PAY RAISES DURING A PANDEMIC

Good Morning!

Last Thursday, backers of reforming California’s Prop. 13 announced that they had collected enough signatures to qualify their initiative for the November ballot. Their amendment seeks to repeal a portion of Prop. 13 passed in 1978. If passed, it would increase taxes on business property valued over $3 million by up to $12 billion per year. Local governments, school districts, and government unions claim that increasing property taxes will allow for greater funding of the public services they provide. Opponents note that small businesses and farmers are already struggling to stay operational during the coronavirus pandemic and that governments haven’t been the best stewards of the public treasury in recent years. 

Consider Huntington Beach. On Monday night, despite over 100 public comments in opposition, the city council approved pay raises for city employees represented by local unions. One councilmember, who voted no on the pay raises, called the move fiscally irresponsible. “I don’t think we should be trying to give raises,” Erik Peterson said. “I just don’t want to be doing that right now without a full picture of our finances. I really think this should be tabled to at least 2021.” Meanwhile in San Diego, the city furloughed 800 employees after recognizing the forthcoming decline in tax revenue. In response, government unions are threatening legal action. 

Local governments and state agencies are expected to be strapped for cash over the coming months (and possibly years). Thanks to the state quarantine, market crash,  and lack of adequate pension reforms, California’s fiscal bomb fuse just got shorter. However, we won’t feel this pain right away. As the San Diego Union-Tribune notes, “local governments won’t face increases in their annual pension payments until summer 2021 at the earliest, because pension systems are always a year behind in calculating the annual payments of individual agencies.” 

In more welcome news, the Golden State is seeing slower growth in the number of coronavirus cases statewide, raising hopes that the state-imposed lockdown may end in the coming weeks. Governor Newsom, in an effort to help small businesses, announced that “businesses with $5 million in sales or less will get up to a year to give the state up to $50,000 in sales taxes they collect from customers.” As of last week, over 20,000 businesses have asked the state for a 90-day delay in sales tax payments. 

The Department of Consumer Affairs issued a waiver on Monday to “amend the licensing requirements that are preventing 14,000 nursing students across the state from graduating, becoming licensed, and assisting with the COVID-19 response efforts.” This decision will enable thousands of nursing students to graduate on time.

Over the last several weeks, Governor Newsom has issued a number of executive orders to combat the spread of the COVID-19 virus. This week, CPC fellow Edward Ring proposes a few executive orders that he believes the governor should pursue. Read more.

United Teachers of Los Angeles released a memo of understanding that demands unionized micromanagement. CPC contributor Larry Sand breaks this down. Read more.

CPC fellow Edward Ring describes the impact of rising minimum wages during the coronavirus pandemic. Read more.

CPC President Will Swaim talks with CPC fellow Edward Ring about homeless people living on the beach during the plague, the financial crisis coming to your city, and his hope that the economic shutdown will lead to a transformation in California politics on National Review’s Radio Free California. Click here to listen.

Finally, are you affected by AB 5, California’s new law that’s reduced people’s ability to work as independent contractors or in the gig economy? If you have been hurt by AB 5, we would like to know your story. Please contact me at [email protected].

As always, if you’d like to join our movement to save California, we invite you to support us. Click here to donate to CPC.