17 Jul

Episode 13 – Cause of Death: Cap and Trade

The cause of death was Cap and Trade

Cap and Trade has been extended in California until at least 2030, and Jerry Brown couldn’t be happier. He sold his soul to ensure California businesses and, most importantly, residents will be forced to struggle for their very existence. We aren’t very positive in this episode. Yet again, a Republican has broken rank and sold out the rest of the state in order to ensure Jerry Brown’s legacy. We break down what will probably happen, and it isn’t good.

California Story – Cap and Trade Passes Out of Committee


  • The bill has already passed in the Assembly 75-0 (with 5 assemblymen not voting)
    • Everyone voted for it. This is the extension of the Global Warming Solutions Act of 2006
      • “The two measures would extend the cap-and-trade program, which requires companies to buy permits to release greenhouse gas emissions, and require tougher regulations on pollution in disadvantaged communities.”
  • Jerry Brown has been pushing hard for this bill to pass.
    • Several environmental groups are opposed to it ostensibly because they feel it isn’t hard enough on the polluters like oil companies and such.
    • I’ve heard the “polluter” companies are actually in favor of it because it provides them with clear rules and regulations, rather than being subjected to the whims of unelected air resources boards (which have traditionally been fairly draconian in their regulations).
  • This bill is part of Jerry’ Brown’s legacy.
    • He’s always pushed for environmental reforms.
      • That’s what got us the bullet train to nowhere.
    • These “reforms” have created an economically unbalanced playing field when it comes to commerce.
      • Companies outside of California do not incur as many costs as companies inside California, so their margins are going to be better.
      • I also wonder how people in areas like the LA Basin and the Bay Area would react if the solar and wind farms and whatnot that will have to be used to achieve Kevin de Leon’s plan to use 100% renewable sources to provide California’s energy were erected in their backyards. It’s fine when the people in the desert or in the Central Valley have to shoulder the costs and cede space for these projects, but what if they had to “pay” for them? Would their attitude change?
  • In all likelihood, this bill will pass. It will be considered a “bi-partisan victory” and everyone will pat themselves on the back.
    • Basically, the argument is doom and gloom if it doesn’t pass.
      • This is Jerry Brown’s go-to argument. It’s always “if you don’t pass this, the system will fall apart.”
    • If it does pass, there is a strong chance it could raise our already ridiculous gas prices another $0.45!
      • If we’re trying to recall Josh Newman over a $0.12 increase, among other things, then every single person who votes for this Cap and Trade bill should be recalled as well.
        • I’m all for this.
  • If you want a list of reasons why this bill is a bad deal for California, head over to the Flash Report.

California Story – We Need To Build More Homes. Like Now.


  • From 2009-2014, California only added 308 housing units per 1,000 new residents.
    • That is a recipe for disaster.
      • Housing costs have risen to 2.5 times the national average.
      • In some areas of the state, there’s no feasible way for a working or even middle class family to afford housing.
        • Average rents of nearly $3,000-$4,000 in the bay area.
        • A recent story about the need to make over $100,000 to rent a 2-bedroom apartment in some parts of LA.
  • Prop 13 (passed in 1978) is the cause of much of this.
    • It incentivized cities to zone areas for commercial development, rather than residential.
      • Cities could collect more revenue in the form of sales taxes than they could from property taxes under prop 13.
        • As a result, many areas of cities are zoned for commercial developments.
        • I know Brea gets a good deal of revenue from sales tax, especially from the Mall.
  • Environmental regulations also create a barrier to building new housing units.
    • “The California Environmental Quality Act was created for good reason, and it helped prevent sprawl. But it’s now being used to prevent new developments for reasons unrelated to the environment. A recent study found that nearly 80 percent of CEQA lawsuits targeted urban infill projects, including dense, transit-oriented units that would have lowered housing costs while helping the environment.”
  • Finally, the author argues that a change to California’s tax code is warranted to create more revenue for affordable housing.
    • Basically, if we eliminated the mortgage interest deduction for second (or third, fourth, etc.) homes, the increased revenue from those taxes could fund the construction of affordable housing units.
      • Or it could prompt those owners to sell those second homes, thus increasing the available housing stock.
  • If we don’t do something to address this through market means, we might end up with people arguing for statewide rent control.
30 May

Episode 6 – Housing Prices Are Too Damn High

You know it's true. Housing Prices, bitch.

It’s time to talk about housing prices an a couple other topics. Here are the stories we mentioned in the episode.

