Star State. He suggested it was "next to impossible" to build a business in California.
Hold on, partner: How soon you forget.
It was not so long ago that Perry was an aspiring presidential candidate reaping millions from California benefactors who found it not only possible — but prosperous — to do business in the Golden State.
In his 30-second radio spot aimed at California businesses, Perry cited his state's "low taxes, sensible regulations and fair legal system" as cause for relocation.
While Perry has a point about the challenges of doing business in California, all is not exactly business bliss in Texas, despite its allure of low wages, low land prices and no state income tax. It is true that Texas has enjoyed a bit of migration of jobs from California firms in recent years, including some of the big players in Silicon Valley. Yet it is also evident in various analyses that the shift has been largely in back offices, sales operations and call centers — not corporate headquarters.
California still has its advantages: One, the talented people that cutting-edge businesses need really want to live here. And our leaders in Sacramento are showing signs of getting their act together: The budget mess is getting resolved (thanks in large part to voter-approved tax increases) and there is a serious effort in the Legislature to address a 40-year-old environmental law that is Exhibit A when businesses complain about regulatory excess and uncertainty.
We read Perry's Jan. 29 State of the State address and were struck at its similarities with the post-recession themes of self-congratulation and fiscal prudence in Brown's annual speech. Heck, Perry even invoked California's efforts — "yes, that California" — in prodding Texas lawmakers to make its state colleges more affordable. He also asked to tap into a rainy day fund for infrastructure investments because "a chief concern" of businesses looking to relocate is the adequacy of water, power and transportation.
Perry's speech made it sound pretty darn good in Texas.
The Lone Star State knows it will have arrived when Texas trumps California as the prime stop for presidential candidates shaking down new-economy entrepreneurs for donations — and wealthy individuals who can live anywhere, such as the former Massachusetts governor who defeated Perry in the GOP primary, stop choosing La Jolla.
Until then, Gov. Perry, keep those advertising dollars flowing into California.
The Sacramento Bee: "Legislature needs to clarify credit card law"
California consumers shouldn't have to reveal any more personal information than absolutely necessary, whether they're shopping at a mall or at their computers.
That means the Legislature ought to debate whether to update the state's consumer protection law for credit card purchases to cover the billions of dollars of online purchases. The state Supreme Court basically beckoned lawmakers to do so in its 4-3 decision Monday in a lawsuit brought by an Apple customer who didn't want to divulge his home address and phone number to download music.
The majority of justices ruled that the Song-Beverly Credit Card Act — which bars "brick-and-mortar" retailers from demanding such information — does not extend to online transactions. The justices agreed with e-retailers that argued they require personal data to fight fraud and identity theft. Unlike traditional retailers, they are unable to require photo identification, Justice Goodwin Liu wrote for the majority.
Indeed, Liu asserted, the law enacted more than two decades ago — before Amazon and iTunes became ubiquitous — did not envision online transactions. "In 1990, the idea of computerized transactions involving the sale and purchase of virtual products was beyond any legislator's imagination," he wrote. "Such technology was not even a twinkle in Steve Jobs' eye."
The three dissenting justices, however, cautioned that the ruling further erodes privacy protections and frees retailers to sell personal information to other companies. The justices noted that other forms of remote purchases such as mail and telephone orders did exist when the law was passed. Civil liberties and consumer advocacy groups argue that online merchants can prevent fraud without collecting so much personal data.
There needs to be the right balance between protecting merchants from losing money to fraud and shielding shoppers from unnecessary intrusions into their privacy.
As usual, there are a lot of inconsequential bills being bandied about the Capitol this session. Here's an issue worth the Legislature's time, where it can do some real good.
The Stockton Record: "CalFire burns public trust"
We can now add some CalFire bureaucrats to that infamous, and apparently growing, cadre of nincompoops who believe rules are for others.
The details are still coming out, but the California Department of Forestry and Fire Protection secretly squirreled away $3.66 million that should have gone directly into the state general fund.
OK, judged against a $130 billion budget, the millions Cal Fire hid isn't much. Had the money — settlements of lawsuits against property owners who had liability from fires — gone into the general fund, it would not have cured the state's multiyear, multibillion-dollar budget deficits.
That's hardly the point. The point is trust.
For reasons yet to be explained, Cal Fire officials apparently felt they had a right to the money, or they knew best how it should be spent, or that their department's efforts generated the funds, therefore they should stay in the department.
What we do know is that Cal Fire used the money to buy digital cameras, GPS equipment and metal detectors. They even spent $33,000 for a conference at a Pismo Beach resort, according to The Sacramento Bee.
Maybe Cal Fire needs some cameras, GPS equipment and metal detectors. There may even be a reason for a conference (although holding it at a seaside resort at a time of extreme austerity walks common sense right up to the line).
But they couldn't be bothered following the law in the same way the Parks Department didn't when officials there hid some $54 million at the same time they were planning to close parks.
And that's the biggest loss, not the use of the needed money. It's that these officials have given the public yet another reason to doubt government officials know what they're supposed to do and can be trusted to do it.