Newsletter - November 2019

The past number of years have been difficult for many Californians especially those who remember when this truly was the Golden State.  Now, we have fires, electrical black outs and laws that are going to limit how much water we use each day.  What on earth is going on? 

Let’s look at some causes of some of the problems.  California has become the epicenter for the climate change belief that is being used to change our way of life.  Basically, we are not talking about pollution.  We are talking about a radical change in how we live.  We are told that global warming is caused by fossil fuel.  Therefore, we must go to an all electric life, no natural gas, wind and sun power and most of all panic about our life on earth.  All of these efforts do not negate the fact that California accounts for less than 1% of global emissions.  California is not going to make a difference to the climate.

If you listen to our Governor and to many people who are very upset, the black outs are the total fault of PG&E.  Let’s look at another explanation. 

PG&E has not maintained the aging grid.  In January of 2019 PG&E filed for chapter 11 bankruptcy to restructure billions of dollars in liabilities including for wildfire.  The Governor has blasted the company for putting profits over safety.  However, PG&E exemplifies the left’s “stakeholder” model.  This model means that a business is not accountable to just their shareholders but also their workers, the environment, local communities and of course society at large.  Put into practical language, this means that a business exists to serve the political overlord.

Some challenges:  The California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission set rates and return (profits).  Every three years PG&E has to submit funding plans to the CPUC.  The CPUC then holds pubic hearings with “stakeholders” including customers and activist groups.  We have a state law that requires utilities to obtain 60% of their power from “renewable” sources by 2030.  The CPUC also ordered utilities to buy energy from homeowners with solar panels. 

There are many other factors that companies must deal with in today’s world.  PG&E proclaims that “diversity and inclusion are integral to how we do business” and “are embedded throughout the lifecycle of our talent management programs.”  The company has a Chief Diversity officer, a Diversity Council and a Compliance and Public Policy Committee on its board to review its diversity metrics. 

PG&E has no detailed records on the age or condition of its transmission towers and wires but it knows that 1.2% of its workforce is American Indian and 0.6% Native Hawaiian or Pacific Islander.  43.9% of the employees belong to ethnic minorities.  The company also knows all of the demographics of its board members, suppliers, LGBTQ individuals and service-disabled veteran owned businesses. 

PG&E requested a $4.84 Billion rate increase over three years in 2012.  The company wanted the increase to ensure grid reliability which is needed to replace aging equipment.  The Utility Reform Network (TURN) described this request as PG&E’s greediest grab.  The PUC finally approved a $2.4 Billion rate increase.

It appears that California customers do not know the price they are paying for green energy mandates.  PG&E rates have climbed 41% since 2010 and are double the national average.  In 2016, the PUC approved a 1% revenue increase.  This has not been enough to finance the grid repairs and upgrades which are necessary to provide consistent power to Californians.  Governor Newsom has been blasting PG&E.  He probably felt differently when he took over $200,000 from PG&E during the 2018 race for governor.

Of course, another major problem in the state is that the state and local communities have made it very difficult to clear areas of dead vegetation and dead trees.  Many Environmentalists firmly believe that forest areas and grasslands must be left alone.  Humans are not to interfere.  Well, the truth is that if people don’t clear the land, Mother Nature will.  She will do that through fire.

We have another issue in California.  THE PRICE OF GASOLINE.  Governor Newsom is very upset about the cost of gas and wants to know the cause.  Are we to believe that the Governor does not know that political policy including taxes and a mandate that fuel sold in California meets strict air quality standards not imposed in other states just might be at least partially responsible.  The Governor has ordered his transportation department to do whatever it can to reduce automotive travel to battle climate change.  The theory is that high fuel prices should discourage driving.  It is worth noting that as the Governor was asking for an investigation of gas prices, the Washington-based Tax Foundation released its annual report on business tax climate.  California was scored as having the 48th highest burden, surpassed only by New York and New Jersey.  The 48th ranking was strongly affected by our ultra-high personal income and sales taxes. 

It is important to remind voters that in September the Governor ordered revenue to be redirected from the last gas tax hike, which was supposed to fund highway construction, to projects that “reverse the trend of increased fuel consumption and reduce greenhouse gas emissions.”

The Democrat legislature and Governor are constantly raising taxes on the rich claiming that those higher taxes have no effect on taxpayers leaving the state or state tax revenue.  In 2012, Prop. 30 passed.  The law raised the top marginal rate on taxpayers with more that $1 Million of income from 10.3% to 13.3%.  The top rates on persons earning more than $250,000 rose between one and two percentage points.  The research of two Stanford economists concluded that the likelihood of wealthy residents moving out of California increased by about 40% after Prop. 30.  After the tax reform of 2017, state and local taxes are no longer fully deductible so the incentive to move increases. 

We need to be on alert.  When the next recession comes and investment income and capital gains fall for the wealthy, it will be necessary to soak the middle class in order to fund all the new causes such as free health care for undocumented immigrants.  That is one reason that the split roll referendum is being pushed on the 2020 ballot.  This referendum will remove the state’s constitutional tax cap on commercial property which has always been a part of Prop 13.  Of course, raising taxes on business means that businesses will pass that increase on to the consumer. 

A little history may be worth reviewing.  Except for 1995/96 Democrats have had control of the state Assembly since 1970.  The Democrat Party has had control of the California Senate since 1970.  Voters need to remember that the Governor does not introduce legislation.  That is done in the state legislature.  Between 3,000 and 4,000 bills may be introduced in the legislature every year.  In 2019, 1042 of those bills made it to the Governor’s desk for approval or veto.  He signed 800.  He vetoed 16.5% of the bills that came to his desk.

How much longer are California voters going to keep voting a straight Democrat ticket or not voting at all?  Many people are dealing with the mess in this state by leaving the state.  However, everyone cannot leave.  It is time to educate yourself and vote for a change. 

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