Tomorrow Angelenos will have a chance to weigh in on everything from pension reform to taxation of medical marijuana dispensaries. Yes, that's right, we're voting again. Here are some descriptions and thoughts on the major ballot measures on the March 8th Los Angeles ballot. The thoughts expressed herein are solely my own and not those of my employers, friends, family, acquaintances, KCET or the people I recently encountered at a restaurant who felt it appropriate to scream about local politics throughout their meal.
Description: This measure would reduce the minimum pension benefits that firefighters and police officers hired on or after July 1, 2011 could receive.
Minimum pension benefits would be reduced from 50% of a worker's highest earning year to 40% of the average of a worker's two highest earning years. The minimum pension benefits apply to workers who are fifty years of age and have worked for twenty years.
Measure G would also increase the required employee contribution to pension funds. Contributions would be raised from 8 to 9% percent of an employee's salary. Employees would also have to contribute an additional 2% of their salaries for health benefits.
It is estimated that Measure G would save the City $152 million over 10 years. The cost to the City for each new employee, per year, would drop from $15,000 to $12,000, while the employee's average annual contribution would rise from $6,100 to $7,500.
Thoughts: This is moderate, incremental pension reform. Pension reform is vitally important for the City's economic future. Pension funding comes from employee contributions, City contributions, and Pension Fund investments. Because of the global economic downturn, Pension Fund investments have dropped and the City has had to make up for that shortfall. In five years pension benefits will go from one sixth to one third of the City's General Fund (also, make sure to also check out SoCal Connected's investigation into one of the city's pension programs for police and fire).
Description: Measure H would primarily do three things. First, it would restrict campaign contributions and fundraising by City contractors. Specifically, bidders of contracts for $100,000 or more could not give or fundraise for candidates with the authority to approve their contracts. Second, it would lift the prohibition on having a maximum balance (now about $12 million) in the City's Campaign Trust Fund. This fund is used to provide public funds for candidates who opt into the City's voluntary public campaign financing system. Third, Measure H would allow the City, under certain circumstances, to borrow money from the Trust Fund and not to make an annual appropriation of about $3 million to that fund during fiscal emergencies.
Thoughts: Measure H targets the one group of donors, City contractors, who raise unique concerns of corruption or the appearance of corruption because their livelihoods depend on receiving business from the City. It tries to reduce the influence of this group. Measure H is designed to ensure that there is enough money in the Trust Fund for candidates who want to run as publicly-funded candidates, and to give the City some flexibility in times of fiscal emergencies to borrow from that pot of money and/or to refrain from making an annual contribution to that fund in certain circumstances.
Measures I and J
Description: Measure J would create an Office of Public Accountability for Los Angeles Department of Water and Power (LADWP), including a Ratepayer Advocate. The purpose of Measure J is to provide an independent analysis of the LAWDP's actions related to electricity rates. The cost to the taxpayers would be approximately $1 million per year.
Measure I would require the LADWP to coordinate its budget with the City. Specifically, the LADWP would have to submit preliminary and updated budgets to the City. In addition, Measure I would make it more difficult for the LAWDP to fail to make a transfer of surplus funds to the City.
Thoughts: Measures I and J are a result of events that occurred in the Spring of 2010, when the LAWDP told the City Council that it would withhold a $73.5 mil transfer in surplus revenue if the City Council did not approve a rate hike. The LADWP controls its own budget, which is approved by its board. However, the City depends on the transfers or surplus funds that the LADWP makes to the City's general fund. Last year the transfers accounted for 6% of the City's budget. Both measures would create more oversight over the LAWDP, which is both the nation's largest municipal utility and the largest municipal utility that does not have a dedicated overseer.
Measures I and J do not address the fact that the Mayor has the power to appoint the LADWP board and to fire the general manager at well.
Description: Measure L would increase the amount of the City's General Fund that goes to the Library Department from 0.0175% of assessed value of property in City to double that, 0.0300%. This would be an increase of approximately $76 million to $130 million per year. Measure L would also make the Library Department responsible for its own direct and indirect costs. Measure L would mandate a reallocation of money from the General Fund, it is not a new tax.
Thoughts: Measure L is an example of something called "ballot box budgeting," by which voters make budget policy at the ballot box. It asks voters a question in isolation, asking if they want more money for libraries while not asking if they therefore want less money for other services. While it is vitally important to have open, functioning libraries, Measure L would earmark a portion of the budget for libraries, leaving less money for other services.
Description: Measure M would mandate a tax on medical marijuana collectives of $50 per $1,000 of gross receipts. Currently, some marijuana collectives pay no City business tax, while others pay between approximately $1 to $5 per $1,000 of gross receipts. It is estimated that Measure M could increase revenue to the City by about $10 million per year.
Thoughts: Measure M presents some thorny legal questions. Thanks to a successful statewide ballot initiative, California authorizes the sale of medical marijuana. However, the federal government makes sale, possession and use of marijuana illegal. Therefore, it is unclear as to whether the City can legally tax marijuana sales.
In addition, back when now-Governor Jerry Brown was an Attorney General, he stated that medical marijuana dispensaries could only operate as non-profit cooperatives or collectives. A City ordinance similarly states that medical marijuana collectives are non-profit entities. While this opinion has yet to be fully tested in the courts, this categorization presents a problem, because it is impermissible to impose a business tax on gross receipts of non-profits.
While Measure M could bring in some revenue, when the City desperately needs it, it could also expose the City to lawsuits, for the reasons stated above. In addition, a tax of $50 per $1,000 of gross receipts is significantly higher than other city business taxes.
Description: Measure N would remove from the City Charter three campaign finance laws, which are now unconstitutional as a result of recent United States Supreme Court decisions.
Thoughts: If voters fail to pass this measure, it could expose the City to lawsuits for having unconstitutional laws on the books.
Description: Measure O would impose a tax of $1.44 per barrel of oil extracted. It is estimated that it would bring in approximately $4 million per year in revenue.
Thoughts: While Los Angeles is one of few cities in country that doesn't impose an oil extraction tax, oil extraction companies do already pay Los Angeles' municipal business taxes, which are relatively high. In addition, the tax $1.44 per barrel is high compared to other cities around Los Angeles. Having said that, the City does desperately need revenue.
Jessica Levinson writes about the intersection of law and government every Monday at noon. She is the Director of Political Reform at the Center for Governmental Studies and an Adjunct Professor at Loyola Law School.