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STOP CORRUPTION IN LOCAL GOVERNMENT
I was elected with overwhelming public support in 2013, following one of the highest profile corruption scandals in the history of the region. It was my duty at the time to restore public trust from the ground up, and usher a new culture of honest and responsible government. Immediately upon installation, I was appointed Mayor of my City, and used my professional background in finance and economics (including my status as a certified public accountant) to initiate a forensic examination of the City’s internal financial and administrative controls. My preliminary findings were alarming, and I subsequently demanded a consequential, authoritative audit from the California State Controller and other government agencies. The state audit I commissioned provided the credible bill of health I needed to launch the most sweeping management overhaul in our City’s history and the most extensive government reform measures in the entire region. I am proud of this early chapter in my tenure, and the application of my technical, forensic background to profoundly alter the culture and internal control environment of my City. I continue to serve as the City’s watchdog, and I wish to bring the same discipline to state government.
I support the following local reforms:
· Mandatory bidding for all public contracts
· Open and public discussion on all contract renewals (no automatic behind-the-scene evergreen extensions!)
· Periodic rotation of City auditors
· Real-time public disclosure of all campaign contributions (including same-day disclosure at council meetings whenever related contracts are up for consideration)
· Caps on executive compensation and bloated benefits
· Timely approval of balanced budgets, in advance of the applicable fiscal year
· Immediate public disclosure of all auditor communications involving internal controls
· Mandatory remediation of internal control deficiencies identified in audit reports
· Reasonable term limits for local and appointed officials
· Vote recusal from all conflicted members of the city council
· Criminal prosecution of all local corruption
PENSION REFORM AND FISCAL DISCIPLINE
Our state’s unfunded liability for combined pension funds (CalPERS, CalSTRS, and UC), together with promised healthcare for retirees, approximates $1 trillion of debt, according to the most recent estimate of the Stanford University Economics Research Institute. This is a staggering amount, which is at least six-times the size of the State’s entire General Fund revenue intake. As an economist, university lecturer in statistics, and one-time pension auditor, I can confirm (with mathematical certainty) that the system will be unavailable to deliver on promised obligations, and will increasingly encroach on city, county, and state budgets each year of the foreseeable future – threatening every aspect of public services. Last year alone, $20 billion in pension payments were disbursed to 600,000 retirees, with nearly 25,000 individuals earning pensions of over $100,000 – a 63% increase since 2012. In some cases, “public service” retirees were paid in excess of a quarter-million dollars.
We need bold, responsible leadership NOW to reform a broken pension system. I demand that California pension funds use realistically achievable discount rates immediately (closer to the risk-free rate of return), instead of the generous and unrealistically achievable 7.0%-7.5% assumption used by sneaky politicians to deliberately cloud the full extent of these obligations. In addition to immediate transparency, I support migration to defined contribution plans (or transitional hybrid plans) for new employees, higher mandated funding levels for all funds, and re-evaluation of the so-called “California Rule” to enable good-faith renegotiation of fair and economically sustainable pension programs for existing participants. We must also end abusive spiking schemes and double-dipping scenarios, which inflate these obligations and further exacerbate their unfunded status.
Our educational system requires immediate overhaul. At one point, California’s educational system was the best in the nation. Today, it ranks near the bottom – 46 out of 50 states in terms of student achievement, and nearly half of our children cannot read proficiently at grade level. The achievement gap is the widest on record, with children from underprivileged communities falling further and further behind – notwithstanding rising educational outlays in California, and per-pupil spending above the national average. We NEED accountability now, to demand that local school districts allocate greater shares of their budgets to the classroom, instead of bloated administrator salaries, excessive pensions for district executives, and central office overhead – which now, collectively, account for a majority of the education budget.
I support school choice, school competition, and student vouchers so that parents can send their children to better performing schools – including those reserved for the children of Sacramento’s political elite. I support overhaul of arcane tenure rules, so that teachers are evaluated (and rewarded) based on student performance and achievement in the classroom. I support return of traditional academic disciplines and curricula focused on college preparation and the high-skilled jobs of the future. I am NOT beholden to union bosses, political elites, or the special interest industrial complex which works diligently to perpetuate the decrepit status quo. I will champion the civil rights of children and their parents.
Every major survey of business climate consistently ranks California dead last (50 out of 50 states) in terms of business-friendly environment, with over 13,000 businesses leaving the state of California in the last 10 years, including major employers with ties to our Senatorial district. This dire predicament for companies, employees, and working families, is the direct result of over-taxation, over-regulation, and arcane licensing processes that are prone to abuse, favoritism, and in the worst cases, corruption. We need to reduce excessive taxation across the board; streamline the convoluted business permit and licensing process (without special treatment for campaign donors or the expensive lobbyists who represent them); and provide greater efficiencies in regulatory monitoring and compliance.
I join mainstream economists across the political spectrum who recognize that excessive taxation is hurtful not only to businesses and private sector jobs growth, but to the state's ability to achieve sustainable tax revenue -- due largely to the deleterious disincentives that excessive taxation has on production. This concept can be illustrated through the Laffer Curve, which was first described by economist Arthur Laffer of President Reagan's Council of Economic Advisors, and which has since received broad academic recognition even from left-wing economists like Christina Romer of President Obama's Council of Economic Advisors. Basically, excessive business taxation (like the California status quo) crosses a critical inflection point on the Laffer Curve, beyond which higher tax rates actually produce declining tax revenue to the state. Every member of the State Legislature should be mindful of this inter-play between tax rates and tax revenue.