  1. Southern California can’t match nation’s new housing pace
    1. http://www.ocregister.com/2017/05/29/southern-california-cant-match-nations-new-housing-pace/
    2. Orange County added 9,200 housing units in 2016, growing 0.85% compared to 0.59% in 2010-16
    3. So is Southern California making progress? The five counties did combine to add more housing units since the recession ended in 2010 than fast-growth states such as Arizona or Colorado or Washington or Virginia in the six-year period.
    4. But if the region had built at the national pace over the past six years, there would be 22,000 more housing units here. Or, look at regional growth this way: The six-year tally is slightly fewer new units than Texas added … in just the past year.
  2. Why some people are fleeing Southern California
    1. http://www.ocregister.com/2017/03/14/why-some-people-are-fleeing-southern-california/
    2. During the first 10 months of 2016, 5,706 residents of Orange, Los Angeles, Riverside and San Bernardino counties took out loans to buy a primary residence out of state, a CoreLogic analysis of mortgage applications shows.
    1. That’s not counting the number of people who paid cash for a home or who, like Tornquist, are renting.
    2. Housing costs are a major concern – SoCal’s median house price in 2016 = 2016 $473,000 – DOUBLE THE NATIONAL AVERAGE.
    3. Typically, a buyer with $550,000 can get a small, two-bedroom, two-bath condo in Irvine, he said. In Riverside County, that same amount buys a four-bedroom house with a three-car garage and twice the square footage.
    4. About 266,000 more people left California than moved in from other states from 2010 to 2015, U.S. Census data show.
    5. Orange County lost nearly 11,000 residents to other California counties or other states. Los Angeles County lost almost 270,000 but Riverside County offset that loss with a net gain of 66,000 people.
  3. Huntington Beach prepared to go to court to keep at-large elections
    1. http://www.ocregister.com/2017/05/25/huntington-beach-prepared-to-go-to-court-to-keep-at-large-elections/
    2. Huntington Beach is fighting to keep At Large elections.
  4. California set to vote on single-payer health
    1. http://www.scpr.org/news/2017/05/29/72306/california-set-to-vote-on-single-payer-health/
    2. Analysts say the state would have to raise about 200 billion dollars a year to pay for the new system. That’s as much as the entire state budget. Governor Brown has raised strong objections to the bill’s cost.
    3. The bill includes an amendment that would block it from taking effect until a funding source for the program is in place.
  5. Prop. 13 corporate loopholes hurting California taxpayers
    1. http://www.sandiegouniontribune.com/opinion/commentary/sd-utbg-prop13-taxpayers-loopholes-20170525-story.html
    2. Proposition 13 also allowed big corporations to freeze their property taxes by locking their assessed value, as if they are worth what they paid for them nearly 40 years ago. That single act has allowed them to avoid over $9 billion per year in taxes.
    3. Closing the loophole would address unintended consequences that have plagued small businesses for decades without sacrificing our state’s unique commitment to keep residential property taxes low. In fact, the proposed changes in recent proposals have no effect on actual tax rates or residential property taxes.
    4. Beyond the prospects of creating budget stability, by closing the loophole in Proposition 13, California can create a more equitable business landscape, where small businesses can compete.
  6. Hoover Golden State Poll: Voters Know What Road To Take On Infrastructure, May Reconsider Proposition 13, But Not Trump
    1. http://www.hoover.org/news/hoover-golden-state-poll-may-2017
    2. Hoover’s Golden State Poll, administered by the survey research firm YouGov, asked Californians to choose from a dozen infrastructure investments and tell us which ones they would be willing to see their taxes go up to pay for.
    3. Most popular: better roads and freeways (59%); repair and maintenance of dams and reservoirs (56%); bridge repair (53%) and building new water storage and transportation (52%). All received majority support from Democrats and independent voters and across economic lines.

      Least popular: electric vehicle charging stations (26%) and port facility modernization (23%). On Proposition 13, which is approaching the 40th anniversary of its voter passage, Californians seem open to revisiting the controversial ballot initiative that placed a cap on commercial and residential property taxes.

      39% of survey respondents supported and 33% opposed a “split roll” approach that removes the cap for commercial properties only.  Interestingly, “split roll” support is the same (39%) among residential property owners and non-owners, while property owners are in stronger opposition (39% vs. 26% for non-owners).

    4. Asked to choose the best way for government to encourage economic growth, 47% said cut taxes and business regulations while 41% chose spending on programs and infrastructure. Again, the survey showed a partisan fracture: Democrats were 60% in favor of spending and only 25% in support of tax cuts; Republicans overwhelmingly preferred tax cuts (84%) to spending (just 10% in favor). Among independent voters, there was a more mixed view. 52% pointed to cutting taxes and regulations, while 35% credited government spending.